General

Penn Virginia Corporation (“Penn Virginia,” the “Company,” “we,” “us” or “our”) is an independent oil and gas company primarily engaged in the development, exploration and production of natural gas and oil through our wholly owned subsidiary, Penn Virginia Oil & Gas Corporation, or PVOG. We also own partner interests in Penn Virginia Resource Partners, L.P., (NYSE: PVR), which is involved in the coal and natural resource management and natural gas midstream businesses, and Penn Virginia GP Holdings, L.P., or PVG, which owns PVR’s general partner. Please visit PVR’s website, www.pvresource.com or PVG’s website www.pvgpholdings.com for overviews of and business strategies for the coal and midstream segments, as well as for additional information about the partnerships.

Oil and Gas Segment Overview

We have a geographically diverse asset base with core areas of operation in the East Texas, Mid-Continent, Appalachian, Mississippi and Gulf Coast regions of the United States. As of December 31, 2008, we had proved natural gas and oil reserves of approximately 916 Bcfe, of which 82% were natural gas and 51% were proved developed, with an SEC pre-tax PV-10 value of $908.0 million and standardized measure of discounted future net cash flows of $729.4 million.

For the three months ended March 31, 2009 and the year ended December 31, 2008, we had average daily production of 152.3 MMcfe and 128.1 MMcfe. Our properties generally have long reserve lives and reasonably stable and predictable well production characteristics with a ratio of proved reserves to production (based on production for the year ended December 31, 2008) of approximately 19.5 years. At December 31, 2008, we owned 1.2 million net acres of leasehold interests, approximately 37% of which were undeveloped.

The following table sets forth by region the estimated quantities of proved reserves, production and reserves to production ratio (based on production for the year ended December 31, 2008):

Business Strengths

•  Geographically diverse, primarily lower-risk and longer-lived reserve base. We have successfully grown and diversified our asset base through entry into five key oil and gas regions, which we believe helps reduce our dependence on any single area, thereby reducing operational, production and reserve growth risk. At December 31, 2008, 97% of our proved reserves were located in primarily longer-lived lower-risk basins in Appalachia, Mississippi, East Texas and the Mid-Continent. Wells in these regions are generally characterized by predictable production profiles. Furthermore, our proved reserves generally have long production lives with a ratio of proved reserves to production of approximately 19.5 years based on average daily production of 128.1 MMcfe in the year ended December 31, 2008.

•  Consistent track record of efficient proved reserve and production growth. For the three years ended December 31, 2008, we were able to replace 572% of our production at a cost of $2.21 per Mcfe. For the three years ended December 31, 2008, we increased our proved reserves and production at annualized compounded growth rates of 35% and 20%. We have achieved these results from a combination of organic growth through drilling and selective asset acquisitions that have enhanced our competitive position. In the three years ended December 31, 2008, we drilled 785 gross (544.4 net) wells, of which 94% were successful in producing natural gas in commercial quantities.

• Conservative financial profile. We have historically operated with relatively conservative levels of leverage and have also maintained relatively strong interest coverage ratios by industry standards for companies of our size. At March 31, 2009, after giving effect to the issuance and sale of shares of our common stock on May 22, 2009 and the application of the net proceeds therefrom to repay a portion of the borrowings outstanding under our revolving credit facility, the ratio of debt to proved developed reserves would have been $1.12 per Mcfe, and the debt to Adjusted EBITDAX would have been 1.5x for the twelve months ended March 31, 2009.

• Additional cash flow from PVG and PVR. Our partner interests in PVG and PVR have historically provided us with growing quarterly cash distributions. Based on PVG’s and PVR’s annualized distribution rates of $1.52 and $1.88 per unit in the first half of 2009, we would receive aggregate annualized distributions of $46.3 million in respect of our partner interests in the year ended December 31, 2009. PVR expects to grow its coal reserves and expand its midstream operations through accretive acquisitions and development projects. We believe that PVR’s growth strategy, if successfully implemented, will provide us with a growing source of cash flow from our partner interests in PVG and PVR.

• Advantages of our relationship with PVR. During 2006, PVR began marketing our natural gas production in Louisiana, Oklahoma and Texas, allowing PVR to add a new source of revenues. In 2008, PVR constructed the Crossroads plant, an 80 MMcfd gas processing plant in the Bethany Field in East Texas, and entered into a gas gathering and processing agreement with us. The Crossroads plant provides fee-based gas processing services to our oil and gas business in the East Texas region, as well as other producers.

• Experienced management and technical teams. Our key executives have an average of over 25 years of industry experience. Our executive management team is supported by technical and operating managers who also have substantial industry experience and expertise within the basins in which we operate.

Business Strategy

We intend to pursue the following business strategy with respect to our oil and gas segment:

• Growth primarily through development drilling. We anticipate spending approximately $130.0 million to $140.0 million on oil and gas capital expenditures in 2009. We currently plan to allocate up to approximately 96% of capital expenditures in 2009 to development drilling and related projects in our core areas of East Texas, the Mid-Continent, Appalachia and Mississippi.  We are applying horizontal drilling technology in each of these core areas which may result in increased reserve additions, higher production rates and increased rates of return. Capital spending levels in each of our core areas is expected to be significantly lower in 2009 than 2008.

• Exploratory drilling provides operational balance and future development growth opportunities. We intend to apply up to approximately 4% of capital expenditures in 2009 to our exploratory activities, including potentially higher-risk, higher-reward exploratory prospects in the Marcellus Shale in Pennsylvania. Capital for other exploratory prospects in the Mid-Continent, Appalachian and Gulf Coast regions has been deferred until commodity prices increase and access to the capital markets allows for increased equity or debt financing.

• Pursue selective acquisition opportunities in existing basins. Historically, we have pursued acquisitions of properties that we believe have development potential and that are consistent with our lower-risk drilling strategies. Our experienced team of management and technical professionals looks for new opportunities to increase reserves and production that complement our existing core properties. As a result of the current deterioration in the global economy, including financial and credit markets, minimal capital expenditures are anticipated as part of near-term oil and gas capital expenditures. In 2008, we made approximately $95.5 million of leasehold and other oil and gas acquisitions.

• Manage 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 proved developed production through the use of derivatives, typically three-way collar contracts. The level of our hedging activity and the duration of the instruments employed depend upon our cash flow at risk, available hedge prices and our operating strategy. As of May 31, 2009, we had hedged approximately 73%, 56% and 12% of our 2009, 2010 and 2011 proved developed production.