Rule 425

Filed by Penn Virginia GP Holdings, L.P. pursuant to Rule 425 under the

Securities Act of 1933 and

deemed filed pursuant to Rule 14a-12 under the Securities Exchange Act of 1934

Subject Company: Penn Virginia GP Holdings, L.P.

Commission File No.: 001-33171

Penn Virginia GP Holdings, L.P.

Five Radnor Corporate Center, Suite 500, 100 Matsonford Road, Radnor, PA 19087

 

 

FOR IMMEDIATE RELEASE

 

Contact:   

Stephen R. Milbourne

Director, Investor Relations

Phone: 610-975-8204 Fax: 610-975-8201

E-Mail: invest@pvrpartners.com

PENN VIRGINIA GP HOLDINGS, L.P. ANNOUNCES

FOURTH QUARTER AND FULL-YEAR 2010 RESULTS

RADNOR, PA – February 9, 2011 .. . . Penn Virginia GP Holdings, L.P. (NYSE: PVG) today reported financial results for the three months and the full-year ended December 31, 2010.

Distributable cash, a non-GAAP (generally accepted accounting principles) measure, was $15.2 million for the three months ended December 31, 2010, an increase of $0.4 million, or three percent, from the prior year quarter. Net income attributable to PVG was $9.9 million, or $0.25 per limited partner unit, as compared to $12.5 million, or $0.32 per limited partner unit, in the prior year quarter.

For the year ended December 31, 2010, distributable cash was $61.0 million, as compared to $59.4 million in 2009. Net income attributable to PVG was $37.1 million, or $0.95 per limited partner unit, as compared to $37.9 million, or $0.97 per limited partner unit, in 2009.

Reconciliations of distributable cash to GAAP-based measures appear in the financial tables later in this release.

As previously announced, PVG will pay a quarterly cash distribution of $0.39 per limited partner unit, on February 22, 2011 to unitholders of record as of February 15, 2011. The distribution equates to an annualized rate of $1.56 per unit, and represents a $0.01 per unit, or three percent, increase over the $0.38 per unit distribution paid in the same quarter of 2009.

We own the general partner, including the incentive distribution rights, and are the largest limited partner unitholder of Penn Virginia Resource Partners, L.P. (NYSE: PVR), and we report our financial results on a consolidated basis with the financial results of PVR. We currently have no separate operating activities other than those conducted by PVR and derive our cash flow solely from cash distributions received from PVR.

Financial and operational updates, as well as full-year 2011 guidance for PVR and its coal and natural resource management and natural gas midstream segments, are discussed in more detail in PVR’s news release dated February 9, 2011 (please visit PVR’s website, www.pvresource.com, under “For Investors” for a copy of the release).

Fourth Quarter 2010 Financial and Operational Results Conference Call

A joint conference call and webcast for PVR and PVG, during which management will discuss fourth quarter 2010 financial and operational results, is scheduled for Thursday, February 10, 2011 at 11:00 a.m. ET. Prepared remarks by William H. Shea, Jr., Chief Executive Officer and other members of management, will be followed by a question and answer period. Interested parties may participate via phone by dialing 800-860-2442 (international 412-858-4600) five to ten minutes before the scheduled start of the conference call (reference the Penn Virginia Resource Partners call), or listen via


PVG Announces Fourth Quarter 2010 Results    Page 2

 

webcast by logging on to our website, www.pvgpholdings.com, or PVR’s website, www.pvresource.com, at least 15 minutes prior to the scheduled start of the call to download and install any necessary audio software. An on-demand replay of the conference call will be available on both websites shortly after the conclusion of the call. A telephonic replay of the call will be available through February 17 by dialing 877-344-7529 (international: 412-317-0088) and using conference playback number 447680.

******

PVR and PVG have filed a joint proxy statement/prospectus and other documents with the SEC in relation to their proposed merger. Investors are urged to read these documents carefully because they contain important information regarding PVR, PVG, and the transaction. A definitive joint proxy statement/prospectus and joint proxy statement/prospectus supplement has been sent to unitholders of PVR and PVG seeking their approvals as contemplated by the Merger Agreement. Investors may obtain a free copy of the joint proxy statement/prospectus, joint proxy statement/prospectus supplement and other documents containing information about PVR and PVG, without charge, at the SEC’s website at www.sec.gov. Copies of the joint proxy statement/prospectus and the SEC filings incorporated by reference in the joint proxy statement/prospectus may also be obtained free of charge by contacting Investor Relations at (610) 975-8204 or invest@pvrpartners.com or by accessing www.pvresource.com or www.pvgpholdings.com.

