Penn Virginia GP Holdings, L.P. (NYSE:PVG) today reported financial results for the three months ended June 30, 2010.

Distributable cash, a non-GAAP (generally accepted accounting principles) measure, was $15.2 million for the three months ended June 30, 2010, an increase of $0.4 million, or three percent, from the prior year quarter. Adjusted net income attributable to PVG, a non-GAAP measure that excludes the effects of the non-cash change in derivatives fair value that affects comparability to prior periods, was $5.9 million, or $0.15 per limited partner unit, as compared to $10.7 million, or $0.27 per limited partner unit, in the prior year quarter. Net income attributable to PVG was $11.6 million, or $0.30 per limited partner unit, as compared to $8.3 million, or $0.21 per limited partner unit, in the prior year quarter.

Reconciliations of distributable cash and adjusted net income to GAAP-based measures appear in the financial tables later in this release.

The Board of Directors of PVG GP, LLC, the general partner of PVG, today declared a second quarter cash distribution of $0.39 per limited partner unit, payable on August 24, 2010 to unitholders of record as of August 18, 2010. The distribution equates to an annualized rate of $1.56 per unit, and represents a $0.01 per unit, or 2.6 percent, increase over the $0.38 per unit distribution paid in the same quarter of 2009.

We own the general partner, including the incentive distribution rights, and are the largest limited partner unitholder of Penn Virginia Resource Partners, L.P. (NYSE:PVR), and we report our financial results on a consolidated basis with the financial results of PVR. We currently have no separate operating activities other than those conducted by PVR and derive our cash flow solely from cash distributions received from PVR.

Financial and operational updates, as well as full-year 2010 guidance for PVR and its coal and natural resource management and natural gas midstream segments, are discussed in more detail in PVR’s news release dated July 27, 2010 (please visit PVR’s website, www.pvresource.com, under “For Investors” for a copy of the release).

Guidance for Full-Year 2010

See the Guidance Table included in PVR’s July 27, 2010 release for guidance estimates for full-year 2010.

Second Quarter 2010 Financial and Operational Results Conference Call

A joint conference call and webcast for PVG and PVR, during which management will discuss second quarter 2010 financial and operational results, is scheduled for Wednesday, July 28, 2010 at 10:00 a.m. ET. Prepared remarks by William H. Shea, Jr., President and Chief Executive Officer, will be followed by a question and answer period. Investors and analysts may participate via phone by dialing 866-630-9986 five to ten minutes before the scheduled start of the conference call (use the passcode 7398464), or via webcast by logging on to our website, www.pvgpholdings.com, or PVR’s website, www.pvresource.com, at least 15 minutes prior to the scheduled start of the call to download and install any necessary audio software. A telephonic replay of the call will be available for two weeks by dialing 888-203-1112 (international: 719-457-0820) and using the following replay code: 7398464. An on-demand replay of the conference call will be available for two weeks at our website.

Penn Virginia GP Holdings, L.P. (NYSE:PVG) is a publicly traded limited partnership which owns the general partner interest, all of the incentive distribution rights and an approximate 37 percent limited partner interest in PVR, a manager of coal and natural resource properties and related assets and the operator of a midstream natural gas gathering and processing business.

For more information about us, please visit our website at www.pvgpholdings.com . For more information about PVR, please visit its website at www.pvresource.com .

Certain statements contained herein and incorporated herein by reference to the PVR news release dated July 27, 2010 that are not descriptions of historical facts are “forward-looking” statements by PVR 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. Because such statements include risks, uncertainties and contingencies, actual results may differ materially from those expressed or implied by such forward-looking statements. These risks, uncertainties and contingencies are discussed in more detail in PVR’s news release dated July 27, 2010 and in our press releases and public periodic filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2009. Many of the factors that will determine PVR’s and, therefore, our future results are beyond the ability of management to control or predict. Readers should not place undue reliance on forward-looking statements, which reflect management’s views only as of the date hereof. We undertake no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as the result of new information, future events or otherwise.
 
