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Penn Virginia First Quarter 2021 Results

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   |    Thursday,May 13,2021

Penn Virginia Corp. announced its financial and operational results for the first quarter 2021.

Recent Significant Highlights:

• Sold 16,324 barrels of oil per day ("bbl/d") for the first quarter of 2021, exceeding the high end of the first quarter guidance range. Total sales volumes for the first quarter of 2021 were 20,534 barrels of oil equivalent per day ("boe/d"). Total production for the seven days ending March 31, 2021, averaged over 20,000 bbl/d and 25,000 boe/d;
• Generated net loss of $20 million (including a non-cash loss on derivatives of $27 million) and net loss attributable to common shareholders of $14 million, or $0.89 per share and per diluted share, and adjusted net income⁽¹⁾ of $15 million, or $0.39 per diluted share, for the first quarter of 2021;
• Reported adjusted EBITDAX⁽²⁾⁽³⁾ of $47 million for the first quarter of 2021;
• Generated net cash provided by operating activities of $32 million for the first quarter of 2021;
• Recorded free cash flow⁽⁴⁾ of $6 million for the first quarter of 2021, including the impact of prepaid capital expenditures of approximately $12 million, which locked in lower service costs and prepayment discounts; and
• Reported capital expenditures for the first quarter of 2021 of approximately $54 million (99% drilling and completion), which was below the low end of the first quarter guidance range.

Darrin Henke, President and Chief Executive Officer of Penn Virginia, said: "In the first quarter Penn Virginia delivered on its commitment to driving down capital costs, increasing operational efficiencies and generating free cash flow. Our sales volumes for the first quarter exceeded the high end of our guidance range, while capital expenditures were below the low end of our guidance range. Our strong performance to date provided us the confidence to raise our full-year 2021 production guidance by more than six percent while still maintaining the previous capital expenditures target. These results for the quarter allowed the Company to deliver its sixth consecutive quarter of free cash flow generation.

“Over the last several quarters, we have taken several strategic steps that we believe have positioned the Company to deliver free cash flow in the future through our commitment to a returns-driven strategy. We expect to use the free cash flow we generate this year to further reduce debt. Consistent with our disciplined approach, we expect any further improvement in cash flow from higher commodity prices will accelerate debt reduction. We remain steadfast in our commitment to free cash flow generation, capital discipline, and maximizing cash-on-cash returns.”

2021 Executive Compensation Program

The Company recently implemented a shareholder-aligned “Pay for Performance” compensation program, which is comprised of short-term and long-term metrics.

• New annual bonus framework rewards employees based on the Company’s performance relative to various returns-based metrics such as Cash Return on Capital Invested and Capital Efficiency per boe as well as other Company objectives, including achievement of the Company’s sustainability, environmental, social, and governance objectives.
• New long-term incentive framework with 100% of executive’s and 50% of non-executive’s equity awards issued in performance-based restricted stock units tied to absolute and relative shareholder return and Return on Capital Employed over a three-year period.

First Quarter 2021 Operating Results

Total sales volumes for the first quarter of 2021 were 1.8 million barrels of oil equivalent, or 20,534 boe/d (80% crude oil). During the first quarter of 2021, the Company completed and turned to sales 13 gross (11.5 net) wells.

First Quarter 2021 Financial Results 

Operating expenses were $57.9 million, or $31.32 per barrel of oil equivalent ("boe"), in the first quarter of 2021. 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 $29.9 million, or $16.20 per boe, in the first quarter of 2021.  Total G&A expenses for the first quarter of 2021 were $7.13 per boe, which included $7.1 million of non-cash share-based compensation, non-recurring strategic transaction costs, and non-recurring organizational restructuring costs, of which $2.2 million was non-cash share-based compensation.  For the first quarter of 2021, adjusted cash G&A expenses⁽⁶⁾, which excludes non-cash share-based compensation and non-recurring G&A items, were $3.27 per boe. LOE was $4.78 per boe for the first quarter of 2021.

Net loss for the first quarter of 2021 was $20.0 million and net loss attributable to common shareholders of $13.6 million, or $0.89 per share and per diluted share, compared to a net income of $163.1 million, or $10.76 per share and per diluted share, in the first quarter of 2020.  Adjusted net income⁽¹⁾ was $14.8 million, or $0.39 per diluted share, in the first quarter of 2021 versus $28.6 million, or $1.89 per diluted share in the first quarter of 2020.

Adjusted EBITDAX⁽²⁾⁽³⁾ was $47.4 million in the first quarter of 2021, compared to $78.5 million in the first quarter of 2020, down primarily due to the effect of lower oil sales volumes and realized prices adjusted for the effects of derivatives.

Balance Sheet and Liquidity

As of March 31, 2021, Penn Virginia had cash of $11.9 million and total debt of $375.8 million, including borrowings under its revolving credit facility of $228.9 million. Liquidity was $132.6 million as of March 31, 2021, including cash of $11.9 million and $120.7 million available under the Company's revolving credit facility. As of March 31, 2021, the Company had a net debt⁽⁷⁾ to LTM adjusted EBITDAX ratio of approximately 1.5x⁽⁷⁾, pro forma for the transaction with certain affiliates of Juniper Capital Advisors, L.P. (collectively “Juniper”).

During the first quarter of 2021, the Company incurred $54.1 million of capital expenditures, of which 99% was associated with drilling and completion capital.

Acreage

As of March 31, 2021, the Company had approximately 102,400 gross (90,400 net) acres.  Approximately 91% of Penn Virginia's acreage is held by production.