PVR, PVG, and the officers and directors of the general partner of each partnership may be deemed to be participants in the solicitation of proxies from their security holders. Information about these entities and persons can be found in PVR’s and PVG’s Annual Reports on Form 10-K for the year ended December 31, 2009. Additional information about such entities and persons may also be obtained from the joint proxy statement/prospectus.

******

Penn Virginia GP Holdings, L.P. (NYSE: PVG) is a publicly traded limited partnership which owns the general partner interest, all of the incentive distribution rights and an approximate 37 percent limited partner interest in PVR, a manager of coal and natural resource properties and related assets and the operator of a midstream natural gas gathering and processing business.

For more information about us, please visit our website at www.pvgpholdings.com. For more information about PVR, please visit its website at www.pvresource.com.

******

Certain statements contained herein and incorporated herein by reference to the PVR news release dated February 9, 2011 that are not descriptions of historical facts are “forward-looking” statements by PVR within the meaning of the Federal Securities Laws. Because such statements include risks, uncertainties and contingencies, actual results may differ materially from those expressed or implied by such forward-looking statements. These risks, uncertainties and contingencies are discussed in more detail in PVR’s news release dated February 9, 2011 and in our press releases and public periodic filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2009 and our most recent Quarterly Reports on Form 10-Q. Many of the factors that will determine PVR’s and, therefore, our future results are beyond the ability of management to control or predict. Readers should not place undue reliance on forward-looking statements, which reflect management’s views only as of the date hereof. We undertake no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as the result of new information, future events or otherwise.


PENN VIRGINIA GP HOLDINGS, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS - unaudited

(dollars in thousands, except per unit data)

 

     Three Months Ended     Year Ended  
     December 31,     December 31,  
     2010     2009     2010     2009  

Revenues

        

Natural gas midstream

   $ 204,802      $ 155,907      $ 702,164      $ 504,789   

Coal royalties

     32,261        29,987        130,349        120,435   

Coal services

     1,854        1,830        7,830        7,332   

Other

     6,480        7,177        23,793        24,148   
                                

Total revenues

     245,397        194,901        864,136        656,704   
                                

Expenses

        

Cost of gas purchased

     162,702        121,454        577,813        406,583   

Operating

     11,926        9,492        44,243        38,788   

General and administrative

     10,228        7,413        44,595        33,662   

Impairments

     —          1,511        —          1,511   

Depreciation, depletion and amortization

     21,117        18,264        75,900        70,235   
                                

Total expenses

     205,973        158,134        742,551        550,779   
                                

Operating income

     39,424        36,767        121,585        105,925   

Other income (expense)

        

Interest expense

     (10,223     (6,167     (35,591     (24,653

Interest income and other

     32        333        686        1,353   

Derivatives

     (10,979     (7,709     (22,493     (19,714
                                

Net income

     18,254        23,224        64,187        62,911   

Net income attributable to noncontrolling interests

     (8,372     (10,705     (27,043     (25,032
                                

Net income attributable to Penn Virginia GP Holdings, L.P.

   $ 9,882      $ 12,519      $ 37,144      $ 37,879   
                                

Net income per limited partner unit, basic and diluted

   $ 0.25      $ 0.32      $ 0.95      $ 0.97   

Weighted average number of units outstanding, basic and diluted (in thousands)

     39,075        39,075        39,075        39,075   

Other data:

        

Coal and natural resource management segment:

        

Coal royalty tons (in thousands)

     8,867        8,456        34,512        34,330   

Average coal royalties ($ per ton)

   $ 3.64      $ 3.55      $ 3.78      $ 3.51   

Natural gas midstream segment:

        

System throughput volumes (MMcf)

     36,583        27,902        129,703        121,335   

Gross margin (in thousands)

   $ 42,100      $ 34,453      $ 124,351      $ 98,206   


PENN VIRGINIA GP HOLDINGS, L.P.

