Penn Virginia Resource Partners (PVR) partners reported record net income of $34.5 MM or $0.65 per limited partner unit, an increase of nearly 117% over Q1 07 earnings of $0.30 per unit and beating our expectations of $0.37 per unit. In the company's two main operating segments -- coal and midstream gas processing -- prices, margins and production increased year-over-year due to a strengthening coal market and increased crude prices from the same period a year ago.
This led to record revenues and increased distributable cash flow, a primary measure of MLP performance, over the first quarter '07. As a result, we have increased our full-year 2008/2009 earnings estimates, from $1.37 and $1.56 to $2.64 and $2.59 per limited partner unit, respectively.
Strong energy fundamentals in the coal markets as well as the bull run in crude oil contributed lead to the 4% and 50% increases in average royalties per ton and gross midstream processing margin, year-over-year, respectively. These earnings came in above our expectations of $0.37 per limited partner unit. The variance was due to higher than expected average royalty prices per ton and unanticipated positive non-cash effects of marked to market derivative positions. Stripping out this expense line item, our earnings estimates would have been inline with actual results.
Read the analyst note on PVR.
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