Penn Virginia GP Holdings, L.P. Announces Third Quarter 2009 Results

Penn Virginia GP Holdings, L.P. (NYSE: PVG) today reported financial results for the three months ended September 30, 2009.

Distributable cash, a non-GAAP (generally accepted accounting principles) measure, was $14.8 million for the three months ended September 30, 2009, the same as the $14.8 million in the prior year quarter. Adjusted net income, a non-GAAP measure that excludes the effects of the non-cash change in derivatives fair value, was $11.4 million, or $0.29 per limited partner unit, as compared to $5.8 million, or $0.15 per limited partner unit, in the prior year quarter. Net income was $10.2 million, or $0.26 per limited partner unit, as compared to $20.3 million, or $0.52 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.

As previously announced, on November 18, 2009, we will pay to unitholders of record as of November 6, 2009 a quarterly cash distribution of $0.38 per unit, or an annualized rate of $1.52 per unit, covering the period of July 1 through September 30, 2009. The distribution remains unchanged from the distribution paid with respect to each of the previous four quarters.

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 2009 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 November 4, 2009 (please visit PVR’s website, www.pvresource.com, under “For Investors” for a copy of the release).

Guidance for 2009

See the Guidance Table included in PVR’s November 4, 2009 release for guidance estimates for full-year 2009.

Conference Call

A joint conference call and webcast, during which management will discuss third quarter 2009 financial and operational results for PVG and PVR, is scheduled for Thursday, November 5, 2009 at 1:00 p.m. ET. Prepared remarks by A. James Dearlove, Chief Executive Officer, will be followed by a question and answer period. Investors and analysts may participate via phone by dialing 1-866-630-9986 five to ten minutes before the scheduled start of the conference call and using the passcode 3241667, or via webcast by logging on to our website at www.pvgpholdings.com at least 20 minutes prior to the scheduled start of the call to download and install any necessary audio software. A telephonic replay will be available approximately two hours after the call for two weeks by dialing toll free 888-203-1112 (international: 719-457-0820) and using the replay code 3241667. In addition, an on-demand replay of the webcast will also be available for two weeks at PVG’s or PVR’s websites beginning 24 hours after the webcast.

Headquartered in Radnor, PA, 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 November 4, 2009 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 November 4, 2009 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, 2008. 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								Nine Months Ended
		September 30,								September 30,
			2009				2008				2009				2008
Revenues
Natural gas midstream		$	118,443			$	241,282			$	348,882			$	601,127
Coal royalties			29,821				33,308				90,448				88,911
Coal services			1,869				1,815				5,502				5,518
Other			5,492				8,871				16,971				23,039
Total revenues			155,625				285,276				461,803				718,595
Expenses
Cost of midstream gas purchased			92,355				211,262				285,129				513,778
Coal royalties expense			1,587				2,125				4,380				8,034
Operating			7,443				6,916				22,558				16,519
Taxes other than income			1,005				969				3,208				3,017
General and administrative			8,447				7,618				25,399				22,057
Depreciation, depletion and amortization			17,851				16,903				51,971				41,322
Total expenses			128,688				245,793				392,645				604,727
Operating income			26,937				39,483				69,158				113,868
Other income (expense)
Interest expense			(6,505	)			(7,060	)			(18,486	)			(17,366	)
Interest income and other			344				(4,118	)			1,020				(3,072	)
Derivatives			(2,810	)			15,742				(12,005	)			(6,424	)
Net income			17,966				44,047				39,687				87,006
Net income attributable to noncontrolling interests			(7,794	)			(23,783	)			(14,327	)			(43,878	)
Net income attributable to Penn Virginia GP Holdings, L.P.		$	10,172			$	20,264			$	25,360			$	43,128
Net income per limited partner unit, basic and diluted		$	0.26			$	0.52			$	0.65			$	1.10
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)			8,387				8,496				25,874				24,975
Average coal royalties ($ per ton)		$	3.56			$	3.92			$	3.50			$	3.56
Average net coal royalties ($ per ton) - (a)		$	3.37			$	3.67			$	3.33			$	3.24
Natural gas midstream segment:
System throughput volumes (MMcf)			29,811				27,744				93,433				68,915
Gross margin (in thousands)		$	26,088			$	30,020			$	63,753			$	87,349
(a) - The average net coal royalties per ton deducts coal royalties expense, which is incurred primarily in Central Appalachia.