CONDENSED CONSOLIDATED BALANCE SHEETS - unaudited

(in thousands)

 

     December 31,      December 31,  
     2010      2009  

Assets

     

Cash and cash equivalents

   $ 15,964       $ 19,314   

Accounts receivable

     97,787         82,321   

Derivative assets

     —           1,331   

Other current assets

     5,900         4,816   
                 

Total current assets

     119,651         107,782   

Property, plant and equipment, net

     971,046         900,844   

Other long-term assets

     213,508         210,437   
                 

Total assets

   $ 1,304,205       $ 1,219,063   
                 

Liabilities and partners’ capital

     

Accounts payable and accrued liabilities

   $ 103,845       $ 71,233   

Deferred income

     4,360         3,839   

Derivative liabilities

     19,516         11,251   
                 

Total current liabilities

     127,721         86,323   

Derivative liabilities

     5,107         4,285   

Other long-term liabilities

     28,727         22,752   

PVR senior notes

     300,000         —     

PVR revolving credit facility

     408,000         620,100   

PVG partners’ capital

     213,805         249,696   

Noncontrolling interests in PVR

     220,845         235,907   
                 

Total liabilities and partners’ capital

   $ 1,304,205       $ 1,219,063   
                 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - unaudited

(in thousands)

 

     Three Months Ended     Year Ended  
     December 31,     December 31,  
     2010     2009     2010     2009  

Cash flows from operating activities

    

Net income

   $ 18,254      $ 23,224      $ 64,187      $ 62,911   

Adjustments to reconcile net income to net cash provided by operating activities:

        

Depreciation, depletion and amortization

     21,117        18,264        75,900        70,235   

Impairments

     —          1,511        —          1,511   

Commodity derivative contracts:

        

Total derivative (gains) losses included in net income

     10,979        8,466        23,583        22,700   

Cash receipts (payments) to settle derivatives for period

     (3,582     (1,135     (10,075     3,000   

Non-cash interest expense

     1,035        1,242        5,278        4,391   

Non-cash unit-based compensation

     148        269        6,172        1,769   

Equity earnings, net of distributions

     774        (81     3,274        (2,537

Other

     (153     (73     (875     (1,003

Changes in operating assets and liabilities

     (10,953     (8,303     11,006        (4,763
                                

Net cash provided by operating activities

     37,619        43,384        178,450        158,214   
                                

Cash flows from investing activities

        

Acquisitions, net of cash acquired

     (7,006     (70     (24,876     (29,580

Additions to property, plant and equipment

     (41,267     (7,316     (99,240     (51,097

Other

     344        275        1,329        1,147   
                                

Net cash used in investing activities

     (47,929     (7,111     (122,787     (79,530
                                

Cash flows from financing activities

        

Distributions to partners

     (30,621     (30,153     (122,024     (120,450

Proceeds from PVR issuance of senior notes

     —          —          300,000        —     

Proceeds from (repayments of) revolving credit facility, net

     43,000        (8,000     (212,100     52,000   

Purchase of PVR limited partner units

     —          —          (1,092     —     

Debt issuance costs

     (4,620     —          (23,797     (9,258
                                

Net cash provided by (used in) financing activities

     7,759        (38,153     (59,013     (77,708
                                

Net increase (decrease) in cash and cash equivalents

     (2,551     (1,880     (3,350     976   

Cash and cash equivalents - beginning of period

     18,515        21,194        19,314        18,338   
                                

Cash and cash equivalents - end of period

   $ 15,964      $ 19,314      $ 15,964      $ 19,314   
                                


PENN VIRGINIA GP HOLDINGS, L.P.

CERTAIN NON-GAAP FINANCIAL MEASURES - unaudited

(in thousands, except per unit data)

The following tables present the calculation of distributable cash to PVG and reconciliation of net income attributable to PVG with respect to the three months and years ended December 31, 2010 and 2009:

 

     Three Months Ended     Year Ended  

Calculation of Non-GAAP “Distributable cash”

   December 31,     December 31,  
      2010     2009     2010     2009  

Distributable cash (a):

        

Cash distributions to be received from PVR associated with:

        

2% general partner interest

   $ 502      $ 497      $ 2,004      $ 1,988   

General partner incentive distribution rights

     6,093        6,035        24,325        24,140   

PVR common units

     9,230        9,206        36,896        36,824   
                                

Total cash to be received from PVR

   $ 15,825      $ 15,738      $ 63,225      $ 62,952   

Deduct: Net expenses of PVG on a stand-alone basis (b)

