SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the period ended March 31, 1998
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
Commission File Number 0-753
PENN VIRGINIA CORPORATION
(Exact name of registrant as specified in its charter)
Virginia 23-1184320
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 MATSONFORD ROAD SUITE 200
RADNOR, PA 19807___
(Address of principal executive offices) (Zip Code)
(610) 687-8900
(Registrant's telephone number, including area code)
_________________________________________________________________
(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Number of shares of common stock of registrant
outstanding at May 8, 1998: 8,921,866
<PAGE>
<TABLE>
PENN VIRGINIA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts)
<CAPTION>
Three Months
Ended March 31,
------------------
1998 1997
------- --------
(Unaudited)
<S> <C> <C>
Revenues:
Oil and condensate $ 117 $ 227
Natural gas 4,991 5,620
Natural gas royalties 363 520
Coal royalties 2,569 2,645
Timber 209 206
Dividends 662 662
Gain on the sale of property 0 9
Other income 153 361
------- -------
Total revenues $ 9,064 $10,250
Expenses:
Operating expenses $ 967 $ 832
Exploration expenses 49 138
Taxes other than income 681 691
General and administrative 1,781 1,614
Loss on the sale of property 4 2
Depreciation, depletion, amortization 1,822 1,503
------- -------
Total expenses $ 5,304 $ 4,780
Operating Income $ 3,760 $ 5,470
Other (Income) Expense:
Interest expense $ 489 $ 473
Other income (816) (992)
------- --------
Income before income tax $ 4,087 $ 5,989
Income tax expense 935 1,263
------- -------
Net Income $ 3,152 $ 4,726
======= =======
Net Income per share, basic 0.38 0.55
======= =======
Net Income per share, diluted 0.37 0.55
====== ======
Weighted average shares outstanding 8,278 8,620
<FN>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
</TABLE>
<PAGE> -1-
<TABLE>
PENN VIRGINIA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<CAPTION>
March 31, December 31,
1998 1997
--------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 2,821 $ 831
Accounts receivable 4,559 7,404
Current portion of long-term notes
receivable 1,383 2,414
Current deferred income taxes 696 696
Inventories 243 233
Prepaid expenses 243 311
-------- -------
Total current assets 9,945 11,889
-------- -------
Investments 123,633 100,885
Long-term notes receivable 4,310 4,195
Oil and gas properties; wells and
equipment, using the successful efforts
method of accounting 149,284 148,487
Other property, plant and equipment 42,625 42,626
Less: Accumulated depreciation,
depletion and amortization (63,473) (61,677)
--------- --------
Total property, plant and equipment 128,436 129,436
-------- ---------
Intangible assets, net of amortization 581 537
Other assets 264 288
-------- --------
Total assets $267,169 $247,230
======== ========
<FN>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
</TABLE>
<PAGE> -2-
<TABLE>
PENN VIRGINIA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<CAPTION>
March 31, December 31,
1998 1997
--------- ------------
(Unaudited)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current installments on long-term debt $ 2,025 $ 2,025
Accounts payable 1,195 1,828
Accrued expenses 4,326 5,885
Deferred liabilities 279 279
Taxes on income 796 144
------- -------
Total current liabilities 8,621 10,161
------- -------
Other liabilities 4,838 4,659
Deferred income taxes 44,602 36,640
Long-term debt 29,095 31,903
Minority interest 160 163
------- -------
Total liabilities 87,316 83,526
------- -------
Commitments and contingencies - -
Shareholders' equity
Preferred stock of $100 par value-
authorized 100,000 shares; none issued
Common stock of $6.25 par value-
authorized 16,000,000 shares, issued
8,906,866 shares and 8,901,438 shares
in 1998 and 1997, respectively 55,793 55,634
Other paid in capital 8,294 8,431
Retained earnings 53,104 51,813
------- ---------
117,191 115,878
Less: 627,108 shares in 1998 and
1997 of common stock held in
treasury, at cost 14,024 14,024
Pension liability 228 228
Unearned compensation - ESOP 1,600 1,650
Add: Net unrealized investment holding
