--- Increased Production 39 Percent over First Quarter ---
--- Raises Area 2 North EUR ---

HOUSTON, Aug. 07, 2018 (GLOBE NEWSWIRE) -- Penn Virginia Corporation (“Penn Virginia” or the “Company”) (NASDAQ:PVAC) today announced its financial and operational results for the second quarter 2018.

Significant Operational and Financial Highlights

  • Produced 22,200 barrels of oil equivalent per day (“BOEPD”) (74% oil) for the second quarter of 2018, exceeding midpoint of production guidance;
  • Raised Area 2 North estimated ultimate recovery (“EUR”) by eight percent;
  • Improved direct operating expense guidance by approximately $1.00 per barrel of oil equivalent (“BOE”);
  • Completed the Company’s longest Extended Reach Lateral (“XRL”) drilled to date – the Hawn Holt 19H well with a lateral length of over 11,100 feet;
  • Closed the sale of the Company’s Oklahoma assets in July 2018, finalizing the Company’s transition to a pure-play Eagle Ford operator;
  • Recorded net loss of $2.5 million, or $0.17 per diluted share, for the second quarter of 2018; Adjusted net income(1) was $37.4 million, or $2.46 per diluted share, for the second quarter of 2018;
  • Generated Adjusted EBITDAX(2) of $75.7 million for second quarter of 2018;
  • Realized cash operating margin(3) per BOE of $43.39 for the second quarter of 2018 with an aggregate realized price of $55.02 per BOE and adjusted direct operating expenses(4) per BOE of $11.63; and
  • Achieved a new Company record low lease operating expense (“LOE”) - $4.32 per BOE for the second quarter of 2018.

Management Quote

“Our second quarter results represent another outstanding achievement for Penn Virginia,” said John A. Brooks, President and Chief Executive Officer of Penn Virginia. “We grew production 39 percent from the first quarter of 2018, posted record low LOE, recorded strong realized cash margins and increased quarterly Adjusted EBITDAX by approximately 50%.”

Mr. Brooks added, “Looking ahead toward the end of the year, we expect to grow production by an additional 30% over our second quarter 2018 production. Penn Virginia is well on its way to accomplishing our stated goal of growing production by more than 120% for 2018 after adjusting for our recent Oklahoma asset sale(6). Given our continued success in Area 2 North we are raising our EUR and redirecting our drilling to this high return area. Additionally, with our proven success in drilling longer laterals, we plan to spud 20 XRLs during the second half of the year. With this shift in drilling activity to Area 2 and the general higher cost environment facing the industry, we anticipate a higher capital program for 2018 of between $390 and $410 million.  We still expect to spend within cash flow during the fourth quarter and generate a leverage ratio of 1.5x or lower by year-end. This will position us for a strong growth profile going into 2019.”

Second Quarter 2018 Operating Results

Total production in the second quarter of 2018 increased 39% from the first quarter of 2018, to approximately 2.0 million BOE, or 22,200 BOEPD (74% oil). Oil production grew 33% over first quarter of 2018 levels to 16,465 barrels of oil per day.

Penn Virginia drilled and turned to sales 20 gross (16.9 net) wells during the second quarter of 2018, all in the Eagle Ford. The Company currently has three rigs active with two completion spreads, one of which operates on a pad-by-pad basis.

The Company turned to sales seven pads in the second quarter of 2018, three of which were in Area 2. Descriptions of pads turned to sales in Area 2 are highlighted in the table below.

Pad NameWorking
Interest
30-Day IP
(BOEPD)
Average Lateral Length - FeetPercent Oil
Schacherl-Effenberger - 2 wells71%2,1176,05089%
Lott – 3 wells100%2,9586,87690%
Medina - 3 wells100%3,8276,13565%

The Company recently turned to sales the two-well Hawn Holt pad.  This pad includes the Hawn Holt 19H which is the Company’s longest lateral drilled to date at over 11,100 feet.

In Area 2 North, optimized completions along with a conservative choke management protocol have improved early life well performance and the Company is increasing its Area 2 EURs by approximately 8%.

