-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LVQYzHyxenpQ8OXEb7e86Sgxskx0paUaEglwjT1wXYroDIzK1gel/6S0RFvsLyty vqIUPyr3rGOY8vMoA6AiCg== 0000899140-02-000174.txt : 20020414 0000899140-02-000174.hdr.sgml : 20020414 ACCESSION NUMBER: 0000899140-02-000174 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20020228 GROUP MEMBERS: DANIEL S. LOEB SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: PENN VIRGINIA CORP CENTRAL INDEX KEY: 0000077159 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 231184320 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-12730 FILM NUMBER: 02561254 BUSINESS ADDRESS: STREET 1: 100 MATSONFORD ROAD SUITE 200 STREET 2: ONE RADNOR CORPORATE CENTER CITY: RADNOR STATE: PA ZIP: 19087 BUSINESS PHONE: 6106878900 MAIL ADDRESS: STREET 1: 800 BELLEVUE 200 S BROAD ST CITY: PHILADELPHIA STATE: PA ZIP: 19102 FORMER COMPANY: FORMER CONFORMED NAME: VIRGINIA COAL & IRON CO DATE OF NAME CHANGE: 19670501 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: THIRD POINT MANAGEMENT CO LLC CENTRAL INDEX KEY: 0001040273 IRS NUMBER: 133922602 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 12 EAST 49TH ST STREET 2: 28TH FL CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2122247400 MAIL ADDRESS: STREET 1: 12 EAST 49TH ST STREET 2: 28TH FL CITY: NEW YORK STATE: NY ZIP: 10017 SC 13D 1 lo1012114b.txt INITIAL FILING ON SCHEDULE 13D SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934* Penn Virginia Corporation - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock, $6.25 par value - -------------------------------------------------------------------------------- (Title of Class of Securities) 707882106 - -------------------------------------------------------------------------------- (CUSIP Number of Class of Securities) Daniel S. Loeb Third Point Management Company L.L.C. 12 East 49th Street, 28th Floor New York, NY 10017 (212) 224-7400 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) Copies to: Jack H. Nusbaum, Esq. Willkie Farr & Gallagher 787 Seventh Avenue New York, NY 10019-6099 (212) 728-8000 February 19, 2002 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Schedule) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box: [ ] NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 240.13d-7 for other parties to whom copies are to be sent. * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). SCHEDULE 13D - ------------------- ------------------ CUSIP No. 707882106 Page 2 of 13 Pages - ------------------- ------------------ - ----------- -------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Daniel S. Loeb - ----------- -------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X] (b) [ ] - ----------- -------------------------------------------------------------------- 3 SEC USE ONLY - ----------- -------------------------------------------------------------------- 4 SOURCE OF FUNDS* N/A - ----------- -------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - ----------- -------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States - --------------------- --------- ------------------------------------------------ 7 SOLE VOTING POWER 0 --------- ------------------------------------------------ NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY 500,000 OWNED BY --------- ------------------------------------------------ EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON WITH 0 --------- ------------------------------------------------ 10 SHARED DISPOSITIVE POWER 500,000 - ----------- -------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON 500,000 - ----------- -------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ----------- -------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.6% - ----------- -------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN - ----------- -------------------------------------------------------------------- SCHEDULE 13D - ------------------- ------------------ CUSIP No. 707882106 Page 3 of 13 Pages - ------------------- ------------------ - ----------- -------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Third Point Management Company L.L.C. I.D. #13-3922602 - ----------- -------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [X] (b) [ ] - ----------- -------------------------------------------------------------------- 3 SEC USE ONLY - ----------- -------------------------------------------------------------------- 4 SOURCE OF FUNDS* N/A - ----------- -------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDING IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - ----------- -------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - --------------------- --------- ------------------------------------------------ 7 SOLE VOTING POWER 0 --------- ------------------------------------------------ NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY 500,000 OWNED BY --------- ------------------------------------------------ EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON WITH 0 --------- ------------------------------------------------ 10 SHARED DISPOSITIVE POWER 500,000 - ----------- -------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH PERSON 500,000 - ----------- -------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ----------- -------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.6% - ----------- -------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO - ----------- -------------------------------------------------------------------- This Schedule 13D is being filed on behalf of Third Point Management Company L.L.C., a Delaware limited liability company (the "Management Company"), and Daniel S. Loeb, an individual ("Mr. Loeb" and, together with the Management Company, the "Reporting Persons"). This Schedule 13D relates to the common stock, par value $6.25 per share, of Penn Virginia Corporation, a Virginia corporation (the "Company"). Unless the context otherwise requires, references herein to the "Common Stock" are to such common stock of the