gain 78,514 63,728
-------- --------
Total shareholders' equity 179,853 163,704
------- --------
Total liabilities and shareholders' equity $267,169 $247,230
======== ========
<FN>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
</TABLE>
<PAGE> -3-
<TABLE>
PENN VIRGINIA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS
(Dollars in thousands)
<CAPTION>
Three Months
Ended March 31,
--------------------
1998 1997
--------- ---------
(Unaudited)
<S <C> <C>
Cash flow from operating activities:
Net Income $ 3,152 $ 4,726
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion, and amortization 1,822 1,503
(Gain), loss on sale of property 4 (7)
Deferred income taxes 0 457
Other (562) (706)
Decrease in current assets 2,904 420
Decrease in current liabilities (1,539) (1,152)
Increase in other assets (44) (15)
Increase (decrease) in other liabilities 178 (30)
------- -------
Net Cash provided by operating activities $5,915 $ 5,196
Cash flows from investing activities:
Proceeds from the sale of securities $ 0 $ 350
Proceeds from notes 1,489 1,230
Proceeds from sale of fixed assets 21 26
Capital expenditures (820) (9,855)
------ --------
Net Cash provided (used) by investing
activities $ 690 $(8,249)
Cash flows from financing activities:
Dividends paid $(1,862) $(1,859)
Proceeds from long-term debt borrowings 0 16,013
Repayment of long-term debt principal (2,825) (2,542)
Purchase of treasury stock 50 (8,662)
Issuance of stock 22 16
-------- --------
Net Cash provided (used) by financing
activities $(4,615) $ 2,966
-------- -------
Net increase (decrease) in cash and cash
equivalents $ 1,990 $ (87)
Cash and cash equivalents-beginning balance 831 1,893
------- --------
Cash and cash equivalents-ending balance $ 2,821 $ 1,806
======= ========
Supplemental disclosures of cash flow information:
Cash paid to date for:
Interest $ 463 $ 412
Income taxes - 833
<FN>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
</TABLE>
<PAGE> -4-
PENN VIRGINIA CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1998
- -----------------------------------------------------------------
(1) ACCOUNTING POLICIES
The accompanying unaudited consolidated financial statements
of Penn Virginia Corporation and its subsidiaries (the "Company")
have been prepared in accordance with generally accepted
accounting principles for interim financial reporting and SEC
regulations. These statements involve the use of estimates and
judgments where appropriate. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. These
financial statements should be read in conjunction with the
Company's consolidated financial statements and footnotes
included in the Company's December 31, 1997 Annual Report on Form
10-K. Operating results for the three months ended March 31, 1998
are not necessarily indicative of the results that may be
expected for the year ended December 31, 1998.
<TABLE>
(2) SECURITIES
The cost, gross unrealized holding gains or losses and
market value for available-for-sale securities at March 31, 1998
were as follows:
<CAPTION>
Gross Unrealized Market
Cost Holding Gain (Loss) Value
------ ------------------- ------
<S> <C> <C> <C>
Available-for-sale:
Norfolk Southern Corporation $2,839 $120,768 $123,607
Other 3 23 26
------- -------- --------
- -
$2,842 $120,791 $123,633
</TABLE>
(3) LEGAL
The Company is involved in various legal proceedings arising
in the ordinary course of business. While the ultimate results of
these cannot be predicted with certainty, Company management
believes these claims will not have a material effect on the
Company's financial position, liquidity or operations.
(4) EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards ("SFAS") No.
128, "Earnings Per Share" which establishes new standards for
computing and presenting earnings per share. The provisions of
the statement are effective for fiscal years ending after
December 15, 1997.
<TABLE>
The following is a reconciliation of the numerators and
denominators used in the calculation of basic and diluted
earnings per share ("EPS") for income from continuing operations
for the quarters ended March 31, 1998 and 1997.