     (1,519     (377     (4,271     (2,304

Cash reserve for working capital

     933        (513     2,002        (1,256
                                

Distributable cash (c)

   $ 15,239      $ 14,848      $ 60,956      $ 59,392   
                                

Cash distributions to be paid to partners of PVG

        

To Penn Virginia Corporation

     —          7,629        3,443        38,116   

To public unitholders

     15,239        7,219        57,513        21,276   
                                

Total cash distributions to be paid

   $ 15,239      $ 14,848      $ 60,956      $ 59,392   
                                

Distribution per limited partner unit (paid in subsequent period)

   $ 0.39      $ 0.38      $ 1.56      $ 1.52   

Weighted-average units outstanding, basic and diluted

     39,075        39,075        39,075        39,075   

 

(a) The distributable cash is presented on basis as to what is expected to be received from PVR cash distributions paid in the subsequent periods, but earned in the current periods.
(b) Estimated net expenses of PVG, which represent general and administrative expenses, partially offset by interest income.
(c) Distributable cash represents cash distributions received from PVR, minus our net expenses, minus cash reserve for working capital. Distributable cash is presented because we believe it is a useful adjunct to net income under GAAP. Distributable cash is a significant liquidity metric which is an indicator of our ability to pay quarterly cash distributions to our limited partners. Distributable cash is also the quantitative standard used throughout the investment community with respect to publicly traded partnerships. Distributable cash is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing or financing activities, as an indicator of cash flows, as a measure of liquidity or as an alternative to net income.


PENN VIRGINIA GP HOLDINGS, L.P.

QUARTERLY SEGMENT INFORMATION - unaudited

(in thousands)

 

     Coal and Natural Resource Management  
     Three Months Ended     Year Ended  
     December 31,     December 31,  
     2010     2009     2010     2009  

Revenues

        

Coal royalties

   $ 32,261      $ 29,987      $ 130,349      $ 120,435   

Coal services

     1,854        1,830        7,830        7,332   

Timber

     1,773        1,371        6,261        5,726   

Oil and gas royalties

     651        688        2,651        2,471   

Other

     1,399        2,149        5,397        8,636   
                                

Total revenues

     37,938        36,025        152,488        144,600   
                                

Expenses

        

Operating

     3,767        2,481        11,437        9,692   

General and administrative

     3,827        3,264        17,046        14,539   

Impairments

     —          1,511        —          1,511   

Depreciation, depletion and amortization

     8,728        7,773        30,873        31,330   
                                

Total expenses

     16,322        15,029        59,356        57,072   
                                

Operating income

   $ 21,616      $ 20,996      $ 93,132      $ 87,528   
                                

Additions to property, plant and equipment and acquisitions

   $ 7,468      $ 206      $ 25,751      $ 2,252   
     Natural Gas Midstream  
     Three Months Ended     Year Ended  
     December 31,     December 31,  
     2010     2009     2010     2009  

Revenues

        

Natural gas midstream

   $ 204,802      $ 155,907      $ 702,164      $ 504,789   

Other

     2,657        2,969        9,484        7,315   
                                

Total revenues

     207,459        158,876        711,648        512,104   
                                

Expenses

        

Cost of gas purchased

     162,702        121,454        577,813        406,583   

Operating

     8,159        7,011        32,806        29,096   

General and administrative

     4,878        3,750        23,235        16,746   

Depreciation, depletion and amortization

     12,389        10,491        45,027        38,905   
                                

Total expenses

     188,128        142,706        678,881        491,330   
                                

Operating income

   $ 19,331      $ 16,170      $ 32,767      $ 20,774   
                                

Additions to property, plant and equipment and acquisitions

   $ 40,805      $ 7,180      $ 98,365      $ 78,425   
     Other  
     Three Months Ended     Year Ended  
     December 31,     December 31,  
     2010     2009     2010     2009  

Expenses

        

General and administrative

     1,523        399        4,314        2,377   
                                

Total expenses

     1,523        399        4,314        2,377   
                                

Operating income (loss)

   $ (1,523   $ (399   $ (4,314   $ (2,377
                                

Additions to property, plant and equipment and acquisitions

   $ —        $ —        $ —        $ —