Company. The Management Company is the investment manager or adviser to a variety of hedge funds and managed accounts (such funds and accounts, collectively, the "Funds"). The Funds directly own the Common Stock to which this Schedule 13D relates, and the Reporting Persons may be deemed to have beneficial ownership over such Common Stock by virtue of the authority granted to them by the Funds to vote and to dispose of the securities held by the Funds, including the Common Stock. Item 1. Security and Issuer. This statement on Schedule 13D relates to the Common Stock of the Company, and is being filed pursuant to Rules 13d-1 and 13d-5 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The address of the 4 principal executive offices of the Company is 100 Matsonford Road, Suite 200, Radnor, Pennsylvania 19087. Item 2. Identity and Background. (a) This statement is filed by the Reporting Persons. Daniel S. Loeb is the managing member of the Management Company and controls the Management Company's business activities. The Management Company is organized as a limited liability company under the laws of the State of Delaware. (b) The address of the principal business and principal office of the Management Company and Mr. Loeb is 12 East 49th Street, 28th Floor, New York, NY 10017. (c) The principal business of the Management Company is to serve as investment manager or adviser to the Funds, and to control the investing and trading in securities of the Funds. The principal business of Mr. Loeb is to act as the managing member of the Management Company. (d) None of the Reporting Persons, nor, to the best of their knowledge, any of their directors, executive officers, general partners or members has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). (e) None of the Reporting Persons, nor, to the best of their knowledge, any of their directors, executive officers, general partners or members has, during the last five years, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result 5 of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (f) Mr. Loeb is a United States citizen. Item 3. Source and Amount of Funds or Other Consideration. The Funds expended an aggregate of approximately $14,059,580.80 of their own investment capital to acquire the 500,000 shares of Common Stock held by them (the "Shares"). The Shares were acquired in open market purchases. The Funds effect purchases of securities primarily through margin accounts maintained for them with Bear, Stearns Securities Corp. (the "Primary Broker") which may extend margin credit to the Funds as and when required to open or carry positions in the margin accounts, subject to applicable Federal margin regulations, stock exchange rules and the firm's credit policies. In such instances, the positions held in the margin accounts are pledged as collateral security for the repayment of debit balances in the accounts. Item 4. Purpose of Transaction. The purpose of the acquisition of the Shares by the Funds is for investment. The Reporting Persons may cause the Funds to make further acquisitions of Common Stock 6 from time to time or to dispose of any or all of the shares of Common Stock held by the Funds at any time. As further detailed in a letter, dated February 27, 2002, from Mr. Loeb as managing member of the Management Company, to the President and Chief Executive Officer of the Company (the "CEO"), a copy of which is attached hereto as Exhibit 2, the Reporting Persons believe that the Company's Common Stock remains significantly undervalued. For the reasons set forth therein, the Reporting Persons are urging the CEO to manage the Company's operations in a manner to maximize the value of the Common Stock. In particular, the Reporting Persons encourage the consideration of the following actions on the part of the Company: (1) refraining from further dilutive oil and gas acquisitions; (2) drastically cutting back on the Company's drilling program; (3) contemplating the sale of some or all oil and gas assets; (4) using the cash flow freed up by steps 1, 2 and possibly 3 above to repurchase the Company's undervalued stock in the open market; and (5) increasing the value of the Company via its general partnership interest in Penn Virginia Resource Partners, L.P. The Reporting Persons are engaged in the investment business. In pursuing this business, the Reporting Persons analyze the operations, capital structure and markets of companies, including the Company, on a continuous basis through analysis of documentation and discussions with knowledgeable industry and market observers 7 and with representatives of such companies (often at the invitation of management). From time to time, one or more of the Reporting Persons may hold discussions with third parties or with management of such companies in which the Reporting Person may suggest or take a position with respect to potential changes in the operations, management or capital structure of such companies as a means of enhancing shareholder value. Such suggestions or positions may relate to one or more of the transactions specified in clauses (a) through (j) of Item 4 of Schedule 13D of the Exchange Act, including, without limitation, such matters as disposing of or selling all or a portion of the company or acquiring another company or business, changing operating or marketing strategies, adopting or not adopting certain types of anti-takeover measures and restructuring the company's capitalization or dividend policy. Except as set forth above, and in the letter attached hereto as Exhibit 2, the Reporting Persons do not have any present plans or proposals that relate to or would result in any of the actions required to be described in Item 4 of Schedule 13D. Each of the Reporting Persons may, at any time, review or reconsider its position with respect to the Company and formulate plans or proposals with respect to any of such matters, but has no present intention of doing so. 8 Item 5. Interest in Securities of the Issuer. (a) As of the