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PENNVIRGINIA RBC Capital Markets Shale Gas Conference CORPORATION - PowerPoint PPT Presentation

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PENNVIRGINIA RBC Capital Markets Shale Gas Conference CORPORATION Appalachian and Mid-Continent Shale Gas Plays Toronto, Ontario January 31, 2008 NYSE: PVA PENN VIRGINIA Key investment highlights CORPORATION Proved reserves

  1. PENNVIRGINIA RBC Capital Markets’ Shale Gas Conference CORPORATION Appalachian and Mid-Continent Shale Gas Plays Toronto, Ontario January 31, 2008 NYSE: PVA

  2. PENN VIRGINIA Key investment highlights CORPORATION Proved reserves • Impressive reserve and production growth Proved reserves Reserve replacement rate 600 500% 452% − Q1-Q3 2007 production growth of 32% 450% 500 487 − 2007 production growth guidance of 30% to 33% 400% 350% 308% 400 − 2008 organic production growth guidance of 20% to 26% 376 354 300% 323 Bcfe − 2006 increase in proved reserves of 29% 300 250% 273 280% 233% 200% 205% 200 • Low-risk plays with compelling economics 150% 100% 100 − Predominantly low-risk unconventional plays 50% 0 0% − After-tax RORs range between ~25-55% @ $7.50 NYMEX 2002 2003 2004 2005 2006 − 2006 3-yr. reserve replacement of 331% @ $2.37 per Mcfe Average daily production − Q1-Q3 2007 cash operating costs of $1.86 per Mcfe 140 • Significant drilling inventory and upside 120.6 120 CAGR: 17.1% − “Deep bench” of over 2,500 drilling locations 100 85.6 − 250+ wells drilled in 2007 and ~330 wells planned for 2008 74.9 MMcfe/d 80 66.8 65.2 − Downspacing in east Texas (Cotton Valley) 57.0 60 − Horizontal drilling: Appalachia, Mississippi & Mid-Continent 40 − Emerging shale plays: Devonian, Woodford, Fayetteville, 20 and Lower Bossier 0 − Higher impact exploration: Gulf Coast 2002 2003 2004 2005 2006 3Q07 2

  3. CORPORATION Snapshot of PVOG’s unconventional play types PENN VIRGINIA Penn Virginia Oil & Gas (PVOG) North Dakota Appalachia Low-Risk, Unconventional Plays Low-Risk, Unconventional Plays Attractive Economics: ATAX RORs ~25-55% Attractive Economics: ATAX RORs ~25-55% Multi-Lateral Horizontal CBM Multi-Lateral Horizontal CBM Excellent Production Growth and Excellent Production Growth and Devonian / Marcellus Shale Devonian / Marcellus Shale Reserve Replacement Metrics Unconventional Tight Sands Reserve Replacement Metrics Unconventional Tight Sands Pennsylvania Mid-Continent West Virginia Hartshorne Horizontal CBM Hartshorne Horizontal CBM Horizontal Granite Wash Horizontal Granite Wash Woodford / Fayetteville Shales Virginia Woodford / Fayetteville Shales Bakken Shale (ND) Kentucky Bakken Shale (ND) Cotton Valley (E. TX/N. LA) Arkansas Selma Chalk (MS) Oklahoma Mississippi Cotton Valley Sands Cotton Valley Sands Selma Chalk Lower Bossier Shale Selma Chalk Lower Bossier Shale Shift to Horizontal Drilling Texas Shift to Horizontal Drilling Louisiana 3