<PAGE> -5-
<CAPTION>
March 31, 1998
-----------------------------------
Income Shares Per Share
(Numerator) (Denominator) Amount
----------- ------------- ---------
(In thousands except per
share amounts)
<S> <C> <C> <C>
Basic EPS:
Income from
continuing operations $ 3,152 8,278 $ 0.38
Dilutive Securities:
Stock options - 234
-------- -----
Diluted EPS:
Income from
continuing operations $ 3,152 8,512 $ 0.37
<CAPTION>
March 31, 1997
---------------------------------
Income Shares Per Share
(Numerator) (Denominator) Amount
----------- ------------- ---------
(In thousands except per
share amounts)
<C> <S> <S> <S>
Basic EPS:
Income from
continuing operations $ 4,726 8,620 $ 0.55
Dilutive Securities:
Stock options - -
-------- -----
Diluted EPS:
Income from
continuing operations $ 4,726 8,620 $ 0.55
</TABLE>
<TABLE>
COMPREHENSIVE INCOME
In the first quarter of 1998, the Company adopted SFAS
No. 130, "Reporting Comprehensive Income," which requires
the display of comprehensive income and its components in
the financial statements. Comprehensive income represents
all changes in equity during the reporting period, including
net income and charges directly to equity, which are
excluded from net income. For the three month periods ended
March 31, 1998 and 1997, the components of comprehensive
income are as follows:
<CAPTION>
Three Months
Ended March 31,
--------------------
1998 1997
--------- -------
<S> <C> <C>
Net income $ 3,152 $ 4,726
Unrealized holding gains (losses) on
available for sale securities 14,786 (1,971)
--------- --------
Comprehensive income $ 17,938 $ 2,755
</TABLE>
START-UP ACTIVITIES
In April 1998, the AICPA issued SOP 98-5, "Reporting on the
Costs of Start-Up Activities," which requires costs of start-up
activities to be expensed as incurred. This statement is
effective for financial statements beginning after December 15,
1998 and requires entities to expense currently capitalized costs
related to start-up activities as a cumulative effect of a change
in accounting principle upon adoption of this statement. The
impact of this new standard is not expected to have a material
impact on the Company's financial position or results of
operations.
<PAGE> -6-
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Penn Virginia reported 1998 first quarter earnings of
$3.2 million or $0.37 per share (diluted) compared with $4.7
million or $0.55 per share (diluted) for the first quarter
of 1997. On a consolidated basis, revenues decreased $1.2
million, primarily as a result of price decreases in the oil
and gas segment. Operating expenses for the first quarter of
1998 increased $0.1 million due to additional gathering and
compression expenses in the oil and gas segment. Interest
expense for the first quarter of 1998 remained flat compared
with the first quarter of 1997. Income tax expense decreased
from $1.3 million in the first quarter of 1997 to $0.9
million in the first quarter of 1998 due to a decrease in
income before taxes of $1.9 million.
The Company operates in two business segments: oil and
gas and coal land management. The oil and gas segment
explores for, develops and produces crude oil and natural
gas in western Virginia, southern West Virginia and eastern
Kentucky. The Company also owns mineral rights to oil and
gas reserves. The coal land management segment includes Penn
Virginia's mineral rights to coal reserves, its timber
assets and land assets. Selected operating and financial
data by segment is presented below.
<PAGE> -7-
Oil and Gas
Operating income for the oil and gas segment was $1.8
million for the first quarter of 1998 compared with $3.0 million
for the first quarter of 1998. Operational and financial data for
the Company's oil and gas segment for the 1998 and 1997 first
quarter is summarized in the following tables:
<TABLE>
Operations Summary
<CAPTION>
Three Months
Ended March 31,
--------------------
1998 1997
------- -----
<S> <C> <C>
Production
Natural gas (MMcf)-Working Interest 1,913 1,735
Natural gas (MMcf)-Royalty Interest 140 146
Oil and condensate (MBbls) 9 11
Production, MMcfe 2,107 1,947
Average Realized Prices
Natural gas ($/Mcf)- Working Interest $ 2.61 $ 3.24
Natural gas ($/Mcf)- Royalty Interest 2.59 3.56
Oil and condensate ($/Bbl) 13.00 20.64
Average Costs (per MMcfe)
Lease operating $ 0.45 $ 0.40
Exploration expenses 0.02 0.04
Taxes other than on income 0.26 0.33
General and administrative 0.29 0.33
Depreciation, depletion and amortization 0.78 0.70
</TABLE>
Approximately 50 percent of the Company's 1998 working
interest natural gas production was sold at market prices, with
the remaining 50 percent sold under fixed-price term contracts.
