The following discussion and analysis of the financial condition and results of
operations of Penn Virginia Corporation and its consolidated subsidiaries ("Penn
Virginia," the "Company," "we," "us" or "our") should be read in conjunction
with our Condensed Consolidated Financial Statements and Notes thereto included
in Part I, Item 1, "Financial Statements." All dollar amounts presented in the
tables that follow are in thousands unless otherwise indicated. Also, due to the
combination of different units of volumetric measure, the number of decimal
places presented and rounding, certain results may not calculate explicitly from
the values presented in the tables. References to "quarters" represent the three
months ended March 31, 2020 or 2019, as applicable.
Overview and Executive Summary
We are an independent oil and gas company engaged in the onshore exploration,
development and production of crude oil, natural gas liquids, or NGLs, and
natural gas. Our current operations consist of drilling unconventional
horizontal development wells and operating our producing wells in the Eagle Ford
Shale, or the Eagle Ford, in Gonzales, Lavaca, Fayette and DeWitt Counties in
South Texas.
Industry Environment and Recent Operating and Financial Highlights
Commodity Price and Other Economic Conditions
The global public health crisis associated with the novel coronavirus, or
COVID-19, has and is anticipated to continue to have an adverse effect on global
economic activity for the immediate future and has resulted in travel
restrictions, business closures and the institution of quarantining and other
restrictions on movement in many communities. The slowdown in global economic
activity attributable to COVID-19 has resulted in a dramatic decline in the
demand for energy which directly impacts our industry and the Company. In
addition, global crude oil prices experienced a collapse starting in early March
2020 as a direct result of failed negotiations between the Organization of the
Petroleum Exporting Countries, or OPEC, and Russia. In response to the global
economic slowdown, OPEC had recommended a decrease in production levels in order
to accommodate reduced demand. Russia rejected the recommendation of OPEC as a
concession to U.S. producers. After the failure to reach an agreement, Saudi
Arabia, a dominant member of OPEC, and other Persian Gulf OPEC members announced
intentions to increase production and offer price discounts to buyers in certain
geographic regions.
As the breadth of the COVID-19 health crisis expanded throughout the month of
March 2020 and governmental authorities implemented more restrictive measures to
limit person-to-person contact, global economic activity continued to decline
commensurately. The associated impact on the energy industry has been adverse
and continued to be exacerbated by the unresolved conflict regarding production.
In the second week of April, OPEC, Russia and certain other petroleum producing
nations, or OPEC+, reconvened to discuss the matter of production cuts in light
of unprecedented disruption and supply and demand imbalances that expanded since
the failed negotiations in early March 2020. Tentative agreements were reached
to cut production by up to 10 million barrels of oil per day, or BOPD, with
allocations to be made among the OPEC+ participants. If effected, these
production cuts, however, may not offset near-term demand loss attributable to
the COVID-19 health crisis and related economic slowdown, and the tentative
agreement has not resulted in increased commodity prices.
The combined effect of COVID-19 and the energy industry disruptions led to a
decline in NYMEX West Texas Intermediate, or NYMEX WTI, crude oil prices of
approximately 67 percent from the beginning of January 2020, when prices were
approximately $62 per barrel, through the end of March 2020, when they were just
above $20 per barrel. During late March NYMEX WTI crude oil prices declined
below $20 per barrel as uncertainty regarding geopolitical factors expanded.
Overall crude oil price volatility has continued despite apparent agreement
among OPEC+ regarding production cuts and for the week ending May 1, 2020, the
average NYMEX WTI crude oil price was approximately $16 per barrel.
Despite a significant decline in drilling by U.S. producers starting in
mid-March 2020, domestic supply continues to exceed demand which has led to
significant operational stress with respect to capacity limitations associated
with storage, pipeline and refining infrastructure, particularly within the Gulf
Coast region. The combined effect of the aforementioned factors is anticipated
to have a continuing adverse impact on the industry in general and our
operations specifically.
In order to mitigate the impact of COVID-19 and the economic effects of the
unprecedented decline in economic activity and global energy markets, we
undertook several actions in March and April 2020 in support of our liquidity
and the efficient continuity of our operations. These actions are described in
greater detail in the discussions for Key Developments that follow as well as
Notes 2, 5, 8 and 12 to the Condensed Consolidated Financial Statements included
in Part I, Item 1, "Financial Statements."