As of August 3, 2018, the Company had 97,900 gross (84,060 net) acres pro forma for the sale of the Company’s Oklahoma assets.  Approximately 92% of Penn Virginia’s acreage is held by production. During the first six months of 2018, the Company has either leased or renewed approximately 3,788 gross (3,574 net) acres.

Second Quarter 2018 Financial Results 

Direct operating expenses, which consist of LOE, gathering, processing and transportation (“GPT”) expenses, production and ad valorem taxes, and cash general and administrative (“G&A”) expenses, were $23.5 million, or $11.66 per BOE, in the second quarter of 2018, as compared to $19.6 million, or $13.52 per BOE, in the first quarter of 2018.  Total G&A expenses for the second quarter of 2018 were $2.63 per BOE, which include $0.9 million of non-cash share-based compensation and $0.1 million associated with non-recurring transaction costs.  For the second quarter of 2018, Adjusted cash G&A(5) which excludes those items was $2.17 per BOE, compared to $2.90 per BOE in the first quarter of 2018.  Adjusted direct operating expenses(4) per BOE, excluding the aforementioned non-cash and non-recurring G&A items were $11.63 for the second quarter of 2018, compared to $13.05 per BOE in the previous quarter. For the second quarter 2018, LOE was $4.32 per BOE, a decrease of almost 14% from the first quarter of 2018.

Net loss for the second quarter of 2018 was $2.5 million, or $0.17 per diluted share, compared to net income of $10.3 million, or $0.68 per diluted share, in the first quarter of 2018.  Adjusted net income(1) was $37.4 million, or $2.46 per diluted share in the second quarter of 2018, versus $22.3 million, or $1.48 per diluted share in the first quarter of 2018.

Adjusted EBITDAX(2) was $75.7 million in the second quarter of 2018, approximately 50% increase over first quarter 2018. 

Hedging Update

Penn Virginia enters into oil hedges on a portion of its production to help mitigate commodity price risk. 

The table below sets forth Penn Virginia’s current oil hedge positions:

 WTI – Oil
Volumes
(Barrels Per Day)
WTI - Average
Swap Price
($/barrel)
LLS - Oil
Volumes
(Barrels Per
Day)
LLS -
Average
Swap Price
($/barrel)
Percent of
Oil Production
Hedged (6)
Q3-Q4
2018
10,455$57.056,000$65.2779%
20196,415$54.485,000$59.17-
20206,000$54.09---

Balance Sheet and Liquidity

During the second quarter of 2018, the Company incurred $125.0 million of capital expenditures (excluding acquisitions), of which 97% was associated with drilling and completion activities.

As of June 30, 2018, Penn Virginia had $243.5 million outstanding on its credit facility and liquidity of $107.2 million. As of August 4, 2018, the Company had outstanding borrowings of $267.5 million on its credit facility and liquidity of $81.1 million. 

The Company is committed to maintaining financial discipline and a strong balance sheet with a targeted net debt to adjusted EBITDAX ratio of 1.5x or below. Penn Virginia believes it will achieve its leverage target by the end of 2018 and spend within cash flow by the fourth quarter of 2018. As of June 30, 2018, the Company’s net debt to adjusted EBITDAX ratio was approximately 2.2x, pro forma for acquisitions and divestitures.

2018 Capital Plans

Penn Virginia has increased its 2018 capital expenditures estimates to between $390 million and $410 million for 2018. Drilling and completion capital is estimated to be 96% of total capital expenditures. The revised capital plan provides for turning in line approximately 55 gross wells (47 net wells) in 2018. The Company will prioritize drilling in Area 2 and anticipates turning in line 35 wells in Area 2 and 20 wells in Area 1.  This is 13 additional wells in Area 2 to be turned in line in 2018 compared with the original plan of development.  The Company will also emphasize drilling XRLs with 20 wells planned for the second half of the year. The Company anticipates the average treatable lateral length per well will increase to more than 7,500 feet in the second half of 2018 from approximately 6,500 feet in the first half of 2018, an increase of approximately 15%.  The benefits realized from the change in the plan of development and increase in the 2018 capital plan are expected to occur primarily in 2019.  

