Penn Virginia Resource Partners L.P. (PVR) posted adjusted net income of 49 cents per unit, above the Zacks Consensus Estimate of 31 cents and well above 28 cents posted a year ago. The significant improvement in quarterly results was due to much higher fractionation spreads for PVR Midstream due to higher natural gas liquids (NGLs) prices and continued low natural gas costs.

For the full year 2009, the partnership reported adjusted earnings of $1.27 per unit, above the Zacks Consensus Estimate of $1.16 and marginally above last year’s earnings of $1.26.

Total revenue in the quarter increased 19.6% year over year to $194.9 million, driven by increased revenue at its midstream segment. For the full year, the partnership reported total revenue of $656.7 million, down 25.5% year over year.

Results by Segment

The Coal and Natural Resource Management segment’s revenue, net of coal royalties expense, decreased 15% to $34.6 million in the quarter. This was primarily due to lower coal royalties revenue, a decrease in other revenues resulting from decreased lessee minimum rental payments and coal transportation fees, and a decrease in oil and gas royalties and timber revenue resulting from lower commodity prices.

Coal royalties revenue, net of coal royalties expense, of $28.6 million ($3.38 per ton) decreased 11.7% from $32.4 million ($3.72 per ton) last year. Penn Virginia’s coal production by lessees was 8.5 million tons in the reported quarter versus 8.7 million tons a year ago.

In 2009, Penn Virginia’s coal production by lessees was a record 34.3 million tons with average coal royalties per ton of $3.51 ($3.34 net of coal royalties expense) as compared to 33.7 million tons with average coal royalties per ton of $3.65 ($3.36 net of coal royalties expense) in 2008.

Natural Gas Midstream (PVR Midstream) segment revenue increased 31% year over year to $155.9 million in the fourth quarter. Quarterly System throughput volumes decreased 6.4% to 27.9 billion cubic feet (Bcf) from 29.8 Bcf last year. Adjusted Midstream gross margin was $35.9 million ($1.29 per Mcf) as compared to $17.6 million ($0.59 per Mcf).

In 2009, PVR Midstream system throughput volumes were a record 121.3 Bcf, with adjusted gross margin of $0.90 per Mcf, as compared to 98.7 Bcf, with adjusted gross margin of $0.77 per Mcf.

Balance Sheet

In the fourth quarter, distributable cash flow (DCF) increased 38% to $48.3 million, primarily due to an $18.3 million increase in natural gas midstream segment gross margin and a $1.4 million decrease in other capital expenditures. At year-end, DCF was a record $151.7 million as compared to $129.9 million in 2008.

Penn Virginia continues to manage its financial position well, ending the year with $178.3 million remaining under its revolving credit facility and $8.7 million of cash and equivalents. This provides the company with adequate capital to support modest growth opportunities. At year-end, Penn Virginia had outstanding borrowings of $620.1 million under its $800 million revolving credit facility.

For 2010, the partnership has guided coal royalty tons to be in the range of 31.0-32.0 million tons, with average coal royalties per ton, net of coal royalty expense, to be $3.15-$3.25. Other revenue for 2010 is expected to be in the $21.0-$22.0 million range. System throughput volumes are expected to be in range of 350-360 million cubic feet (MMcf) per day.

For 2010, capital expenditure for the Coal and Natural Resource Management segment is expected to be approximately $6.0-$7.5 million. Capital expenditures for the Natural Gas Midstream segment is expected to be in the $50.0-$60.0 million range.

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