Penn Virginia reports 6 percent rise in 3Q production, raises guidance; sees charge

Penn Virginia Corp. reported a 6 percent rise in its third-quarter oil and gas production Friday, lifted its production forecast for the year and said it expects an $87.9 million charge in the third quarter related to the sale of some properties.

During the quarter, the Radnor, Pa.-based company said it produced 12.4 billion cubic feet of natural gas equivalent per day, up from 11.7 billion cubic feet during the same period in 2008.

Capital expenditures totaled about $16 million, including about $8 million for drilling and completion, the company said. Penn Virginia drilled two Granite Wash wells, one of them successful and the other yet to be completed.

It also started selling its Gulf Coast properties and expects to complete a transaction during the fourth quarter. As a result, Penn Virginia said it incurred a non-cash impairment charge of $87.9 million in the third quarter.

In the fourth quarter, Penn Virginia said it expects production to decline to about 9.8 to 11.3 billion cubic feet of natural gas equivalent per day due to the anticipated sale of Gulf Coast assets and natural production declines.

For the full year, the company now expects production of about 49.5 to 51 billion cubic feet of natural gas equivalent per day, up from an earlier forecast of 1.0 to 1.5 billion cubic feet. That would be a 6 to 9 percent production increase over 2008 levels.

Penn Virginia also raised its forecast for 2009 capital expenditures to $216 million to $228.7 million _ $48.7 million to $51 million more than an earlier projection. It attributed the higher forecast to the resumption of drilling in the Lower Bossier Shale in East Texas and an expanded leasehold acquisition effort in the Marcellus Shale, Granite Wash and Lower Bossier Shale.

Looking ahead to 2010, Penn Virginia forecast production of about 47 to 51 billion cubic feet of natural gas equivalent per day, about 5 percent to 14 percent higher than 2009 levels. That assumes capital spending of $300 million to $400 million _ about 35 to 80 percent higher than the midpoint of its revised 2009 capital expenditure guidance.

"Natural gas prices have begun to show modest signs of improvement in recent weeks and the prospect of a recovery of gas prices in 2010 appears to be increasing," A. James Dearlove, Penn Virginia's president and CEO, said in a statement.

Penn Virginia shares slid $1.15, or 5.4 percent, to $20.18 in afternoon trading.