Penn Virginia Corporation Announces Second Quarter 2007 Results

Penn Virginia Corporation (NYSE:PVA) today reported financial and operational results for the three months ended June 30, 2007 and provided an update of full-year 2007 guidance. Second Quarter Highlights Operational and financial results for the second quarter of 2007 included the following: Seventh straight quarterly record for oil and gas production of 10.1 billion cubic feet of natural gas equivalent (Bcfe), or 110.5 million cubic feet of natural gas equivalent (MMcfe) per day, a 34 percent increase over the 7.5 Bcfe in the prior year quarter; Operating income of $57.1 million, as compared to $49.9 million in the prior year quarter; Net income of $23.9 million, or $0.63 per diluted share, as compared to $18.2 million, or $0.48 per diluted share, in the prior year quarter; Adjusted net income, a non-GAAP (generally accepted accounting principles) measure which excludes the effects of a non-cash change in derivatives fair value, of $20.0 million, or $0.53 per diluted share, as compared to $22.5 million, or $0.59 per diluted share, in the prior year quarter; and Operating cash flow, a non-GAAP measure, of $78.0 million, as compared to $68.8 million in the prior year quarter. A reconciliation of non-GAAP financial measures appears in the financial tables later in this release. The overall increase in operating income for the quarter over the prior year was fueled by an $11.3 million, or 46 percent, increase in operating income from the oil and gas segment, due primarily to the 34 percent increase in oil and gas production and a seven percent increase in the realized natural gas price. The increase in oil and gas segment operating income was partially offset by a $1.8 million decrease in operating income from the coal segment, a $0.1 million decrease in operating income from the natural gas midstream segment and a $2.2 million increase in corporate expenses. The increase in net income was primarily due to the increase in operating income and the effects of changes in the valuation of unrealized derivative positions, partially offset by an increase in interest expense. Management Comment A. James Dearlove, President and Chief Executive Officer of PVA, said, "Our increased operating cash flow benefited from a solid performance in our oil and gas operations, which delivered a strong production increase and was impacted by higher realized gas prices than in the prior year quarter. Our oil and natural gas production in the second quarter was at record levels and we have increased our full-year 2007 oil and gas production guidance. "We spent approximately 62 percent of our 2007 oil and gas capital expenditures budget during the first half of 2007 and expect to see the benefit of that spending, along with the recently announced acquisitions, during upcoming quarters. During the second quarter, we benefited from recent exploratory success in south Louisiana and we began to see the impact of restored production in Appalachia. Second quarter production increases from our development drilling projects in east Texas and Mississippi were less than anticipated due to delays in stimulations, along with inclement weather and related pipeline construction delays, in east Texas and gathering and compression limitations in Mississippi. We have recently increased completion activity in east Texas and resolved the issues in Mississippi, and we therefore expect larger production increases in both areas in upcoming quarters. "In PVR’s coal royalty segment, second quarter coal production by our lessees increased one percent to 8.1 million tons and the average coal royalty decreased two percent to $2.98 per ton compared with the second quarter of 2006. "PVR’s natural gas midstream segment experienced a two percent decrease in gross midstream processing margin in the second quarter of 2007 as compared to a stronger second quarter of 2006. The decrease was due to a 15 percent decrease in the gross midstream processing margin per thousand cubic feet (Mcf) of volume (from $1.36 per Mcf to $1.14 per Mcf) that was largely offset by a 17 percent increase in system throughput volumes. Moreover, thus far in the third quarter of 2007, "frac spreads,” which drive processing margins, are at record high levels. "The value of our 82 percent ownership stake in Penn Virginia GP Holdings, L.P. (NYSE:PVG), the owner of the general partner of Penn Virginia Resource Partners, L.P. (NYSE:PVR), has increased over 80 percent since its initial public offering (IPO) in December 2006. Considering the increased market value of PVG and the $36 million current annualized run rate of distributions that we receive from PVG, we believe the combined value of our oil and gas operations as well as our stakes in PVG and PVR will become more-fully reflected in our market value over time. "We look forward to continued solid growth over the remainder of 2007 and believe that we have the proper strategies in place at each business segment and the financial strength to achieve that growth.” Oil and Gas Segment Review Oil and gas production grew 34 percent from 7.5 Bcfe in the second quarter of 2006 to a record 10.1 Bcfe in second quarter of 2007, the seventh straight quarterly record for oil and gas production. See today’s separate operational update news release for a more detailed discussion of second quarter 2007 drilling and production operations for the oil and gas business segment. Oil and gas operating income for the second quarter of 2007 was $35.7 million, or 46 percent higher, as compared to $24.4 million in the second quarter of 2006. Total oil and gas revenues increased by 40 percent from $55.6 million in the second quarter of 2006 to $78.1 million in the second quarter of 2007. The increase in revenues was primarily attributable to the production increase and, to a lesser extent, a seven percent increase in the realized natural gas price. Total oil and gas segment expenses increased 36 percent to $42.5 million, or $4.22 per thousand cubic feet of natural gas equivalent (Mcfe) produced, in the second quarter of 2007 from $31.2 million, or $4.17 per Mcfe produced, in the second quarter of 2006, as discussed below: Operating expense increased to $10.0 million, or $1.00 per Mcfe produced, in the second quarter of 2007 from $6.6 million, or $0.88 per Mcfe produced, in the second quarter of 2006. In addition to a general increase in oilfield service costs in all operating areas, the increase was due to the production increase, including new production from the Mid-Continent operations acquired in June 2006, and additional expense in a number of operating areas related to compression, water disposal, workovers and other maintenance. Taxes other than income increased to $4.6 million, or $0.46 per Mcfe produced, in