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Capital Expenditures and Development Progress
On March 17, 2020, in response to the substantial decrease in crude oil prices,
we initially adjusted our drilling and completion program for the remainder of
the year. Subsequently, we suspended our drilling and completion program
altogether in the second week of April 2020 and released our contracted drilling
rigs.
During the first quarter of 2020, we incurred capital expenditures of
approximately $79 million with 96 percent directed to drilling and completion
projects. We drilled and completed a total of 13 gross (11.0 net) wells, all of
which were turned to sales during the quarter. At the time of the suspension in
April, we had a total of eight gross (7.6 net) wells that were drilled but not
completed and remained uncompleted as of May 7, 2020.
Sequential Quarterly Analysis
The following summarizes our key operating and financial highlights for the
three months ended March 31, 2020, with comparison to the three months ended
December 31, 2019 as presented in the table that follows. The year-over-year
highlights for the quarterly periods ended March 31, 2020 and 2019 are addressed
in further detail in the discussions for Financial Condition and Results of
Operations that follow.
•      Daily production decreased nine percent to 26,740 barrels of oil
       equivalent per day, or BOEPD, from 29,314 BOEPD due primarily to the
       timing of wells turned to sales during the first quarter of 2020, which
       included five gross (3.6 net) wells that were turned to sales in the last
       week of March 2020 for which we realized only minimal volume for the

quarterly period. Total production decreased 10 percent to 2,433 thousand


       barrels of oil equivalent, or MBOE, from 2,697 MBOE due primarily to the
       issue of timing referenced above during the quarter ended March 31, 2020.

• Product revenues declined approximately 26 percent to $90.9 million from

$123.2 million due primarily to 19 percent lower crude oil prices, or

$19.7 million, and eight percent lower crude oil volume, or $9.2 million.

NGL revenues were 53 percent lower due to 43 percent lower prices, or $1.4


       million, and 17 percent lower volume, or $0.7 million. Natural gas
       revenues declined 32 percent due to 22 percent lower prices, or $0.8
       million, and 13 percent lower volume, or $0.5 million.

• Production and lifting costs (consisting of Lease operating expenses, or

LOE, and Gathering, processing and transportation expenses, or GPT)

decreased marginally on an absolute basis to $16.0 million from $16.1

million and increased on a per unit basis to $6.57 per BOE from $5.98 per


       BOE due primarily to the effect of lower volume. Lower GPT expenses and
       compression charges associated with the lower production volume were
       substantially offset by higher water disposal costs associated with

protective measures from offset stimulation activities and higher chemical


       product and labor costs.


•      Production and ad valorem taxes decreased on an absolute and per unit
       basis to $6.2 million and $2.53 per BOE from $7.4 million and $2.74 per

BOE, respectively, due to the overall effects of lower volume and product

pricing.

• General and administrative, or G&A, expenses increased on an absolute and

per unit basis to $7.2 million and $2.97 per BOE from $5.3 million and

$1.97 per BOE, respectively, due primarily to the effect of substantially

lower benefits costs in the fourth quarter of 2019 as compared to first

quarter of 2020 as well as higher consulting and information technology

costs partially offset by lower incentive and share-based compensation


       costs in the first quarter of 2020.


•      Depreciation, depletion and amortization, or DD&A, decreased on an

absolute basis to $40.7 million from $44.9 million due primarily to lower


       volume. DD&A increased marginally on a per unit basis to $16.73 per BOE
       from $16.64 per BOE.

• Operating income decreased to $21.3 million from $50.2 million due to the


       combined impact of the matters noted in the bullets above.



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The following table sets forth certain historical summary operating and financial statistics for the periods presented:


