E&P CFO to leave after recent deal collapse

Steve Hartman, the CFO of Penn Virginia has agreed to leave the company by December 31, 2019 at the latest. The company is initiating a search to identify a permanent CFO.

Penn Virginia is an E&P company that primarily has its operations in the Eagle Ford basin.

Mr Hartman has been with Penn Virginia since 2003 and has been the CFO since December 2010. Prior to that he worked at Houston-based El Paso Corporation and its publicly-traded spin-off, GulfTerra Energy Partners.

Separation payments

Under the terms of his separation agreement, he will receive

  • lump sum payment of one year’s salary ($283,250).
  • lump sum payment of the annual cash bonus for 2019 to be paid in early 2020. (For 2018 Mr Hartman received a bonus of $226,317).
  • Accelerated vesting of equity awards. (At the current share price they are worth $1.4 million, ignoring the additional $0.6 million of stock that vests in September).

Recent history of Penn Virginia

Penn Virginia filed for bankruptcy in May 2016 and moved its headquarters from Pennsylvania to west Houston as part of that process. It emerged from bankruptcy in September 2016. In 2017, the Board of directors put the company up for sale. After 23 prospective buyers signed non-disclosure agreements, the Board elected not to sell at that time.

Denbury Resources of Plano originally approached Penn Virginia in April 2018 to discuss a merger. The Board again put the company for sale, signing non-disclosure agreements with 12 parties. In October 2018 the company announced that it would be acquired for $1.7 billion (including debt) by Denbury.

The deal with Denbury collapsed in March due to the downturn in oil prices and opposition from both sets of shareholders. Penn shareholders (primarily Mangrove Partners, an activist investor owning 11%) thought the company was selling too cheaply. Denbury shareholders thought there was too much debt and didn’t like the strategic rationale (the company produces from mature oilfields using tertiary recovery).

Penn Virginia now has an enterprise value of $953 million.

Penn Virginia SEC filing


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