the second quarter of 2007 from $3.4 million, or $0.45 per Mcfe produced, in the prior year. The increase was primarily due to the production increase. General and administrative (G&A) expense increased to $3.5 million, or $0.35 per Mcfe produced, in the second quarter of 2007 from $3.0 million, or $0.40 per Mcfe produced, in the prior year due primarily to the addition of a Mid-Continent regional office and staff in Tulsa and an increase in staffing in both the Appalachia and Gulf Coast offices due to an expansion of operations across the oil and gas segment. Exploration expense increased to $5.7 million, or $0.56 per Mcfe produced, in the second quarter of 2007 from $5.5 million, or $0.74 per Mcfe produced, in the prior year. Depletion, depreciation and amortization (DD&A) expense increased to $18.6 million, or $1.85 per Mcfe produced, in the second quarter of 2007 from $12.7 million, or $1.70 per Mcfe produced, in the prior year. The increase was primarily due to the production increase and the increase in the average depletion rate. Coal Segment Review (Penn Virginia Resource Partners, L.P. – NYSE:PVR) Second quarter 2007 operating income in PVR’s coal segment was $17.6 million, or nine percent lower than the $19.3 million in the prior year. Revenues increased two percent to $28.4 million in the second quarter of 2007 from $27.9 million in the prior year and coal royalty revenue decreased one percent to $24.0 million in the second quarter of 2007 from $24.3 million in the prior year. Coal production by PVR’s lessees increased one percent to 8.1 million tons in the second quarter of 2007 from 8.0 million tons in the prior year. The slight overall increase was primarily attributable to higher lessee production in the San Juan Basin, partially offset by lower lessee production in northern Appalachia and the Illinois Basin. The increase in revenues was due to the increase in coal production by PVR’s lessees and an increase in coal services revenue, partially offset by a two percent decrease in the average coal royalty, from $3.04 per ton in the second quarter of 2006 to $2.98 per ton in the second quarter of 2007. Expenses increased from $8.6 million in the second quarter of 2006 to $10.8 million in the second quarter of 2007, a 27 percent increase, primarily due to: (i) a $1.2 million increase in operating expense, largely as a result of higher production from a sub-leased property; (ii) a $0.6 million increase in DD&A expense due to higher coal production by lessees; and (iii) a $0.3 million increase in general and administrative expense, largely related to acquisition activities. Natural Gas Midstream Segment Review (Penn Virginia Resource Partners, L.P. – NYSE:PVR) Second quarter 2007 operating income in PVR’s natural gas midstream segment was $9.8 million, as compared to $10.0 million in the prior year. System throughput volumes at PVR’s gas processing plants and gathering systems increased 17 percent to 17.0 Bcf, or approximately 187 million cubic feet (MMcf) per day, in the second quarter of 2007 from 14.5 Bcf, or approximately 159 MMcf per day, in the prior year. The increase in system throughput volumes was primarily due to higher average daily system throughput volumes resulting from a pipeline acquisition completed in the second quarter of 2006 and successful drilling results of local producers. The gross midstream processing margin decreased two percent to $19.3 million, or $1.14 per Mcf, in the second quarter of 2007, from $19.7 million, or $1.36 per Mcf, in the prior year. The decrease in the gross midstream processing margin was mainly the result of a $19.4 million increase in the cost of midstream gas purchased, largely offset by a $19.0 million increase in natural gas midstream revenue due to increased system throughput volumes and higher liquids and residue gas prices. Producer services revenue increased by $1.1 million during the second quarter of 2007 as compared to the prior year primarily due to an increase in marketed gas volumes. Expenses, other than the cost of midstream gas purchased, increased by $0.9 million during the second quarter of 2007 as compared to the prior year primarily due to increased operating expense associated with the increased system throughput volumes. Partnership Distributions and Consolidated Financial Statements As previously announced, on August 20, 2007 PVG will pay to unitholders of record as of August 6, 2007 a quarterly cash distribution covering the period April 1 through June 30, 2007 in the amount of $0.28 per unit, or an annualized rate of $1.12 per unit. This annualized distribution represents a $0.08 per unit increase over the annualized distribution of $1.04 per unit paid in the prior quarter. As the result of PVG’s distribution increase, PVA will receive a cash distribution of $9.0 million in the third quarter of 2007. PVA is the largest unitholder of PVG and reports its financial results on a consolidated basis with the financial results of PVG. Similarly, PVG owns PVR’s general partner, including the incentive distribution rights, and is PVR’s largest limited partner unitholder, and reports its financial results on a consolidated basis with the financial results of PVR. PVG currently has no separate operating activities apart from those conducted by PVR and derives its cash flow solely from cash distributions received from PVR. To further assist investors and analysts in the analysis of PVA’s financial statements, a conversion of the GAAP-compliant financial statements ("As reported”) to the equity method of accounting ("As adjusted”) is included in the "Conversion to Non-GAAP Equity Method” section of this release. Using the equity method, PVR’s coal and midstream segment results are reduced to a few line items and the results from oil and gas operations and corporate are therefore highlighted. Management believes that this is useful since the oil and gas and corporate segments provide a majority of the cash flow from operations generated by PVA, as compared to distributions PVA receives from PVG and PVR. Management believes that the financial statements presented using the equity method are less complex and more comparable to those of other oil and gas exploration and production companies. Capital Resources and Impact of Derivatives As of June 30, 2007, PVA had borrowed $328.5 million under its revolving credit facility as compared to $221.0 million at December 31, 2006. The increase in borrowings was primarily due to PVA’s oil and gas capital expenditures and acquisitions in the first half of 2007. PVR’s outstanding borrowings as of June 30, 2007 were $275.1 million, including $11.8 million of senior unsecured notes classified as current portion of long-term debt, an increase from $218.0 million as of December 31, 2006. Consolidated interest expense