Guidance

The table below sets forth the Company’s guidance for 2018 (pro forma for Oklahoma assets sale):

     PreviousCurrent
(pro forma for
Oklahoma asset sale)
 
 Production (BOEPD)  % oil
  Third Quarter 23,500 – 24,500  75%
  Fourth Quarter 28,500 – 30,500  75%
  Full Year22,000 – 25,00022,000 – 24,000  75%
      
 Realized Price Differentials   
  Oil (off WTI, per barrel) $0.00 - $1.00 
  Natural gas (off Henry Hub, per MMBtu) $0.10 - $0.20 
  
Direct Operating Expenses
   
  Lease operating expense (per BOE)$4.50 - $5.00$4.25 - $4.75 
  GPT expense (per BOE)$2.75 - $3.00$2.25 - $2.75 
  Ad valorem and production taxes (percent of product revenue)5.5% - 6.0%5.0% - 5.5% 
  Cash G&A expense (per BOE) $2.00 - $2.50 
      
  Capital Expenditures (millions)$320 -  $360$390 - $410 

Oklahoma Sale

On July 31, 2018, Penn Virginia closed the sale of the Company’s assets in Oklahoma to a third party for a base sales price of $6 million, subject to customary purchase price adjustments.  Production related to the Oklahoma assets in the second quarter 2018 was approximately 68,000 BOE (749 BOEPD), and for the six months ended June 30, 2018 was approximately 138,000 BOE (762 BOEPD).

Evaluation of Strategic Alternatives

On July 23, 2018, Penn Virginia Corporation announced that it intends to evaluate a range of strategic alternatives to enhance shareholder value, including without limitation, a corporate sale, merger or other business combination, one or more strategic acquisitions, or other transactions.

There is no assurance that the evaluation process will result in a transaction. The Company has not set a timetable for the evaluation process, and Penn Virginia does not intend to disclose or comment on developments related to its evaluation unless the Company has determined that further disclosure is appropriate or required by law.

Second Quarter 2018 Conference Call

A conference call and webcast discussing second quarter 2018 financial and operational results is scheduled for Wednesday, August 8, 2018 at 11:00 a.m. ET. Prepared remarks will be followed by a question and answer period. Investors and analysts may participate via phone by dialing (877) 316-5288 (international: (734) 385-4977) five to 10 minutes before the scheduled start time, or via webcast by logging on to the Company’s website, www.pennvirginia.com, at least 15 minutes prior to the scheduled start time to download supporting materials and install any necessary audio software. 

An on-demand replay of the webcast will be available on the Company’s website beginning shortly after the webcast. The replay will also be available from August 8, 2018 through August 15, 2018 by dialing (855) 859-2056 (international (404) 537-3406) and entering the pass code 4794718.

About Penn Virginia Corporation

Penn Virginia Corporation is a pure-play independent oil and gas company engaged in the development and production of oil, NGLs and natural gas, operating in the Eagle Ford shale in south Texas. For more information, please visit our website at www.pennvirginia.com. The information on the Company’s website is not part of this release.

Cautionary Statements Regarding Reserves

The estimates and guidance presented in this release are based on assumptions of capital expenditure levels, prices for oil, natural gas and NGLs, current indications of supply and demand for oil, well results and operating costs.  IP-24 and IP-30 production rates might not be indicative of production over longer periods in the life of the well. EUR represents current estimates based on available information, speak only as of the date of publication and are subject to change.  EUR does not represent guarantees of area well performance. The guidance provided in this release does not constitute any form of guarantee or assurance that the matters indicated will be achieved. While we believe these estimates and the assumptions on which they are based are reasonable, they are inherently uncertain and are subject to, among other things, significant business, economic, operational and regulatory risks and uncertainties and are subject to material revision. Actual results may differ materially from estimates and guidance.

