Penn Virginia Corporation declared a 2011 capital expenditures budget of $290 million and also provided initial full-year 2011 guidance.

The 2011 capital budget is approximately 40 percent lower than expected 2010 capital expenditures of $475 million due primarily to a weak natural gas price environment and outlook. The company intend to focus 2011 capital spending on higher-return play types that are oily or liquids rich and to defer drilling of the gassier, and largely held-by-production, Haynesville Shale and Cotton Valley in east Texas and Selma Chalk in Mississippi. Penn Virginia expect to fund their capital spending program entirely by internally generated cash flows and over $500 million of financial liquidity at the beginning of 2011, comprised of cash on hand, committed availability under their revolving credit facility ($300 million) and an additional $120 million of borrowing base availability.

A. James Dearlove, President and Chief Executive Officer said, "We have adjusted our capital spending plans to reflect changing market conditions while continuing to provide production and reserve growth. We believe that our program for 2011 provides new growth opportunities, which will meaningfully increase our oil and liquids production and allow us to succeed in the current commodity price environment."

The capital budget includes approximately $240 million of development and exploratory drilling and completion expenditures, mostly associated with horizontal drilling, approximately $25 million for leasehold acquisition and approximately $18 million for geological and geophysical expenditures. Capital expenditures in 2011 will primarily target the Granite Wash and other play types in Oklahoma, the Eagle Ford Shale in South Texas and the Marcellus Shale in Pennsylvania. Approximately $212 million, or 73 percent of the capital budget, relates to oily and liquids rich play types, and Penn Virginia expect that oil and liquids production will constitute 25 to 30 percent of our expected 2011 production, a significant increase from the approximately 17 to 18 percent oil and liquids contribution to production expected in 2010.

Penn Virginia anticipate 2011 production will range between 50.0 and 54.0 billion cubic feet of natural gas equivalent ("Bcfe"), as compared to 2010 production guidance of 46.5 to 47.5 Bcfe, an 11 percent increase between the midpoints of the guidance ranges. Due to natural declines in production from the Haynesville Shale, Cotton Valley and Selma Chalk, and given expected initial production contributions from the Eagle Ford Shale and Marcellus Shale to begin in mid-2011, the company expect the majority of 2011 production will occur in the second half of the year. Furthermore, Penn Virginia expect the large majority of the year-over-year production increase to come from the Granite Wash play in the Mid-Continent region.

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