PENN VIRGINIA GP HOLDINGS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - unaudited
(dollars in thousands, except per unit data)
       
Three Months Ended Six Months Ended
June 30, June 30,
  2010     2009     2010     2009  
Revenues
Natural gas midstream $ 146,546 $ 113,060 $ 317,155 $ 230,439
Coal royalties 34,879 29,997 63,105 60,627
Coal services 2,028 1,745 4,001 3,633
Other   5,979     4,617     11,649     11,479  
Total revenues   189,432     149,419     395,910     306,178  
 
Expenses
Cost of gas purchased 121,659 92,154 263,454 192,774
Coal royalties expense 1,630 1,569 3,086 2,793
Operating 8,631 8,146 17,483 16,667
General and administrative 15,539 9,102 25,338 17,603
Depreciation, depletion and amortization   18,263     17,617     36,081     34,120  
Total expenses   165,722     128,588     345,442     263,957  
 
Operating income 23,710 20,831 50,468 42,221
 
Other income (expense)
Interest expense (8,894 ) (6,365 ) (14,729 ) (11,981 )
Interest income and other 216 347 543 676
Derivatives   7,074     (2,034 )   (494 )   (9,195 )
 
 
Net income 22,106 12,779 35,788 21,721
 
Net income attributable to noncontrolling interests   (10,550 )   (4,440 )   (15,807 )   (6,533 )
 
Net income attributable to Penn Virginia GP Holdings, L.P. $ 11,556   $ 8,339   $ 19,981   $ 15,188  
 
 
 
Net income per limited partner unit, basic and diluted $ 0.30 $ 0.21 $ 0.51 $ 0.39
 
Weighted average number of units outstanding, basic and diluted (in thousands) 39,075 39,075 39,075 39,075
 
                 
 
 
Other data:
Coal and natural resource management segment:
Coal royalty tons (in thousands) 8,872 8,739 17,115 17,487
Average coal royalties ($ per ton) $ 3.93 $ 3.43 $ 3.69 $ 3.47
 
Natural gas midstream segment:
System throughput volumes (MMcf) 29,162 31,342 56,887 63,622
Gross margin (in thousands) $ 24,887 $ 20,906 $ 53,701 $ 37,665
 
 
PENN VIRGINIA GP HOLDINGS, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS - unaudited
(in thousands)
       
June 30, December 31,
  2010     2009  
 
Assets
Cash and cash equivalents $ 23,546 $ 19,314
Accounts receivable 75,026 82,321
Derivative assets 2,488 1,331
Other current assets   4,699     4,816  
Total current assets 105,759 107,782
Property, plant and equipment, net 914,131 900,844
Other long-term assets   210,739     210,437  
Total assets $ 1,230,629   $ 1,219,063  
 
Liabilities and partners' capital
Accounts payable and accrued liabilities $ 74,187 $ 71,233
Deferred income 3,047 3,839
Derivative liabilities   9,320     11,251  
Total current liabilities 86,554 86,323
Derivative liabilities 4,043 4,285
Other long-term liabilities 27,049 22,752
PVR senior notes 300,000 -
PVR revolving credit facility 346,490 620,100

PVG partners' capital
226,842 249,696
Noncontrolling interests in PVR   239,651     235,907  
Total liabilities and partners' capital $ 1,230,629   $ 1,219,063  
 
 
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - unaudited
(in thousands)
 
Three Months Ended Six Months Ended
June 30, June 30,
  2010     2009     2010     2009  
Cash flows from operating activities
Net income $ 22,106 $ 12,779 $ 35,788 $ 21,721

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization 18,263 17,617 36,081 34,120
Commodity derivative contracts:
Total derivative losses included in net income (6,566 ) 2,951 1,584 10,566
Cash receipts (payments) to settle derivatives for period (2,412 ) 1,613 (4,058 ) 4,449
Non-cash interest expense 1,367 1,242 2,610 1,733
Non-cash unit-based compensation 4,952 - 5,887 -
Equity earnings, net of distributions 1,947 489 2,390 (1,070 )
Other (312 ) (425 ) (614 ) (632 )
Changes in operating assets and liabilities   2,525     2,610     10,724     1,648  
Net cash provided by operating activities   41,870     38,876     90,392     72,535  
 
Cash flows from investing activities
Acquisitions, net of cash acquired (17,835 ) (606 ) (17,864 ) (1,862 )
Additions to property, plant and equipment (16,776 ) (15,208 ) (24,733 ) (32,258 )
Other   398     307     670     572  
Net cash used in investing activities   (34,213 )   (15,507 )   (41,927 )   (33,548 )
 
Cash flows from financing activities
Distributions to partners (30,631 ) (29,986 ) (60,784 ) (59,974 )
Proceeds from PVR issuance of senior notes 300,000 - 300,000 -
Proceeds from (repayments of) revolving credit facility, net (271,610 ) 2,000 (273,610 ) 29,000
Purchase of PVR limited partner units (1,092 ) - (1,092 ) -
Debt issuance costs   (8,747 )   -     (8,747 )   (9,258 )
Net cash used in financing activities   (12,080 )   (27,986 )   (44,233 )   (40,232 )
 