Forward-Looking Statements 

Certain statements contained herein that are not descriptions of historical facts are “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We use words such as "guidance," "projects," “estimates,” “expects,” “continues,” “intends,” “plans,” “believes,” “forecasts,” “future,” “will”, “target” and variations of such words or similar expressions in this press release to identify forward-looking statements. Because such statements include assumptions, risks, uncertainties and contingencies, actual results may differ materially from those expressed or implied by such forward-looking statements. These risks, uncertainties and contingencies include, but are not limited to, the following:  our ability to satisfy our short-term and long-term liquidity needs, including our ability to generate sufficient cash flows from operations or to obtain adequate financing to fund our capital expenditures and meet working capital needs; negative events or publicity adversely affecting our ability to maintain our relationships with our suppliers, service providers, customers, employees, and other third parties; plans, objectives, expectations and intentions contained in this press release that are not historical; our ability to execute our business plan in volatile and depressed commodity price environments; any decline in and volatility of commodity prices for oil, NGLs, and natural gas; our anticipated production and development results; our ability to develop, explore for, acquire and replace oil and natural gas reserves and sustain production; our ability to generate profits or achieve targeted reserves in our development and exploratory drilling and well operations; any impairments, write-downs or write-offs of our reserves or assets; the projected demand for and supply of oil, NGLs and natural gas; our ability to contract for drilling rigs, frac crews, supplies and services at reasonable costs; our ability to obtain adequate pipeline transportation capacity for our oil and gas production at reasonable cost and to sell the production at, or at reasonable discounts to, market prices; the uncertainties inherent in projecting future rates of production for our wells and the extent to which actual production differs from that estimated in our proved oil and natural gas reserves; drilling and operating risks; concentration of assets; our ability to compete effectively against other oil and gas companies; leasehold terms expiring before production can be established and our ability to replace expired leases; costs or results of any strategic initiatives; environmental obligations, results of new drilling activities, locations and methods, costs and liabilities that are not covered by an effective indemnity or insurance; the timing of receipt of necessary regulatory permits; the effect of commodity and financial derivative arrangements, and counterparty risk related to the ability of parties to these arrangements to meet their future obligations; the occurrence of unusual weather or operating conditions, including force majeure events and hurricanes; our ability to retain or attract senior management and key employees; compliance with and changes in governmental regulations or enforcement practices, especially with respect to environmental, health and safety matters; physical, electronic and cybersecurity breaches; litigation that impacts us, our assets or our midstream service providers; uncertainties relating to general domestic and international economic and political conditions; the impact of our review of strategic alternatives; and other risks set forth in our filings with the SEC. Additional information concerning these and other factors can be found in our press releases and public filings with the SEC. Many of the factors that will determine our future results are beyond the ability of management to control or predict. In addition, readers should not place undue reliance on forward-looking statements, which reflect management's views only as of the date hereof. The statements in this release speak only as of the date of this release. We undertake no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable law. 

(1) Adjusted net income is a non-GAAP financial measure. Definitions of non-GAAP financial measures and reconciliations of non-GAAP financial measures to the closest GAAP-based financial measures appear at the end of this release.
(2)Adjusted EBITDAX is a non-GAAP financial measure. Definitions of non-GAAP financial measures and reconciliations of non-GAAP financial measures to the closest GAAP-based financial measures appear at the end of this release.
(3)Realized cash operating margin per BOE is a non-GAAP financial measure. Definitions of non-GAAP financial measures and reconciliations of non-GAAP financial measures to the closest GAAP-based financial measures appear at the end of this release.
(4)Adjusted direct operating expenses per BOE is a non-GAAP financial measure. Definitions of non-GAAP financial measures and reconciliations of non-GAAP financial measures to the closest GAAP-based financial measures appear at the end of this release.
(5)Adjusted Cash G&A is a non-GAAP financial measure. Definitions of non-GAAP financial measures and reconciliations of non-GAAP financial measures to the closest GAAP-based financial measures appear at the end of this release.
(6)Assumes mid-point of guidance.