PENN VIRGINIA GP HOLDINGS, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS - unaudited
(in thousands)
		September 30,				December 31,
			2009				2008
Assets
Cash and cash equivalents		$	21,194			$	18,338
Accounts receivable			60,023				73,267
Derivative assets			7,322				30,431
Other current assets			4,304				4,263
Total current assets			92,843				126,299
Property, plant and equipment, net			909,994				895,119
Other long-term assets			215,937				206,256
Total assets		$	1,218,774			$	1,227,674
Liabilities and Partners' Capital
Accounts payable and accrued liabilities		$	56,930			$	71,481
Deferred income			3,043				4,842
Derivative liabilities			10,900				13,585
Total current liabilities			70,873				89,908
Derivative liabilities			4,323				6,915
Other long-term liabilities			23,971				24,228
Long-term debt of PVR			628,100				568,100
Penn Virginia GP Holdings, LP partners' capital			251,729				269,542
Noncontrolling interests in PVR			239,778				268,981
Total liabilities and partners' capital		$	1,218,774			$	1,227,674
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - unaudited
(in thousands)
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
			2009				2008				2009				2008
Cash flows from operating activities
Net income		$	17,966			$	44,047			$	39,687			$	87,006
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization			17,851				16,903				51,971				41,322
Commodity derivative contracts:
Total derivative losses (gains)			3,668				(14,239	)			14,234				10,552
Cash receipts (payments) to settle derivatives for period			(314	)			(14,054	)			4,135				(33,279	)
Non-cash interest expense			1,416				1,175				3,149				1,543
Equity earnings, net of distributions			(1,386	)			(1,409	)			(2,456	)			(1,415	)
Other			1,202				(896	)			570				(1,337	)
Changes in operating assets and liabilities			1,892				(10,853	)			3,540				(11,277	)
Net cash provided by operating activities			42,295				20,674				114,830				93,115
Cash flows from investing activities
Acquisitions, net of cash acquired			(27,648	)			(156,791	)			(29,510	)			(253,031	)
Additions to property, plant and equipment			(11,523	)			(16,062	)			(43,781	)			(54,902	)
Other			300				982				872				1,657
Net cash used in investing activities			(38,871	)			(171,871	)			(72,419	)			(306,276	)
Cash flows from financing activities
Distributions to partners			(30,323	)			(28,884	)			(90,297	)			(78,276	)
Proceeds from (repayments of) borrowings, net			31,000				176,600				60,000				146,000
Proceeds from PVR equity issuance			-				-				-				138,015
Other			-				(3,454	)			(9,258	)			(4,074	)
Net cash provided by (used in) financing activities			677				144,262				(39,555	)			201,665
Net increase (decrease) in cash and cash equivalents			4,101				(6,935	)			2,856				(11,496	)
Cash and cash equivalents - beginning of period			17,093				25,942				18,338				30,503
Cash and cash equivalents - end of period		$	21,194			$	19,007			$	21,194			$	19,007

PENN VIRGINIA GP HOLDINGS, L.P.
DISTRIBUTABLE CASH - unaudited
(in thousands, except per unit data)
The following table presents the calculation and reconciliation of distributable cash of PVG with respect to the three and nine months ended September 30, 2009 and 2008:

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
Distributable cash:		2009 (a)					2008			2009 (a)					2008
Cash distributions received from PVR associated with:
2% general partner interest		$	497			$	497			$	1,491			$	1,405
General partner incentive distribution rights			6,035				6,035				18,105				16,031
PVR common units			9,206				9,206				27,618				27,032
Total cash received from PVR			15,738				15,738				47,214				44,468
Deduct: Net expenses of PVG on a stand-alone basis (b)			(858	)			(457	)			(1,927	)			(1,557	)
Cash reserve for working capital			(32	)			(433	)			(743	)			(711	)
Distributable cash (c)		$	14,848			$	14,848			$	44,544			$	42,200
Cash distributions paid to partners of PVG
To Penn Virginia Corporation		$	11,429			$	11,429			$	34,287			$	33,166
To public unitholders			3,419				3,419				10,257				9,034
Total cash distributions paid		$	14,848			$	14,848			$	44,544			$	42,200
Distribution per limited partner unit (paid in subsequent period)		$	0.38			$	0.38			$	1.14			$	1.08
Weighted-average units outstanding, basic and diluted			39,075				39,075				39,075				39,075

(a)		The three and nine months ended September 30, 2009 columns represent cash distributions expected to be received from PVR and cash distributions expected to be paid to unitholders of PVG in November 2009.
(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 a cash reserve for working capital. Distributable cash is a significant liquidity metric which is an indicator of our ability to sustain or support an increase in quarterly cash distributions paid to our limited partners. Distributable cash is also the quantitative standard used by investors and professional research analysts in the valuation, comparison, rating and investment recommendations of publicly traded partnerships. Distributable cash is presented because we believe it is a useful adjunct to net cash provided by operating activities under GAAP. 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.

CERTAIN NON-GAAP FINANCIAL MEASURES - unaudited
(in thousands, except per unit data)
		Three Months Ended								Nine Months Ended
		September 30,								September 30,
			2009				2008				2009				2008
Reconciliation of GAAP "Net income attributable to PVG" to Non-GAAP "Net income attributable to PVG, as adjusted"
Net income attributable to PVG		$	10,172			$	20,264			$	25,360			$	43,128
Adjustments for derivatives:
Derivative losses included in operating income			-				1,503				-				4,128
Derivative losses (gains) included in other income			3,668				(15,742	)			14,234				6,424
Cash receipts (payments) to settle derivatives for period			(314	)			(14,054	)			4,135				(33,279	)
Impact of adjustments on noncontrolling interests (d)			(2,115	)			13,864				(6,631	)			11,260
Net income attributable to PVG, as adjusted (e)		$	11,411			$	5,835			$	37,098			$	31,661
Net income attributable to PVG, as adjusted, per limited partner unit, basic and diluted		$	0.29			$	0.15			$	0.95			$	0.81

