Penn Virginia Corporation announced an operational update and timing of its second quarter 2021 earnings release and conference call.
Preliminary Operational and Financial Update
- As previously announced, Penn Virginia entered into an agreement to acquire Lonestar Resources US Inc. (“Lonestar”) in an all-stock transaction. The transaction is expected to materially increase Penn Virginia’s Free Cash Flow, production, and drilling inventory and is accretive to all key metrics. The Company also expects to realize over $20 million in annual cost synergies after the transaction has closed;
- Exceeded the high-end of the oil guidance range, selling 20,117 barrels of oil per day (“bbl/d”) for the second quarter of 2021. Total sales volumes for the second quarter of 2021 were 24,844 barrels of oil equivalent per day (“boe/d”);
- Reduced estimated per well costs by approximately 4% compared to initial guidance estimates for wells completed in the second quarter of 2021, driven primarily by utilizing simulfrac operations and improvements in cycle times. The more efficient operational cadence allowed Penn Virginia to complete two multi-well pads at the end of the quarter, originally scheduled for completion in early July. The cycle time improvements shifted approximately $12.2 million in capital expenditures from the third quarter into the second quarter of 2021, resulting in total capital expenditures in the second quarter of approximately $68.7 million (equating to the low-end of guidance without the effect of cycle time improvements). Both pads were turned to sales in the third quarter;
- Maintaining 2021 capital expenditure guidance for the full year. The Company remains focused on capital discipline with a consistent two-rig development plan;
- Generated significant Free Cash Flow(1) for the seventh consecutive quarter, lowering Net Debt(2) by approximately $30 million to $334.2 million as of June 30, 2021;
- Realized oil price for the second quarter of 2021 of $63.54 per barrel, or $52.70 per barrel, including effects of derivatives, net(3);
- Estimate net income for the second quarter of 2021 to be within a range of $3 million to $12 million;
- Estimate Adjusted EBITDAX(4) for the second quarter of 2021 to be within a range of $76 million and $78 million; and
- Obtained an updated proved developed reserve report from DeGolyer and MacNaughton (“D&M”) as of June 30, 2021.
Darrin Henke, President and Chief Executive Officer of Penn Virginia, commented, “Last quarter, after materially exceeding our oil sales guidance, we raised our second quarter and full-year guidance. I am quite pleased to announce this quarter that we again significantly exceeded the mid-point of this new guidance, topping the high end of our range while at the same time driving down costs on a per well basis and reducing our Net Debt by $30 million. I am so proud of the operational excellence being applied to what we believe is a premier oil asset. We are also incredibly excited about our recently announced acquisition of Lonestar. We believe this highly accretive Eagle Ford acquisition will result in substantial increases in Free Cash Flow, drilling inventory and production, and significant synergies, both G&A-related and operational, for the combined company. We continue our commitment to creating shareholder value through our relentless focus on maximining cash-on-cash returns, Free Cash Flow generation, capital discipline, continuous improvement, and our steadfast commitment to the communities and environment where we live and work.”
Proved Developed (“PD”) Reserves
Penn Virginia, on a standalone basis (excluding the acquisition of Lonestar), obtained an updated third-party reserve report from D&M with respect to its PD reserves as of June 30, 2021. Pursuant to such reserve report, Penn Virginia's PD reserves as of June 30, 2021, were approximately 58.0 million barrels of oil equivalent (“MMboe”). The PD reserves were calculated in accordance with Securities and Exchange Commission (“SEC”) guidelines using the pricing of $49.78 per barrel for oil and $2.43 per million British Thermal Units (MMBtu) for natural gas.
Balance Sheet and Liquidity
As of June 30, 2021, Penn Virginia had cash of $49.7 million and total debt of $383.9 million, including borrowings under its revolving credit facility of $238.9 million. Liquidity was $160.4 million as of June 30, 2021, including cash and $110.7 million available under the Company's revolving credit facility.