 

           
PENN VIRGINIA CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 and SELECTED OPERATING STATISTICS- unaudited
(in thousands, except per share, production and price data)
              
              
  Three Months Ended Six Months Ended
  June 30, March 31, June 30, June 30, June 30,
  2018 2018 2017 2018 2017
Revenues             
Crude oil $101,716  $71,258  $32,351  $172,974  $ 62,424 
Natural gas liquids (NGLs) (1)  5,533   2,946   2,043   8,479    4,345 
Natural gas  3,912   2,790   1,880   6,702    4,223 
Total product revenues  111,161   76,994   36,274   188,155    70,992 
Gain (loss) on sales of assets, net  4   75   (134)  79    (69)
Other revenues, net  415   142   142   557    345 
Total revenues  111,580   77,211   36,282   188,791    71,268 
Operating expenses                     
Lease operating  8,730   7,296   5,370   16,026    10,286 
Gathering, processing and transportation (1)  4,574   3,359   2,555   7,933    5,106 
Production and ad valorem taxes  5,795   4,092   2,119   9,887    4,098 
General and administrative  4,447   4,895   2,854   9,342    6,115 
Total direct operating expenses  23,546   19,642   12,898   43,188    25,605 
Share-based compensation                     
- equity classified awards  875   1,576   848   2,451    1,694 
Depreciation, depletion and amortization  31,273   22,081   11,076   53,354    20,886 
Total operating expenses  55,694   43,299   24,822   98,993    48,185 
           
Operating income  55,886   33,912   11,460   89,798    23,083 
Other income (expense)          
Interest expense, net  (6,150)  (4,601)  (1,274)  (10,751)   (1,812)
Derivatives  (52,241)  (18,795)  11,061   (71,036)   28,077 
Other, net  (16)  (58)  82   (74)   62 
Income (loss) before income taxes  (2,521)  10,458   21,329   7,937    49,410 
Income tax expense  -   (163)  -   (163)   - 
Net income (loss) $(2,521) $10,295  $21,329  $7,774  $ 49,410 
              
Net income (loss) per share:             
Basic $(0.17) $0.68  $1.42  $0.52  $ 3.30 
Diluted $(0.17) $0.68  $1.42  $0.51  $ 3.27 
              
Weighted average shares outstanding:             
Basic  15,058   15,042   14,992   15,050    14,992 
Diluted  15,058   15,081   15,050   15,171    15,097 
              
              
              
  Three Months Ended Six Months Ended
  June 30, March 31, June 30, June 30, June 30,
  2018 2018 2017 2018 2017
Production             
Crude oil (MBbls)  1,498   1,127   685   2,625    1,293 
NGLs (MBbls)  269   164   131   434    250 
Natural gas (MMcf)  1,515   971   653   2,486    1,418 
Total (MBOE)  2,020   1,453   925   3,473    1,779 
Average daily production (BOEPD)  22,200   16,145   10,159   19,189    9,829 
              
Prices             
Crude oil ($ per Bbl) $67.89  $63.23  $47.25  $65.89  $ 48.29 
NGLs ($ per Bbl) (1) $20.54  $17.94  $15.59  $19.56  $ 17.38 
Natural gas ($ per Mcf) $2.58  $2.87  $2.88  $2.70  $ 2.98 
Aggregate ($ per BOE) $55.02  $52.99  $39.24  $54.17  $ 39.90 
              
Prices - Adjusted for derivative settlements             
Crude oil ($ per Bbl) $59.61  $56.51  $46.57  $58.28  $ 46.39 
NGLs ($ per Bbl) (1) $20.54  $17.94  $15.59  $19.56  $ 17.38 
Natural gas ($ per Mcf) $2.58  $2.87  $2.88  $2.70  $ 2.98 
Aggregate ($ per BOE) $48.89  $47.77  $38.73  $48.42  $ 38.52 
              
(1)  NGL revenues for the periods in 2018 are presented net of processing costs. Such costs are included in Gathering, processing and transportation expense in the periods ended in 2017.       


