General

Penn Virginia Corporation (“Penn Virginia,” the “Company,” “we,” “us” or “our”) are engaged in the development, exploration and production of natural gas and crude oil through our subsidiary, Penn Virginia Oil & Gas Corporation. We also own partner interests in Penn Virginia Resource Partners, L.P., or PVR, which is involved in the coal land 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 Appalachia, Mississippi, east Texas, the Mid-Continent and the Gulf Coast regions of the United States. As of December 31, 2006, we had proved oil and natural gas reserves of approximately 487 Bcfe, of which 71% were proved developed and 94% were natural gas, with an SEC pre-tax PV-10 value of $787 million.

For the quarter ended March 31, 2007, we had average daily production of 97 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 quarter ended March 31, 2007) of approximately 13.8 years. At December 31, 2006, we owned 1,067,000 net acres of leasehold, approximately 52% of which were undeveloped. We have identified 418 proved undeveloped locations and over 1,900 additional potential drilling locations, which we believe represent over five years of drilling opportunities based on our current drilling rate.

The following table sets forth the estimated quantities of proved reserves, production and reserve lives attributable to our principal operating areas.

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 onshore oil and gas regions, which we believe helps reduce our dependence on any single area, thereby reducing operational and reserve risk. At December 31, 2006, 90% of our proved reserves were located in primarily 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 an overall implied reserve life of 13.8 years based on first quarter 2007 daily production of 97.0 MMcfe.

•  Multi-year drilling inventory. As of December 31, 2006, we had a leasehold position of 1,067,000 net acres, and we had identified 418 proved undeveloped locations and over 1,900 additional potential drilling locations. Many of our proved undeveloped locations and additional potential drilling locations are in locations that are direct offsets or extensions from existing production. We believe our existing acreage position represents over five years of drilling opportunities based on our current drilling rate.

•  Consistent track record of efficient proved reserve and production growth. For the three years ended December 31, 2006, we were able to replace 331% of our production at a cost of $2.25 per Mcfe. During the year ended December 31, 2006, we increased our proved reserves and production by 29% and 14%, respectively. 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, 2006, we drilled 540 gross (392.5 net) wells, of which 94% were successful in producing natural gas and oil in commercial quantities.

Business Strategy

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

• Continue to grow through the drillbit. We anticipate spending approximately $335 million on developmental and exploratory drilling in 2007. We currently plan to allocate 82% of this amount to our lower-risk drilling prospects in our core areas in Appalachia , Mississippi , east Texas and the Mid-Continent regions. We intend to apply the remaining 18% to our exploratory prospects in our existing Gulf Coast region and in unconventional shale plays, including the Devonian, Fayetteville and New Albany shales.

• Pursue selective acquisition opportunities in existing basins. We intend to continue to pursue acquisitions of properties that we believe to have exploitation and development potential comparable to our existing inventory of drilling locations. Our experienced team of management and engineering professionals consistently works to increase reserves and production and complement our existing core properties, including identifying and evaluating acquisition opportunities.

• 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 costless collars. 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, 2007, we have hedged approximately 57% and 37% of proved developed production for the second half of 2007 and for 2008. We manage our hedge position on a rolling two-year basis and typically target to hedge up to 50-60% of expected proved developed production.