PVR Partners Announces Third Quarter Results and Increases Quarterly Distribution

     PVR Partners Announces Third Quarter Results and Increases Quarterly                                  Distribution  PR Newswire  RADNOR, Pa., Oct. 24, 2012  RADNOR, Pa., Oct. 24, 2012 /PRNewswire/ --PVR Partners, L.P. (NYSE: PVR) ("PVR") today reported financial and operational results for the three months ended September 30, 2012. In addition, PVR announced an increase in its quarterly distribution to $0.54 per unit.  (Logo: http://photos.prnewswire.com/prnh/20110224/PH54022LOGO )  Third Quarter Results  Third quarter 2012 highlights and results, with comparisons to third quarter 2011 results, included the following:    oAdjusted EBITDA of $61.2 million as compared to $60.0 million.   oDistributable cash flow ("DCF") of $29.9 million as compared to $36.1     million.   oAdjusted net income of $7.7 million as compared to $20.5 million.  Adjusted EBITDA, distributable cash flow, and adjusted net income are not Generally Accepted Accounting Principles ("GAAP") measures. Definitions and reconciliations of these non-GAAP measures to GAAP reporting measures appear in the financial tables which follow.  Quarterly Distribution  The Board of Directors of PVR GP, LLC, the general partner of PVR, declared a quarterly distribution of $0.54 per unit payable in cash on November 14, 2012 to common unitholders of record at the close of business on November 7, 2012. This distribution equates to an annualized rate of $2.16 per unit, and represents a 1.9% increase over the prior quarter distribution and an 8.0% increase over the third quarter of 2011.  Management Comment  "While our operating results continue to be impacted by very challenging coal markets and low NGL prices in the Midcontinent Midstream Segment, the solid growth of our Eastern Midstream business continued during the third quarter," said Bill Shea, President and CEO of PVR's general partner. "The strong volume gains and operating results of our Eastern Midstream Segment reflect the growing positive impacts of the acquisition of Chief Gathering and the continuing build out of our Lycoming system and other internal growth projects in the Marcellus. With the recent start of operation of our new Wyoming County Pipeline, we expect continued strong growth in the Eastern Midstream Segment during the fourth quarter."  Eastern Midstream Segment  The Eastern Midstream Segment reported third quarter 2012 results, with comparisons to third quarter 2011 results, as follows:    oAdjusted EBITDA of $21.4 million as compared to $6.6 million, primarily     due to the continued development of internal growth projects and the     acquisition of Chief Gathering LLC.   oQuarterly average throughput volumes of 456 million cubic feet per day     ("MMcfd"), as compared to 63 MMcfd. The volume growth reflects the     expansion of business on PVR's existing Lycoming and Wyoming systems, as     well as the acquisition of Chief Gathering.  Midcontinent Midstream Segment  The Midcontinent Midstream Segment reported third quarter 2012 results, with comparisons to third quarter 2011 results, as follows:    oAdjusted EBITDA of $13.0 million as compared to $14.1 million, primarily     due to low NGL prices, the migration to lower-margin fee-based contracts,     and the sale of our Crossroads system.   oQuarterly average throughput volumes of 410 MMcfd, as compared to 441     MMcfd. Third quarter 2011 volumes include approximately 48 MMcfd     attributable to the Crossroads system that was sold on July 3, 2012.  Coal and Natural Resource Management Segment  The Coal and Natural Resource Management Segment reported third quarter 2012 results, with comparisons to third quarter 2011 results, as follows:    oAdjusted EBITDA of $26.8 million as compared to $39.4 million, primarily     due to decreased coal production and pricing.   oCoal royalty tons of 7.7 million tons, as compared to 9.5 million tons.   oCoal royalties revenue of $28.8 million, or $3.73 per ton, as compared to     $41.0 million, or $4.32 per ton.  Capital Investment and Resources  We invested approximately $150.0 million on internal growth projects during the third quarter of 2012, including $130.6 million in the Eastern Midstream Segment. We now expect 2012 internal growth capital to total approximately $485 million.  As of September 30, 2012, we had borrowings of $535.0 million under our $1.0 billion revolving credit facility with remaining borrowing capacity thereunder of $457.1 million.  Expansion Projects Update  As previously reported, the Wyoming County Pipeline began full commercial operation at the end of the third quarter. Current volumes on the Wyoming County Pipeline are approximately 325 MMcfd. Construction continues to progress on Phase III and the Canton Lateral on our Lycoming County, Pennsylvania gas trunkline and water line, and these projects are expected to be in service by the end of the fourth quarter to gather gas for an affiliate of Southwestern Energy Company and a subsidiary of Royal Dutch Shell. Construction of the first phase of the new gathering system in Lycoming County to service the acreage dedications of Inflection Energy has also begun and is proceeding on schedule.  