increased $2.9 million from $5.4 million in the second quarter of 2006 to $8.3 million in the second quarter of 2007, due primarily to the higher weighted average level of outstanding borrowings during the second quarter of 2007 as compared to the second quarter of 2006. PVA reported a derivative loss of $0.9 million the second quarter of 2007, as compared to a loss of $6.4 million for the same period of 2006. The decrease in the derivative loss was primarily due to the change in the fair value, on a "mark-to-market,” basis of open natural gas midstream hedging positions. Cash settlements of derivatives during the second quarter of 2007 resulted in net cash payments of $1.8 million, compared to $2.9 million of net cash payments in the prior year period. See the Guidance Table included in this release for detail of derivative positions as of June 30, 2007. Guidance for 2007 See the Guidance Table included in this release for guidance estimates for full-year 2007. These estimates, including capital expenditure plans, are meant to provide guidance only and are subject to revision as PVA’s and PVR’s operating environments change. 2007 Second Quarter Financial Results Conference Call A conference call and webcast, during which management will discuss second quarter 2007 financial and operational results for PVA, is scheduled for Thursday, August 2, 2007 at 3:00 p.m. ET. 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 webcast by logging on to PVA’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 August 16, 2007 at 11:59 p.m. ET by dialing 1-877-660-6853 and using the following replay pass codes: account #286, conference ID #248539. An on-demand replay of the conference call will be available at PVA’s website beginning shortly after the call. Headquartered in Radnor, PA and a member of the S&P SmallCap 600 Index, Penn Virginia Corporation (NYSE:PVA) is an independent natural gas and oil company focused on the exploration, acquisition, development and production of reserves in onshore regions of the U.S., including the Appalachian Basin, the Cotton Valley play in east Texas, the Selma Chalk play in Mississippi, the Mid-Continent region and the Gulf Coast of Louisiana and Texas. PVA also owns approximately 82 percent of Penn Virginia GP Holdings, L.P. (NYSE:PVG), the owner of the general partner and the largest unit holder of Penn Virginia Resource Partners, L.P. (NYSE:PVR), a manager of coal properties and related assets and the operator of a midstream natural gas gathering and processing business. For more information about PVA, please visit its website at www.pennvirginia.com. Certain statements contained herein that are not descriptions of historical facts are "forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Because such statements include risks, uncertainties and contingencies, actual results may differ materially from those expressed or implied by such forward-looking statements. These risks, uncertainties and contingencies include, but are not limited to, the following: the volatility of commodity prices for natural gas, crude oil, NGLs and coal; the cost of finding and successfully developing oil and gas reserves; our ability to acquire new oil and gas reserves and the price for which such reserves can be acquired; energy prices generally and specifically, the price of natural gas, crude oil, NGLs and coal; the relationship between natural gas and NGL prices; the price of coal and its comparison to the price of natural gas and crude oil; the projected demand for natural gas, crude oil, NGLs and coal; the projected supply of natural gas, crude oil, NGLs and coal; the availability of required drilling rigs, production equipment and materials; our ability to obtain adequate pipeline transportation capacity for our oil and gas production; non-performance by third party operators in wells in which we own an interest; competition among producers in the oil and natural gas and coal industries generally and among natural gas midstream companies; the extent to which the amount and quality of actual production of our oil and natural gas or PVR’s coal differs from estimated recoverable proved oil and gas reserves and coal reserves; PVR’s ability to generate sufficient cash from its midstream and coal businesses to pay the minimum quarterly distribution to its general partner and its unitholders; hazards or operating risks incidental to our business and to PVR’s coal or midstream business; PVR’s ability to successfully manage its relatively new natural gas midstream business; PVR’s ability to acquire new coal reserves or natural gas midstream assets on satisfactory terms; the price for which PVR can acquire coal reserves; PVR’s ability to continually find and contract for new sources of natural gas supply for its midstream business; PVR’s ability to retain existing or acquire new natural gas midstream customers; PVR’s ability to lease new and existing coal reserves; the ability of PVR’s lessees to produce sufficient quantities of coal on an economic basis from PVR’s reserves; the ability of PVR’s lessees to obtain favorable contracts for coal produced from its reserves; PVR’s exposure to the credit risk of its coal lessees and natural gas midstream customers; hazards or operating risks incidental to natural gas midstream operations; unanticipated geological problems; the dependence of PVR’s natural gas midstream business on having connections to third party pipelines; the occurrence of unusual weather or operating conditions including force majeure events; the failure of equipment or processes to operate in accordance with specifications or expectations; the failure of PVR’s infrastructure and its lessees’ mining equipment or processes to operate in accordance with specifications or expectations; delays in anticipated start-up dates of our oil and natural gas production and PVR’s lessees’ mining operations and related coal infrastructure projects; environmental risks affecting the drilling and producing of oil and gas wells, the mining of coal reserves or the production, gathering and processing of natural gas; the timing of receipt of necessary governmental permits by us and by PVR or PVR’s lessees; the risks associated with having or not having price risk management programs; labor relations and costs; accidents; changes in governmental regulation or enforcement practices, especially with respect to environmental, health and safety matters, including with respect to emissions levels applicable to coal-burning power generators; uncertainties relating to the outcome of current and future litigation regarding mine permitting; risks and uncertainties relating to general domestic and international economic (including inflation and interest rates) and political conditions (including the impact of potential