In an effort to focus on its core exploration and development area, independent producer Penn Virginia Corp. (PVA) said last week it has sold nonoperated working interests in Virginia producing acreage to Equitable Resources Inc. for $30 million.
The working interests sold had proved reserves of 13.3 Bcfe as of Jan. 1, 2007 and net production of approximately 1.7 MMcfe/d during the second quarter of 2007. They are located primarily in Wise County, VA. The properties, in which PVA had an approximate 14% working interest, are currently operated by Equitable. PVA said the net proceeds from the sale will be used to repay borrowings under the company's revolving credit facility.
"The sale of these noncore, nonoperated properties has allowed us to finance most of the previously announced acquisitions of properties in our core East Texas and Mississippi areas in a tax-efficient way," said PVA CEO James Dearlove. "We are also pleased to make this trade as we believe the strategic fit of the recently acquired assets will allow us to more actively realize their upside potential."
On July 2, PVA announced that it had spent $32.5 million to acquire properties in East Texas and Mississippi with estimated proved reserves of 30.7 Bcfe and net production of approximately 1.6 MMcfe/d. PVA funded this acquisition using its revolving credit facility. PVA expects to match this acquisition with the divestiture of the working interests to effectuate a like-kind exchange and defer the taxes it will incur from the gain on the sale of the working interests.
PVA also has been recently boosting its Arkoma Basin production holdings. In late August, the company closed a land acquisition for $47.9 million in eastern Oklahoma primarily targeting Hartshorne coalbed methane, with upside potential in the Woodford and Caney Shales (see NGI, Sept. 3). That deal included proved reserves of 18.8 Bcfe.
During the summer of 2006, PVA closed its acquisition of privately held producer Crow Creek Holding Corp. in a cash transaction for $71.5 million. Crow Creek's operations (total net proved reserves of about 42.7 Bcfe) were primarily in the Oklahoma portions of the Arkoma and Anadarko Basins.
Radnor, PA-based PVA is focused on the exploration, acquisition, development and production of reserves in onshore regions of the U.S., including the Appalachian Basin, the Cotton Valley play in East Texas, the Selma Chalk play in Mississippi, the Midcontinent region and the Gulf Coast of Louisiana and Texas. PVA also owns approximately 82% of Penn Virginia GP Holdings LP, the owner of the general partner and the largest unit holder of Penn Virginia Resource Partners LP, a manager of coal properties and related assets and the operator of a midstream natural gas gathering and processing business.
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