(d)		Noncontrolling interests for the quarters ended September 30, 2009 and 2008 has been adjusted for the effect of incentive distribution rights and reflects the noncontrolling interests percentage of net income recognized for the three and nine months ended September 30, 2009 and 2008.
(e)		Net income attributable to PVG, as adjusted, represents net income attributable to PVG adjusted to exclude the effects of non-cash changes in the fair value of derivatives and adjusted for related noncontrolling interests. We believe this presentation is commonly 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 attributable to PVG, 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 and
		Natural
		Resource			Natural Gas
		Management			Midstream			Other				Consolidated
Three Months Ended September 30, 2009
Revenues
Natural gas midstream		$	-		$	118,443		$	-			$	118,443
Coal royalties			29,821			-			-				29,821
Coal services			1,869			-			-				1,869
Timber			1,582			-			-				1,582
Oil and gas royalties			535			-			-				535
Other			1,372			2,003			-				3,375
Total revenues			35,179			120,446			-				155,625
Expenses
Cost of midstream gas purchased			-			92,355			-				92,355
Coal royalties expense			1,587			-			-				1,587
Other operating			559			6,884			-				7,443
Taxes other than income			421			584			-				1,005
General and administrative			3,388			4,180			879				8,447
Depreciation, depletion and amortization			7,999			9,852			-				17,851
Total expenses			13,954			113,855			879				128,688
Operating income (loss)		$	21,225		$	6,591		$	(879	)		$	26,937
Additions to property and equipment and acquisitions		$	140		$	39,031		$	-			$	39,171
		Coal and
		Natural
		Resource			Natural Gas
		Management			Midstream			Other				Consolidated
Three Months Ended September 30, 2008
Revenues
Natural gas midstream		$	-		$	241,282		$	-			$	241,282
Coal royalties			33,308			-			-				33,308
Coal services			1,815			-			-				1,815
Timber			1,911			-			-				1,911
Oil and gas royalties			1,940			-			-				1,940
Other			2,686			2,334			-				5,020
Total revenues			41,660			243,616			-				285,276
Expenses
Cost of midstream gas purchased			-			211,262			-				211,262
Coal royalties expense			2,125			-			-				2,125
Other operating			752			6,164			-				6,916
Taxes other than income			373			596			-				969
General and administrative			3,321			3,757			540				7,618
Depreciation, depletion and amortization			8,794			8,109			-				16,903
Total expenses			15,365			229,888			540				245,793
Operating income (loss)		$	26,295		$	13,728		$	(540	)		$	39,483
Additions to property and equipment and acquisitions		$	497		$	172,356		$	-			$	172,853

PENN VIRGINIA GP HOLDINGS, L.P.
YEAR-TO-DATE SEGMENT INFORMATION - unaudited
(in thousands)
		Coal and
		Natural
		Resource			Natural Gas
		Management			Midstream			Other				Consolidated
Nine Months Ended September 30, 2009
Revenues
Natural gas midstream		$	-		$	348,882		$	-			$	348,882
Coal royalties			90,448			-			-				90,448
Coal services			5,502			-			-				5,502
Timber			4,355			-			-				4,355
Oil and gas royalties			1,783			-			-				1,783
Other			6,487			4,346			-				10,833
Total revenues			108,575			353,228			-				461,803
Expenses
Cost of midstream gas purchased			-			285,129			-				285,129
Coal royalties expense			4,380			-			-				4,380
Other operating			2,200			20,358			-				22,558
Taxes other than income			1,146			2,062			-				3,208
General and administrative			10,760			12,661			1,978				25,399
Depreciation, depletion and amortization			23,557			28,414			-				51,971
Total expenses			42,043			348,624			1,978				392,645
Operating income (loss)		$	66,532		$	4,604		$	(1,978	)		$	69,158
Additions to property and equipment and acquisitions		$	2,046		$	71,245		$	-			$	73,291
		Coal and
		Natural
		Resource			Natural Gas
		Management			Midstream			Other				Consolidated
Nine Months Ended September 30, 2008
Revenues
Natural gas midstream		$	-		$	601,127		$	-			$	601,127
Coal royalties			88,911			-			-				88,911
Coal services			5,518			-			-				5,518
Timber			5,328			-			-				5,328
Oil and gas royalties			4,730			-			-				4,730
Other			6,523			6,458			-				12,981
Total revenues			111,010			607,585			-				718,595
Expenses
Cost of midstream gas purchased			-			513,778			-				513,778
Coal royalties expense			8,034			-			-				8,034
Other operating			1,488			15,031			-				16,519
Taxes other than income			1,115			1,902			-				3,017
General and administrative			9,780			10,559			1,718				22,057
Depreciation, depletion and amortization			22,733			18,589			-				41,322
Total expenses			43,150			559,859			1,718				604,727
Operating income (loss)		$	67,860		$	47,726		$	(1,718	)		$	113,868
Additions to property and equipment and acquisitions		$	25,186		$	282,747		$	-			$	307,933