terrorist attacks); the experience and financial condition of PVR’s coal lessees and natural gas midstream customers, including their ability to satisfy their royalty, environmental, reclamation and other obligations to PVR and others; PVR’s ability to expand its natural gas midstream business by constructing new gathering systems, pipelines and processing facilities on an economic basis and in a timely manner; coal handling joint venture operations; changes in financial market conditions; and PVG’s ability to generate sufficient cash from its interests in PVR to maintain and pay the quarterly distribution to its general partner and its unitholders. Additional information concerning these and other factors can be found in our press releases and public periodic filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2006. Many of the factors that will determine our future results are beyond the ability of management to control or predict. Readers should not place undue reliance on forward-looking statements, which reflect management’s views only as of the date hereof. We undertake no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as the result of new information, future events or otherwise.   PENN VIRGINIA CORPORATION OPERATIONS SUMMARY   Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 Production Natural gas (MMcf) 9,381 6,926 17,465 13,677 Oil and condensate (MBbls) 113 95 220 186 Total oil, condensate and natural gas production (MMcfe) 10,060 7,496 18,786 14,793 Coal royalty tons (thousands) 8,060 7,966 16,344 15,686 Midstream system throughput volumes (MMcf) 17,019 14,466 32,919 28,648   Prices and margin Natural gas ($/Mcf) $ 7.68 $ 7.17 $ 7.37 $ 8.03 Oil and condensate ($/Bbl) $ 50.82 $ 59.19 $ 49.30 $ 55.99 Average gross coal royalty ($/ton) $ 2.98 $ 3.04 $ 3.00 $ 2.98 Gross midstream processing margin (in thousands) $ 19,330 $ 19,658 $ 34,917 $ 30,188       CONSOLIDATED STATEMENTS OF EARNINGS - unaudited (in thousands, except per share data)     Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 Revenues Natural gas $ 72,032 $ 49,634 $ 128,651 $ 109,844 Oil and condensate 5,750 5,623 10,854 10,414 Natural gas midstream 114,407 95,350 209,725 204,531 Coal royalties 24,029 24,254 49,029 46,676 Other   6,180     4,289     10,409     8,592   Total revenues   222,398     179,150     408,668     380,057   Expenses Cost of midstream gas purchased 95,077 75,692 174,808 174,343 Operating 15,522 10,701 29,955 19,179 Exploration 5,667 5,510 10,737 13,401 Taxes other than income 5,463 3,930 10,839 8,895 General and administrative 15,049 11,714 30,100 22,389 Depreciation, depletion and amortization   28,546     21,664     56,616     43,245   Total expenses   165,324     129,211     313,055     281,452     Operating income 57,074 49,939 95,613 98,605   Other income (expense) Interest expense (8,308 ) (5,396 ) (15,035 ) (10,184 ) Derivatives (892 ) (6,379 ) (17,613 ) (6,537 ) Other   544     363     1,960     759     Income before minority interest and income taxes 48,418 38,527 64,925 82,643   Minority interest 9,228 7,759 18,524 12,648 Income tax expense   15,312     12,551     18,120     27,670     Net income $ 23,878   $ 18,217   $ 28,281   $ 42,325     Per share data   Net income per share, basic $ 0.63   $ 0.49   $ 0.75   $ 1.13   Net income per share, diluted $ 0.63   $ 0.48   $ 0.74   $ 1.12     Weighted average shares outstanding, basic 37,750 37,354 37,682 37,336 Weighted average shares outstanding, diluted 38,055 37,826 37,962 37,794     PENN VIRGINIA CORPORATION CONSOLIDATED BALANCE SHEETS (in thousands)     June 30, December 31, 2007 2006 (unaudited) Assets Current assets $ 211,489 $ 192,383 Net property and equipment 1,558,587 1,358,383 Other assets   79,815   82,383 Total assets $ 1,849,891 $ 1,633,149   Liabilities and Shareholders' Equity Current liabilities $ 184,348 $ 172,690 Long-term debt 328,500 221,000 Long-term debt of Penn Virginia Resource Partners, L.P. 263,283 207,214 Other liabilities and deferred taxes 223,186 211,448 Minority interest - (a) 192,402 438,372 Shareholders' equity - (a)   658,172   382,425 Total liabilities and shareholders' equity $ 1,849,891 $ 1,633,149   (a) - The decrease in minority interest and corresponding increase in shareholders' equity is primarily due to a gain recognized on PVR's initial public offering in 2001 and each subsequent PVR equity issuance to third parties. In accordance with SEC Staff Accounting Bulletin No. 51, PVA deferred recognition of the gain until all PVR junior securities converted to common units in May 2007.   CONSOLIDATED STATEMENTS OF CASH FLOWS - unaudited (in thousands)     Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 Operating Activities Net income $ 23,878 $ 18,217 $ 28,281 $ 42,325 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization 28,546 21,664 56,616 43,245 Commodity derivative contracts: Total derivative losses 2,374 6,454 19,516 7,633 Cash receipts (payments) to settle derivatives for period (1,817 ) (2,888 ) 1,695 (6,217 ) Minority interest 9,228 7,759 18,524 12,648 Deferred income taxes 10,719 9,941 12,684 18,823 Dry hole and unproved leasehold expense 4,330 3,984 8,716 8,359 Other   745     3,716     1,271     4,564   Operating cash flow (see attached table "Reconciliation of Certain Non-GAAP Financial Measures") 78,003 68,847 147,303 131,380 Changes in operating assets and liabilities   (10,147 )   15,358     (14,506 )   18,520   Net cash provided by operating activities   67,856     84,205     132,797     149,900     Investing Activities Proceeds from sale of property and equipment 196 1,247 243 2,475 Acquisitions, net of cash acquired (72,389 ) (158,418 ) (76,224 ) (164,663 ) Additions to property and equipment   (94,531 )   (58,758 )   (199,302 )   (105,539 ) Net cash used in investing activities   (166,724 )   (215,929 )   (275,283 )   (267,727 )   Financing Activities Dividends paid (2,124 ) (2,103 ) (4,240 ) (4,197 ) Distributions paid to minority interest holders (12,445 ) (9,173 ) (23,465 ) (18,317 ) Proceeds from issuance of partners' capital by PVG - - 860 - Net proceeds from (repayments of) PVA borrowings 54,500 78,000 107,500 66,000 Net proceeds from (repayments of) PVR borrowings 52,000 64,800 57,000 61,500 Other   6,621     14     6,704     734   Net cash provided by (used in) financing activities   98,552     131,538     144,359     105,720     Net increase (decrease) in cash and cash equivalents (316 ) (186 ) 1,873 (12,107 ) Cash and cash equivalents-beginning balance   22,527     13,992     20,338     25,913   Cash and cash equivalents-ending balance $ 22,211   $ 13,806   $ 22,211   $ 13,806       PENN VIRGINIA CORPORATION QUARTERLY SEGMENT INFORMATION - unaudited (Dollars in thousands except where noted)     Natural Gas Oil and Gas Coal Midstream Other Consolidated Amount (per Mcfe) * Three