Focus on Eagle Ford boosts firm’s rebound
Three years ago, Houston-based Penn Virginia Corp. filed for Chapter 11 bankruptcy and was forced to delist from the New York Stock Exchange. Now those days of financial hardship are behind it as Penn Virginia’s profits rebounded last year, putting it at No.5 on this year’s Chronicle 100 list of top-performing Houston-based companies.
With about 95 employees, Penn Virginia’s operations are relatively small compared with other shale oil powerhouses. Last year,
it had just two to three drilling rigs running in the Eagle Ford shale region.
Yet the company certainly makes those rigs count. After buying about 19,600 net acres in the Eagle Ford region from Oklahoma City-based Devon Energy in 2017, Penn Virginia started realizing the benefits of shifting from a company with national operations and plenty of natural gas production to a more nimble company focused on Eagle Ford shale oil. It had 98,200 net acres at the end of 2018.
The NASDAQ-traded company increased oil production by 110 percent in 2018 over the previous year to produce 21,765 barrels of oil equivalent per day. That hike in oil production came as oil prices climbed to about
$65 a barrel and Penn Virginia kept operating cost low, helping the company boost profits by a whopping 588 percent.
The company’s net income hit $224 million in 2018, up from $32.6 million the year earlier. Its revenue more than doubled, reaching $440 million from $160 million the year before.
It’s a dramatic turnaround for the company, said CEO John Brooks, who was named CEO of Penn Virginia in 2017, the year after it emerged from bankruptcy.
“We went from being a distressed company exiting the restructuring process to growing at a phenomenal rate with really low costs and high revenue,” Brooks said in an interview. “It’s nothing short of remarkable for our team. It certainly took everyone here to do it.”
For 2019, Brooks said, the company still plans to boost oil production by 25 to 30 percent — a slower rate of growth so it can focus on generating positive cash flow while decreasing capital expenses.
Last fall, Penn Virginia struck a deal to be acquired by Plano-based Denbury Resources Inc. for $1.7 billion, including the assumption of debt, but the merger was called off in March, at least in part because of opposition from Penn Virginia’s shareholders. Brooks said Penn Virginia would consider another buyer if it is the best way to maximize shareholder value, but for now it plans to operate as a stand-alone company.
“If you look at how we stack up against our peers … we believe we’re significantly undervalued,” Brooks said.