Net increase (decrease) in cash and cash equivalents (4,423 ) (4,617 ) 4,232 (1,245 )
Cash and cash equivalents - beginning of period   27,969     21,710     19,314     18,338  
Cash and cash equivalents - end of period $ 23,546   $ 17,093   $ 23,546   $ 17,093  
 
 
PENN VIRGINIA GP HOLDINGS, L.P.
DISTRIBUTABLE CASH - unaudited
(in thousands, except per unit data)
       

The following tables present the calculation of distributable cash to PVG and reconciliation of net income attributable to PVG with respect to the three and six months ended June 30, 2010 and 2009:
 
 
Three Months Ended Six Months Ended

Calculation of Non-GAAP "Distributable cash"
June 30, June 30,
Distributable cash:   2010 (a)   2009     2010 (a)   2009  
Cash distributions received from PVR associated with:
2% general partner interest $ 502 $ 497 $ 1,000 $ 994
General partner incentive distribution rights 6,093 6,035 12,139 12,070
PVR common units   9,230     9,206     18,436     18,412  
Total cash received from PVR 15,825 15,738 31,575 31,476
 
Deduct: Net expenses of PVG on a stand-alone basis (b) (1,154 ) (543 ) (2,123 ) (1,069 )
Cash reserve for working capital   568     (347 )   1,026     (711 )
 
Distributable cash (c) $ 15,239   $ 14,848   $ 30,478   $ 29,696  
 
 
Cash distributions to be paid to partners of PVG
To Penn Virginia Corporation $ - $ 11,429 $ 3,443 $ 22,858
To public unitholders   15,239     3,419     27,035     6,838  
 
Total cash distributions to be paid $ 15,239   $ 14,848   $ 30,478   $ 29,696  
 
Distribution per limited partner unit (paid in subsequent period) $ 0.39   $ 0.38   $ 0.78   $ 0.76  
 
Weighted-average units outstanding, basic and diluted   39,075     39,075     39,075     39,075  
 
 
 

Reconciliation of GAAP "Net income" to Non-GAAP "Net income as adjusted"
Net income attributable to PVG $ 11,556 $ 8,339 $ 19,981 $ 15,188
Adjustments for derivatives:
Derivative (gains) losses included in net income (6,566 ) 2,951 1,584 10,566
Cash receipts (payments) to settle derivatives for period (2,412 ) 1,613 (4,058 ) 4,449
Impact of adjustments on noncontrolling interests (d)   3,366     (2,206 )   1,032     (4,516 )
Net income attributable to PVG, as adjusted (e) $ 5,944   $ 10,697   $ 18,539   $ 25,687  
 
Net income attributable to PVG, as adjusted, per limited partner unit,
basic and diluted $ 0.15   $ 0.27   $ 0.47   $ 0.66  

(a) The three and six months ended June 30, 2010 columns represent cash distributions expected to be received from PVR and cash distributions expected to be paid to unitholders of PVG in August 2010.

(b) Estimated net expenses of PVG, which represent general and administrative expenses, partially offset by interest income.

(c) Distributable cash represents cash distributions received from PVR, minus our net expenses, minus cash reserve for working capital. Distributable cash is presented because we believe it is a useful adjunct to net income under GAAP. Distributable cash is a significant liquidity metric which is an indicator of our ability to pay quarterly cash distributions to our limited partners. Distributable cash is also the quantitative standard used throughout the investment community with respect to publicly traded partnerships. Distributable cash is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing or financing activities, as an indicator of cash flows, as a measure of liquidity or as an alternative to net income.

(d) Noncontrolling interests in net income adjusts for the effects of incentive distribution rights and reflects the noncontrolling interests percentage of net income. The ratio of net income and net income attributable to noncontrolling interests calculated on a GAAP basis was used to estimate the impact of adjustments on noncontrolling interests. A pro forma calculation of net income attributable to noncontrolling interests was not performed.

(e) Net income as adjusted represents net income adjusted to exclude the effects of non-cash changes in the fair value of derivatives, and adjustments for an estimate of the related noncontrolling interests. We believe this presentation is widely used by investors and professional research analysts in the valuation, comparison, rating and investment recommendations of companies in the natural gas midstream industry. We use this information for comparative purposes within the industry. Net income as adjusted 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.
       
