77159--3/1/2007--PENN_VIRGINIA

related topics

{gas, price, oil}

{debt, indebtedness, cash}

{operation, natural, condition}

{loss, insurance, financial}

{cost, operation, labor}

{acquisition, growth, future}

{cost, regulation, environmental}

{customer, product, revenue}

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. Natural gas and crude oil prices are volatile, and a substantial or extended decline in prices would hurt our profitability and financial condition. Our future performance depends on our ability to find or acquire additional oil and gas reserves that are economically recoverable. We may not be able to fund our planned capital expenditures. Exploration and development drilling may not result in commercially productive reserves. Our business involves many operating risks that may result in substantial losses for which insurance may be unavailable or inadequate. Our business depends on transportation facilities owned by others. Estimates of oil and natural gas reserves are not precise. We have limited control over the activities on properties we do not operate. Our producing property acquisitions carry significant risks. Responses to recent coal mining accidents could have an adverse effect on our operations. Hedging transactions may limit our potential gains and involve other risks. We are subject to complex laws and regulations that can adversely affect the cost, manner or feasibility of doing business. PVG s ability to make distributions to us is entirely dependent upon PVG s receiving distributions from PVR, and the amount of cash that PVR will be able to distribute to its unitholders, including PVG, principally depends upon the amount of cash it can generate from its coal and natural gas midstream businesses. A portion of PVG s partnership interests in PVR are subordinated to PVR s common units, which would result in decreased distributions by PVR to PVG and, consequently, could result in decreased distributions from PVG to its unitholders, including us, if PVR is unable to meet its minimum quarterly distribution. A reduction in PVR s distributions will disproportionately affect the amount of cash distributions to which PVG is currently entitled, and, consequently, will affect the amount of cash distributions PVG is able to make to its unitholders, including us. PVR may issue additional limited partner interests or other equity securities, which may increase the risk that PVR will not have sufficient available cash to maintain or increase its cash distribution level, which in turn may reduce the available cash that PVG has to distribute to its unitholders, including us. Our ability to sell our common units of PVG, and PVG s ability to sell its partnership interests in PVR, may be limited by securities law restrictions and liquidity constraints. If PVR s lessees do not manage their operations well, their production volumes and PVR s coal royalty revenues could decrease. The coal mining operations of PVR s 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 PVR s coal royalty revenues and the value of PVR s coal reserves. PVR depends on a limited number of primary operators for a significant portion of its coal royalty revenues and the loss of or reduction in production from any of PVR s major lessees could reduce its coal royalty revenues. PVR s coal business will be adversely affected if PVR is unable to replace or increase its coal reserves through acquisitions. PVR s lessees could satisfy obligations to their customers with coal from properties other than PVR s, depriving PVR 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 PVR s properties. PVR s lessees could experience labor disruptions, and PVR s lessees workforces could become increasingly unionized in the future. PVR s coal reserve estimates depend on many assumptions that may be inaccurate, which could materially adversely affect the quantities and value of PVR s coal reserves. Any change in fuel consumption patterns by electric power generators away from the use of coal could affect the ability of PVR s lessees to sell the coal they produce and thereby reduce PVR s coal royalty revenues. Extensive environmental laws and regulations affecting electric power generators could have corresponding effects on the ability of PVR s lessees to sell the coal they produce and thereby reduce PVR s coal royalty revenues. Delays in PVR s lessees obtaining mining permits and approvals, or the inability to obtain required permits and approvals, could have an adverse effect on PVR s coal royalty revenues. PVR s lessees mining operations are subject to extensive and costly laws and regulations, which could increase operating costs and limit its lessees ability to produce coal, which could have an adverse effect on PVR s coal royalty revenues. The success of PVR s natural gas midstream business depends upon its ability to find and contract for new sources of natural gas supply. The profitability of PVR s natural gas midstream business is dependent upon prices and market demand for natural gas and NGLs, which are beyond PVR s control and have been volatile. Acquisitions and expansions may affect PVR s 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 PVR s natural gas midstream business by constructing new gathering systems, pipelines and processing facilities subjects it to construction risks. If PVR is unable to obtain new rights-of-way or the cost of renewing existing rights-of-way increases, then it may be unable to fully execute its growth strategy and its cash flows could be reduced. PVR is exposed to the credit risk of its midstream customers, and nonpayment or nonperformance by PVR s customers could reduce its cash flows. Any reduction in the capacity of, or the allocations to, PVR in interconnecting third-party pipelines could cause a reduction of volumes processed, which would adversely affect its revenues and cash flow. Natural gas hedging transactions may limit PVR s potential gains and involve other risks. PVR s 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 PVR s natural gas midstream business. PVR s natural gas midstream business is subject to extensive environmental regulation.

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77159--3/1/2007--PENN_VIRGINIA_CORP