                                                                Three Months Ended
                                                     March 31,     December 31,      March 31,
                                                       2020            2019            2019
Total production (MBOE)                                 2,433             2,697         2,222
Average daily production (BOEPD)                       26,740            29,314        24,692
Crude oil production (MBbl)                             1,881             2,043         1,652
Crude oil production as a percent of total                 77 %              76 %          74 %
Product revenues                                    $  90,891     $     123,196     $ 104,637
Crude oil revenues                                  $  86,308     $     115,252     $  94,812
Crude oil revenues as a percent of total                   95 %              94 %          91 %
Realized prices:
Crude oil ($ per Bbl)                               $   45.90     $       56.40     $   57.39
NGLs ($ per Bbl)                                    $    6.16     $       10.74     $   17.60
Natural gas ($ per Mcf)                             $    1.83     $        2.34     $    2.79
Aggregate ($ per BOE)                               $   37.35     $       45.68     $   47.08
Prices adjusted for derivatives:
Crude oil ($ per Bbl)                               $   54.15     $       55.70     $   56.37
Natural gas ($ per Mcf)                             $    1.90     $        2.34     $    2.79
Aggregate ($ per BOE)                               $   43.78     $       45.15     $   46.32
Production and lifting costs:
Lease operating ($ per BOE)                         $    4.33     $        3.65     $    4.95
Gathering, processing and transportation ($ per
BOE)                                                $    2.24     $        2.32     $    1.77
Production and ad valorem taxes ($ per BOE)         $    2.53     $        2.74     $    2.56
General and administrative ($ per BOE) 1            $    2.97     $        1.97     $    3.18
Depreciation, depletion and amortization ($ per
BOE)                                                $   16.73     $       16.64     $   17.49
Capital expenditure program costs 2                 $  79,220     $      64,623     $ 101,288
Cash provided by operating activities 3             $  72,473     $      75,981     $  69,259
Cash paid for capital expenditures 4                $  62,015     $      71,010     $  86,486
Cash and cash equivalents at end of period          $  55,331     $       7,798     $   4,655
Debt outstanding at end of period, net 5            $ 592,624     $     555,028     $ 515,919
Credit available under credit facility at end of
period 6                                            $ 100,200     $     137,200     $ 124,600
Net development wells drilled and completed              11.0               9.9           7.8


__________________________________________________________________________________

1 Includes combined amounts of $0.35, $0.36 and $0.79 per BOE for the three

months ended March 31, 2020, December 31, 2019 and March 31, 2019,

respectively, attributable to equity-classified share-based compensation and

significant special charges, including acquisition, divestiture and strategic

transaction and other costs, as described in the discussion of "Results of

Operations - General and Administrative" that follows.

2 Includes amounts accrued and excludes capitalized interest and capitalized

labor.

3 Includes net cash received (paid) for derivative settlements of $(0.3) million,

$0.2 million and $4.4 million for the three months ended March 31, 2020,

December 31, 2019 and March 31, 2019, respectively. Reflects changes in

operating assets and liabilities of $16.0 million, $(12.7) million and $(6.5)

million for the three months ended March 31, 2020, December 31, 2019 and

March 31, 2019, respectively.

4 Represents actual cash paid for capital expenditures including capitalized

interest and capitalized labor.

5 Represents amounts net of unamortized discount and deferred issue costs of

$6.8 million, $7.4 million and $9.1 million as of March 31, 2020, December 31,

2019 and March 31, 2019, respectively.

6 The borrowing base under the credit agreement, or Credit Facility, was reduced

to $400 million effective April 30, 2020 through June 30, 2020 at which time it

will decrease further to $375 million, and effective October 1, 2020,

availability will be decreased to a maximum of $350 million until the

redetermination of the borrowing base in Fall 2021. Based on the amended

borrowing base, our credit availability would have been $0.2 million had the


  amendment been in effect as of March 31, 2020.



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Key Developments
The following general business developments had or may have a significant impact
on our results of operations, financial position and cash flows:
Actions to Address the Economic Impact of COVID-19 and Decline in Commodity
Prices
During March and April 2020, we initiated and began pursuit of several actions
to mitigate the anticipated adverse economic conditions for the immediate future
and to support our financial position, liquidity and the efficient continuity of
our operations as follows:
Drilling and Completion Program. We suspended our drilling and completion
program altogether in April 2020. All of our contracted operated rigs were
released from drilling activities in early April 2020.
Derivatives. We substantially expanded the scope and range of our commodity
derivatives portfolio and restructured certain oil hedge positions to move hedge
positions from the second half of 2021 into the second and the fourth quarters
of 2020. In April 2020, we received over $14 million in proceeds from
settlements of our commodity derivatives.
Federal Relief. We have initiated a number of liquidity and income tax measures
made available under the Coronavirus Aid, Relief and Economic Security Act, or
the CARES Act and related regulations, including the application for an
accelerated refund of our remaining alternative minimum tax, or ATM, credits of
approximately $2.5 million that would have otherwise been payable to us over the
next two years.
Working Capital. We have negotiated more favorable payment terms with certain of
our larger vendors and are continuing to increase our diligence in collecting
and managing our portfolio of joint venture receivables.
Cost Containment. We initiated a hiring freeze in March 2020 and eliminated
annual cost-of-living and similar adjustments to our salaries and wages for
2020. We are also reviewing our operations to reduce or otherwise defer certain
costs consistent with the anticipated level of business activity and changes to
the timing of certain action plans.
Operations Considerations. In anticipation of continued excess domestic supply,
we: (i) have secured supplemental storage capacity for our crude oil production
for up to six months beginning in May 2020, (ii) have shut in certain producing
wells beginning in April 2020 and continue to evaluate other opportunities to do
so if the price environment remains depressed for an extended period and (iii)
are enhancing the integrity of our producing wells and reserves in place in the
event a larger scale curtailment condition is necessary. In April 2020, we
rescinded the release of one rig and entered into a new agreement to maintain
the rig in place for a minimal daily rate providing us with the option to either
restart drilling operations on seven days notice or release the rig altogether
for demobilization.
Borrowing Base Redetermination
On April 30, 2020, we entered into the Borrowing Base Redetermination Agreement
and Amendment No. 7 to Credit Agreement, or the Seventh Amendment. The Seventh
Amendment provides for a $1.0 billion revolving commitment and a $400 million
borrowing base, reduced from $500 million, including a $25 million sublimit for
the issuance of letters of credit. Furthermore, the Seventh Amendment provides
for an additional decrease in the borrowing base to $375 million effective July
1, 2020 and, effective October 1, 2020, limits availability under the Credit
Facility to a maximum of $350 million until the redetermination of the borrowing
base in Fall 2021. In addition, the Seventh Amendment provides for: (i) an
increase of 100 basis points to the applicable margin ranges for outstanding
borrowings, (ii) a decrease to the maximum leverage ratio from 4.00 times to
3.50 times, (iii) implementation of certain anti-cash hoarding provisions,
including the requirement to repay outstanding loans and cash collateralize
outstanding letters of credit on a weekly basis in the amount of any cash on the
balance sheet (subject to certain exceptions) in excess of $25 million and (iv)
further limitations on dividends and share repurchases until Spring 2021
borrowing base determination.
Production and Development Plans
Total production for the first quarter of 2020 was 2,433 BOE, or 26,740 barrels
of oil equivalent per day, or BOEPD, with approximately 77 percent, or 1,881
MBbls, of production from crude oil, 13 percent from NGLs and 10 percent from
natural gas, respectively.
We drilled and turned 13 gross (11.0 net) wells to sales during the first
quarter of 2020. At the time we suspended our drilling and completion program
and continuing through to May 1, 2020, we had a total of eight gross (7.6 net)
wells in process that were substantially drilled and waiting on completion.
As of May 1, 2020, we had approximately 99,300 gross (86,600 net) acres in the
Eagle Ford, net of expirations. Approximately 92 percent of our acreage is held
by production and substantially all is operated by us.

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Commodity and Interest Rate Hedging Program
As of April 30, 2020, we have hedged a portion of our estimated future crude oil
and natural gas production from May 1, 2020 through the first half of 2021. We
are currently unhedged with respect to NGL production. The following table
summarizes our hedge positions for the periods presented:
                      WTI - Oil Volumes      WTI Average Price      MEH - Oil Volumes      MEH Average Price
Swaps                 (Barrels per day)       ($ per barrel)        (Barrels per day)       ($ per barrel)
2Q - 2020                       13,209     $             52.06                 2,000     $             61.03
3Q - 2020                        8,630     $             55.20                 2,000     $             61.03
4Q - 2020                        9,804     $             55.18                 2,000     $             61.03
1Q - 2021                        5,000     $             51.60                     -     $                 -
2Q - 2021                        4,945     $             51.60                     -     $                 -


          WTI - Oil Volumes     WTI Floor Price      WTI Ceiling Price
Collars   (Barrels per day)      ($ per barrel)        ($ per barrel)
2Q - 2020             2,000    $           48.00    $             57.10
3Q - 2020             6,891    $           52.97    $             58.03
4Q - 2020             2,000    $           48.00    $             57.10
1Q - 2021             1,667    $           55.00    $             58.00
2Q - 2021             1,648    $           55.00    $             58.00


          WTI - Oil Volumes     WTI Average Put Price
Long Puts (Barrels per day)         ($ per barrel)
2Q - 2020             3,297    $                 23.00
2Q - 2020             8,242    $                 30.00
2Q - 2020             3,297    $                 55.00
3Q - 2020             2,717    $                 30.00
1Q - 2021             2,500    $                 36.00
2Q - 2021             2,473    $                 36.00


           WTI - Oil Volumes     WTI Put Price
Short Puts (Barrels per day)     ($ per barrel)
2Q - 2020                912    $         44.00
4Q - 2020              5,087    $         43.50
1Q - 2021              9,167    $         37.36
2Q - 2021              9,066    $         37.36


            WTI - Oil Volumes     WTI Long Puts Price      WTI Short Puts Price
Put Spreads (Barrels per day)        ($ per barrel)           ($ per barrel)
3Q - 2020               5,435    $               30.00    $                20.00


                      Basis Volumes         Basis Price
MEH-WTI Basis Swaps (Barrels per day)     ($ per barrel)
2Q - 2020                       2,747    $         (0.85 )


                          Henry Hub - Gas
                              Volumes           Henry Hub Floor Price       Henry Hub Ceiling Price
Collars                      (MMBtu/d)                ($/MMBtu)                    ($/MMBtu)
2Q - 2020                          12,901     $                  2.00     $                    2.21
3Q - 2020                          12,804     $                  2.00     $                    2.21
4Q - 2020                          12,804     $                  2.00     $                    2.21






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Financial Condition
Liquidity
Our primary sources of liquidity include our cash on hand, cash provided by
operating activities and borrowings under the Credit Facility. The Credit
Facility provides us with up to $1.0 billion in borrowing commitments. The
current borrowing base under the Credit Facility is $400 million through June
30, 2020 at which time it will be further reduced to $375 million, and effective
October 1, 2020, availability under the Credit Facility will be limited to a
maximum of $350 million until the redetermination of the borrowing base in Fall
2021. As of May 7, 2020, we had $20.2 million available under the Credit
Facility.
Our cash flows from operating activities are subject to significant volatility
due to changes in commodity prices for crude oil, NGL and natural gas products,
as well as variations in our production. The prices for these commodities are
driven by a number of factors beyond our control, including global and regional
product supply and demand, weather, product distribution, refining and
processing capacity and other supply chain dynamics, among other factors. All of
these factors have been negatively impacted by the COVID-19 health crisis and
the ongoing disruptions to the global energy markets. In order to mitigate this
volatility, we entered into derivative contracts with a number of financial
institutions, all of which are participants in the Credit Facility, hedging a
portion of our estimated future crude oil and natural gas production through the
the first half of 2021. The level of our hedging activity and duration of the
financial instruments employed depends on our desired cash flow protection,
available hedge prices, the magnitude of our capital program and our operating
strategy.
Capital Resources
We plan to fund our operations for the next twelve months primarily with cash on
hand, cash from operating activities, including net receipts from derivative
settlements and borrowings under the Credit Facility. Based upon current price
and production expectations for the remainder of the year, we believe that our
cash on hand, cash from operating activities and borrowings under our Credit
Facility will be sufficient to fund our operations for the next twelve months;
however, future cash flows are subject to a number of variables including the
length and magnitude of the current global economic slowdown associated with the
COVID-19 health crisis and related disruptions to global energy markets.
Cash on Hand and Cash From Operating Activities. As of May 7, 2020, we had
approximately $39 million of cash on hand. For additional information and an
analysis of our historical cash from operating activities, see the "Cash Flows"
discussion that follows.
Credit Facility Borrowings. During the three months ended March 31, 2020, we
borrowed $37 million, net of repayments, under the Credit Facility. We paid down
$20 million on May 4, 2020 subsequent to the effective date of the Seventh
Amendment. For additional information regarding the terms and covenants under
the Credit Facility, see the "Capitalization" discussion that follows.
The following table summarizes our borrowing activity under the Credit Facility
for the periods presented:
                                                                  Borrowings Outstanding
                                                                  Weighted-                        Weighted-
                                             End of Period         Average           Maximum      Average Rate
Three months ended March 31, 2020          $       399,400   $     376,059         $ 399,400           3.68 %


Proceeds from Sales of Assets. For additional information and an analysis of our
historical proceeds from sales of assets, see the "Cash Flows" discussion that
follows.
Capital Markets Transactions. From time-to-time and under market conditions that
we believe are favorable to us, we may consider capital market transactions,
including the offering of debt and equity securities. We intend to maintain an
effective shelf registration statement to allow for optionality, including by
filing in the near term a new Shelf Registration Statement on Form S-3 in
advance of the expiration of our current Shelf Registration Statement. At the
present time, however; we do not believe that the market conditions for such
transactions are viable for entities of our size within our industry.
Accordingly, we do not consider such transactions as a potential source of
capital at this time.

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