1144945--3/1/2007--PENN_VIRGINIA_RESOURCE_PARTNERS_L

related topics

{gas, price, oil}

{tax, income, asset}

{debt, indebtedness, cash}

{stock, price, operating}

{operation, natural, condition}

{cost, contract, operation}

{cost, regulation, environmental}

{loss, insurance, financial}

{cost, operation, labor}

{acquisition, growth, future}

{provision, law, control}

Our business and operations are subject to a number of risks and uncertainties as described below. However, the risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we are unaware of, or that we may currently deem immaterial, may become important factors that harm our business, financial condition or results of operations. If any of the following risks actually occur, our business, financial condition or results of operations could suffer. The amount of cash that we will be able to distribute on our common units principally depends upon the amount of cash we generate from our coal and natural gas midstream businesses. While we may incur debt to pay distributions to our unitholders, the agreements governing such debt may restrict or limit the distributions we can pay to our unitholders. Our unitholders do not elect our general partner or vote on our general partner s directors. The owner of our general partner owns a sufficient number of units to allow it to prevent the removal of our general partner. Our general partner may cause us to issue additional common units or other equity securities without your approval, which would dilute your ownership interests. The control of our general partner may be transferred to a third party who could replace our current management team, in either case, without unitholder consent. You may not have limited liability if a court finds that unitholder action constitutes control of our business. Our partnership agreement restricts the rights of unitholders owning 20% or more of our units. We may issue additional limited partner interests or other equity securities, which may increase the risk that we will not have sufficient available cash to maintain or increase our cash distribution level. If our lessees do not manage their operations well, their production volumes and our coal royalty revenues could decrease. The coal mining operations of our lessees are subject to numerous operational risks that could result in lower coal royalty revenues. A substantial or extended decline in coal prices could reduce our coal royalty revenues and the value of our coal reserves. We depend on a limited number of primary operators for a significant portion of our coal royalty revenues and the loss of or reduction in production from any of our major lessees could reduce our coal royalty revenues. Our coal business will be adversely affected if we are unable to replace or increase our coal reserves through acquisitions. Lessees could satisfy obligations to their customers with coal from properties other than ours, depriving us of the ability to receive amounts in excess of the minimum royalty payments. Fluctuations in transportation costs and the availability or reliability of transportation could reduce the production of coal mined from our properties. Our lessees could experience labor disruptions, and our lessees workforces could become increasingly unionized in the future. Our coal reserve estimates depend on many assumptions that may be inaccurate, which could materially adversely affect the quantities and value of our coal reserves. Any change in fuel consumption patterns by electric power generators away from the use of coal could affect the ability of our lessees to sell the coal they produce and thereby reduce our coal royalty revenues. Extensive environmental laws and regulations affecting electric power generators could have corresponding effects on the ability of our lessees to sell the coal they produce and thereby reduce our coal royalty revenues. Delays in our lessees obtaining mining permits and approvals, or the inability to obtain required permits and approvals, could have an adverse effect on our coal royalty revenues. Our lessees mining operations are subject to extensive and costly laws and regulations, which could increase operating costs and limit our lessees ability to produce coal, which could have an adverse effect on our coal royalty revenues. The success of our natural gas midstream business depends upon our ability to find and contract for new sources of natural gas supply. The profitability of our natural gas midstream business is dependent upon prices and market demand for natural gas and NGLs, which are beyond our control and have been volatile. Acquisitions and expansions may affect our business by substantially increasing the level of its indebtedness and contingent liabilities and increasing the risks of being unable to effectively integrate these new operations. Expanding our natural gas midstream business by constructing new gathering systems, pipelines and processing facilities subjects us to construction risks. If we are unable to obtain new rights-of-way or the cost of renewing existing rights-of-way increases, then we may be unable to fully execute our growth strategy and our cash flows could be reduced. We are exposed to the credit risk of our midstream customers, and nonpayment or nonperformance by our customers could reduce our cash flows. Any reduction in the capacity of, or the allocations to, us in interconnecting third-party pipelines could cause a reduction of volumes processed, which would adversely affect our revenues and cash flow. Natural gas hedging transactions may limit our potential gains and involve other risks. Our natural gas midstream business involves many hazards and operational risks, some of which may not be fully covered by insurance. Federal, state or local regulatory measures could adversely affect our natural gas midstream business. Our natural gas midstream business is subject to extensive environmental regulation. Potential conflicts of interest may arise among our general partner, its affiliates and us. Our general partner has limited fiduciary duties to us and our unitholders, which may permit it to favor its own interests to the detriment of us and our unitholders. The fiduciary duties of our general partner s officers and directors may conflict with those of PVG s general partner, and our partnership agreement limits the liability and reduces the fiduciary duties of our general partner to us. We may face conflicts of interest in the allocation of administrative time among Penn Virginia s business, PVG s business and our business. Our general partner has a call right that may require you to sell your common units at an undesirable time or price. Our general partner may mortgage, pledge, hypothecate or grant a security interest in all or substantially all of our assets without prior approval of our unitholders. If we were to become subject to entity-level taxation for federal or state tax purposes, then our cash available for distribution to you would be substantially reduced. If the IRS contests the federal income tax positions that we take, it may adversely affect the market for our common units, and the costs of any contest will reduce cash available for distribution to our unitholders. You may be required to pay taxes on your share of our income even if you do not receive any cash distributions from us. Tax gain or loss on disposition of our common units could be more or less than expected. Tax-exempt entities and foreign persons face unique tax issues from owning common units that may result in adverse tax consequences to them. We are registered as a tax shelter. This may increase the risk of an IRS audit of us or a unitholder. We treat each purchaser of our common units as having the same tax benefits without regard to the common units purchased. The IRS may challenge this treatment, which could adversely affect the value of our common units. The sale or exchange of 50% or more of our capital and profits interests during any twelve-month period will result in the termination of our partnership for federal income tax purposes. You will likely be subject to state and local taxes in states where you do not live as a result of an investment in our common units.

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1144945--3/1/2007--PENN_VIRGINIA_RESOURCE_PARTNERS_L_P