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Eagle Ford Operator Ups 2021 Spending 72%, Doubles Well Plans YOY

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   |    Tuesday,March 09,2021

Penn Virginia Corp. announced its financial and operational results for the fourth quarter and full-year 2020 and 2021 outlook.

2021 Plan

- Capex: $210-240 million - up 72% vs. 2020 levels of $130.6MM

• D&C: $205-235 million - up 76% from 2020 levels of $125 million
  

• Land, Facilities & Other: $5 million

- Production: did not disclose - 2020 output was 24.3 MBOEPD

• Oil Production: 17.2-19 MBOPD - relatively flat from 2020 levels of 18.7 MBOPD
  

- Wells Drilled: 43 gross wells - up 105% from 21 gross wells in 2020

- Wells Completed: 40 gross wells - up 74% from 23 gross wells in 2020

- Rig Count: two rigs running

Q4 Significant Highlights:

• Generated net cash provided by operating activities of $32 million for the fourth quarter of 2020. For the full-year 2020, the Company generated net cash provided by operating activities of $222 million;
• Recorded approximately $3 million of free cash flow ("FCF")⁽¹⁾ for the fourth quarter of 2020, including the impact of prepaid and early payments of approximately $21 million of capital expenditures, which locked in lower service costs and prepayment discounts. This is the fifth consecutive quarter of positive FCF. For the full-year 2020, the Company generated approximately $53 million of FCF⁽¹⁾;   
• Sold 16,719 barrels of oil per day ("BOPD") for the fourth quarter of 2020, at the high end of guidance. Total sales volumes were 21,502 barrels of oil equivalent per day ("BOEPD") (78% crude oil) for the fourth quarter of 2020;
• Reported net loss of $136 million (including a non-cash impairment of oil and gas properties of $120 million), or $8.92 per share, and adjusted net income⁽²⁾ of $22 million, or $1.43 per diluted share, for the fourth quarter of 2020. Net loss was $311 million (including a non-cash impairment of oil and gas properties of $392 million), or $20.46 per share, and adjusted net income⁽²⁾ of $88 million, or $5.71 per diluted share, for the full year 2020; and
• Generated adjusted EBITDAX⁽³⁾ of $57 million for the fourth quarter of 2020. For the full year 2020, the Company generated adjusted EBITDAX⁽³⁾ of $266 million.

Darrin Henke, Penn Virginia's President and Chief Executive Officer, said: "Our fourth quarter results represent another outstanding achievement for Penn Virginia. Our oil sales volumes significantly exceeded the mid-point of guidance, while capital expenditures were below the low-end range of guidance. Our realized hedge book gains also contributed significantly to our high realized oil price of $48.84 per barrel. These strong operational and financial results allowed the Company to be free cash flow positive for the fifth consecutive quarter."

"For 2021, we have outlined several strategic areas of emphasis for Penn Virginia.  Our primary objective will be to increase cash-on-cash returns. We will strive to accomplish this by focusing on maximizing the value of every barrel of oil and Mcf of gas we produce and scrutinizing every capital project to ensure they meet our robust risk-adjusted return hurdle. In addition, we will continue to execute on opportunities to improve our operational performance through cost control and ongoing improvements. We are linking our compensation to achieving short-term and long-term performance metrics, thus coupling management's compensation to shareholder returns. Finally, we intend to protect our strong balance sheet and continue to generate free cash flow to reduce debt further. We believe these shareholder-aligned initiatives make Penn Virginia a strong investment opportunity and uniquely positioned among its peer group."

Fourth Quarter 2020 and Full-Year Operating Results

Total sales volumes for the fourth quarter of 2020 were 1.98 million barrels of oil equivalent ("MMBOE"), or 21,502 BOEPD (78% crude oil).  Penn Virginia sold 8.89 MMBOE, or 24,281 BOEPD (77% crude oil) for the full-year 2020.

The Company spud nine gross (8.3 net) wells and turned to sales two gross (2.0 net) wells during the fourth quarter of 2020. During 2020, the Company spud 21 gross (18.6 net) wells and turned to sales 23 gross (20.6 net) wells. At year-end 2020, Penn Virginia had two wells completing, three wells waiting on completion and two wells being drilled.