Financial Guidance for 2012  PVR's financial guidance for full year 2012 Adjusted EBITDA in the range of $245 - $260 million and full year 2012 distributable cash flow, net of maintenance and replacement capital, in the range of $120 - $130 million is unchanged from guidance provided with the second quarter results in July. PVR's financial guidance is based on numerous assumptions about future events and conditions and, therefore, could vary materially from actual results. These estimates, including capital expenditure plans, are meant to provide guidance only and are subject to revision for acquisitions or operating environment changes. Adjusted EBITDA and distributable cash flow are non-GAAP measures; reconciliations of these non-GAAP measures to GAAP reporting measures appear in the financial tables which follow.  Third Quarter 2012 Financial and Operational Results Conference Call  A conference call and webcast, during which management will discuss third quarter 2012 financial and operational results, is scheduled for Wednesday, October 24, 2012 at 11:00 a.m. EDT. Prepared remarks by William H. Shea, Jr., President and Chief Executive Officer, and other members of company management will be followed by a question and answer period. Interested parties may listen via webcast at http://www.videonewswire.com/event.asp?id=89879 or by logging on using the link posted on our website, www.pvrpartners.com. Participants who would like to ask questions may join the conference via phone by dialing 800-860-2442 (international 412-858-4600) five to ten minutes before the scheduled start of the conference call (reference the PVR Partners call). An on-demand replay of the webcast will be available on our website shortly after the conclusion of the call. A telephonic replay of the call will be available through October 30 by dialing 877-344-7529 (international: 412-317-0088) and using conference playback number 10019447.  ******  PVR Partners, L.P. (NYSE: PVR) is a publicly traded limited partnership which owns and operates a network of natural gas midstream pipelines and processing plants, and owns and manages coal and natural resource properties. Our midstream assets, located principally in Texas, Oklahoma and Pennsylvania, provide gathering, transportation, compression, processing, dehydration and related services to natural gas producers. Our coal and natural resource properties, located in the Appalachian, Illinois and San Juan basins, are leased to experienced operators in exchange for royalty payments. More information about PVR is available on our website at www.pvrpartners.com.  ******  This release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100.0%) of the Partnership's distributions to non-U.S. investors as being attributable to income that is effectively connected with a United States trade or business. Accordingly, the Partnership's distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate.  ******  This press release includes "forward-looking statements" within the meaning of federal securities laws. All statements, other than statements of historical facts, included in this release that address activities, events or developments that the Partnership expects, believes or anticipates will or may occur in the future are forward-looking statements. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties, factors and risks, many of which are outside the Partnership's ability to control or predict, which could cause results to differ materially from those expected by management. Such risks and uncertainties include, but are not limited to, regulatory, economic and market conditions, our ability realize the anticipated benefits from the acquisition of Chief, the timing and success of business development efforts and other uncertainties. Additional information concerning these and other factors can be found in our press releases and public periodic filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2011 and most recently filed Quarterly Reports on Form 10-Q. Readers should not place undue reliance on forward-looking statements, which reflect management's views only as of the date hereof. We undertake no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.    PVR PARTNERS, L.P. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - unaudited (in thousands, except per unit data)                             Three Months Ended        Nine Months Ended                             September 30,             September 30,                             2012         2011         2012         2011 Revenues  Natural gas           $        $        $        $                               78,026      120,240     215,780      324,447  Natural gas liquids    96,237       129,389      316,161      374,279  Gathering and          27,229       10,081       62,488       24,172 transportation  Coal royalties         28,760       40,977       91,150       124,546 Gain on sale of plant  31,292       -            31,292       -  Other                  7,303        7,665        21,305       24,757 Total revenues              268,847      308,352      738,176      872,201 Expenses  Cost of gas purchased  147,246      223,762      453,543      613,295  Operating              17,587       15,797       47,530       43,112  General and            11,531       8,755        34,574       31,700 administrative  Acquisition related    -            -            14,049       - costs  Impairments            -            -            124,845      -  Depreciation,          31,992       22,463       84,301       65,357 depletion and amortization Total expenses              208,356      270,777      758,842      753,464 Operating income (loss)     60,491       37,575       (20,666)     118,737 Other income (expense)  Interest expense       (20,288)     (10,528)     (45,616)     (33,806)  Derivatives            (1,524)      8,690        2,201        (6,289)  