The Company will, when circumstances warrant, hedge the price
received for market-sensitive production through the use of swaps
with purchased options. Gains and losses from hedging activities
are included in natural gas revenues when the hedged production
occurs. In the first quarter of 1998, the Company recognized a
$200,550 loss on hedging activities. The company had no
comparable hedging activities for the first quarter of 1997. The
following table shows the effect of hedging activities on the
Company's working interest natural gas prices:
<TABLE>
Hedging Summary
<CAPTION>
Three Months
Ended March 31,
--------------------
1998 1997
-------- --------
<S> <C> <C>
Natural gas prices ($/Mcf):
Actual price received for production $ 2.71 $ 3.24
Effect of hedging activities (0.10) -
-------- -------
Average price $ 2.61 $ 3.24
</TABLE>
<PAGE> -8-
<TABLE>
Financial Summary
<CAPTION>
Three Months
Ended March 31,
-------------------
1998 1997
-------- -------
(Dollars in thousands)
(Unaudited)
<S> <C> <C>
Revenues:
Oil and condensate 117 227
Natural gas $ 4,991 $ 5,620
Natural gas royalties 363 520
Other income 72 76
-------- --------
Total revenues $ 5,543 $ 6,443
-------- --------
Expenses:
Operating expenses $ 939 $ 787
Exploration expenses 37 84
Taxes other than income 556 636
General and administrative 606 636
Loss on the sale of property 4 1
Depreciation and depletion 1,651 1,360
-------- -------
Total expenses 3,793 3,504
-------- -------
Operating Income $ 1,750 $ 2,939
======== =======
</TABLE>
OIL AND CONDENSATE SALES. Oil sales decreased $110,000 (48
percent) in the first quarter of 1998 compared with the same
period of 1997. Prices per barrel were lower, averaging $13.00
per barrel (Bbl) for 1998 compared with $20.64 per Bbl for 1997.
Also oil volume was down 2 MBbls for first quarter of 1998
compared with 1997.
NATURAL GAS. Natural gas sales decreased $0.6 million (11
percent) in the first quarter of 1998 compared with the same
period of 1997. Natural gas prices were down approximately 20
percent in the first quarter of 1998 compared with the first
quarter of 1997. The average price received by the Company for
its working interest gas was $2.61 per thousand cubic feet (Mcf)
compared with $3.24 per Mcf for the same period of 1997. Volumes
(MMcfe) were up approximately eight percent for the first quarter
of 1998 compared with the first quarter of 1997.
NATURAL GAS ROYALTIES. Oil and gas royalties decreased $157,000
(30 percent) in the first quarter of 1998 compared with the same
period of 1997. This variance resulted from a decrease in pricing
from $3.56 in the first quarter of 1997 to $2.59 in the first
quarter of 1998.
OTHER INCOME. Other income remained flat for the first quarter
of 1998 compared with the first quarter for 1997.
OPERATING EXPENSES. Operating expenses for the first quarter of
1998 were $939,000, which is an increase of $152,000 (19 percent)
compared with the first quarter of 1997. On a MMcfe basis,
operating expenses increased from $0.40 cents in 1997 to $0.45
cents in 1998. This increase is largely a result of increased
gathering and compression expenses.
EXPLORATION EXPENSES. Exploration expenses for the first quarter
of 1998 were $37,000 compared with $84,000 in the first quarter
of 1996. This 56 percent decrease is a result of lower costs
incurred at this time on geological evaluations on various
properties.
