26 May 2006 -- Penn Virginia Resource Partners, L.P. today announced the acquisition of the lease rights to approximately 69 million tons of coal reserves from a private seller for $65 million of cash.
The leased reserves are located on approximately 20,000 acres in Logan, Boone and Wyoming Counties, West Virginia. The reserves include approximately 21 million tons of compliance and high quality steam coal, which are currently being surface mined and produced at the rate of approximately 2.3 million tons per year. The reserves also include approximately 27 million tons of compliance grade deep mineable steam coal and approximately 21 million tons of deep mineable high volatile metallurgical coal.
PVR has entered into sublease agreements with operators who plan to use an existing permit to develop an initial deep mine expected to begin production in 2007 and to apply for permits necessary to develop additional deep mines over the next four years. All mines on the property are expected to be fully operational by approximately 2011 and annual production from the property is expected to exceed three million tons by 2009. The acquisition is expected to be accretive to net income, and cash flow from operations from the property over the first 12 months is expected to be $4.0 to $4.5 million.
A. James Dearlove, Chief Executive Officer of the Partnership's general partner, said in a statement, "We expect coal production from the property by 2009 to be sustainable at over three million tons per year for the following ten years. Acquisitions of this type are important to PVR's ability to sustain and increase coal related cash flows over the long term."