Months Ended June 30, 2007   Production Oil, condensate and gas (MMcfe) 10,060 Natural gas (MMcf) 9,381 Crude oil and condensate (MBbls) 113 Coal royalty tons (thousands of tons) 8,060 Midstream system throughput volumes (MMcf) 17,019   Revenues Natural gas $ 72,032 $ 7.68 $ - $ - $ - $ 72,032 Oil and condensate 5,750 50.82 - - - 5,750 Natural gas midstream - - - 114,407 - 114,407 Coal royalties - - 24,029 - - 24,029 Other   363   -   4,381   1,327   109     6,180 Total revenues   78,145   7.77   28,410   115,734   109     222,398 Expenses Cost of midstream gas purchased - - - 95,077 - 95,077 Operating 10,025 1.00 2,514 2,983 - 15,522 Exploration 5,667 0.56 - - - 5,667 Taxes other than income 4,647 0.46 267 336 213 5,463 General and administrative 3,502 0.35 2,743 3,020 5,784 15,049 Depreciation, depletion and amortization   18,632   1.85   5,320   4,502   92     28,546 Total expenses   42,473   4.22   10,844   105,918   6,089     165,324   Operating income (loss) $ 35,672 $ 3.55 $ 17,566 $ 9,816 $ (5,980 ) $ 57,074   Additions to property and equipment and acquisitions, net of cash acquired $ 101,333 $ 52,130 $ 11,859 $ 1,598 $ 166,920     Natural Gas Oil and Gas Coal Midstream Other Consolidated Amount (per Mcfe) * Three Months Ended June 30, 2006   Production Oil, condensate and gas (MMcfe) 7,496 Natural gas (MMcf) 6,926 Crude oil and condensate (MBbls) 95 Coal royalty tons (thousands of tons) 7,966 Midstream system throughput volumes (MMcf) 14,466   Revenues Natural gas $ 49,634 $ 7.17 $ - $ - $ - $ 49,634 Oil and condensate 5,623 59.19 - - - 5,623 Natural gas midstream - - - 95,350 - 95,350 Coal royalties - - 24,254 - - 24,254 Other   379   -   3,643   216   51     4,289 Total revenues   55,636   7.42   27,897   95,566   51     179,150 Expenses Cost of midstream gas purchased - - - 75,692 - 75,692 Operating 6,608 0.88 1,252 2,841 - 10,701 Exploration 5,510 0.74 - - - 5,510 Taxes other than income 3,382 0.45 102 337 109 3,930 General and administrative 2,984 0.40 2,469 2,665 3,596 11,714 Depreciation, depletion and amortization   12,737   1.70   4,747   4,069   111     21,664 Total expenses   31,221   4.17   8,570   85,604   3,816     129,211   Operating income (loss) $ 24,415 $ 3.26 $ 19,327 $ 9,962 $ (3,765 ) $ 49,939   Additions to property and equipment and acquisitions, net of cash acquired $ 128,306 $ 69,163 $ 18,980 $ 727 $ 217,176     * Natural gas revenues are shown per Mcf, oil and gas condensate revenues are shown per Bbl, and all other amounts are shown per Mcfe.     PENN VIRGINIA CORPORATION YEAR-TO-DATE SEGMENT INFORMATION - unaudited (Dollars in thousands except where noted)     Natural Gas Oil and Gas Coal Midstream Other Consolidated Amount (per Mcfe) * Six Months Ended June 30, 2007   Production Oil, condensate and gas (MMcfe) 18,786 Natural gas (MMcf) 17,465 Crude oil and condensate (MBbls) 220 Coal royalty tons (thousands of tons) 16,344 Midstream system throughput volumes (MMcf) 32,919   Revenues Natural gas $ 128,651 $ 7.37 $ - $ - $ - $ 128,651 Oil and condensate 10,854 49.30 - - - 10,854 Natural gas midstream - - - 209,725 - 209,725 Coal royalties - - 49,029 - - 49,029 Other   675   -   7,865   1,725   144     10,409 Total revenues   140,180   7.46   56,894   211,450   144     408,668 Expenses Cost of midstream gas purchased - - - 174,808 - 174,808 Operating 18,944 1.01 4,669 6,342 - 29,955 Exploration 10,737 0.57 - - - 10,737 Taxes other than income 8,869 0.47 590 856 524 10,839 General and administrative 6,902 0.37 5,359 6,043 11,796 30,100 Depreciation, depletion and amortization   36,476   1.94   10,810   9,145   185     56,616 Total expenses   81,928   4.36   21,428   197,194   12,505     313,055   Operating income (loss) $ 58,252 $ 3.10 $ 35,466 $ 14,256 $ (12,361 ) $ 95,613   Additions to property and equipment and acquisitions, net of cash acquired $ 201,058 $ 53,466 $ 17,864 $ 3,138 $ 275,526     Natural Gas Oil and Gas Coal Midstream Other Consolidated Amount (per Mcfe) * Six Months Ended June 30, 2006   Production Oil, condensate and gas (MMcfe) 14,793 Natural gas (MMcf) 13,677 Crude oil and condensate (MBbls) 186 Coal royalty tons (thousands of tons) 15,686 Midstream system throughput volumes (MMcf) 28,648   Revenues Natural gas $ 109,844 $ 8.03 $ - $ - $ - $ 109,844 Oil and condensate 10,414 55.99 - - - 10,414 Natural gas midstream - - - 204,531 - 204,531 Coal royalties - - 46,676 - - 46,676 Other   1,119   -   6,550   870   53     8,592 Total revenues   121,377   8.21   53,226   205,401   53     380,057 Expenses Cost of midstream gas purchased - - - 174,343 - 174,343 Operating 11,607 0.78 2,221 5,351 - 19,179 Exploration 13,401 0.91 - - - 13,401 Taxes other than income 7,412 0.50 412 725 346 8,895 General and administrative 5,468 0.37 4,699 5,705 6,517 22,389 Depreciation, depletion and amortization   25,390   1.72   9,499   8,138   218     43,245 Total expenses   63,278   4.28   16,831   194,262   7,081     281,452   Operating income (loss) $ 58,099 $ 3.93 $ 36,395 $ 11,139 $ (7,028 ) $ 98,605   Additions to property and equipment and acquisitions, net of cash acquired $ 172,458 $ 75,167 $ 21,541 $ 1,036 $ 270,202     * Natural gas revenues are shown per Mcf, oil and gas condensate revenues are shown per Bbl, and all other amounts are shown per Mcfe.     PENN VIRGINIA CORPORATION RECONCILIATION OF CERTAIN NON-GAAP FINANCIAL MEASURES - unaudited (in thousands)     Three Months Ended Six Months Ended June 30, June 30, 2007 2006 2007 2006 Reconciliation of GAAP "Net cash provided by operating activities" to Non-GAAP "Operating cash flow" Net cash provided by operating activities $ 67,856 $ 84,205 $ 132,797 $ 149,900 Adjustments: Changes in operating assets and liabilities   10,147     (15,358 )   14,506     (18,520 )   Operating cash flow (see Note 1 below) $ 78,003   $ 68,847   $ 147,303   $ 131,380       Reconciliation of GAAP "Additions to property and equipment" to Non-GAAP "Capital expenditures" Additions to property and equipment $ 94,531 $ 58,758 $ 199,302 $ 105,539 Acquisitions, net of cash acquired 72,389 158,418 76,224 164,663 Seismic expenditures 716 1,229 1,582 3,640 Delay rentals and other expenditures 582 299 654 1,406 Acquisition of assets and liabilities other than property or equipment (554 ) 29,915 (931 ) 29,915 Change in accrued capital expenditures 11,704 3,654 7,092 2,456 Less: Capitalized interest   (938 )   (516 )   (1,917 )   (906 )   Capital expenditures (see Note 2 below) $ 178,430   $ 251,757   $ 282,006   $ 306,713     Reconciliation of GAAP "Net income" to Non-GAAP "Net income as adjusted" Net income as reported $ 23,878 $ 18,217 $ 28,281 $ 42,325 Adjustments for derivatives: Derivative losses included in operating income 1,482 1,021 1,903 1,021 Derivative losses included in other income 892 6,379 17,613 6,537 Cash receipts (payments) to settle