TAXES OTHER THAN ON INCOME. Taxes other than on income decreased
$80,000 (13 percent) in the first quarter of 1998 compared to the
same period in 1997. This decrease is a result of lower severance
and ad valorem taxes related to lower revenues resulting from
price decreases.
<PAGE> -9-
GENERAL AND ADMINISTRATIVE. General and administrative expenses
decreased $30,000 (5 percent) in the first quarter of 1998
compared with the same period in 1997. This decrease is a result
of a reduction in salary and related employee benefit expenses.
DEPRECIATION AND DEPLETION. Depreciation and depletion expense
increased $291,000 (21 percent) from $1,360,000 in the first
quarter of 1997 to $1,651,000 in the first quarter 1998.
Decreases in reserve estimates at December 31, 1997 in various
fields have resulted in depletion rate increases. The rate
increased from $0.70 per Mcfe in the first quarter of 1997 to
$0.78 per Mcfe in the first quarter of 1998.
<PAGE> -10-
Coal Land Management
Operating income for the coal segment was $2.1 million for
the first quarter of 1998 compared with $2.6 million for the
first quarter of 1997. Operational and financial data for the
Company's coal segment for the 1998 and 1997 first quarter is
summarized in the following tables:
<TABLE>
Operations Summary
<CAPTION>
Three Months
Ended March 31,
------------------
1998 1997
-------- -------
<S> <C> <C>
Production
Timber (Mbf) 984 829
Coal tons (000's) 1,221 1,173
Average Realized Prices
Timber ($/Mbf) $ 191 $ 220
Coal royalties ($/ton) 2.10 2.25
Average Costs (per ton)
Lease operating $ 0.03 $0.04
Exploration expenses 0.01 0.05
Taxes other than on income 0.07 0.01
General and administrative 0.41 0.29
Depreciation, depletion and amortization 0.12 0.10
</TABLE>
<TABLE>
Financial Summary
<CAPTION>
Three Months
Ended March 31,
------------------
1998 1997
-------- -------
(Dollars in thousands)
(Unaudited)
<S> <C> <C>
Revenues:
Coal royalties $ 2,569 $ 2,645
Timber sales 209 206
Gain on the sale of property - 9
Other income 81 285
------- -------
Total revenues 2,859 3,145
------- -------
Expenses:
Operating expenses 28 44
Exploration expenses 11 54
Taxes other than income 86 11
General and administrative 498 345
Loss on the sale of property 1 1
Depreciation and depletion 142 118
------ ------
Total expenses 766 573
------ ------
Operating Income $2,093 $2,572
====== ======
</TABLE>
<PAGE> -11-
COAL ROYALTIES. Coal royalties decreased $76,000 (3 percent) in
the first quarter of 1998 compared with the same period in 1997.
This decrease resulted from a decline in the average realization
per ton from $2.25 in the first quarter of 1997 to $2.10 in the
first quarter of 1998. The loss of a sales contract by one lessee
and financial difficulties experienced by another lessee reduced
first quarter production. Additionally, power outages and coal
transportation delays due to a severe snowstorm adversely
affected the production of several of the Company's lessees.
TIMBER SALES. Timber sales were virtually unchanged in the first
quarter of 1998 compared with the same period of 1997. Volume
sold was 984 Mbf in the first quarter of 1998 compared with 829
Mbf in the first quarter of 1997. The average realized prices
also decreased from $220 per Mbf in the first quarter of 1997 to
$191 per Mbf in the first quarter of 1998.
OTHER INCOME. Other income decreased $204,000 (716 percent) for
the first quarter of 1998 compared with the first quarter of
1997. In the first quarter of 1997, the Company recognized income
from signing bonuses paid by new lessees to secure leases on the
Company's Wise coal properties. The majority of these reserves
were leased in 1997.
OPERATING EXPENSES. Operating expenses decreased $16,000 (36
percent) from $44,000 in the first quarter of 1997 to $28,000 in
the first quarter of 1998. This decrease is a result of lower
costs associated with the sale of timber on the Company's
properties.
