Penn Virginia Resource Partners, L.P.




Penn Virginia Resource Partners (PVR) is engaged in the business of managing coal properties in the United States. Formed in 2001 by Penn Virginia Corp., PVR enters into long-term leases with experienced, third-party mine operators for the right to mine its coal reserves in exchange for royalty payments.   PVR also earns revenues from the sale of standing timber on its properties.  In 2003, 94.4% of PVR’s revenues were attributable to coal and land leasing operations, 3.8% of revenues were attributable to our coal services operations and 1.8% of revenues were attributable to the timber operations.


Coal Properties


As of December 31, 2003, PVR’s properties contained approximately 588 million tons of proven and probable coal reserves located on 241,000 acres in Virginia, West Virginia, New Mexico and eastern Kentucky. In 2003, PVR’s lessees produced 26.5 million tons of coal from these properties and paid coal royalty revenues of $50.3 million. As of December 31, 2003, PVR leased an aggregate of approximately 90% of its reserves under 53 leases to 29 different operators who mine coal at 54 mines.  PVR does not itself operate any mines.


Approximately 72% of 2003 coal royalty revenues and 99% of 2002 coal royalty revenues were based on the higher of a percentage of the gross sales price or a fixed price per ton of coal sold, with pre-established minimum monthly or annual rental payments. The balance of the 2003 and 2002 coal royalty revenues was derived from fixed royalty rate leases, which escalate annually, with pre-established minimum monthly payments.


         Penn Virginia’s properties, their production, reserves, and revenues are as follows:






Royalty Revenue

2003 Production

Reserves at 12/31/03




(million tons)







Wise and Lee Counties, VA and Letcher and Harlan Counties, KY




Coal River

Boone, Fayette, Kanawha, Linc­oln and Raleigh Counties, WV

$  9,469



New Mexico

McKinley County, NM

$  9,398



Northern Appalachia

Barbour, Harrison, Lewis, Monon­­galia and Upshur Counties, WV

$  6,273



Spruce Laurel

Boone and Logan Counties, WV





Buchanan County, VA










Of the 588.2 million tons of proven and probable reserves, PVR owns both the mineral interests and the related surface rights to 369.9 million tons, or 67.5%, and owns the mineral interest only to 147.6 million tons, or 25.1%.  PVR leases the mineral rights to the remaining 43.7 million tons, or 7.4% from unaffiliated third parties and, in turn, subleases these reserves to its lessees.


Timber Properties


As of December 31, 2003, PVR owned approximately 114,500 surface acres of timberland containing approximately 166 million board (Mbf) feet of inventory.  This figure includes only timber that can be harvested and is greater than 12 inches in diameter.  The timberlands are located on the Wise, Spruce Laurel and Coal River properties and contain various hardwood species, including red oak, white oak, yellow poplar and black cherry.


 In 2003, PVR sold 5.3 Mbf of timber, which generated timber revenues of $1.0 million.  Revenues depend on harvest levels and the species and quality of timber harvested. Harvest levels in any given year will depend upon a number of factors, including anticipated mining activity, timber maturation and market conditions. Any timber which would otherwise be removed due to lessee mining operations is harvested in advance to prevent loss of the resource.


Timber is sold in a competitive bid process involving sales of standing timber on individual parcels and, from time to time, on a contract basis where independent contractors harvest and sell the timber. Timber revenues are recognized when the timber has been sold or harvested by the independent contractors. Title and risk of loss pass to the independent contractors upon the execution of the contract. If the contractors do not harvest the timber within the specified time period, the title of the timber reverts back to the partnership with no refund of original payment.


Business Strategies


         PVR’s principal business strategies are as follows:


Ø    Focus first on eastern coal.  PVR and its parent Penn Virginia have been in the coal land management business in Appalachia since 1882.  PVR actively pursues opportunities to expand its eastern reserves through acquisition of additional coal reserves and exploration of  its existing properties.

Ø    Expand the geographic diversity of its reserves.  PVR is actively pursuing opportunities to acquire reserves outside Central Appalachia, where its operations have historically been centered.  In 2002, for instance, it acquired a total of 136,000 tons of coal reserves outside its core area, including 23,000 mineral acres in the western U.S. and northern Appalachia.

Ø    Diversify its lessee base and sources of coal-related revenues. Currently (as of the end of 2003) PVR leases its coal reserves under 53 leases to 29 different operators, who are mining coal at 38 underground mines and 16 surface mines.  In order to diversify its base and increase the stability of its cash flow, PVR will seek not only additional coal royalty revenues but also to generate coal services revenues through fee-based coal preparation and transportation facilities, and to to increase our fee-based asset revenues through acquisitions of assets such as rail car or barge loading facilities, terminals and coal preparation plants, specifically those that serve multiple operators and end-users.

Ø    Pursue other opportunities.  PVR intend to pursue other types of long-term assets with stable cash flows.  The fact that its parent Penn Virginia is engaged in the exploration, development and production of oil and natural gas suggests opportunities to purchase oil and natural gas gathering systems and other infrastructure assets.

Ø    Maintain financial flexibility. PVR has taken a number of steps to obtain the means to respond promptly to acquisition opportunities.  These include a private placement of $90 million in senior unsecured notes, the proceeds of which were used to pay debt incurred in PVR’s 2002 acquisitions; increasing its revolving credit facility from $50 million to $100 million; and filing a $300 million universal shelf registration statement with the Securities and Exchange Commission.


For further information on Penn Virginia Resource Partners, contact:


Frank A. Pici
Vice President and Chief Financial Officer
100 Matsonford Road
Three Radnor Corporate Center, Suite 230
Radnor, PA 19087

Phone: 610-687-8900

Fax: 610-687-3688

E-mail: [email protected]


or visit the Penn Virginia Resource Partners website at


Financial Information from 2003 10-K

(in thousands, except per unit amounts)





Market value*



Current assets



Net property, plant & equipment



Total assets



Current liabilities



Long-term debt



Partners’ capital






Operating income



Net income



Net income/unit  (undiluted)



Distribution / unit  



High unit price



Low unit price



*As of February 26, 2004 and June 28, 2002.



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