Penn Virginia borrowing base lowered

Oil and natural-gas company Penn Virginia Corp. said Tuesday its revolving credit administrator has recommended lowering the borrowing base to the company's bank group.

The new base uses year-end 2008 oil and gas reserves and will be subject to approval by banks holding two-thirds of the lending commitments. Such approval is expected around March 31.

The dollar amount of the new borrowing base will be disclosed upon its approval by the bank group.

The company said in a statement the proposed new base is significantly greater than outstanding borrowings and would allow for continued borrowings under the revolver.

As of March 9, outstanding borrowings were about $384 million.

Available borrowing capacity, together with operating cash flows, are expected to be more than sufficient to fund 2009 oil and gas capital expenditures.

The company said it was in compliance with the financial covenants under the revolving credit facility as of Dec. 31 and expects to remain in compliance during 2009.

"We understand the financial community's concern regarding liquidity in general and in the exploration and production industry in particular and, therefore, believe this update regarding our revolving credit facility is appropriate," said Chief Executive A. James Dearlove.

Dearlove said he expects the company's borrowing base reduction to be far less severe than what has been or will be experienced by others in the industry and said the new base is in line with expectations in light of the weak commodity price environment, offset with the 35 percent increase in proved reserves.

Penn Virginia focuses on the exploration, acquisition, development and production of oil and gas reserves in onshore regions of the U.S., including the East Texas, Mississippi, the Mid-Continent region, the Appalachian Basin and the Gulf Coast of Louisiana and Texas.

Shares rose 4.8 percent, or 42 cents, to $9.15 in afternoon trading.