EXPLORATION EXPENSES. Exploration expenses decreased $42,000 (80
percent) from $54,000 in the first quarter of 1997 to $11,000 in
the first quarter of 1998. This decrease is a result of the
timing of the startup of the Company's coal core drilling
program.
TAXES OTHER THAN INCOME. Taxes other than on income increased
$75,000 (682 percent) from $11,000 in the first quarter of 1997
to $86,000 in the first quarter of 1998. The numbers reported in
the first quarter of 1997 reflected an adjustment to property
taxes.
GENERAL AND ADMINISTRATIVE. General and administrative expenses
increased $153,000 (44 percent) in the first quarter of 1998
compared with the same period of 1997. These increases are
related to the opening of a satellite office in Charleston, West
Virginia as well as increases in salary and related employee
benefits.
DEPRECIATION AND DEPLETION. Depreciation and depletion increased
$24,000 (20 percent) from $118,000 in the first quarter of 1997
to $142,000 in the first quarter of 1998. The depletion rate
increased from $0.10 per ton to $0.12 per ton.
Capital Expenditures, Capital Resources and Liquidity
CAPITAL EXPENDITURES.
In the first quarter of 1998, capital expenditures totaled
$820,000 compared with $9,855,000 in the first quarter of 1997.
These expenditures were related to the drilling and development
of wells in the oil and gas segment in the first quarter of 1997.
Of the 60 to 65 net wells scheduled for drilling in 1998, as of
the end of the first quarter 6.5 net wells had been drilled. The
Company successfully completed two coal reserve acquisitions
during the first quarter of 1997. In January, a transaction was
completed for a property in Virginia. The Company acquired 10.5
million tons of high quality metallurgical coal reserves. The
purchase price was approximately $7.0 million. In February, the
Company acquired 7.5 million tons of coal contiguous to its
existing Wise reserves for approximately $1.9 million. The
reserves have been leased to an operator.
<PAGE> -12-
CAPITAL RESOURCES AND LIQUIDITY.
Net cash provided by operating activities was $5.9 million
in the first quarter of 1998 compared with $5.2 million in the
first quarter of 1997. The Company's borrowings decreased from
$31.9 million at the end of 1997 to $29.0 million at March 31,
1998.
The Company has entered into four fixed-price term contracts
with respect to a portion of its natural gas production to limit
exposure to price fluctuations. The Company has sold
approximately 9,000 net Mcf per day at a weighted average price
in excess of $2.75 per Mcf. These physical sales cover various
periods from April 1998 to December 1998. Additionally, the
Company has entered into two natural gas derivative transactions.
The financial instruments executed provide a price floor to limit
downside price risk and a market participation price that allows
the Company to receive the benefit of a price upturn. The two
financial transactions are for 5,000 MMBtu per day each with a
floor of approximately $2.10 per MMBtu and market re-opener at
$2.48 per MMBtu and $2.35 per MMBtu, respectively with terms
ending October 1999.
FORWARD-LOOKING STATEMENTS.
Statements included in this report which are not historical
facts (including any statements concerning plans and objectives
of management for future operations or economic performance, or
assumptions related thereto) are forward-looking statements
within the meaning of Section 21E of the Securities Exchange Act
of 1934, as amended, and Section 27A of the Securities Act of
1933, as amended. In addition, Penn Virginia and its
representatives may from time to time make other oral or written
statements which are also forward-looking statements.
Such forward-looking statements include, among other things,
statements regarding development activities, capital
expenditures, acquisitions and dispositions, drilling and
exploration programs, expected commencement dates of coal mining
or oil and gas production, projected quantities of future oil and
gas production by Penn Virginia, projected quantities of future
coal production by the Company's lessees producing coal from
reserves leased from Penn Virginia, costs and expenditures as
well as projected demand or supply for coal and oil and gas,
which will affect sales levels, prices and royalties realized by
Penn Virginia.
