Penn Virginia GP Holdings, L.P. Announces Third Quarter 2009 Results

November 4, 2009 4:10 PM EST

RADNOR, Pa.--(BUSINESS WIRE)-- Penn Virginia GP Holdings, L.P. (NYSE: PVG) today reported financial results for the three months ended September 30, 2009.

Distributable cash, a non-GAAP (generally accepted accounting principles) measure, was $14.8 million for the three months ended September 30, 2009, the same as the $14.8 million in the prior year quarter. Adjusted net income, a non-GAAP measure that excludes the effects of the non-cash change in derivatives fair value, was $11.4 million, or $0.29 per limited partner unit, as compared to $5.8 million, or $0.15 per limited partner unit, in the prior year quarter. Net income was $10.2 million, or $0.26 per limited partner unit, as compared to $20.3 million, or $0.52 per limited partner unit, in the prior year quarter.

Reconciliations of distributable cash and adjusted net income to GAAP-based measures appear in the financial tables later in this release.

As previously announced, on November 18, 2009, we will pay to unitholders of record as of November 6, 2009 a quarterly cash distribution of $0.38 per unit, or an annualized rate of $1.52 per unit, covering the period of July 1 through September 30, 2009. The distribution remains unchanged from the distribution paid with respect to each of the previous four quarters.

We own the general partner, including the incentive distribution rights, and are the largest limited partner unitholder of Penn Virginia Resource Partners, L.P. (NYSE: PVR), and we report our financial results on a consolidated basis with the financial results of PVR. We currently have no separate operating activities other than those conducted by PVR and derive our cash flow solely from cash distributions received from PVR.

Financial and operational updates, as well as full-year 2009 guidance for PVR and its coal and natural resource management and natural gas midstream segments, are discussed in more detail in PVR's news release dated November 4, 2009 (please visit PVR's website, www.pvresource.com, under "For Investors" for a copy of the release).

Guidance for 2009

See the Guidance Table included in PVR's November 4, 2009 release for guidance estimates for full-year 2009.

Conference Call

A joint conference call and webcast, during which management will discuss third quarter 2009 financial and operational results for PVG and PVR, is scheduled for Thursday, November 5, 2009 at 1:00 p.m. ET. Prepared remarks by A. James Dearlove, Chief Executive Officer, will be followed by a question and answer period. Investors and analysts may participate via phone by dialing 1-866-630-9986 five to ten minutes before the scheduled start of the conference call and using the passcode 3241667, or via webcast by logging on to our website at www.pvgpholdings.com at least 20 minutes prior to the scheduled start of the call to download and install any necessary audio software. A telephonic replay will be available approximately two hours after the call for two weeks by dialing toll free 888-203-1112 (international: 719-457-0820) and using the replay code 3241667. In addition, an on-demand replay of the webcast will also be available for two weeks at PVG's or PVR's websites beginning 24 hours after the webcast.

Headquartered in Radnor, PA, Penn Virginia GP Holdings, L.P. (NYSE: PVG) is a publicly traded limited partnership which owns the general partner interest, all of the incentive distribution rights and an approximate 37 percent limited partner interest in PVR, a manager of coal and natural resource properties and related assets and the operator of a midstream natural gas gathering and processing business.

For more information about us, please visit our website at www.pvgpholdings.com. For more information about PVR, please visit its website at www.pvresource.com.

Certain statements contained herein and incorporated herein by reference to the PVR news release dated November 4, 2009 that are not descriptions of historical facts are "forward-looking" statements by PVR 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 are discussed in more detail in PVR's news release dated November 4, 2009 and 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, 2008. Many of the factors that will determine PVR's and, therefore, 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 GP HOLDINGS, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - unaudited

(dollars in thousands, except per unit data)

                              Three Months Ended        Nine Months Ended

                              September 30,             September 30,

                                2009         2008         2009         2008

Revenues

Natural gas midstream         $ 118,443    $ 241,282    $ 348,882    $ 601,127

Coal royalties                  29,821       33,308       90,448       88,911

Coal services                   1,869        1,815        5,502        5,518

Other                           5,492        8,871        16,971       23,039

Total revenues                  155,625      285,276      461,803      718,595

Expenses

Cost of midstream gas           92,355       211,262      285,129      513,778
purchased

Coal royalties expense          1,587        2,125        4,380        8,034

Operating                       7,443        6,916        22,558       16,519

Taxes other than income         1,005        969          3,208        3,017

General and administrative      8,447        7,618        25,399       22,057

Depreciation, depletion and     17,851       16,903       51,971       41,322
amortization

Total expenses                  128,688      245,793      392,645      604,727

Operating income                26,937       39,483       69,158       113,868

Other income (expense)

Interest expense                (6,505  )    (7,060  )    (18,486 )    (17,366 )

Interest income and other       344          (4,118  )    1,020        (3,072  )

Derivatives                     (2,810  )    15,742       (12,005 )    (6,424  )

Net income                      17,966       44,047       39,687       87,006

Net income attributable to      (7,794  )    (23,783 )    (14,327 )    (43,878 )
noncontrolling interests

Net income attributable to
Penn Virginia GP Holdings,    $ 10,172     $ 20,264     $ 25,360     $ 43,128
L.P.