PENN VIRGINIA GP HOLDINGS, L.P.
QUARTERLY SEGMENT INFORMATION - unaudited
(in thousands)
 

Coal andNaturalResourceManagement

Natural GasMidstream

Other

Consolidated
Three months ended June 30, 2010
 
Revenues
Natural gas midstream $ - $ 146,546 $ - $ 146,546
Coal royalties 34,879 - - 34,879
Coal services 2,028 - - 2,028
Timber 1,746 - - 1,746
Oil and gas royalties 625 - - 625
Other   1,304   2,304   -     3,608
Total revenues   40,582   148,850   -     189,432
Expenses
Cost of gas purchased - 121,659 - 121,659
Coal royalties expense 1,630 - - 1,630
Other operating 951 7,680 - 8,631
General and administrative 5,841 8,532 1,166 15,539
Depreciation, depletion and amortization   7,379   10,884   -     18,263
Total expenses   15,801   148,755   1,166     165,722
       
Operating income (loss) $ 24,781 $ 95 $ (1,166 ) $ 23,710
 
Additions to property, plant and equipment and acquisitions $ 18,082 $ 16,529 $ - $ 34,611
                 
 

Coal andNaturalResourceManagement

Natural GasMidstream
Other

 

Consolidated
Three months ended June 30, 2009
 
Revenues
Natural gas midstream $ - $ 113,060 $ - $ 113,060
Coal royalties 29,997 - - 29,997
Coal services 1,745 - - 1,745
Timber 1,456 - - 1,456
Oil and gas royalties 545 - - 545
Other   1,401   1,215   -     2,616
Total revenues   35,144   114,275   -     149,419
Expenses
Cost of gas purchased - 92,154 - 92,154
Coal royalties expense 1,569 - - 1,569
Other operating 919 7,227 - 8,146
General and administrative 4,159 4,381 562 9,102
Depreciation, depletion and amortization   8,164   9,453   -     17,617
Total expenses   14,811   113,215   562     128,588
       
Operating income (loss) $ 20,333 $ 1,060 $ (562 ) $ 20,831
 
Additions to property, plant and equipment and acquisitions $ 606 $ 15,208 $ - $ 15,814
 
       
PENN VIRGINIA GP HOLDINGS, L.P.
YEAR-TO-DATE SEGMENT INFORMATION - unaudited
(in thousands)
 

 

Coal andNaturalResourceManagement

Natural GasMidstream
Other

Consolidated
Six months ended June 30, 2010
 
Revenues
Natural gas midstream $ - $ 317,155 $ - $ 317,155
Coal royalties 63,105 - - 63,105
Coal services 4,001 - - 4,001
Timber 3,051 - - 3,051
Oil and gas royalties 1,369 - - 1,369
Other   2,616   4,613     -     7,229
Total revenues   74,142   321,768     -     395,910
Expenses
Cost of gas purchased - 263,454 - 263,454
Coal royalties expense 3,086 - - 3,086
Other operating 1,676 15,807 - 17,483
General and administrative 9,533 13,651 2,154 25,338
Depreciation, depletion and amortization   14,705   21,376     -     36,081
Total expenses   29,000   314,288     2,154     345,442
 
Operating income (loss) $ 45,142 $ 7,480   $ (2,154 ) $ 50,468
 
Additions to property, plant and equipment and acquisitions $ 18,114 $ 24,483 $ - $ 42,597
                 
 

Coal andNaturalResourceManagement

Natural GasMidstream
Other

Consolidated
Six months ended June 30, 2009
 
Revenues
Natural gas midstream $ - $ 230,439 $ - $ 230,439
Coal royalties 60,627 - - 60,627
Coal services 3,633 - - 3,633
Timber 2,773 - - 2,773
Oil and gas royalties 1,248 - - 1,248
Other   5,115   2,343     -     7,458
Total revenues   73,396   232,782     -     306,178
Expenses
Cost of gas purchased - 192,774 - 192,774
Coal royalties expense 2,793 - - 2,793
Other operating 1,983 14,684 - 16,667
General and administrative 7,755 8,749 1,099 17,603
Depreciation, depletion and amortization   15,558   18,562     -     34,120
Total expenses   28,089   234,769     1,099     263,957
 
Operating income (loss) $ 45,307 $ (1,987 ) $ (1,099 ) $ 42,221
 
Additions to property, plant and equipment and acquisitions $ 1,906 $ 32,214 $ - $ 34,120
 

Copyright Business Wire 2010

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