Penn Virginia Sells Appalachian Assets
Penn Virginia Corporation has entered into a definitive agreement to sell substantially all of its Appalachian assets, with the exception of the Marcellus Shale, to an undisclosed buyer for gross cash proceeds of $100 million. This sale is expected to close before mid-August and is subject to customary purchase price adjustments and other customary closing conditions. The effective date of the sale is January 1, 2012. We intend to use the net proceeds from this sale to help fund our 2012 capital expenditure plan.
The properties to be sold include vertical and horizontal coalbed methane and conventional properties, as well as royalty interests. The properties had net production of approximately 20 million cubic feet of natural gas equivalent per day during June 2012, almost 100 percent of which was natural gas. As a result of the divestiture, our 2012 production will decrease by an estimated 2.9 billion cubic feet of natural gas equivalent (Bcfe). Estimated proved reserves associated with the divested properties, as determined by our third party engineers at year-end 2011, were 105.7 Bcfe, 96 percent of which were proved developed and 100 percent of which were natural gas.
RBC Richardson Barr served as PVA's financial advisor in connection with the transaction.
H. Baird Whitehead, President and Chief Executive Officer, stated, "The divestiture of these non-core natural gas assets will substantially reduce our indebtedness, improve our liquidity and fund further investment in our oily Eagle Ford Shale play in which we have had continuing success. In addition, as a result of this divestiture, we plan to close our Canonsburg, Pennsylvania office, which will reduce our general and administrative expenses.
"We had previously discussed the potential sale of our Mid-Continent assets. However, the preliminary bids we received for those assets were unacceptable, due likely to the recent substantial declines in natural gas liquids (NGL) and oil prices. With the higher operating income, cash flow and drilling opportunities associated with our Mid-Continent properties as compared to Appalachia, we are pleased to retain our Mid-Continent assets."
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