Net income per limited
partner unit, basic and       $ 0.26       $ 0.52       $ 0.65       $ 1.10
diluted

Weighted average number of
units outstanding, basic and    39,075       39,075       39,075       39,075
diluted (in thousands)

Other data:

Coal and natural resource
management segment:

Coal royalty tons (in           8,387        8,496        25,874       24,975
thousands)

Average coal royalties ($     $ 3.56       $ 3.92       $ 3.50       $ 3.56
per ton)

Average net coal royalties    $ 3.37       $ 3.67       $ 3.33       $ 3.24
($ per ton) - (a)

Natural gas midstream
segment:

System throughput volumes       29,811       27,744       93,433       68,915
(MMcf)

Gross margin (in thousands)   $ 26,088     $ 30,020     $ 63,753     $ 87,349

(a) - The average net coal royalties per ton deducts coal royalties expense,
which is incurred primarily in Central Appalachia.

PENN VIRGINIA GP HOLDINGS, L.P.

CONDENSED CONSOLIDATED BALANCE SHEETS - unaudited

(in thousands)

                         September 30,  December 31,

                           2009           2008

Assets

Cash and cash            $ 21,194       $ 18,338
equivalents

Accounts receivable        60,023         73,267

Derivative assets          7,322          30,431

Other current assets       4,304          4,263

Total current assets       92,843         126,299

Property, plant and        909,994        895,119
equipment, net

Other long-term assets     215,937        206,256

Total assets             $ 1,218,774    $ 1,227,674

Liabilities and
Partners' Capital

Accounts payable and     $ 56,930       $ 71,481
accrued liabilities

Deferred income            3,043          4,842

Derivative liabilities     10,900         13,585

Total current              70,873         89,908
liabilities

Derivative liabilities     4,323          6,915

Other long-term            23,971         24,228
liabilities

Long-term debt of PVR      628,100        568,100

Penn Virginia GP
Holdings, LP partners'     251,729        269,542
capital

Noncontrolling             239,778        268,981
interests in PVR

Total liabilities and    $ 1,218,774    $ 1,227,674
partners' capital

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - unaudited

(in thousands)

                         Three Months Ended            Nine Months Ended

                         September 30,                 September 30,

                           2009           2008           2009         2008

Cash flows from
operating activities

Net income               $ 17,966       $ 44,047       $ 39,687     $ 87,006

Adjustments to
reconcile net income to
net cash provided by
operating activities:

Depreciation, depletion    17,851         16,903         51,971       41,322
and amortization

Commodity derivative
contracts:

Total derivative losses    3,668          (14,239   )    14,234       10,552
(gains)

Cash receipts
(payments) to settle       (314      )    (14,054   )    4,135        (33,279  )
derivatives for period

Non-cash interest          1,416          1,175          3,149        1,543
expense

Equity earnings, net of    (1,386    )    (1,409    )    (2,456  )    (1,415   )
distributions

Other                      1,202          (896      )    570          (1,337   )

Changes in operating       1,892          (10,853   )    3,540        (11,277  )
assets and liabilities

Net cash provided by       42,295         20,674         114,830      93,115
operating activities

Cash flows from
investing activities

Acquisitions, net of       (27,648   )    (156,791  )    (29,510 )    (253,031 )
cash acquired

Additions to property,     (11,523   )    (16,062   )    (43,781 )    (54,902  )
plant and equipment

Other                      300            982            872          1,657

Net cash used in           (38,871   )    (171,871  )    (72,419 )    (306,276 )
investing activities

Cash flows from
financing activities

Distributions to           (30,323   )    (28,884   )    (90,297 )    (78,276  )
partners

Proceeds from
(repayments of)            31,000         176,600        60,000       146,000
borrowings, net

Proceeds from PVR          -              -              -            138,015
equity issuance

Other                      -              (3,454    )    (9,258  )    (4,074   )

Net cash provided by
(used in) financing        677            144,262        (39,555 )    201,665
activities

Net increase (decrease)
in cash and cash           4,101          (6,935    )    2,856        (11,496  )
equivalents

Cash and cash
equivalents - beginning    17,093         25,942         18,338       30,503
of period

Cash and cash
equivalents - end of     $ 21,194       $ 19,007       $ 21,194     $ 19,007
period

PENN VIRGINIA GP HOLDINGS, L.P.