  
PENN VIRGINIA CORPORATION 
CONDENSED CONSOLIDATED BALANCE SHEETS - unaudited 
(in thousands) 
            
        June 30, December 31, 
        2018 2017 
Assets           
Current assets       $88,320  $87,088  
Net property and equipment        791,624   529,059  
Other assets        7,790   13,450  
Total assets       $887,734  $629,597  
            
Liabilities and shareholders' equity           
Current liabilities       $191,239  $123,958  
Other liabilities        35,059   18,733  
Total long-term debt, net        432,824   265,267  
Total shareholders' equity        228,612   221,639  
Total liabilities and shareholders' equity       $887,734  $629,597  
            
            
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - unaudited 
(in thousands) 
            
  Three Months Ended Six Months Ended 
  June 30, March 31, June 30, June 30, June 30, 
  2018 2018 2017 2018 2017 
Cash flows from operating activities           
Net income (loss) $(2,521) $10,295  $21,329  $7,774  $49,410  
Adjustments to reconcile net income (loss) to           
net cash provided by operating activities:           
Depreciation, depletion and amortization  31,273   22,081   11,076   53,354   20,886  
Derivative contracts:           
Net losses (gains)  52,241   18,795   (11,061)  71,036   (28,077) 
Cash settlements, net  (12,401)  (7,576)  (466)  (19,977)  (2,458) 
Deferred income tax expense  -   163   -   163   -  
(Gain) loss on sales of assets, net  (4)  (75)  134   (79)  69  
Non-cash interest expense  848   796   800   1,644   988  
Share-based compensation (equity-classified)  875   1,576   848   2,451   1,694  
Other, net  13   13   20   26   38  
Changes in operating assets and liabilities  11,412   (7,386)  4,195   4,026   (6,533) 
Net cash provided by operating activities  81,736   38,682   26,875   120,418   36,017  
Cash flows from investing activities           
Acquisitions, net  (3,497)  (83,338)  -   (86,835)  -  
Capital expenditures  (123,511)  (77,839)  (25,842)  (201,350)  (43,583) 
Proceeds from sales of assets, net  974   1,551   -   2,525   -  
Net cash used in investing activities  (126,034)  (159,626)  (25,842)  (285,660)  (43,583) 
Cash flows from financing activities           
Proceeds from credit facility borrowings  48,500   118,000   7,000   166,500   14,000  
Repayment of credit facility borrowings  -   -   -   -   (2,000) 
Debt issuance costs paid  -   (754)  (1,090)  (754)  (1,090) 
Proceeds received from rights offering, net  -   -   55   -   55  
Other, net  -   -   (25)  -   (55) 
Net cash provided by financing activities  48,500   117,246   5,940   165,746   10,910  
Net increase (decrease) in cash and cash equivalents 4,202   (3,698)  6,973   504   3,344  
Cash and cash equivalents - beginning of period  7,319   11,017   3,132   11,017   6,761  
Cash and cash equivalents - end of period $11,521  $7,319  $10,105  $11,521  $10,105  


            
PENN VIRGINIA CORPORATION 
CERTAIN NON-GAAP FINANCIAL MEASURES - unaudited 
(in thousands, except per unit amounts) 
            
Readers are reminded that non-GAAP measures are merely a supplement to, and not a replacement for, or superior to financial measures prepared according to GAAP. They should be evaluated in conjunction with the GAAP financial measures. It should be noted as well that our non-GAAP information may be different from the non-GAAP information provided by other companies. 
            
Reconciliation of GAAP "Net income (loss)" to Non-GAAP "Adjusted net income" 
            
Adjusted net income is a non-GAAP financial measure that represents net income (loss) adjusted to exclude the effects, net of income taxes, of non-cash changes in the fair value of derivatives, net gains and losses on the sales of assets, acquisition and divestiture transaction costs, executive retirement costs and restructuring expenses. We believe that Non-GAAP adjusted net income and non-GAAP adjusted net income per share amounts provide meaningful supplemental information regarding our operational performance. This information facilitates management's internal comparisons to the Company's historical operating results as well as to the operating results of our competitors. Since management finds this measure to be useful, the Company believes that our investors can benefit by evaluating both non-GAAP and GAAP results. Adjusted net income non-GAAP is not a measure of financial performance under GAAP and should not be considered as a measure of liquidity or as an alternative to net income (loss). 
            