derivatives for period (1,814 ) (2,888 ) 1,698 (6,217 ) Impact of adjustments on minority interest (3,884 ) (1,729 ) (4,686 ) (1,729 ) Impact of adjustments on income tax expense   (565 )   1,495     (8,295 )   1,495     Net income as adjusted (see Note 3 below) $ 19,989   $ 22,495   $ 36,515   $ 43,432     Note 1 - Operating cash flow represents net cash provided by operating activities before changes in assets and liabilities. Operating cash flow is presented because PVA believes it is a useful adjunct to net cash provided by operating activities under accounting principles generally accepted in the United States (GAAP). PVA believes that operating cash flow is widely accepted as a financial indicator of an oil and gas company's ability to generate cash which is used to internally fund exploration and development activities, service debt and pay dividends. This measure is widely used by investors and professional research analysts in the valuation, comparison, rating and investment recommendations of companies within the oil and gas exploration and production industry. Operating cash flow is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing or financing activities, as an indicator of cash flows, or a measure of liquidity or as an alternative to net income.   Note 2 - Capital expenditures represents cash additions to property and equipment, plus cash paid for acquisitions, seismic expenditures, delay rentals and other expenditures, changes in accrued capital expenditures minus capitalized interest. PVA believes that capital expenditures provide useful information regarding PVA's capital program as a supplement to cash additions to property and equipment.   Note 3 - Net income as adjusted represents net income excluding any gains or losses on derivatives, adjusted for any cash settlements received (paid) and adjusted for related minority interest and income taxes. The Company believes "net income as adjusted" provides a useful measure which excludes the impact of mark-to-market accounting. PENN VIRGINIA CORPORATION CONVERSION TO NON-GAAP EQUITY METHOD - unaudited (in thousands)   Reconciliation of GAAP "Income Statements As Reported" to Non-GAAP "Income Statements As Adjusted" (see Note 1 below):   Three Months Ended June 30, 2007 Three Months Ended June 30, 2006 As Reported Adjustments As Adjusted As Reported Adjustments As Adjusted Revenues Natural gas $ 72,032 - $ 72,032 $ 49,634 - $ 49,634 Oil and condensate 5,750 - 5,750 5,623 - 5,623 Natural gas midstream 114,407 (114,407 ) - 95,350 (95,350 ) - Coal royalties 24,029 (24,029 ) - 24,254 (24,254 ) - Other   6,180   (5,708 )   472     4,289   (3,859 )   430   Total revenues   222,398   (144,144 )   78,254     179,150   (123,463 )   55,687   Expenses Cost of midstream gas purchased 95,077 (95,077 ) - 75,692 (75,692 ) - Operating 15,522 (5,497 ) 10,025 10,701 (4,094 ) 6,607 Exploration 5,667 - 5,667 5,510 - 5,510 Taxes other than income 5,463 (607 ) 4,856 3,930 (439 ) 3,491 General and administrative 15,049 (6,305 ) 8,744 11,714 (5,134 ) 6,580 Depreciation, depletion and amortization   28,546   (9,822 )   18,724     21,664   (8,816 )   12,848   Total expenses   165,324   (117,308 )   48,016     129,211   (94,175 )   35,036     Operating income 57,074 (26,836 ) 30,238 49,939 (29,288 ) 20,651   Other income (expense) Interest expense (8,308 ) 3,617 (4,691 ) (5,396 ) 4,416 (980 ) Derivatives (892 ) 7,550 6,658 (6,379 ) 11,929 5,550 Equity earnings in PVG - 6,907 6,907 - 5,461 5,461 Other   544   (466 )   78     363   (277 )   86     Income before minority interest and income taxes 48,418 (9,228 ) 39,190 38,527 (7,759 ) 30,768   Minority interest 9,228 (9,228 ) - 7,759 (7,759 ) - Income tax expense   15,312   -     15,312     12,551   -     12,551     Net income $ 23,878   -   $ 23,878   $ 18,217   -   $ 18,217       Six Months Ended June 30, 2007 Six Months Ended June 30, 2006 As Reported Adjustments As Adjusted As Reported Adjustments As Adjusted Revenues Natural gas $ 128,651 - $ 128,651 $ 109,844 - $ 109,844 Oil and condensate 10,854 - 10,854 10,414 - 10,414 Natural gas midstream 209,725 (209,725 ) - 204,531 (204,531 ) - Coal royalties 49,029 (49,029 ) - 46,676 (46,676 ) - Other   10,409   (9,590 )   819     8,592   (7,420 )   1,172   Total revenues   408,668   (268,344 )   140,324     380,057   (258,627 )   121,430   Expenses Cost of midstream gas purchased 174,808 (174,808 ) - 174,343 (174,343 ) - Operating 29,955 (11,011 ) 18,944 19,179 (7,572 ) 11,607 Exploration 10,737 - 10,737 13,401 - 13,401 Taxes other than income 10,839 (1,450 ) 9,389 8,895 (1,137 ) 7,758 General and administrative 30,100 (12,706 ) 17,394 22,389 (10,404 ) 11,985 Depreciation, depletion and amortization   56,616   (19,955 )   36,661     43,245   (17,637 )   25,608   Total expenses   313,055   (219,930 )   93,125     281,452   (211,093 )   70,359     Operating income 95,613 (48,414 ) 47,199 98,605 (47,534 ) 51,071   Other income (expense) Interest expense (15,035 ) 7,164 (7,871 ) (10,184 ) 8,483 (1,701 ) Derivatives (17,613 ) 10,197 (7,416 ) (6,537 ) 18,062 11,525 Equity earnings in PVG - 13,348 13,348 - 8,912 8,912 Other   1,960   (819 )   1,141     759   (571 )   188     Income before minority interest and income taxes 64,925 (18,524 ) 46,401 82,643 (12,648 ) 69,995   Minority interest 18,524 (18,524 ) - 12,648 (12,648 ) - Income tax expense   18,120   -     18,120     27,670   -     27,670     Net income $ 28,281   -   $ 28,281   $ 42,325   -   $ 42,325       Note 1 – Equity method income statements represent consolidated income statements, minus 100% of PVG’s consolidated results of operations, plus minority interest which represents the portion of PVG’s consolidated results of operations that PVA does not own. Management believes equity method income statements provide useful information to allow the public to more easily discern PVG’s effect on PVA's operations.   