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Penn Virginia Corporation Announces 2005 Oil and Gas Reserves, Provides Oil and Gas Operations Update, Announces Year-End and Fourth Quarter Results Conference Call

Posted on: Friday, 3 February 2006, 09:00 CST

Penn Virginia Corporation (NYSE:PVA) today announced record levels for proved oil and gas reserves and production, and provided an update of its oil and gas operational activities for the fourth quarter and full-year 2005.

Penn Virginia estimates its proved reserves at December 31, 2005 were a Company record 385 billion cubic feet equivalent (Bcfe), up nine percent from 354 Bcfe at December 31, 2004. Natural gas comprised approximately 93 percent of total year-end 2005 proved reserves, and 74 percent of total year-end reserves were attributable to proved developed wells. Net of revisions, the Company added approximately 85 Bcfe of proved reserves primarily from extensions, discoveries and additions, replacing 310 percent of 2005 production. The Company sold 27 Bcfe of proved reserves in the first quarter of 2005.

Full-year 2005 production of 27.4 Bcfe was also a Company record, surpassing the previous record of 24.5 Bcfe in 2004 by 12 percent. The production increase over last year was primarily due to the continued success of the Company's development projects, including its Appalachian horizontal coalbed methane (HCBM) play, the Cotton Valley play in east Texas and the Selma Chalk play in Mississippi. Production increases were partially offset by the first quarter 2005 sale of oil and gas properties in west Texas, third quarter Gulf Coast production curtailments resulting from hurricanes Katrina and Rita and normal field declines.

Oil and gas capital expenditures by Penn Virginia for 2005 were approximately $170 million, consisting of:

-- $127 million to drill 178 gross wells, including $110 million

to drill 166 development wells with 163 successes and $17

million to drill 12 exploratory wells with six successful

wells, three dry holes and three wells under evaluation;

-- $30 million for leasehold acquisitions and other;

-- $8 million for the acquisition of seismic data; and

-- $5 million to construct gathering and transmission lines and

compressor stations to facilitate production growth in

Appalachia and east Texas.

As discussed in the Company's December 22, 2005 press release, 2006 oil and gas production is expected to increase due to the Company's active drilling program. The Company has budgeted 2006 oil and gas capital expenditures of $208 million to support this program.

Fourth Quarter 2005 Operations Update

Penn Virginia drilled 44 (30.1 net) wells during the fourth quarter of 2005, including 41 (27.6 net) development wells and three (2.5 net) exploratory wells. All but one of the development wells were successful and the three exploratory wells are under evaluation. Fourth quarter 2005 production was 7.2 Bcfe, or approximately 78 million cubic feet equivalent (Mmcfe) per day, an increase of 11 percent over fourth quarter 2004 production of 6.4 Bcfe, or approximately 70 Mmcfe per day.

Four (2.3 net) HCBM development wells were drilled on the Company's leasehold position in Wyoming County, West Virginia, during the fourth quarter of 2005, and all were successful. Daily production from the Company's HCBM wells increased 76 percent from 8.5 Mmcfe for the fourth quarter of 2004 to approximately 15.0 Mmcfe during the fourth quarter of 2005. HCBM production is expected to increase in 2006 as the Company continues its development drilling program, installs additional pipeline and compressor infrastructure and resolves pipeline capacity issues. Eight (1.0 net) non-operated conventional wells, all successful, were also drilled during the fourth quarter in Virginia and Kentucky.

In the Baxterville and Maxie fields in Marion and Forrest Counties, Mississippi, 18 (17.2 net) successful Selma Chalk development wells were drilled during the fourth quarter. Daily production in the Company's Mississippi fields for the fourth quarter of 2005 was 17.5 Mmcfe, an increase of 48 percent from 11.8 Mmcfe per day in the fourth quarter of 2004. The increase was primarily a result of new production in the Baxterville and Maxie fields, offset in part by normal field declines and disruptions due to hurricane Katrina. Production is expected to continue to increase in the field during 2006 as a result of the Company's ongoing drilling program.

In the Company's Cotton Valley project in Harrison County, Texas, Penn Virginia drilled eight (5.7 net) development wells, all of which were successful. Six of the wells commenced production during the fourth quarter, one is awaiting completion and one is awaiting pipeline. All but one of the eight wells drilled during the quarter are in the North Carthage field, which is part of the Company's Bethany development drilling joint venture with GMX Resources Inc. (NASDAQ:GMXR). Net production in the North Carthage field increased to 8.1 Mmcfe per day during the fourth quarter of 2005 from 4.6 Mmcfe per day during the fourth quarter of 2004. The increase in production was a result of the Company's successful and growing development drilling program in the play. The other successful development well drilled during the quarter is in the Company's Scottsville field. The Company has a 100 percent working interest in the well, which commenced production during the fourth quarter. On the north Louisiana side of the Company's Cotton Valley play, two (0.5 net) development wells were drilled in the Swan Lake field in Bossier Parish during the fourth quarter. Both non-operated wells are awaiting completion. In 2006, the Company expects production from its Cotton Valley play to increase due to increased drilling activity in its Bethany drilling joint venture with GMX Resources, development of its 100 percent working interest areas and the installation of new pipeline and compressor facilities. Three drilling rigs are currently in use and a fourth rig is anticipated in the third quarter of 2006.

