OilVoice - Penn Virginia Provides Financial Liquidity Update

Penn Virginia Provides Financial Liquidity Update

Sunday, March 15, 2009

Penn Virginia Corporation announces that the administrative agent for its revolving credit facility has recommended a new borrowing base to the bank group which is significantly greater than outstanding borrowings and would thereby allow for continued borrowings under the revolver. As of March 9, 2009, outstanding borrowings were approximately $384 million. Available borrowing capacity, together with operating cash flows, are expected to be more than sufficient to fund 2009 oil and gas capital expenditures.

The recommended newly re-determined borrowing base uses year-end 2008 oil and gas reserves and will be subject to approval by banks holding two-thirds of the lending commitments. Such approval is expected on or about March 31, 2009. The dollar amount of the new borrowing base will be disclosed upon its approval by the bank group. In addition, as of December 31, 2008, we were in compliance with the financial covenants under the revolving credit facility and we expect that we will stay in compliance with these covenants during 2009.

A. James Dearlove, President and Chief Executive Officer of PVA, said,
“We understand the financial community’s concern regarding liquidity in general and in the exploration and production industry in particular and, therefore, believe this update regarding our revolving credit facility is appropriate. The recommended new borrowing base is in line with our expectations in light of the weak commodity price environment, offset with the 35 percent increase in our proved reserves from 680 Bcfe (billion cubic feet of natural gas equivalent) at year-end 2007 to 916 Bcfe at year-end 2008. We expect our borrowing base reduction will be far less severe than what has been or will be experienced by others in the industry.

“As previously discussed, we will continuously monitor the impact of commodity prices on our financial liquidity and will remain flexible with our capital spending plans going forward. As further support for our cash flows, we currently have approximately 62 percent of our 2009 natural gas production guidance volumes hedged at prices ranging between average floors of $7.24 and average ceilings of $8.87 per million British thermal units.”