PENN VIRGINIA CORPORATION CONVERSION TO NON-GAAP EQUITY METHOD - (continued) (in thousands)   Reconciliation of GAAP "Balance Sheet As Reported" to Non-GAAP "Balance Sheet As Adjusted" (see Note 2 below):   June 30, 2007 (unaudited) December 31, 2006 (unaudited) As Reported Adjustments As Adjusted   As Reported Adjustments As Adjusted Assets Current assets $ 211,489 (96,962 ) $ 114,527 $ 192,383 (83,710 ) $ 108,673 Net property and equipment 1,558,587 (606,597 ) 951,990 1,358,383 (556,513 ) 801,870 Equity investment in PVG - 210,297 210,297 - (61,269 ) (61,269 ) Other assets   79,815   (74,348 )   5,467     82,383   (50,691 )   31,692   Total assets $ 1,849,891   (567,610 ) $ 1,282,281   $ 1,633,149   (752,183 ) $ 880,966     Liabilities and Shareholders' Equity Current liabilities $ 183,448 (98,637 ) $ 84,811 $ 172,690 (90,048 ) $ 82,642 Long-term debt 328,500 - 328,500 221,000 - 221,000 Long-term debt of Penn Virginia Resource Partners, L.P. 263,283 (263,283 ) - 207,214 (207,214 ) - Other liabilities and deferred taxes 224,086 (13,288 ) 210,798 211,448 (16,549 ) 194,899 Minority interest 192,402 (192,402 ) - 438,372 (438,372 ) - Shareholders' equity   658,172   -     658,172     382,425   -     382,425   Total liabilities and shareholders' equity $ 1,849,891   (567,610 ) $ 1,282,281   $ 1,633,149   (752,183 ) $ 880,966     Reconciliation of GAAP "Statement of Cash Flows As Reported" to Non-GAAP "Statement of Cash Flows As Adjusted" (see Note 3 below):   Three Months Ended June 30, 2007 (unaudited)   Three Months Ended June 30, 2006 (unaudited) As Reported Adjustments As Adjusted   As Reported   Adjustments   As Adjusted Operating Activities Net income $ 23,878 - $ 23,878 $ 18,217 - $ 18,217 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization 28,546 (9,822 ) 18,724 21,664 (8,816 ) 12,848 Commodity derivative contracts: Total derivative losses (gains) 2,374 (8,835 ) (6,461 ) 6,454 (12,640 ) (6,186 ) Cash received (paid) to settle derivatives for period (1,817 ) 2,189 372 (2,888 ) 5,139 2,251 Minority interest 9,228 (9,228 ) - 7,759 (7,759 ) - Investment in PVG - (6,907 ) (6,907 ) - (5,461 ) (5,461 ) Cash distributions from PVG and PVR - 8,587 8,587 - 5,302 5,302 Other   15,794   639     16,433     17,641   (2,969 )   14,672   Operating cash flow 78,003 (23,377 ) 54,626 68,847 (27,204 ) 41,643 Changes in operating assets and liabilities   (10,147 ) (1,580 )   (11,727 )   15,358   (3,668 )   11,690   Net cash provided by (used in) operating activities   67,856   (24,957 )   42,899     84,205   (30,872 )   53,333     Investing Activities Proceeds from sale of property and equipment 196 (154 ) 42 1,247 (3 ) 1,244 Acquisitions, net of cash acquired (72,389 ) 52,117 (20,272 ) (158,418 ) 78,318 (80,100 ) Additions to property and equipment   (94,531 ) 11,872     (82,659 )   (58,758 ) 9,825     (48,933 ) Net cash provided by (used in) investing activities   (166,724 ) 63,835     (102,889 )   (215,929 ) 88,140     (127,789 )   Financing Activities Dividends paid (2,124 ) - (2,124 ) (2,103 ) - (2,103 ) Distributions paid to minority interest holders (12,445 ) 12,445 - (9,173 ) 9,173 - Net proceeds from (repayments of) PVA borrowings 54,500 - 54,500 78,000 - 78,000 Net proceeds from (repayments of) PVR borrowings 52,000 (52,000 ) - 64,800 (64,800 ) - Other   6,621   -     6,621     14   -     14   Net cash provided by (used in) financing activities   98,552   (39,555 )   58,997     131,538   (55,627 )   75,911     Net increase (decrease) in cash and cash equivalents (316 ) (677 ) (993 ) (186 ) 1,641 1,455 Cash and cash equivalents-beginning balance   22,527   (21,534 )   993     13,992   (9,110 )   4,882   Cash and cash equivalents-ending balance $ 22,211   (22,211 ) $ -   $ 13,806   (7,469 ) $ 6,337       Six Months Ended June 30, 2007 (unaudited)   Six Months Ended June 30, 2006 (unaudited) As Reported Adjustments As Adjusted   As Reported Adjustments As Adjusted Operating Activities Net income $ 28,281 - $ 28,281 $ 42,325 - $ 42,325 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, depletion and amortization 56,616 (19,955 ) 36,661 43,245 (17,637 ) 25,608 Commodity derivative contracts: Total derivative losses (gains) 19,516 (12,325 ) 7,191 7,633 (18,512 ) (10,879 ) Cash received (paid) to settle derivatives for period 1,695 4,261 5,956 (6,217 ) 8,061 1,844 PVA minority interest in PVG 18,524 (18,524 ) - 12,648 (12,648 ) - Investment in PVG - (12,470 ) (12,470 ) - (10,940 ) (10,940 ) Cash distributions from PVG and PVR - 10,909 10,909 - 10,606 10,606 Other   22,671   (130 )   22,541     31,746   (1,111 )   30,635   Operating cash flow 147,303 (48,234 ) 99,069 131,380 (42,181 ) 89,199 Changes in operating assets and liabilities   (14,506 ) 2,972     (11,534 )   18,520   4,340     22,860   Net cash provided by operating activities   132,797   (45,262 )   87,535     149,900   (37,841 )   112,059     Investing Activities Proceeds from sale of property and equipment 243 (197 ) 46 2,475 (3 ) 2,472 Acquisitions, net of cash acquired (76,224 ) 52,456 (23,768 ) (164,663 ) 81,387 (83,276 ) Additions to property and equipment   (199,302 ) 18,874     (180,428 )   (105,539 ) 15,321     (90,218 ) Net cash provided by (used in) investing activities   (275,283 ) 71,133     (204,150 )   (267,727 ) 96,705     (171,022 )   Financing Activities Dividends paid (4,240 ) - (4,240 ) (4,197 ) - (4,197 ) Distributions paid to minority interest holders (23,465 ) 23,465 - (18,317 ) 18,317 - Proceeds from issuance of partners' capital by PVG 860 (860 ) - - - - Net proceeds from (repayments of) PVA borrowings 107,500 - 107,500 66,000 - 66,000 Net proceeds from (repayments of) PVR borrowings 57,000 (57,000 ) - 61,500 (61,500 ) - Other   6,704   -     6,704     734   -     734   Net cash provided by (used in) financing activities   144,359   (34,395 )   109,964     105,720   (43,183 )   62,537     Net increase (decrease) in cash and cash equivalents 1,873 (8,524 ) (6,651 ) (12,107 ) 15,681 3,574 Cash and cash equivalents-beginning balance   20,338   (13,687 )   6,651     25,913   (23,150 )   2,763   Cash and cash equivalents-ending balance $ 22,211   (22,211 ) $ -   $ 13,806   (7,469 ) $ 6,337       Note 2 – Equity method balance sheets and statements of cash flows represent consolidated balance sheets, minus 100% of PVG’s consolidated balance sheet, excluding minority interest which represents the portion of PVG’s consolidated balance sheet that PVA does not own and including other adjustments to eliminate inter-company transactions. Management believes equity method balance sheets provide useful information to allow the public to more easily discern PVG’s effect on PVA’s assets, liabilities and shareholders’ equity.   Note 3 – Equity method statements of cash flows represent consolidated statements of cash flows, minus 100% of PVG’s consolidated statements of cash flows, excluding minority interest which represents the portion of PVG’s consolidated results of operations that PVA does not own and including other adjustments to eliminate inter-company transactions. Management believes equity method balance sheets provide useful information to allow the public to more easily discern PVG’s effect on PVA's assets, liabilities and shareholders’ equity. PENN VIRGINIA CORPORATION GUIDANCE TABLE (Dollars in millions except where noted)   Penn Virginia Corporation is providing the following guidance regarding financial and operational expectations for 2007.   