            
  Three Months Ended Six Months Ended 
  June 30, March 31, June 30, June 30, June 30, 
  2018 2018 2017 2018 2017 
  (in thousands, except per share amounts) 
Net income (loss) $(2,521) $10,295  $21,329  $7,774  $49,410  
Adjustments for derivatives:           
Net losses (gains)  52,241   18,795   (11,061)  71,036   (28,077) 
Cash settlements, net  (12,401)  (7,576)  (466)  (19,977)  (2,458) 
(Gain) loss on sales of assets, net  (4)  (75)  134   (79)  69  
Acquisition and divestiture transaction costs  56   431   -   487   -  
Executive retirement costs  -   250   -   250   -  
Restructuring expenses  -   -   -   -   (20) 
Impact of adjustment on income taxes  -   163   -   163   -  
Adjusted net income  $37,371  $22,283  $9,936  $59,654  $18,924  
            
Net income (loss), per diluted share $(0.17) $0.68  $1.42  $0.51  $3.27  
Adjusted net income, per diluted share $2.46  $1.48  $0.66  $3.93  $1.25  
            
Reconciliation of GAAP "Net income (loss)" to Non-GAAP "Adjusted EBITDAX" 
            
Adjusted EBITDAX represents net income (loss) before interest expense, income tax expense, depreciation, depletion and amortization expense and share-based compensation expense, further adjusted to exclude the effects of gains and losses on sales of assets, non-cash changes in the fair value of derivatives, and special items including acquisition and divestiture transaction costs, executive retirement costs and restructuring expenses. We believe this presentation is commonly used by investors and professional research analysts for the valuation, comparison, rating, and investment recommendations of companies within the oil and gas exploration and production industry. We use this information for comparative purposes within our industry. Adjusted EBITDAX is not a measure of financial performance under GAAP and should not be considered as a measure of liquidity or as an alternative to net income (loss). Adjusted EBITDAX as defined by Penn Virginia may not be comparable to similarly titled measures used by other companies and should be considered in conjunction with net income (loss) and other measures prepared in accordance with GAAP, such as operating income or cash flows from operating activities. Adjusted EBITDAX should not be considered in isolation or as a substitute for an analysis of Penn Virginia's results as reported under GAAP. 
            
  Three Months Ended Six Months Ended 
  June 30, March 31, June 30, June 30, June 30, 
  2018 2018 2017 2018 2017 
  (in thousands, except per unit amounts) 
Net income (loss) $(2,521) $10,295  $21,329  $7,774  $49,410  
Adjustments to reconcile to Adjusted EBITDAX:           
Interest expense, net  6,150   4,601   1,274   10,751   1,812  
Income tax expense  -   163   -   163   -  
Depreciation, depletion and amortization  31,273   22,081   11,076   53,354   20,886  
Share-based compensation expense (equity-classified)  875   1,576   848   2,451   1,694  
(Gain) loss on sales of assets, net  (4)  (75)  134   (79)  69  
Adjustments for derivatives:           
Net losses (gains)  52,241   18,795   (11,061)  71,036   (28,077) 
Cash settlements, net  (12,401)  (7,576)  (466)  (19,977)  (2,458) 
Adjustment for special items:           
Acquisition and divestiture transaction costs  56   431   -   487   -  
Executive retirement costs  -   250   -   250   -  
Restructuring expenses  -   -   -   -   (20) 
Adjusted EBITDAX $75,669  $50,541  $23,134  $126,210  $43,316  
            
Adjusted EBITDAX per BOE $37.46  $34.78  $25.02  $36.34  $24.35  
            
Reconciliation of GAAP "Income (loss) before income taxes" to Non-GAAP "Realized cash operating margin and cash operating margin per BOE" 
            
Realized cash operating margin and realized cash operating margin per BOE are a supplemental non-GAAP financial measure that excludes certain non-recurring expenses, certain non-operating items and non-cash  expenses. We believe that the non-GAAP measure of realized cash operating margin per BOE is useful to investors because it provides readers with a meaningful measure of our operating profitability and provides for greater comparability period-over-period. 
            
