Penn Virginia Corporation Reports Operating Results for the Fourth Quarter and Year Ended December 31, 2012; Provides Production Guidance for Fiscal 2013
For the year, the company reported production of 6.51 MMBOE, or 17,794 barrels of oil equivalent (BOE) per day (BOEPD) compared to 7.76 MMBOE, or 21,257 BOEPD for 2011. On a pro forma basis to exclude production from assets sold in 2010, 2011 and 2012, production in 2012 was 5.8 MMBOE, or 15,776 BOEPD, compared to 5.9 MMBOE, or 16,157 BOEPD in 2011, and 5.5 MMBOE, or 15,176 BOEPD, in 2010. The slight decrease from 2011 to 2012 was due to natural gas production declines associated with discontinued natural gas drilling, largely offset by increased crude oil production from the Eagle Ford Shale. reported year-end reserves of 113.5 barrels of oil equivalent, 40% of which were oil and NGLs and 41% of which were proved developed. Eagle Ford crude reserves increased to 161% from approximately 10 million barrels oil equivalent to 26.1 million barrels equivalent or approximately 23% of the total company proved reserves. The PV-10 of the proved reserves in Eagle Ford alone were about $600 million.
The company provided production guidance for fiscal 2013. Production guidance is 5.7 million to 6.2 million barrels equivalent or 15,500 to 16,900 BOE per day. Year-over-year, the midpoint is roughly 3% higher than 2012 actual, pro forma for the 2012 property sale. Expects oil production to grow at 23%, 37% over 2012 volumes with 30% growth at the midpoint. Expects oil and NGLs together to comprise 60% to 65% of the total production in 2013 compared to 48% in 12 and 56% in the fourth quarter. Production growth was impacted since the preliminary guidance in October, primarily due to lower drilling in Granite Wash and by accelerating from 50% working interest Eagle Ford wells earlier in the 2013 drilling schedules. Product revenues are expected to be $330 million to $364 million in 13. Revenues derived from oil and NGLs are expected to approximately 87% of total product revenues. Assuming a 90% oil price and a $3.50 gas price for 2013, it would expect to receive about $13 million in cash proceeds from the hedges it had currently in the portfolio. For LOE it is guiding to a flat cost of $4.80 per barrel at the mid point which takes in to account lower LOE as a result of the property sale offset by higher LOE for Eagle Ford oil. For adjusted EBITDAX which includes cash received from hedging, it assumes the $257 million mid-point of the given range. This is based on the price assumption $90 oil and $3.50 natural gas for 2013. Assuming the mid point of this guidance range, adjusted EBITDAX grows 3% over 2012, pro forma to adjust for the contribution from the sold properties the growth rate is approximately 7%, and this may seem like a smaller growth rate than expected. There was some significant drivers of cash flow in 2012 that it is not assuming in this guidance. Specifically it realized the significant LLS premium to WTI. It was $9 a barrel for the fourth quarter net of transportation. The company is not assuming this higher premium in the 2013 guidance, although it had been seeing it in the first two of this year. Also not forecasting as much hedging proceeds. In 2012 it realized $30 million in cash proceeds from hedging, which is included in adjusted EBITDAX. The company expect to stick with a three rig program and drill 38 Eagle Ford wells, about 29 net this year, with 22 gross 15.2 net in Gonzales County, the 16 gross 13.6 net in Lavaca County. With the three rigs, it can expect to continue to drill 35 to 40 gross wells per year. The stated goal of ours at a minimum is to maintain the multiple year drilling inventory by acquiring 4,000 to 5,000 (inaudible) on acreage annually at a total cost of $10 million to $20 million.