About PVA

Business Strategy

Executing our drilling program and further expanding in the Eagle Ford Shale

We anticipate operating eight drilling rigs under our current drilling program in the fourth quarter of 2014 and into 2015. We are continuing efforts to lower our completion costs and improve results through the increased use of multi-well pads and more effective fracturing techniques and stimulation referred to as “zipper fracs.”  As of October 2014, we own approximately 104,300 net acres in the Eagle Ford Shale, and we plan to further increase our acreage position in proximity to our existing holdings. As of October 2014, our lease position provides us with in excess of 1,600 drilling locations, or the equivalent of an approximate 12-year inventory of drilling sites.


Improving our liquidity and financial position


We are pursuing a goal of continuing to strengthen our balance sheet. In furtherance of this goal, in January 2014, we sold our South Texas natural gas gathering assets for approximately $96 million and, in July 2014, we sold our Mississippi assets for approximately $73 million and the rights to gather and transport oil in a portion of our South Texas area for $150 million. The Mississippi assets consisted of proved reserves of approximately 26 MMBOE at year-end 2013 and production of approximately 652 BOEPD in 3Q14. These proceeds will fund our projected capital program outspend for 2014 and 2015. Through these actions, we lowered our debt-to-EBITDAX ratio, a non-GAAP measure defined in our revolving credit agreement, to 2.6x as of September 30, 2014. Our goal is to maintain ample levels of financial liquidity (cash on hand plus availability under the revolving credit agreement) and in the longer term, to maintain a debt-to-EBITDAX ratio of less than 3.0 times.


Managing risk exposure through an active hedging program


We actively manage our exposure to commodity price fluctuations by hedging the commodity price risk for our expected production. The level of our hedging activity and duration of the instruments employed depend upon our cash flows at risk, available hedge prices and our operating strategy. We have hedged approximately 79 percent of our estimated crude oil production for the fourth quarter of 2014 at a weighted-average floor WTI price of $92.92 per barrel. In addition, we have hedged approximately 13 percent of our estimated natural gas production for the fourth quarter of 2014 at a weighted-average floor price of $4.50 per MMBtu.


Retain long-term optionality of our core natural gas assets


We maintain substantial natural gas properties in the Haynesville Shale and Cotton Valley in East Texas, which are largely held-by-production. At this time, we plan to retain these assets, which provide us with the option to increase development in these regions.


Generating new exploration opportunities


We are actively seeking new exploration opportunities with a goal of early entry into emerging plays at modest lease acquisition cost. Potential opportunities that we are considering include resource and unconventional play types with a horizontal drilling application.