Interest income and    104          120          329          384 other Net income (loss)          38,783       35,857       (63,752)     79,026 Net loss (income) attributable to             -            -            -            664 noncontrolling interests (pre-merger) Net income (loss)           $        $       $        $    attributable to PVR         38,783      35,857      (63,752)    79,690 Partners', L.P. Earnings per common unit,   $       $       $       $      basic and diluted            0.16        0.50     (1.14)    1.26 Weighted average number of common units outstanding,   88,366       71,197       83,834       63,019 basic and diluted Weighted average number of  21,620                    10,770 Class B units outstanding Weighted average number of  10,346                    5,173 Special units outstanding Other data: Daily throughput volumes (MMcfd) - Eastern           456          63           337          47 Midstream Daily throughput volumes (MMcfd) - Midcontinent      410          441          435          415 Midstream Coal royalty tons (in       7,703        9,479        23,584       29,501 thousands)        PVR PARTNERS, L.P. CONDENSED CONSOLIDATED BALANCE SHEETS - unaudited (in thousands)                           September 30,  December 31,                           2012           2011 Assets  Cash and cash        $          $      equivalents               10,127         8,640  Accounts receivable  97,443         101,340  Other current        5,314          5,640 assets  Total current    112,884        115,620 assets  Property, plant and  1,822,010      1,282,297 equipment, net  Other long-term      854,140        196,075 assets  Total assets    $            $                              2,789,034      1,593,992 Liabilities and Partners' Capital  Accounts payable     $           $     and accrued liabilities   152,754       124,082  Deferred income      3,963          3,416  Derivative           1,787          12,042 liabilities  Total current    158,504        139,540 liabilities  Other long-term      33,933         31,748 liabilities  Senior notes        900,000        300,000  Revolving credit     535,000        541,000 facility  Partners' capital    1,161,597      581,704  Total           $            $    liabilities and           2,789,034      1,593,992 partners' capital CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - unaudited (in thousands)                           Three Months Ended           Nine Months Ended                           September 30,                September 30,                           2012           2011          2012         2011 Cash flows from operating activities  Net income (loss)    $          $        $        $                              38,783        35,857       (63,752)    79,026  Adjustments to reconcile net income to  net cash provided by operating activities:  Gain on sale of      (31,292)       -             (31,292)     - plant  Depreciation, depletion and             31,992         22,463        84,301       65,357 amortization  Impairments          -              -             124,845      -  Commodity derivative contracts:  Total derivative losses included in net    1,524          (8,690)       (2,201)      6,289 income  Cash payments to settle derivatives for    (1,332)        (6,699)       (8,578)      (19,477) the period  Non-cash interest    1,589          1,040         4,217        4,735 expense  Non-cash unit-based  1,086          966           4,643        2,805 compensation  Equity earnings, net of distributions      697            2,818         142          4,635 received  Other                (231)          (127)         (929)        (909)  Changes in operating assets and      23,334         2,329         23,396       (153) liabilities Net cash provided by      66,150         49,957        134,792      142,308 operating activities Cash flows from investing activities Acquisitions, net of      787            (95)          (850,156)    (122,135) cash acquired Additions to property,    (173,455)      (67,000)      (348,449)    (141,796) plant and equipment Proceeds for sale of      62,271         -             62,271       - plant Other                     (9,932)        347           (20,992)     2,558 Net cash used in          (120,329)      (66,748)      (1,157,326)  (261,373) investing activities Cash flows from financing activities Net proceeds from equity  (219)          -             577,743      - offerings Proceeds from issuance    -              -             600,000      - of senior notes Distributions to          (46,833)       (34,887)      (128,516)    (99,696) partners Proceeds from (repayments of)           103,000        55,000        (6,000)      227,000 borrowings, net Cash paid for debt        (617)          -             (19,206)     (3,675) issuance costs Cash paid for merger      -              (16)          -            (6,620) Net cash provided by      55,331         20,097        1,024,021    117,009 financing activities Net increase (decrease) in cash and cash          1,152          3,306         1,487        (2,056) equivalents Cash and cash equivalents - beginning   8,975          10,602        8,640        15,964 of period Cash and cash             $          $        $       $    equivalents - end of      10,127        13,908       10,127       13,908 period          PVR PARTNERS, L.P. CERTAIN NON-GAAP FINANCIAL MEASURES - unaudited (in thousands)                  Three Months Ended  Nine Months Ended                  September 30,       September 30,        Guidance