In south Texas, the Company drilled one (0.96 net) unsuccessful development well in the Marg Tex Sand objective on the Company's Fannett prospect in Jefferson County. Additional development drilling in the Fannett area is expected in 2006. During the fourth quarter of 2005, production also commenced from the successful development well drilled in the third quarter of 2005 in the Rugeley field in Matagorda County, which is operated by Brigham Exploration Company (NASDAQ:BEXP). Additional development activity is expected in the Rugeley field in 2006. During the fourth quarter of 2005, the Company determined that an exploratory well (100 percent working interest) drilled in the Vicksburg objective in the Company's Esperanza field in Nueces County, Texas, during the first quarter of 2005 was not commercially viable, resulting in a write-off to exploration expense of approximately $3.0 million of drilling and leasehold-related costs.

In McCone County, Montana, the Company drilled an exploratory well, which was stimulated and is currently being tested. This well is part of the Company's agreement to participate with Bill Barrett Corporation (NYSE:BBG) for a 50 percent working interest in a 20,000 net acre Bakken Dolomite horizontal oil well prospect in the Williston basin. If the test well results are encouraging, the Company expects to move forward with a development drilling program based on 640 acre spacing.

The Company drilled two 100 percent working interest exploratory wells in the New Albany Shale in Coles County, Illinois, during the fourth quarter of 2005. Reservoir analysis is currently in progress, with completion and testing expected over the remainder of 2006. Additional drilling is expected in 2006 to test this and other unconventional shale play types.

Hedging Update

Natural gas and crude oil commodity price hedging positions remain in place as disclosed in the Company's 2004 Form 10-K and its third quarter 2005 Form 10-Q. In conjunction with the Company's ongoing hedging program, Penn Virginia has entered into the following additional natural gas and crude oil price hedges in the form of costless collars: Price Per MMbtu/Bbl MMbtu/Bbl ------------------- Natural Gas: Per Day Floor Ceiling --------- ------ ------- December 2005 through March 2006 5,000 $10.00 $21.00 April 2006 through October 2006 5,000 $ 8.00 $16.45 November 2006 through March 2007 10,000 $ 9.00 $19.50 April 2007 through October 2007 10,000 $ 7.00 $12.65 April 2006 through October 2006 5,000 $10.00 $12.80 Crude Oil: March 2006 through December 2007 200 $60.00 $72.20

Year-End and Fourth Quarter 2005 Results and Conference Call

The Company will release its consolidated full-year and fourth quarter 2005 results, including the results of Penn Virginia Resource Partners, L.P. (NYSE:PVR), after the close of trading on the NYSE on Wednesday, February 8, 2006, followed by a conference call on Thursday, February 9, at 3:00 p.m. Eastern time. Prepared remarks by A. James Dearlove, President and Chief Executive Officer, will be followed by a question and answer period. Investors and analysts may participate via phone by dialing 1-877-407-9205 five to ten minutes before the scheduled start of the conference call, or via Internet webcast by logging on to the Company's website at www.pennvirginia.com at least 20 minutes prior to the scheduled start of the call to download and install any necessary audio software. A telephone replay of the call will be available until February 10 at 11:59 p.m. EDT by dialing 1-877-660-6853 and using replay passcodes: account number 286 and conference number 189330. An on-demand replay of the call will also be available at the Company's website beginning shortly after the call.

Penn Virginia Corporation (NYSE:PVA) is an energy company engaged in the exploration, acquisition, development and production of crude oil and natural gas. Through its ownership in Penn Virginia Resource Partners, L.P. (NYSE:PVR), PVA also manages coal properties and related assets and operates a midstream natural gas business. PVA is headquartered in Radnor, PA. For more information about PVA, visit the Company's website at www.pennvirginia.com.

Forward-looking statements: Penn Virginia Corporation is including the following cautionary statement to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for any forward-looking statements made by, or on behalf of, the Company. With the exception of historical matters, any matters discussed are forward-looking and, therefore, involve risks and uncertainties that could cause actual results to differ materially from projected results. These risks, uncertainties and contingencies include, but are not limited to, the following: development activities, capital expenditures, acquisitions and dispositions, drilling and exploration programs, expected commencement dates of oil and natural gas production, projected quantities of future oil and natural gas production by the Company, costs and expenditures and projected demand or supply for oil and natural gas. Additional information concerning these and other factors can be found in the Company's press releases and public periodic filings with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the year ended December 31, 2004 filed on March 11, 2005 and its Quarterly Report on Form 10-Q for the period ended September 30, 2005, filed on November 3, 2005. Except as required by applicable securities laws, the Company does not intend to update its forward-looking statements.

Source: Business Wire

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