DISTRIBUTABLE CASH - unaudited

(in thousands, except per unit data)

The following table presents the calculation and reconciliation of
distributable cash of PVG with respect to the three and nine months ended
September 30, 2009 and 2008:

                                  Three Months Ended      Nine Months Ended

                                  September 30,           September 30,

Distributable cash:               2009 (a)      2008      2009 (a)      2008

Cash distributions received from
PVR associated with:

2% general partner interest       $ 497       $ 497       $ 1,491     $ 1,405

General partner incentive           6,035       6,035       18,105      16,031
distribution rights

PVR common units                    9,206       9,206       27,618      27,032

Total cash received from PVR        15,738      15,738      47,214      44,468

Deduct: Net expenses of PVG on a    (858   )    (457   )    (1,927 )    (1,557 )
stand-alone basis (b)

Cash reserve for working capital    (32    )    (433   )    (743   )    (711   )

Distributable cash (c)            $ 14,848    $ 14,848    $ 44,544    $ 42,200

Cash distributions paid to
partners of PVG

To Penn Virginia Corporation      $ 11,429    $ 11,429    $ 34,287    $ 33,166

To public unitholders               3,419       3,419       10,257      9,034

Total cash distributions paid     $ 14,848    $ 14,848    $ 44,544    $ 42,200

Distribution per limited partner  $ 0.38      $ 0.38      $ 1.14      $ 1.08
unit (paid in subsequent period)

Weighted-average units              39,075      39,075      39,075      39,075
outstanding, basic and diluted

     The three and nine months ended September 30, 2009 columns represent cash
(a)  distributions expected to be received from PVR and cash distributions
     expected to be paid to unitholders of PVG in November 2009.

(b)  Estimated net expenses of PVG, which represent general and administrative
     expenses, partially offset by interest income.

     Distributable cash represents cash distributions received from PVR, minus
     our net expenses, minus a cash reserve for working capital. Distributable
     cash is a significant liquidity metric which is an indicator of our ability
     to sustain or support an increase in quarterly cash distributions paid to
     our limited partners. Distributable cash is also the quantitative standard
     used by investors and professional research analysts in the valuation,
(c)  comparison, rating and investment recommendations of publicly traded
     partnerships. Distributable cash is presented because we believe it is a
     useful adjunct to net cash provided by operating activities under GAAP.
     Distributable cash 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, as a
     measure of liquidity or as an alternative to net income.

CERTAIN NON-GAAP FINANCIAL MEASURES - unaudited

(in thousands, except per unit data)

                                Three Months Ended       Nine Months Ended

                                September 30,            September 30,

                                  2009        2008         2009        2008

Reconciliation of GAAP "Net
income attributable to PVG" to
Non-GAAP "Net income
attributable to PVG, as
adjusted"

Net income attributable to PVG  $ 10,172    $ 20,264     $ 25,360    $ 43,128

Adjustments for derivatives:

Derivative losses included in     -           1,503        -           4,128
operating income

Derivative losses (gains)         3,668       (15,742 )    14,234      6,424
included in other income

Cash receipts (payments) to       (314   )    (14,054 )    4,135       (33,279 )
settle derivatives for period

Impact of adjustments on          (2,115 )    13,864       (6,631 )    11,260
noncontrolling interests (d)

Net income attributable to      $ 11,411    $ 5,835      $ 37,098    $ 31,661
PVG, as adjusted (e)

Net income attributable to
PVG, as adjusted, per limited   $ 0.29      $ 0.15       $ 0.95      $ 0.81
partner unit, basic and
diluted

     Noncontrolling interests for the quarters ended September 30, 2009 and 2008
(d)  has been adjusted for the effect of incentive distribution rights and
     reflects the noncontrolling interests percentage of net income recognized
     for the three and nine months ended September 30, 2009 and 2008.

     Net income attributable to PVG, as adjusted, represents net income
     attributable to PVG adjusted to exclude the effects of non-cash changes in
     the fair value of derivatives and adjusted for related noncontrolling
     interests. We believe this presentation is commonly used by investors and
(e)  professional research analysts in the valuation, comparison, rating and
     investment recommendations of companies in the natural gas midstream
     industry. We use this information for comparative purposes within the
     industry. Net income attributable to PVG, as adjusted, is not a measure of
     financial performance under GAAP and should not be considered as a measure
     of liquidity or as an alternative to net income.

PENN VIRGINIA GP HOLDINGS, L.P.