Year-End 2020 Proved Reserves

Penn Virginia's total proved reserves as of December 31, 2020 were approximately 126.4 MMBOE compared to 133.1 MMBOE reported at year-end 2019. The composition of the reserves at the end of 2020 was 78% oil, 12% NGLs and 10% natural gas, with 40% of the reserves classified as proved developed. The proved reserves were calculated in accordance with Securities and Exchange Commission ("SEC") guidelines using the pricing of $39.54 per barrel for crude oil and $1.99 per million British Thermal Units (MMBtu) for natural gas. Penn Virginia's estimated proved reserves were prepared by DeGolyer and MacNaughton, the Company's independent third party reserve engineers.

The Company's Standardized Measure of total proved reserves was $650.3 million as of December 31, 2020 and the Standardized Measure of the Company’s Proved Developed (“PD”) reserves was $479.8 million as of December 31, 2020. The value of the Company's total proved reserves, utilizing the SEC price guidelines, discounted at 10% and before tax ("PV-10 value")⁽⁴⁾, was $657.5 million as of December 31, 2020. The PV-10 value⁽⁴⁾ of the Company's PD reserves utilizing the SEC price guidelines was $485.1 million as of December 31, 2020.

On January 15, 2021, Penn Virginia closed on the acquisition of certain assets from an affiliate of Juniper Capital Advisors, L.P. (“Juniper”). Pro forma for this transaction and using flat pricing of $55 per barrel and $2.50 per MMbtu for natural gas, the PV-10 value⁽⁴⁾ of the Company's PD reserves was $834 million.

Fourth Quarter 2020 Financial Results 

Operating expenses were $174.4 million (including a non-cash impairment of oil and gas properties of $120.3 million), or $88.17 per BOE, in the fourth quarter of 2020. Total cash direct operating expenses⁽⁵⁾, which consist of lease operating expenses ("LOE"), gathering, processing, and transportation ("GPT") expenses, production and ad valorem taxes, and cash general and administrative ("G&A") expenses, were $27.6 million, or $13.94 per BOE, in the fourth quarter of 2020.  Total G&A expenses for the fourth quarter of 2020 were $5.05 per BOE, which included $0.7 million of non-cash share-based compensation, $4.5 million of non-recurring acquisition, divestiture and strategic transaction costs and organizational restructuring costs (including severance).  For the fourth quarter of 2020, adjusted cash G&A expenses⁽⁶⁾, which excludes those items, were $2.41 per BOE. LOE was $4.83 per BOE for the fourth quarter of 2020.

Net loss for the fourth quarter of 2020 was $135.5 million, or $8.92 per diluted share.  Adjusted net income⁽²⁾ was $22.0 million, or $1.43 per diluted share in the fourth quarter of 2020.

Adjusted EBITDAX⁽³⁾ was $56.7 million in the fourth quarter of 2020.

Full Year 2020 Financial Results 

Operating expenses were $642.4 million (including a non-cash impairment of oil and gas properties of $391.8 million), or $72.29 per BOE, in 2020. Total cash direct operating expenses⁽⁵⁾ were $106.6 million, or $12.00 per BOE in 2020. 

Net loss for the full year of 2020 was $310.6 million, or $20.46 per diluted share. Adjusted net income⁽²⁾ was $87.5 million, or $5.71 per diluted share in 2020.

Adjusted EBITDAX⁽³⁾ was $265.6 million for 2020.

Balance Sheet and Liquidity

During the fourth quarter of 2020, the Company incurred $32.6 million of capital expenditures (excluding acquisitions), of which 99% was associated with drilling and completion capital. For the full year 2020, Penn Virginia incurred $130.6 million of capital expenditures, of which 96% was for drilling and completion capital.

As of March 5, 2021, Penn Virginia had cash of $20.1 million and total debt of $377.6 million, including borrowings under its revolving credit facility of $228.9 million. Liquidity was $140.8 million as of March 5, 2021, including cash and $120.7 million available under the Company's revolving credit facility.

Penn Virginia does not expect to be required to undergo a borrowing base redetermination in Spring 2021.