Range                  2012      2011      2012       2011      Full Year 2012 Reconciliation of Non-GAAP "Segment Adjusted EBITDA" to GAAP "Net income (loss)": Segment Adjusted EBITDA (a): Eastern          $       $      $        $       $         $  Midstream        21,440   6,583    49,060    14,547   87,000    93,000 Midcontinent     12,994    14,052    38,001     51,084    58,000     62,000 Midstream Coal and Natural          26,757    39,403    84,176     118,463   100,000    105,000 Resource Management Total segment    $       $       $         $        $          $ adjusted EBITDA  61,191   60,038   171,237   184,094  245,000   260,000 Adjustments to reconcile total Segment Adjusted EBITDA to Net income (loss) Depreciation, depletion and    (31,992)  (22,463)  (84,301)   (65,357) amortization Impairments      -         -         (124,845)  - Acquisition      -         -         (14,049)   - related costs Gain on sale of  31,292    -         31,292     - plant Interest         (20,288)  (10,528)  (45,616)   (33,806) expense Derivatives      (1,524)   8,690     2,201      (6,289) Other            104       120       329        384 Net income       $       $       $         $   (loss)           38,783   35,857   (63,752)  79,026 Reconciliation of GAAP "Net income (loss)" to Non-GAAP "Distributable cash flow": Net income       $       $       $         $       $          $ (loss)           38,783   35,857   (63,752)  79,026   (45,000)  (42,000) Depreciation, depletion and    31,992    22,463    84,301     65,357    115,000    118,000 amortization Impairment       -         -         124,845    -         125,000    125,000 Acquisition      -         -         14,049     -         14,000     14,000 related costs Gain on sale of  (31,292)  -         (31,292)   -         (31,300)   (31,300) plant Derivative contracts:  Derivative losses included  1,524     (8,690)   (2,201)    6,289     (2,000)    (1,000) in net income  Cash payments to settle        (1,332)   (6,699)   (8,578)    (19,477)  (11,000)   (10,000) derivatives for the period Equity earnings from joint ventures, net    697       2,818     142        4,635     (500)      500 of distributions Maintenance capital          (3,749)   (2,884)   (12,197)   (8,532)   (17,200)   (16,200) expenditures Replacement capital          (6,725)   (6,725)   (20,175)   (20,175)  (27,000)   (27,000) expenditures Distributable    $       $       $        $        $          $ cash flow (b)    29,898   36,140   85,142    107,123  120,000   130,000 Distribution to Partners: Total cash distribution     $       $       $         $   paid during the  46,833   34,887   128,516   99,696 period Reconciliation of GAAP "Net income (loss)" to Non-GAAP "Net income as adjusted": Net income       $       $       $         $   (loss)           38,783   35,857   (63,752)  79,026 Impairments      -         -         124,845    - Acquisition      -         -         14,049     - related costs Gain on sale of  (31,292)  -         (31,292)   - plant Adjustments for derivatives: Derivative losses included  1,524     (8,690)   (2,201)    6,289 in net income Cash payments to settle        (1,332)   (6,699)   (8,578)    (19,477) derivatives for the period Net income, as   $      $       $        $   adjusted (c)     7,683    20,468   33,071    65,838 (a) Adjusted EBITDA, or earnings before interest, tax and depreciation, depletion and amortization ("DD&A"), represents operating income plus DD&A, plus impairments, plus acquisition related costs, minus gains on sale of plant. We believe EBITDA or a version of Adjusted EBITDA is commonly used by investors and professional research analysts in the valuation, comparison, rating and investment recommendations of companies in the natural gas midstream and coal industries. We use this information for comparative purposes within the industry. EBITDA is not a measure of financial performance under GAAP and should not be considered as a measure of liquidity or as an alternative to net income. (b) Distributable cash flow represents net income plus DD&A, plus impairments, plus acquisition related costs, minus gain on sale of plant, plus (minus) derivative losses (gains) included in net income, plus (minus) cash received (paid) for derivative settlements, minus equity earnings in joint ventures, plus cash distributions from joint ventures, minus maintenance capital expenditures, minus replacement capital expenditures. Distributable cash flow is also the quantitative standard used by investors and professional research analysts in the valuation, comparison, rating and investment recommendations of publicly traded partnerships. Distributable cash flow is presented because we believe it is a useful adjunct to net cash provided by operating activities under GAAP. Distributable cash flow is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing or financing activities, as an indicator of cash flows, as a measure of liquidity or as an alternative to net income. (c) Net income, as adjusted, represents net income adjusted to exclude the effects impairments, one-time charges related to acquisitions, gains on sale of plant, and non-cash changes in the fair value of derivatives. We believe this presentation is commonly used by investors and professional research analysts in the valuation, comparison, rating and investment recommendations of companies in the natural gas midstream industry. We use this information for comparative purposes within the industry. Net income, as adjusted, is not a measure of financial performance under GAAP and should not be considered as a measure of liquidity or as an alternative to net income.      