These forward-looking statements are made based upon
management's current plans, expectations, estimates, assumptions
and beliefs concerning future events impacting Penn Virginia and
therefore involve a number of risks and uncertainties. Penn
Virginia cautions that forward-looking statements are not
guarantees and that actual results could differ materially from
those expressed or implied in the forward-looking statements.
Important factors that could cause the actual results of
operations or financial condition of Penn Virginia to differ
include, but are not necessarily limited to: the cost of finding
and successfully developing oil and gas reserves; the cost of
finding new coal reserves; the ability to acquire new oil and gas
and coal reserves on satisfactory terms; the price for which such
reserves can be sold; the volatility of commodity prices for oil
and gas and coal; the risks associated with having or not having
price risk management programs; Penn Virginia's ability to lease
new and existing coal reserves; the ability of Penn Virginia's
lessees to produce sufficient quantities of coal on an economic
basis from Penn Virginia's reserves; the ability of lessees to
obtain favorable contracts for coal produced from Penn Virginia
reserves; Penn Virginia's ability to obtain adequate pipeline
transportation capacity for its oil and gas production;
competition among producers in the coal and oil and gas
industries generally and in the Appalachian Basin in particular;
the extent to which the amount and quality of actual production
differs from estimated recoverable coal reserves and proved oil
and gas reserves; unanticipated geological problems; availability
of required materials and equipment; the occurrence of unusual
weather or operating conditions including force majeure or
events; the failure of equipment or processes to operate in
accordance with specifications or expectations; delays in
anticipated start-up dates; environmental risks affecting the
drilling and producing of oil and gas wells or the mining of coal
reserves; the timing of receipt of necessary governmental
permits; labor relations and costs; accidents; changes in
governmental regulation or enforcement practices, especially with
respect to environmental, health and safety matters, including
with respect to emissions levels applicable to coal-burning power
generators; risks and uncertainties relating to general domestic
and international economic (including inflation and interest
rates) and political conditions; the experience and financial
condition of lessees of coal reserves, joint venture partners and
purchasers of reserves in transactions financed by Penn Virginia,
including their ability to satisfy their royalty, environmental,
reclamation and other obligations to Penn Virginia and others;
changes in financial market conditions; changes in the market
prices or value of the marketable securities owned by Penn
Virginia, including the price of Norfolk Southern common stock
and other risk factors detailed in Penn Virginia's
<PAGE> -13-
Securities and Exchange commission filings. Many of such factors
are beyond Penn Virginia's ability to control or predict.
Readers are cautioned not to put undue reliance on forward-
looking statements.
While Penn Virginia periodically reassesses material trends
and uncertainties affecting Penn Virginia's results of operations
and financial condition in connection with the preparation of
Management's Discussion and Analysis of Results of Operations and
Financial Condition and certain other sections contained in Penn
Virginia's quarterly, annual or other reports filed with the
Securities and Exchange Commission, Penn Virginia does not intend
to publicly review or update any particular forward-looking
statement, whether as a result of new information, future events
or otherwise.
<PAGE> -14-
PART II Other information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(27) Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed for the quarter ended
March 31, 1998
<PAGE> -15-
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, as amended, the Registrant has duly caused this
report to be signed on its behalf by the undersigned,
thereunto duly authorized.
PENN VIRGINIA CORPORATION
Date: May 15, 1998 By: /S/ STEVEN W. THOLEN
--------------------------
Steven W. Tholen
Vice President and Chief
Financial Officer
Date: May 15, 1998 By: /S/ ANN N. HORTON
---------------------------
Ann N.Horton, Controller and
Principal Accounting Officer
<PAGE> -16-
PENN VIRGINIA CORPORATION
INDEX
PAGE
PART I Financial Information:
Item 1. Financial Statements
Condensed Consolidated Statements of Income
for the three months ended March 31, 1998 and 1997 1
Condensed Consolidated Balance Sheets as of
March 31, 1998 and December 31, 1997 2
Condensed Consolidated Statements of Cash Flows
for the three months ended March 31, 1998 and 1997 4
Notes to Condensed Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 7
PART II Other Information
Item 6. Exhibits and Reports on Form 8-K 15
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