  4. CORPORATION Snapshot of PVOG’s reserve & production base PENN VIRGINIA Penn Virginia Oil & Gas (PVOG) North Dakota Appalachia 536 Bcfe Proved Reserves (PF 12/06) 536 Bcfe Proved Reserves (PF 12/06) 1,510 Bcfe “3P” Reserves (PF 12/06) 134 Bcfe Proved (25%) 1,510 Bcfe “3P” Reserves (PF 12/06) 134 Bcfe Proved (25%) 188 Bcfe 3P (12%) 120.6 MMcfe/d 3Q07 Production 188 Bcfe 3P (12%) 120.6 MMcfe/d 3Q07 Production 36.7 MMcfe/d (30%) 36.7 MMcfe/d (30%) Pennsylvania Mid-Continent West Virginia 70 Bcfe Proved (13%) 70 Bcfe Proved (13%) 181 Bcfe 3P (12%) 181 Bcfe 3P (12%) Virginia 13.6 MMcfe/d (11%) 13.6 MMcfe/d (11%) Kentucky Cotton Valley (E. TX/N. LA) Arkansas Selma Chalk (MS) Oklahoma Mississippi 151 Bcfe Proved (28%) 151 Bcfe Proved (28%) 132 Bcfe Proved (25%) 762 Bcfe 3P (51%) 132 Bcfe Proved (25%) 762 Bcfe 3P (51%) 192 Bcfe 3P (13%) 22.7 MMcfe/d (19%) 192 Bcfe 3P (13%) Texas 22.7 MMcfe/d (19%) 21.9 MMcfe/d (18%) 21.9 MMcfe/d (18%) Louisiana Gulf Coast (S. LA / S. TX) 49 Bcfe Proved (9%) 49 Bcfe Proved (9%) 187 Bcfe 3P (12%) 187 Bcfe 3P (12%) 25.7 MMcfe/d (21%) 25.7 MMcfe/d (21%) 4

  5. PENN VIRGINIA Economic sensitivities for PVOG by major play CORPORATION • PVOG’s plays generate attractive after-tax returns even at prices below current levels (current 12-month NYMEX strip $8.26 per MMBtu) • Hedges protect the downside economics of certain plays with floors between $7.25 and $8.50 per MMBtu 90 80 70 After-tax Rate of Return % 60 S. LA Prospect (risked) Mississippi Selma Chalk (horizontal) 50 M B C H l a r e a t L - t i l u 40 M a h i c a l a p p A E. Texas Cotton Valley 30 a l ) o n t r i z h o h ( W a s e n i t G r a n . C o d - M i Mid-Con. Hartshorne CBM 20 1/25/08 Avg. NYMEX 10 12-Month Strip Price 0 $6.00 $6.50 $7.00 $7.50 $8.00 $8.50 $9.00 NYMEX Gas Price (Flat) - $/MMBtu 5

  6. PENN VIRGINIA CORPORATION E&P capital expenditures 2007E 1 - $493 MM: development (63%), acquisitions (28%) and exploration (9%) • 2008B 2 - $475 MM: development (87%) and exploration (13%) • Breakout of 2007 & 2008 E&P Capital Expenditures $MM $600 By Major Category By Geographic Region $500 Gulf Coast 6% 6% Gulf Coast Explor. 13% 12% Appalachia 11% Acquis. 28% Appalachia $400 8% Facil./Other 12% Selma Chalk 11% Selma Chalk Explor. 9% Mid- $300 Mid- 21% 7% 23% Facil./Other Continent Continent Devel. $200 79% Devel. 56% Cotton 51% Cotton 47% Valley Valley $100 $0 1 2 1 2 2007E 2008B 2007E 2008B 1 Mid-point of updated guidance announced 12/13/07 2 Budget data announced 12/13/07; excludes acquisitions 6