PVR PARTNERS, L.P. QUARTERLY SEGMENT INFORMATION - unaudited (in thousands)                                 Eastern Midstream                                 Three Months Ended        Nine Months Ended                                 September 30,             September 30,                                 2012         2011         2012       2011 Revenues  Gathering and              $        $       $      $     transportation                  25,759      7,720       56,710     16,582  Other                      1,041        -            2,687      -  Total revenues          26,800       7,720        59,397     16,582 Expenses  Operating                 2,124        635          4,211      898  General and                3,236        502          6,126      1,137 administrative  Acquisition related costs  -            -            14,049     -  Depreciation, depletion    11,867       987          22,322     2,151 and amortization  Total expenses           17,227       2,124        46,708     4,186 Operating income                $       $       $      $                                     9,573       5,596       12,689     12,396                                 Midcontinent Midstream                                 Three Months Ended        Nine Months Ended                                 September 30,             September 30,                                 2012         2011         2012       2011 Revenues  Natural gas                $        $         $       $                                    78,026      120,240     215,780    324,447  Natural gas liquids        96,237       129,389      316,161    374,279  Gathering and              1,470        2,361        5,778      7,590 transportation  Gain on sale of plant      31,292       -            31,292     -  Other                      497          1,186        2,042      4,874  Total revenues          207,522      253,176      571,053    711,190 Expenses  Cost of gas purchased      147,246      223,762      453,543    613,295  Operating                 11,164       10,880       31,642     30,399  General and                4,826        4,482        16,575     16,412 administrative  Impairments                -            -            124,845    -  Depreciation, depletion    11,913       11,904       37,220     35,228 and amortization  Total expenses           175,149      251,028      663,825    695,334 Operating income (loss)        $        $       $       $                                     32,373      2,148       (92,772)  15,856                                 Coal and Natural Resource Management                                 Three Months Ended        Nine Months Ended                                 September 30,             September 30,                                 2012         2011         2012       2011 Revenues  Coal royalties             $        $        $      $                                    28,760      40,977      91,150     124,546  Coal services              1,953        2,151        4,583      6,739  Timber                     1,411        1,457        4,284      3,834  Oil and gas royalties      977          1,234        2,165      3,016  Other                      1,424        1,637        5,544      6,294  Total revenues          34,525       47,456       107,726    144,429 Expenses  Operating                 4,299        4,282        11,677     11,815  General and                3,469        3,771        11,873     14,151 administrative  Depreciation, depletion    8,212        9,572        24,759     27,978 and amortization  Total expenses           15,980       17,625       48,309     53,944 Operating income                $        $        $      $                                     18,545      29,831      59,417     90,485        PVR PARTNERS, L.P. DERIVATIVE CONTRACT SUMMARY - unaudited As of September 30, 2012                      Average                       Volume Per         Swap           Weighted Average Price                       Day                Price          Put (a)      Call (b) NGL - natural        (gallons)                       (per gallon) gasoline collar Fourth quarter       54,000                            $1.75        $2.02 2012 Crude swap           (barrels)        (per                                         barrel) Fourth quarter       600                $88.62 2012 Natural gas          (MMBtu)          (MMBtu) purchase swap Fourth quarter       4,000              $5.195 2012 We estimate that, excluding the effects of derivative positions described above, for every $1.00 per MMBtu increase or decrease in the natural gas price, our natural gas midstream gross margin and operating income (loss) for the remainder of 2012 would increase or decrease by $0.1 million. In addition, we estimate that for every $5.00 per barrel increase or decrease in the crude oil price, our natural gas midstream gross margin and operating income (loss) for the remainder of 2012 would increase or decrease by $2.0 million. This assumes that natural gas prices, crude oil prices and inlet volumes remain constant at anticipated levels. These estimated changes in our gross margin and operating income (loss) exclude potential cash receipts or payments in settling these derivative positions. (a) - Purchased put/floor. (b) - Sold call/ceiling.      Contact: Stephen R. Milbourne          Director - Investor Relations          Phone: 610-975-8204          E-Mail: invest@pvrpartners.com    SOURCE PVR Partners, L.P.  Website: http://www.pvrpartners.com