Penn Virginia Corporation (NASDAQ:PVAC) Q3 2019 Earnings Conference Call - Final Transcript

Nov 08, 2019 • 11:00 am ET

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Penn Virginia Corporation (NASDAQ:PVAC) Q3 2019 Earnings Conference Call - Final Transcript

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Presentation
Executive
Clay Jeansonne

move on to Page 4 and take a closer look at our solid operational and financial performance for the third quarter. For the first nine months of 2019 production averaged 27196 barrels of oil equivalent per day which represents a 33% increase from the same period last year. For the third quarter of 2019 we grew average daily production 4% over the second quarter. We continue to benefit from our close proximity to the LLS and MEH markets which resulted in the third quarter realized oil price of $57.12. This is approximately $0.68 higher than or 101% of the average WTI price for the third quarter. For the balance of the year we expect that premium to moderate and expect realized pricing to be at parity with WTI or up to $1 off.

Adjusted EBITDAX for the first nine months of the year was $255.8 million which was 21% higher than the same period last year or $34.46 per BOE. Looking specifically at the third quarter of 2019 adjusted EBITDAX was $87.1 million slightly higher than the same quarter. We recorded adjusted direct operating expenses of $11.73 per BOE for the first nine months of 2019 and that's a 6% improvement year-over-year. Our growth in adjusted EBITDAX allowed us to improve our leverage ratio to 1.7x as compared to 1.9x on September 30 2018. Finally increased production lower cost offset by lower pricing yielded adjusted net income per share for the first nine months of the year of $6.20 per diluted share. Looking at Page 5 we believe there are 4 keys to Penn Virginia's continued success. First of all is our focus on cost. In this volatile commodity price environment to remain profitable you must maintain a lean cost structure and we believe Penn Virginia has one of the lowest cost structures for any oil-weighted E&P. Secondly maintain strong margins. As I mentioned previously our close proximity to the Gulf Coast allows Pen Virginia to access premium priced markets.

This includes accessing Gulf Coast waterborne markets such as Corpus Christi by truck and the LLS and MEH markets through multiple pipeline access points. Third ensure financial discipline given the current and expected continued volatility in the energy commodity markets we remain hyper-focused on maintaining financial discipline and a strong balance sheet growing production while drilling within cash flow is a great example of that. And finally the most important measure generate free cash flow. Ultimately you must live within your means and we expect to drill within cash flow in the fourth quarter and generate significant free cash flow in 2020. We believe this makes Penn Virginia unique a proven small cap with a clear path to free cash flow generation in the near term. On Page 6 and turning to our capital budget for 2019 our capital budget is currently estimated at $350 million to $360 million all of it in the Eagle Ford. This is slightly higher than previous estimates due primarily to 2 factors. First of