With the goal of becoming a pure-play natural gas and oil producer, Radnor, PA-based Penn Virginia Corp. (PVA) earlier this week completed the spin-off of its interests in Penn Virginia GP Holdings, LP (PVG).
PVA completed the public offering of 8.8 million common units representing limited partner interests in PVG. As a result, PVA no longer owns any limited or general partner interests in PVG. PVG’s subsidiary Penn Virginia Resource Partners, LP (PVR) is involved in the coal and natural resource management and natural gas midstream segments.
Since September PVA has sold approximately 30.1 million common units representing 77% of PVG, raising approximately $450 million in pre-tax proceeds. In connection with the sale of its interests in PVG, PVA said it expects to incur approximately $3.5 million of nonrecurring general and administrative costs during 2Q2010.
For 2Q2010, PVA will present the results of operations, cash flows and financial position attributable to PVG as discontinued operations for all current and prior periods, resulting in PVA’s financial statements becoming more readily comparable to those of other oil and gas exploration and production companies.
“The divestiture of PVA’s holdings in PVG completes the process of transforming PVA into a pure-play exploration and production (E&P) company,” said PVA CEO A. James Dearlove. “We believe our emerging presence in several key plays, including the Granite Wash, Marcellus Shale and Lower Bossier (Haynesville) Shale, coupled with our strong balance sheet and liquidity, position us for meaningful growth over the next several years.”
In late 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 (see Daily GPI, June 1). The producer also will gain an overriding royalty stake on a portion of the new acreage. With the two transactions PVA expanded its Marcellus acreage position from approximately 35,000 net acres to 45,000 net acres.
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