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Penn Virginia Corporation Provides First Quarter 2006 Oil and Gas Operational Results; Announces Fourth Consecutive Quarterly Production Record

Posted on: Thursday, 27 April 2006, 18:00 CDT

Penn Virginia Corporation (NYSE:PVA) today reported record quarterly production and provided an update of its oil and gas operational activities for the first quarter of 2006.

Oil and gas production for the first quarter of 2006 totaled 7.3 billion cubic feet equivalent (Bcfe), or 81.1 million cubic feet equivalent (Mmcfe) per day, surpassing the previous quarterly record of 7.2 Bcfe, set in the fourth quarter of 2005. Production in the first quarter of 2006 was 14 percent higher than the 6.4 Bcfe reported for the same period of 2005.

The Company's continued growth in production was due to the success of its development and exploratory drilling programs. These programs include the Company's Cotton Valley play in east Texas, the Appalachian horizontal coalbed methane (HCBM) play, the Selma Chalk play in Mississippi and the Fannett prospect in south Texas.

Based on first quarter production and drilling program results, the Company expects full-year 2006 production to range from 28.5 to 30.5 Bcfe, which is consistent with the guidance provided in the Company's February 8, 2006, press release.

Oil and gas capital expenditures by Penn Virginia for the first quarter of 2006 were approximately $47.2 million, consisting of:

-- $28.2 million to drill 39 gross development wells all of

which were successful;

-- $ 9.9 million to drill 6 exploratory wells with one

success, one dry hole, two wells currently being tested,

and two wells awaiting completion;

-- $ 3.9 million for leasehold acquisitions and other;

-- $ 2.4 million for the acquisition of seismic data; and

-- $ 2.8 million to construct gathering and transmission

lines and compressor stations to facilitate production

growth in Appalachia and east Texas.

First Quarter 2006 Operations Update

In the Company's Cotton Valley project in Harrison County, Texas, Penn Virginia drilled nine (5.7 net) successful development wells, all of which are located in the North Carthage field and are part of the Company's AMI with GMX Resources Inc. (NASDAQ:GMXR). Net production increased 89 percent to 9.3 Mmcfe per day during the first quarter of 2006 from 4.9 Mmcfe per day during the first quarter of 2005. The increase in production is a result of the Company's successful and growing development drilling program in the play. The Company currently operates two rigs under long term contracts and shares a third rig with GMXR. Additionally, the Company plans to take delivery of two more rigs later this year. The Company expects to drill 51 gross wells in the Cotton Valley project area during 2006.

Two exploratory wells (1.5 net) were drilled to test the Cotton Valley formation in the Company's 100 percent owned Longhorn prospect which lies to the north of the GMX AMI. The Longhorn prospect area is part of the approximate 29,000 acres the Company has under lease north of the GMX AMI. One well is currently being tested and the other is awaiting completion.

Eight (3.8 net) HCBM development wells were drilled on the Company's leasehold positions in West Virginia during the first quarter of 2006 with a 100 percent success rate. Of the eight wells drilled in the first quarter, one is currently on production while the remaining seven wells are waiting on completion. Daily production from the Company's HCBM wells increased 22 percent from 12.5 Mmcfe per day for the first quarter of 2005 to approximately 15.1 Mmcfe per day during the first quarter of 2006. Three drilling rigs operated by CDX Gas, LLC are currently drilling within an area of mutual interest (AMI) between PVOG and CDX as discussed previously in the Company's October 26, 2005 press release. The Company expects to participate in the drilling of 30 gross HCBM wells during 2006.

In Mississippi, 22 (21.8 net) successful Selma Chalk development wells were drilled during the first quarter in the Company's Baxterville, Gwinville and Maxie fields. Daily production in the Company's Mississippi fields for the first quarter of 2006 was 16.9 Mmcfe per day, and represents an increase of 56 percent over the 10.8 Mmcfe per day in the first quarter of 2005. The Company is actively developing its assets in the Selma chalk and currently has two rigs drilling. A total of 85 gross wells are expected to be drilled during 2006.

In south Texas, the Company drilled one (0.9 net) unsuccessful exploratory well on the Company's Fannett prospect in Jefferson county. This well was a test of an undrilled fault block, and followed the drilling of the successful Paul Dickson #1 which was completed in late 2005 and is currently producing over 5.0 MMcfe per day (gross). Also in south Texas, the Company participated in the Santa Ana #1. This is a successful exploratory well (0.2 net) that is awaiting completion in the Frio Marks formation in Hidalgo County, with potential gross reserves of approximately 15 Bcfe.

In Williams County, North Dakota, the Company participated in the drilling of two (0.7 net) exploratory wells in the Ratcliffe formation. Currently one well is being tested while the other is waiting on completion. These wells are part of the Company's agreement to participate with Bill Barrett Corporation (NYSE:BBG) in the potential development of 62,000 gross acres in Montana and North Dakota. Under the terms of the agreement, Barrett will drill and operate the wells, which will target the Bakken and Ratcliffe formations. The Company will participate with a working interest of 40 percent in the Ratcliffe play and 50 percent in the Bakken Dolomite play. A previously discussed Bakken Dolomite well drilled in the fourth quarter of 2005 in McCone County, Montana is currently under evaluation. The Company also recently acquired 100 percent of the rights to 22,000 net acres in Dunn County, North Dakota with potential in the Bakken Dolomite.

The company is currently participating in the drilling of four exploration wells:

-- Brigham Exploration (NASDAQ:BEXP) spudded the Cotton Land Corp

#1 on March 25 to test the Company's Bayou Postillion Prospect

in Iberia Parish, Louisiana. The projected total depth (TD) is

13,650 feet. Estimated gross unrisked reserves for the

prospect are 13 Bcfe. The Company has a 43.35 percent working

interest before casing point (BCP), reduced to 41.18 percent

after casing point (ACP).

-- Palace Operating Company spudded the C.M. Peterson #1 on April

5 to test the Company's Laphroaig Prospect in St. Mary's

Parish, Louisiana. Projected TD is 20,527 feet. Estimated

gross unrisked reserves for the prospect are 49 Bcfe. The

Company's cost of the project is carried by its partners to

casing point, with a 25 percent working interest ACP.

-- Century Exploration spudded the Miami Corp #1 on April 17 to

test the Company's Ardbeg Prospect in Bayou Sale, St. Mary's

Parish, Louisiana. Projected TD is 18,448 feet. Estimated

gross unrisked reserves for the prospect are 24 Bcfe and the

Company's working interest is 20 percent BCP and 30 percent

ACP.

-- Clayton Williams Energy, Inc. (NASDAQ:CWEI) spudded the Borah

etal #1 on January 1 to test the Company's Fishers Ridge

Prospect in St. Martin Parish, Louisiana. Projected TD is

17,500 feet. Estimated gross unrisked reserves for the

prospect are 23 Bcfe and the Company's working interest is 25

percent.

Hedging Update

Natural gas and crude oil commodity price hedging positions remain in place as disclosed in the Company's 2005 Form 10-K. 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 ------------------- Per Day Floor Ceiling --------- -------- ---------- Natural Gas: November 2006 through March 2007 5,000 $9.00 $18.50 April 2007 through October 2007 5,000 $8.00 $13.50 November 2007 through March 2008 10,000 $9.00 $17.95

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, 2005, filed on March 16, 2006. 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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