  7. PENN VIRGINIA CORPORATION 2008 guidance table 2008 Budget/ Capital Expenditures - $MM Guidance Development drilling $377.3 Exploratory drilling 50.6 Pipeline, gathering, facilities 27.8 Lease acquisition, field projects, other 19.1 Proved property acquisitions --- Total PVOG capital expenditures $474.8 Drilling Program – gross (net) wells E. Texas Cotton Valley verticals (40-ac. and 20-ac.) 141 (102.2) E. Texas Cotton Valley horizontal Lower Bossier 1 (1.0) Appalachia multi-lateral HCBM 27 (13.7) Appalachia Devonian Shale 4 (3.0) Selma Chalk horizontals 18 (16.4) Selma Chalk verticals 14 (13.4) Mid-Continent Hartshorne HCBM 49 (34.0) Mid-Continent horizontal Granite Wash 16 (5.8) Mid-Continent horizontal Fayetteville Shale 12 (4.7) Mid-Continent horizontal Woodford Shale 4 (1.0) Mid-Continent (Williston Basin) horizontal Bakken Shale 2 (1.3) Gulf Coast 11 (6.0) Other 30 (13.9) Total PVOG drilling program 329 (216.4) Other Guidance Natural gas production (Bcf) 43.2 – 45.1 Crude oil and natural gas liquids production (MMBbls) 1.0 – 1.1 Natural gas equivalent production (Bcfe) 49.2 – 51.7 Natural gas equivalent daily production (MMcfe/d) 134.4 – 141.3 Cash operating expenses (LOE, TOTI, G&A)($MM) $100.0 – $110.0 Exploration expense ($MM) $30.0 – $40.0 Depreciation, depletion and amortization expense ($/Mcfe) $2.20 – $2.25 7

  8. CORPORATION Penn Virginia Oil & Gas PENN VIRGINIA Overview of Shale Plays 8

  9. PENN VIRGINIA CORPORATION Summary of PVOG’s major shale plays • Devonian / Marcellus Shale − Lower Huron and Marcellus effort in WV and Marcellus in PA − Approximately 87,500 net acres with net unrisked reserve potential in excess of 250 Bcfe − Effort underway to add Marcellus acreage via leasing and partnering arrangements − Currently completing and testing Lower Huron wells in West Virginia; Marcellus timing of drilling TBD • Woodford / Caney Shale − Located in the Arkoma and Anadarko Basins in Oklahoma − Approximately 40,000 net acres with net unrisked reserve potential of ~ 200 Bcfe − Plans to drill up to 4 exploratory wells in 2008 • Fayetteville Shale − Located in the Arkoma Basin primarily in Pope County, Arkansas − Approximately 14,500 net acres − Currently testing acreage through drilling to determine whether to proceed in the play – results have improved over the last few wells • Bakken Shale − Oil play located in the Williston Basin in Dunn County, North Dakota − Approximately 65,000 (39,000 net) acres with net unrisked reserve potential in excess of 100 Bcfe − Plans to drill up to 2 exploratory wells in 2008 • Lower Bossier Shale − Located in Harrison and Panola Counties in east Texas − Approximately 46,000 (40,000 net) acres with net unrisked reserve potential of ~ 800 Bcfe − Vertical completions have confirmed stabilized flow rates up to 300 Mcf/d − Plans to spud first exploratory horizontal well in first quarter of 2008 9

  10. PENN VIRGINIA Industry: Devonian / Marcellus Shale CORPORATION • Technically recoverable resource: 24 Tcf − Production primarily due to natural fractures − Primary producing interval is organically rich Lower Huron (Devonian) – 30 to 200 net feet − Annual Devonian Shale production ~ 120 Bcf with cumulative production ~ 3Tcf − Historically exploited with vertical wells − Horizontal drilling has increased potential − Mature areas may benefit from downspacing and horizontal drilling • Marcellus is the “new” Appalachian shale play Sunbury Shale Sunbury Shale − Deepest section of the Devonian Shale Upper Huron Shale Upper Huron Shale Lower Huron Shale Lower Huron Shale − Generally thickest from SW to NE PA but also deeper with the right TOC’s especially in NE PA − Proximity to thrust belt is probably important Cleveland Shale Cleveland Shale − Significant competition for acreage Rhinestreet Shale Rhinestreet Shale • Exploratory opportunities exist in both Marcellus Shale Marcellus Shale shallower and deeper organic shales (i.e. Utica and Sunbury) 10

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