Actual Guidance First Quarter 2007 Second Quarter 2007 YTD 2007 Full Year 2007 Oil & Gas Segment: Production: Natural gas (Bcf) - See Note a 8.1 9.4 17.5 36.5 - 37.4 Crude oil and condensate (MBbls) - See Note b 107 113 220 420 - 440 Equivalent production (Bcfe) 8.7 10.1 18.8 39.0 - 40.0 Equivalent daily production (MMcfe) 97.0 110.7 103.8 106.8 - 109.6   Expenses: Operating expenses $ 16.5 18.2 34.7 68.0 - 72.0 Exploration $ 5.1 4.3 9.4 27.0 - 30.0 Depreciation, depletion and amortization ($ per Mcfe) $ 2.04 1.85 1.94 1.95 - 2.05   Capital Expenditures: Development drilling $ 69.4 77.9 147.3 240.0 - 245.0 Exploratory drilling $ 19.2 8.5 27.7 55.0 - 65.0 Pipeline, gathering, facilities $ 4.9 5.3 10.2 26.0 - 30.0 Seismic $ 0.9 0.7 1.6 4.0 - 5.0 Lease acquisition, field projects and other $ 0.8 12.1 12.9 17.0 - 20.0 Proved property acquisitions $ 1.4 7.1 8.5 38.0 - 40.0 Total oil & gas capital expenditures $ 96.6 111.6 208.2 380.0 - 405.0   Coal Segment (PVR): Coal royalty tons (millions) 8.3 8.1 16.3 32.0 - 34.0   Revenues: Average royalty per ton $ 3.02 2.98 3.00 2.80 - 2.90 Other $ 3.5 4.4 7.9 14.0 - 15.5   Expenses: Operating expenses $ 5.1 5.5 10.6 18.5 - 20.0 Depreciation, depletion and amortization $ 5.5 5.3 10.8 22.0 - 23.0   Capital Expenditures: Expansion and acquisitions $ 0.4 52.1 52.5 54.0 - 56.0 Maintenance capital expenditures $ 0.1 - 0.1 0.2 - 0.3 Total coal capital expenditures $ 0.5 52.1 52.6 54.2 - 56.3   Natural Gas Midstream Segment (PVR): Throughput volumes (MMcf per day) - see Note c 177 187 182 185 - 195   Expenses: Operating expenses $ 6.9 6.3 13.2 27.0 - 29.0 Depreciation, depletion and amortization $ 4.6 4.5 9.1 17.5 - 18.5   Capital Expenditures: Expansion and acquisitions $ 5.7 6.9 12.6 38.0 - 40.0 Maintenance capital expenditures $ 1.9 2.7 4.6 9.5 - 12.0 Total midstream capital expenditures $ 7.6 9.6 17.2 47.5 - 52.0   Corporate and Other: General and administrative expense - PVA - see Note d $ 5.2 5.2 10.4 19.0 - 20.0 General and administrative expense - PVG - see Note d $ 0.8 0.5 1.3 2.4 - 2.8 Interest expense: PVA average long-term debt outstanding $ 242.0 306.5 274.3 320.0 - 340.0 PVA interest rate 6.5 % 6.6 % 6.6 % 6.8 % - 7.2 % Percentage capitalized - see Note e 25 % 17 % 20 % 15 % - 25 % PVR average long-term debt outstanding $ 221.8 241.6 232.9 265.0 - 275.0 PVR interest rate assumed 6.2 % 5.9 % 6.0 % 6.3 % - 6.8 %   Minority interest in PVG & PVR $ 9.3 9.2 18.5 see Note f Income tax rate - see Note g 39 % 39 % 39 % 40 %   Other capital expenditures $ 1.5 2.3 3.8 6.0 - 8.0     These estimates are meant to provide guidance only and are subject to change as PVA's operating environment changes.   See Notes on following page. PENN VIRGINIA CORPORATION GUIDANCE TABLE (Dollars in millions except where noted)     Notes to Guidance Table:   a- The oil and gas segment's natural gas derivative positions as of June 30, 2007, are summarized below: Average Volume Per Day Weighted Average Price Additional Put Option Floor Ceiling   Natural Gas Costless Collars (in MMBtus) (per MMBtu) Third Quarter 2007 15,000 $ 7.33 $ 12.93 Fourth Quarter 2007 11,685 $ 8.28 $ 15.78 First Quarter 2008 10,000 $ 9.00 $ 17.95   Natural Gas Three-way Collars (in MMBtus) (per MMBtu) Third Quarter 2007 33,000 $ 5.00 $ 7.39 $ 9.05 Fourth Quarter 2007 26,370 $ 5.25 $ 7.74 $ 11.14 First Quarter 2008 22,500 $ 5.44 $ 8.00 $ 12.64 Second Quarter 2008 22,500 $ 5.00 $ 7.11 $ 9.09 Third Quarter 2008 22,500 $ 5.00 $ 7.11 $ 9.09 Fourth Quarter 2008 15,870 $ 5.21 $ 7.58 $ 10.73 First Quarter 2009 10,000 $ 5.50 $ 8.00 $ 12.60   Crude Oil Costless Collars (in barrels) (per barrel) Third Quarter 2007 200 $ 60.00 $ 72.20 Fourth Quarter 2007 200 $ 60.00 $ 72.20   Crude Oil Swaps (in barrels) (per barrel) Third Quarter 2007 300 $ 69.00 Fourth Quarter 2007 300 $ 69.00     b- The costless collar natural gas prices per MMBtu per quarter include the effects of basis differentials, if any.   Average Volume Per Day Weighted Average Price     Collars Put Call Ethane Swaps (in gallons) (per gallon) Third Quarter 2007 through Fourth Quarter 2007 34,440 $ 0.5050 First Quarter 2008 through Fourth Quarter 2008 34,440 $ 0.4700   Propane Swaps (in gallons) (per gallon) Third Quarter 2007 through Fourth Quarter 2007 26,040 $ 0.7550 First Quarter 2008 through Fourth Quarter 2008 26,040 $ 0.7175   Crude Oil Swaps (in barrels) (per barrel) Third Quarter 2007 through Fourth Quarter 2007 560 $ 50.80 First Quarter 2008 through Fourth Quarter 2008 560 $ 49.27   Natural Gas Swaps (purchase) (in MMBtus) (per MMBtu) Third Quarter 2007 through Fourth Quarter 2008 4,000 $ 6.97   Natural Gasoline Swap/Crude Oil Swap (purchase) (in gallons/in barrels) (per gallon / per barrel) Third Quarter 2007 through Fourth Quarter 2007 23,520 / 560 1.265 / 57.12   Ethane Collar (in gallons) (per gallon) Third Quarter 2007 through Fourth Quarter 2007 5,000 $ 0.6100 $ 0.7125   Propane Collar (in gallons) (per gallon) Third Quarter 2007 through Fourth Quarter 2007 9,000 $ 1.0300 $ 1.1640   Natural Gasoline Collar (in gallons) (per gallon) Third Quarter 2007 through Fourth Quarter 2008 6,300 $ 1.4800 $ 1.6465   Crude Oil Collar (in barrels) (per barrel) First Quarter 2008 through Fourth Quarter 2008 400 $ 65.00 $ 75.25   Frac Spread (in MMBtus) (per MMBtu) Third Quarter 2007 through Fourth Quarter 2007 7,128 $ 4.299   c- Based on the derivative positions described above, management estimates that for every $1.00 per MMBtu decrease or increase in natural gas prices from the $7.00 per MMBtu budgeted 2007 benchmark price, natural gas midstream gross processing margin and operating income in 2007 would increase or decrease, respectively, by approximately $6.2 million for the last six months of the year. This assumes oil and other liquids prices and system throughput volumes remain constant at forecasted (guidance) levels. In addition, based on the derivative positions described above, management estimates that for every $5.00 per barrel increase or decrease in the oil prices from the $60.00 per barrel budgeted 2007 benchmark price, natural gas midstream gross processing margin and operating income would increase or decrease, respectively, by approximately $5.5 million for the last six months of the year. This assumes natural gas prices and system throughput volumes remain constant at forecasted (guidance) levels.     d- Year-to-date 2007 results and full-year 2007 guidance reflects increased incentive compensation costs in general and administrative expense.   e- PVA capitalizes a portion of interest expense incurred to recognize the carrying cost of certain unproved properties as required by accounting principles generally accepted in the United States.     f- PVA controls the general partner of PVA GP Holdings, L.P. ("PVG") and owns an 82 percent limited partner interest in PVG. PVG's operating results are included in PVA's consolidated financial statements, and minority interest reflects the 18 percent of PVG owned by parties other than PVA.     g- Deferred federal and state income taxes are expected to comprise approximately 60% to 70% of PVA's income tax expense for the full year.