PVAC Penn Virginia Corp.

Management Discussion

• We are an independent oil and gas company engaged in the onshore exploration, development and production of crude oil, natural gas liquids, or NGLs, and natural gas. Our current operations consist of drilling unconventional horizontal development wells and operating our producing wells in the Eagle Ford Shale, or the Eagle Ford, in Gonzales, Lavaca, Fayette and DeWitt Counties in South Texas.
• Crude oil prices increased moderately throughout the first half of 2019, rising from levels in the upper $40 per barrel range at the beginning of the year and into the lower $60 per barrel range in April and May before falling back to the mid $50 per barrel range by the end of September 2019 due primarily to domestic and global supply and demand and other geopolitical dynamics. While impacting us to a lesser extent, NGL and natural gas pricing has steadily declined from year-end 2018 levels due primarily to excess domestic supply. Collectively, these trends have had a substantial impact on the rate of growth in our product revenues.
• Since February 2019, we have contracted for our drilling rigs on a pad-to-pad basis and the day rates charged for these services as well as casing costs have declined through the nine months ended September 30, 2019. In addition, costs associated with our dedicated frac services agreement including certain component stimulation product and service costs have also declined in the nine months ended September 30, 2019. For the remainder of the year, we anticipate that these costs will continue a declining trend. Costs incurred for most oilfield products and services associated with operating our properties remained relatively stable during the nine months ended September 30, 2019 and are anticipated to remain as such for the remainder of 2019 with moderate declines in certain costs consistent with recent industry experience.