77159--3/16/2006--PENN_VIRGINIA

related topics

{gas, price, oil}

{loss, insurance, financial}

{cost, regulation, environmental}

{operation, natural, condition}

{cost, contract, operation}

{cost, operation, labor}

{personnel, key, retain}

{regulation, change, law}

{competitive, industry, competition}

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. Competition within our industry may adversely affect our operations. 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. Competition for experienced, technical personnel may negatively impact our operations. 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. Accounting for Derivative Instruments and Hedging Activities, We are subject to complex laws and regulations that can adversely affect the cost, manner or feasibility of doing business. We rely upon distributions from the Partnership, and the amount of cash that the Partnership will be able to distribute to its unitholders principally depends upon the amount of cash it can generate from its coal and natural gas midstream businesses. If the Partnership s lessees do not manage their operations well, their production volumes and the Partnership s coal royalty revenues could decrease. Coal mining operations are subject to numerous operational risks that could result in lower coal royalty revenues. A substantial or extended decline in coal prices could reduce The Partnership 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 its major lessees could reduce its coal royalty revenues. The Partnership s coal business will be adversely affected if it is unable to replace or increase its reserves through acquisitions. Lessees could satisfy obligations to their customers with coal from properties other than the Partnership s, depriving it of the ability to receive amounts in excess of the minimum royalty payments. Competition within the coal industry may adversely affect the ability of the Partnership s lessees to sell coal at high prices, which could reduce its coal royalty revenues. Fluctuations in transportation costs and the availability or reliability of transportation could reduce the production of coal mined from the Partnership s properties. The Partnership s lessees could experience labor disruptions, and its lessees workforces could become increasingly unionized in the future. The Partnership s reserve estimates depend on many assumptions that may be inaccurate, which could materially adversely affect the quantities and value of its reserves. Any change in fuel consumption patterns by electric power generators away from the use of coal could affect the ability of the Partnership s lessees to sell the coal they produce and thereby reduce its coal royalty revenues. Extensive environmental laws and regulations affecting electric power generators could have corresponding effects on the ability of the Partnership s lessees to sell the coal they produce and thereby reduce its coal royalty revenues. Delays in the Partnership s lessees obtaining mining permits and approvals, or the inability to obtain required permits and approvals, could have an adverse effect on its coal royalty revenues. The Partnership s lessees mining operations are subject to extensive and costly laws and regulations, and such current and future laws and regulations could increase operating costs and limit its lessees ability to produce coal, which could have an adverse effect on its coal royalty revenues. The success of the Partnership s midstream business depends upon its ability to find and contract for new sources of natural gas supply. The Partnership may not be able to retain existing customers or acquire new customers, which would reduce its revenues and limit its future profitability. The profitability of the Partnership s midstream business is dependent upon prices and market demand for natural gas and NGLs, which are beyond its control and have been volatile. The Partnership encounters competition from other midstream companies. Expanding the Partnership s midstream business by constructing new gathering systems, pipelines and processing facilities subjects it to construction risks. If the Partnership 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. The Partnership is exposed to the credit risk of its midstream customers, and nonpayment or nonperformance by its customers could reduce its cash flows. Any reduction in the capacity of, or the allocations to, the Partnership in interconnecting third-party pipelines could cause a reduction of volumes processed, which would adversely affect its revenues and cash flow. Hedging transactions may limit the Partnership s potential gains and involve other risks. The Partnership s 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 the Partnership s midstream business. The Partnership s midstream business is subject to extensive environmental regulation.

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77159--3/16/2006--PENN_VIRGINIA_CORP