Penn Virginia Corp. (PVA) has paid $14.5 million for approximately 4,100 net acres in Gonzales County, TX, bringing its total net Eagle Ford Shale acreage to about 10,900 acres, and has seen success with its initial Eagle Ford well, the Radnor, PA-based company said.

The Gardner #1 H well in Gonzales County had a peak 24-hour production rate of approximately 1,100 b/d and 1 MMcf/d, according to the onshore producer, which has an 83% working interest in the well.

The acquired leasehold is in the vicinity of PVA’s initial Eagle Ford acreage position and is estimated to contain approximately 40 additional horizontal well locations.

The company expects capital expenditures in the Eagle Ford Shale, including the newly acquired leasehold, of up to approximately $165 million this year, or 48% of its expected total capital program.

Increased activity in the Eagle Ford should provide strong growth in oil and liquids production, according to CEO A. James Dearlove.

“We have elected to shift one of two operated rigs from the Midcontinent to the Eagle Ford Shale and to add a third rig to the Eagle Ford Shale,” Dearlove said during a conference call with analysts Thursday. “These contemplated changes to our drilling program are expected to occur by mid-year 2011. In the Marcellus Shale, we have drilled our first horizontal well and are currently drilling our second well from the same pad in Potter County, PA. We expect initial production from this play by mid-year.”

PVA reported record year-end proved oil and gas reserves of 942 Bcfe for 2010, compared with 935 Bcfe at year-end 2009. Proved developed reserves increased to 53% from 46% and proved oil and natural gas liquid (NGL) reserves increased to 21% from 17% in 2010. The proved reserve increases were primarily attributable to core assets in the Haynesville Shale, Selma Chalk, horizontal Cotton Valley and Granite Wash, with decreases in Appalachia and other, smaller Midcontinent fields, the company said.

In December PVA said it would concentrate its exploration activities in oily and liquids-rich plays in 2011 and would spend 40% less than it did in 2010 because of a “weak natural gas price environment and outlook” (see Shale Daily, Dec. 20, 2010). The producer plans to spend $290 million in 2011, down from $475 million last year.

PVA reported a net loss of $22.9 million (minus 50 cents/share) for 4Q2010, compared with a loss of $5.4 million (minus 12 cents) in 4Q2009.

Last May PVA agreed to pay an estimated $19.5 million in cash in two separate transactions to add nearly 10,000 net acres to its Marcellus Shale leasehold, expanding its Marcellus acreage position to approximately 45,000 net acres (see Daily GPI, June 1, 2010).

At the end of 3Q2010 related master limited partnership Penn Virginia Resource Partners LP (PVR) agreed to buy general partner Penn Virginia GP Holdings LP in a stock transaction valued at about $954.5 million (see Shale Daily, Sept. 22, 2010). PVR manages natural gas gathering and processing businesses. With the goal of becoming a pure-play natural gas and oil producer, PVA last year completed the spin-off of its interests in Penn Virginia GP Holdings (see Daily GPI, June 10, 2010).

PVR recently began commercial operations on the first large-diameter gathering pipeline in the north-central Pennsylvania Marcellus fairway (see Shale Daily, Feb. 18). The first section of the gathering system in Lycoming County, PA, provides more than 850 MMcf/d of capacity on a 30-inch trunkline that connects to Transcontinental Gas Pipeline Co. LLC’s interstate system.