 Three Months Ended Six Months Ended 
 June 30, March 31, June 30, June 30, June 30, 
 2018 2018 2017 2018 2017 
 (in thousands, except per unit amounts)
Income (loss) before income taxes $(2,521) $10,458  $21,329  $7,937  $49,410  
Plus:           
Interest expense, net  6,150   4,601   1,274   10,751   1,812  
Derivatives  52,241   18,795   (11,061)  71,036   (28,077) 
Other, net  16   58   (82)  74   (62) 
Share-based compensation           
- equity classified awards  875   1,576   848   2,451   1,694  
Acquisition and divestiture transaction costs  56   431   -   487   -  
Executive retirement costs  -   250   -   250   -  
Restructuring expenses  -   -   -   -   (20) 
Depreciation, depletion and amortization  31,273   22,081   11,076   53,354   20,886  
Less:           
(Gain) loss on sales of assets, net  (4)  (75)  134   (79)  69  
Other revenues, net  (415)  (142)  (142)  (557)  (345) 
Non-GAAP Realized cash operating margin $87,671  $58,033  $23,376  $145,704  $45,367  
            
Non-GAAP Realized cash operating margin per BOE $43.39  $39.94  $25.28  $41.95  $25.50  
            
Reconciliation of GAAP "Operating expenses" to Non-GAAP "Adjusted direct operating expenses and Adjusted direct operating expenses per BOE" 
            
Adjusted total direct operating expenses and adjusted total direct operating expenses per BOE are a supplemental non-GAAP financial measure that excludes certain non-recurring expenses and non-cash expenses. We believe that the non-GAAP measure of Adjusted total direct operating expense per BOE is useful to investors because it provides readers with a meaningful measure of our cost profile and provides for greater comparability period-over-period. 
 
 Three Months Ended Six Months Ended 
 June 30, March 31, June 30, June 30, June 30, 
 2018 2018 2017 2018 2017 
 (in thousands, except per unit amounts)
Operating expenses $55,694  $43,299  $24,822  $98,993  $48,185  
Less:           
Share-based compensation - equity-classified awards  (875)  (1,576)  (848)  (2,451)  (1,694) 
Depreciation, depletion and amortization  (31,273)  (22,081)  (11,076)  (53,354)  (20,886) 
Significant special charges:           
Acquisition and divestiture transaction costs  (56)  (431)  -   (487)  -  
Executive retirement costs  -   (250)  -   (250)  -  
Restructuring expenses  -   -   -   -   20  
Non-GAAP Adjusted direct operating expenses $23,490  $18,961  $12,898  $42,451  $25,625  
            
Non-GAAP Adjusted direct operating expenses per BOE $11.63  $13.05  $13.95  $12.22  $14.40  
            
Reconciliation of GAAP "General administrative expenses" to Non-GAAP "Adjusted cash-based general and administrative expenses" 
            
Adjusted cash-based general and administrative expense ("Adjusted cash G&A") is a supplemental non-GAAP financial measure that excludes certain non-recurring expenses and non-cash share-based compensation expense. We believe that the non-GAAP measure of Adjusted cash G&A is useful to investors because it provides readers with a meaningful measure of our recurring G&A expense and provides for greater comparability period-over-period. 
            
  Three Months Ended Six Months Ended 
  June 30, March 31, June 30, June 30, June 30, 
  2018 2018 2017 2018 2017 
  (in thousands, except per unit amounts)
General and administrative expenses - direct $4,447  $4,895  $2,854  $9,342  $6,115  
Share-based compensation - equity-classified awards  875   1,576   848   2,451   1,694  
GAAP General and administrative expenses  5,322   6,471   3,702   11,793   7,809  
Less: Share-based compensation - equity-classified awards  (875)  (1,576)  (848)  (2,451)  (1,694) 
Significant special charges:           
Acquisition and divestiture transaction costs  (56)  (431)  -   (487)  -  
Executive retirement costs  -   (250)  -   (250)  -  
Restructuring expenses  -   -   -   -   20  
Adjusted cash-based general and administrative expenses $4,391  $4,214  $2,854  $8,605  $6,135  
            
GAAP General and administrative expenses per BOE $2.63  $4.45  $4.00  $3.40  $4.39  
Adjusted cash-based general and administrative expenses per BOE $2.17  $2.90  $3.09  $2.48  $3.45  
            

Contact:
Clay Jeansonne
Investor Relations
Ph: (713) 722-6540
E-Mail: invest@pennvirginia.com