Unit Closes Purchase Of Gassy Arkoma Assets From Penn Virginia

Bought Arkoma Basin assets in 4 TX cos. and 23 OK cos. targeting Hartshorne CBM & Woodford shale formations, gaining 7.8 MMcfe/d, 42.5 Bcfe proved.

Unit Petroleum Co., a subsidiary of Unit Corp., Tulsa, Okla., (NYSE: UNT) has closed its acquisition of substantially all of the Arkoma Basin oil and gas assets in Texas and Oklahoma held by Penn Virginia Corp., Radnor, Pa., (NYSE: PVA) for $30.5 million in cash.

The assets were held by Penn Virginia’s subsidiaries Penn Virginia MC Energy LLC and Penn Virginia Oil & Gas Corp.

The properties include the Hartshorne coalbed-methane and Woodford shale formations and a number of conventional natural gas play types. The assets are in Beaver, Caddo, Canadian, Cleveland, Custer, Dewey, Ellis, Garvin, Grady, Haskell, Hughes, Latimer, Le Flore, Logan, McClain, McIntosh, Noble, Oklahoma, Pawnee, Pittsburg, Sequoyah, Stephens and Washita counties, Oklahoma, and Irion, Lipscomb, Ochiltree and Upton counties, Texas.

Production is approximately 7.8 million cubic feet of gas equivalent per day (97% gas). Proved reserves as of year-end 2010 were 42.5 billion cubic feet equivalent (78% proved developed).

Penn Virginia president and chief executive H. Baird Whitehead says, “Given their gassy nature and our current focus on drilling higher rate-of-return, oily locations in the Eagle Ford shale and Anadarko Basin, as well as our substantial retained inventory of natural gas drilling locations in east Texas, Mississippi and Appalachia, we were unlikely to develop these assets in the future. Barring further investment on our part, the divested assets were expected to generate negative operating income and undergo substantial declines in both production and reserves from 2012 forward.”

Penn Virginia plans to use the net proceeds to partially fund its 2011 capex plan and general corporate purposes.

RBC Richardson Barr was financial advisor to Penn Virginia.