Quarterly / Earnings Reports | Second Quarter (2Q) Update

Penn Virginia Details Q2 2019 Results

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Penn Virginia Corp. announced its financial and operational results for the second quarter 2019.

Recent Significant Highlights

• Produced 27,845 barrels of oil equivalent per day ("BOEPD") (72% crude oil) in the second quarter of 2019, which is 13% higher than the first quarter of 2019 and 25% higher than the second quarter of 2018;
• Reported net income of $51.6 million, or $3.40 per diluted share, and adjusted net income⁽¹⁾ of $29.8 million, or $1.96 per diluted share, for the second quarter of 2019;
• Generated adjusted EBITDAX⁽²⁾ of $85.0 million for the second quarter of 2019;
• Realized oil price of $62.63 per barrel, an approximate $2.70 per barrel premium over the West Texas Intermediate ("WTI") average price for the second quarter of 2019; and
• Recorded total cash direct operating expenses per barrel of oil equivalent ("BOE") of $11.67 and adjusted direct operating expenses per BOE⁽³⁾ of $11.64 for the second quarter of 2019, including lease operating expense ("LOE") of $4.09 per BOE.

John A. Brooks, President and Chief Executive Officer of Penn Virginia commented, "We reported second quarter production above mid-point of guidance, realized strong pricing that represented a significant premium over WTI and recorded low operating costs. These positive results generated adjusted EBITDAX⁽²⁾ of approximately $85 million and adjusted net income⁽¹⁾ per diluted share of $1.96 for the quarter."

Mr. Brooks continued, "Given our production growth trajectory, we expect to generate free cash flow beginning in the fourth quarter of this year, while increasing year-over-year production by 25% to 30%. Looking ahead, we are confident in our ability to generate free cash flow in 2020."

Second Quarter 2019 Operating Results

Total production increased approximately 25% from the second quarter of 2018, to 2.534 million barrels of oil equivalent ("MMBOE"), or 27,845 BOEPD (72% crude oil). Penn Virginia turned to sales 8 gross (7.3 net) wells during the second quarter of 2019.

Second Quarter 2019 Financial Results

Total cash direct operating expenses, which consist of LOE, gathering, processing and transportation ("GPT") expenses, production and ad valorem taxes, and cash general and administrative ("G&A") expenses, were $29.6 million, or $11.67 per BOE, in the second quarter of 2019. Total G&A expenses for the second quarter of 2019 were $6.2 million, or $2.46 per BOE, which included $1.1 million of share-based compensation and non-recurring transaction costs, of which $1.0 million was non-cash. For the second quarter of 2019, adjusted cash general and administrative expenses⁽⁴⁾, which exclude those items, were $2.03 per BOE. Adjusted direct operating expenses⁽³⁾ per BOE, excluding the aforementioned non-cash and non-recurring G&A items, were $11.64 for the second quarter of 2019. For the second quarter of 2019, LOE was $4.09 per BOE.

Net income for the second quarter of 2019 was $51.6 million, or $3.40 per diluted share, compared to net loss of $2.5 million, or $0.17 per share, in the second quarter of 2018. Adjusted net income⁽¹⁾ was $29.8 million, or $1.96 per diluted share in the second quarter of 2019, versus $37.4 million, or $2.46 per diluted share in the second quarter of 2018.

Adjusted EBITDAX⁽²⁾ was $85.0 million in the second quarter of 2019, compared to $75.7 million in the second quarter of 2018.

Hedging Update

Penn Virginia enters into oil hedges on a portion of its production to help mitigate commodity price risk.

The table below sets forth Penn Virginia's current oil hedge positions:

Balance Sheet and Liquidity

During the second quarter of 2019, the Company incurred $90.9 million of capital expenditures, of which 96% was associated with drilling and completion capital.

As of June 30, 2019, Penn Virginia had cash of $12.8 million and total debt of $540 million including borrowings under its revolving credit facility of $340.0 million. Liquidity was $172.4 million, including cash and $159.6 million available under the Company's revolving credit facility. As of June 30, 2019, the Company's net debt to adjusted EBITDAX ratio was approximately 1.6x⁽⁵⁾.

Acreage and Drilling Inventory

As of June 30, 2019, the Company had approximately 98,500 gross (84,400 net) acres. Approximately 92% of Penn Virginia's acreage is held by production.

Penn Virginia had an estimated 510 gross (438 net) drilling locations at June 30, 2019, of which 100% are Company-operated.

2019 Outlook

The Company is committed to maintaining financial discipline and a strong balance sheet. Penn Virginia is targeting year-over-year production growth of approximately 25% to 30% for 2019, assuming a two-rig development program.

The table below sets forth the Company's operational and financial guidance for 2019: