Penn Virginia Resource Partners L.P. (PVR) posted adjusted net income of 30 cents per unit, marginally above the Zacks Consensus Estimate of 29 cents and well above 19 cents posted a year ago. The increase in net income was primarily due to improved operating income from PVR Midstream and lower interest and other expenses, offset by lower operating income from PVR Coal & Natural Resource Management and an increase in cash paid to settle interest rate derivatives. Distributable cash flow (DCF) increased 33% to $37.2 million from $28.0 million last year.
 
Total revenues in the quarter declined 45% year over year to $155.6 million, driven by lower revenue across the company’s business segments due to lower commodity prices.
 
Coal and Natural Resource Management segment’s revenues, net of coal royalties expense, decreased 15% to $33.6 million, primarily due to lower coal royalties revenue, oil and gas royalties revenues resulting from lower commodity prices, and timber and other revenues. Coal royalties revenues, net of coal royalties expense, of $28.2 million ($3.37 per ton) decreased 9.6% from $31.2 million ($3.67 per ton) last year. Penn Virginia’s coal production by lessees was 8.4 million tons versus 8.5 million tons a year ago, benefiting from the long-term contract prices its lessees had previously negotiated with their customers.
 
Natural Gas Midstream (PVR Midstream) segment revenues declined 51% year over year to $120.4 million. System throughput volumes increased 7% to 29.8 billion cubic feet (Bcf) from 27.7 Bcf last year, primarily due to contributions from expansions and acquisitions completed in 2008 and 2009, along with successful results at the company’s gathering systems. While system throughput volumes declined 6% sequentially, processed volumes increased due to the acquisition of a processing plant and expanded capacity in the Panhandle system.
 
Penn Virginia continues to manage its financial position well, ending the third quarter with $170 million remaining under its revolving credit facility.  This provides the company with adequate capital to support modest growth opportunities. At quarter-end, Penn Virginia had outstanding borrowings of $628.1 million under its $800 million revolving credit facility and $11.3 million of cash and equivalents.
 
For 2009, the company has guided coal royalty tons to be in the range of 33-34 million tons, with average coal royalties per ton, net of coal royalty expense, to be $3.25-$3.35. System throughput volumes are expected to be in range of 330-340 million cubic feet (MMcf) per day, down 20 MMcf per day from previous guidance, reflecting lower expected system throughput volumes. However, the company expects processed volumes to increase.
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