Penn Virginia posts 86% gain in operating income

Shares in Penn Virginia Corp. climbed 12 percent this morning after the Radnor energy company said its second-quarter operating income soared 86 percent to $106.2 million from $57.1 million in last year's comparable quarter.

The Radnor-based producer of oil and natural gas also slightly boosted its production estimates for the rest of the year. The shares gained $6.84 cents to trade for $64.87 on the New York Stock Exchange. Despite the strong operating results, Penn Virginia's net fell to a $3.79 million loss from a profit of $23.88 million because of a $103.62 million mostly non-cash loss on derivatives. Penn Virginia said its net cash payments to settle derivatives designed to protect it from falling natural gas prices were $18 million, compared with $1.8 million of net cash payments in the comparable quarter.

Penn Virginia had to pay because natural gas prices climbed more than expected. However, since the end of the quarter, natural gas prices have fallen, which means that Penn Virginia could book gains on the derivatives in the future.