QUARTERLY SEGMENT INFORMATION - unaudited

(in thousands)

                                 Coal and

                                 Natural

                                 Resource    Natural Gas

                                 Management  Midstream    Other     Consolidated

Three Months Ended September
30, 2009

Revenues

Natural gas midstream            $ -         $ 118,443    $ -       $ 118,443

Coal royalties                     29,821      -            -         29,821

Coal services                      1,869       -            -         1,869

Timber                             1,582       -            -         1,582

Oil and gas royalties              535         -            -         535

Other                              1,372       2,003        -         3,375

Total revenues                     35,179      120,446      -         155,625

Expenses

Cost of midstream gas purchased    -           92,355       -         92,355

Coal royalties expense             1,587       -            -         1,587

Other operating                    559         6,884        -         7,443

Taxes other than income            421         584          -         1,005

General and administrative         3,388       4,180        879       8,447

Depreciation, depletion and        7,999       9,852        -         17,851
amortization

Total expenses                     13,954      113,855      879       128,688

Operating income (loss)          $ 21,225    $ 6,591      $ (879 )  $ 26,937

Additions to property and        $ 140       $ 39,031     $ -       $ 39,171
equipment and acquisitions

                                 Coal and

                                 Natural

                                 Resource    Natural Gas

                                 Management  Midstream    Other     Consolidated

Three Months Ended September
30, 2008

Revenues

Natural gas midstream            $ -         $ 241,282    $ -       $ 241,282

Coal royalties                     33,308      -            -         33,308

Coal services                      1,815       -            -         1,815

Timber                             1,911       -            -         1,911

Oil and gas royalties              1,940       -            -         1,940

Other                              2,686       2,334        -         5,020

Total revenues                     41,660      243,616      -         285,276

Expenses

Cost of midstream gas purchased    -           211,262      -         211,262

Coal royalties expense             2,125       -            -         2,125

Other operating                    752         6,164        -         6,916

Taxes other than income            373         596          -         969

General and administrative         3,321       3,757        540       7,618

Depreciation, depletion and        8,794       8,109        -         16,903
amortization

Total expenses                     15,365      229,888      540       245,793

Operating income (loss)          $ 26,295    $ 13,728     $ (540 )  $ 39,483

Additions to property and        $ 497       $ 172,356    $ -       $ 172,853
equipment and acquisitions

PENN VIRGINIA GP HOLDINGS, L.P.

YEAR-TO-DATE SEGMENT INFORMATION - unaudited

(in thousands)

                             Coal and

                             Natural

                             Resource    Natural Gas

                             Management  Midstream    Other       Consolidated

Nine Months Ended September
30, 2009

Revenues

Natural gas midstream        $ -         $ 348,882    $ -         $ 348,882

Coal royalties                 90,448      -            -           90,448

Coal services                  5,502       -            -           5,502

Timber                         4,355       -            -           4,355

Oil and gas royalties          1,783       -            -           1,783

Other                          6,487       4,346        -           10,833

Total revenues                 108,575     353,228      -           461,803

Expenses

Cost of midstream gas          -           285,129      -           285,129
purchased

Coal royalties expense         4,380       -            -           4,380

Other operating                2,200       20,358       -           22,558

Taxes other than income        1,146       2,062        -           3,208

General and administrative     10,760      12,661       1,978       25,399

Depreciation, depletion and    23,557      28,414       -           51,971
amortization

Total expenses                 42,043      348,624      1,978       392,645

Operating income (loss)      $ 66,532    $ 4,604      $ (1,978 )  $ 69,158

Additions to property and    $ 2,046     $ 71,245     $ -         $ 73,291
equipment and acquisitions

                             Coal and

                             Natural

                             Resource    Natural Gas

                             Management  Midstream    Other       Consolidated

Nine Months Ended September
30, 2008

Revenues

Natural gas midstream        $ -         $ 601,127    $ -         $ 601,127

Coal royalties                 88,911      -            -           88,911

Coal services                  5,518       -            -           5,518

Timber                         5,328       -            -           5,328

Oil and gas royalties          4,730       -            -           4,730

Other                          6,523       6,458        -           12,981

Total revenues                 111,010     607,585      -           718,595

Expenses

Cost of midstream gas          -           513,778      -           513,778
purchased

Coal royalties expense         8,034       -            -           8,034

Other operating                1,488       15,031       -           16,519

Taxes other than income        1,115       1,902        -           3,017

General and administrative     9,780       10,559       1,718       22,057

Depreciation, depletion and    22,733      18,589       -           41,322
amortization

Total expenses                 43,150      559,859      1,718       604,727

Operating income (loss)      $ 67,860    $ 47,726     $ (1,718 )  $ 113,868

Additions to property and    $ 25,186    $ 282,747    $ -         $ 307,933
equipment and acquisitions

    Source: Penn Virginia GP Holdings, L.P.

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