date of this Schedule 13D, the Management Company beneficially owns 500,000 shares of Common Stock. The Management Company shares voting and dispositive power over such holdings with Mr. Loeb and with the Funds. As of November 9, 2001, the Shares represented 5.6% of the total 8,922,086 shares of Common Stock outstanding as reported in the Company's Form 10-Q for the quarterly period September 30, 2001. None of the individual Funds owns a number of shares of Common Stock equal to or greater than 5% of such total Common Stock outstanding. (b) The Management Company and Mr. Loeb share voting and dispositive power over the 500,000 shares of Common Stock held directly by the Funds. (c) Schedule A hereto sets forth certain information with respect to transactions by the Funds, at the direction of the Reporting Persons, in the Common Stock during the past sixty days. All of the transactions set forth on Schedule A, except as may be otherwise noted therein, were effected in open market purchases on the New York Stock Exchange through the Primary Broker. Except as set forth above, during the last sixty days there were no transactions in the Common Stock effected by the Reporting Persons, nor, to the best of their knowledge, 9 any of their directors, executive officers, general partners or members. (d) Other than the Funds which directly hold the Shares, and except as set forth in this Item 5, no person is known to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the Shares. (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer. Pursuant to Rule 13d-1(k) promulgated under the Exchange Act, the Reporting Persons have entered into an agreement with respect to the joint filing of this statement, and any amendment or amendments hereto. By virtue of the relationships among the Reporting Persons and the Funds, as described in Item 2, the Reporting Persons and the Funds may be deemed to be a "group" under the Federal securities laws. Except as otherwise set forth in this Schedule 13D, each Reporting Person expressly disclaims beneficial ownership of any of the shares of Common Stock beneficially owned by any other Reporting Person or the Funds and the filing of this Statement shall not be construed as an admission, for the purposes of Sections 13(d) and 13(g) or under any provision of the Exchange Act or the rules promulgated thereunder or for any other purpose, that any Reporting Person is a beneficial owner of any such shares. 10 Except as set forth herein, there are no contracts, arrangements, understandings or relationships among the persons named in Item 2 or between such persons and any other person with respect to any securities of the Company. Item 7. Material to be Filed as Exhibits. 1. Joint Filing Agreement, dated as of February 28, 2002, by and among the Reporting Persons. 2. Letter from the Management Company to Mr. A. James Dearlove, President and Chief Executive Officer of the Company, dated February 27, 2002. 11 Schedule A ---------- (Transactions by the Funds in Common Stock during the past sixty days) Shares Shares Price Date Purchased Sold Per Share - -------- --------- ------ ---------- 02/14/02 379,100 $27.24240 02/14/02 100 $27.30000 02/15/02 10,600 $29.59790 02/15/02 7,400 $29.78110 02/19/02 79,000 $30.45411 02/22/02 6,500 $31.88954 02/26/02 17,300 $33.64060 SIGNATURES After reasonable inquiry and to the best of our knowledge and belief, the undersigned certify that the information set forth in this statement is true, complete and correct. Dated: February 28, 2002 THIRD POINT MANAGEMENT COMPANY L.L.C. By: /s/ Daniel S. Loeb ------------------------------ Name: Daniel S. Loeb Title: Managing Member Dated: February 28, 2002 /s/ Daniel S. Loeb ------------------------------ Daniel S. Loeb EX-1 4 lo1012114c.txt JOINT FILING AGREEMENT Exhibit 1 --------- JOINT FILING AGREEMENT PURSUANT TO RULE 13d-1(k)(1) The undersigned acknowledge and agree that the foregoing statement on Schedule 13D is filed on behalf of each of the undersigned and that all subsequent amendments to this statement on Schedule 13D shall be filed on behalf of each of the undersigned without the necessity of filing additional joint filing agreements. The undersigned acknowledge that each shall be responsible for the timely filing of such amendments, and for the completeness and accuracy of the information concerning it contained therein, but shall not be responsible for the completeness and accuracy of the information concerning the others, except to the extent that it knows or has reason to believe that such information is inaccurate. This Agreement may be executed in any number of counterparts and all of such counterparts taken together shall constitute one and the same instrument. Dated: February 28, 2002 THIRD POINT MANAGEMENT COMPANY L.L.C. By: /s/ Daniel S. Loeb ------------------------------ Name: Daniel S. Loeb Title: Managing Member Dated: February 28, 2002 /s/ Daniel S. Loeb ------------------------------ Daniel S. Loeb EX-2 5 lo1012114d.txt LETTER Exhibit 2 --------- [THIRD POINT MANAGEMENT COMPANY L.L.C. LETTERHEAD] VIA FACSIMILE & U.S. MAIL February 27, 2002 Mr. A. James Dearlove President & C.E.O. Penn Virginia Corporation One Radnor Corp Center, Suite 200 100 Matsonford Road Radnor, PA 19087-4515 Dear Mr. Dearlove: Third Point Management Company L.L.C. ("Third Point"), as investment manager of Third Point Partners L.P. and its affiliates has recently acquired 500,000 shares of Penn Virginia Corporation (the "Company"), representing 5.6% of the issued and outstanding stock. Do not confuse our investment as a vote of confidence in management's ill-conceived acquisition and exploration strategy. Rather, we believe that Penn Virginia is asset rich and trades significantly below its intrinsic value. We believe that the reason for the discount is that shareholders lack confidence that management has set forth a clear path to value creation. We have set forth such a path below, the essential elements of which are: 1. Refrain from further dilutive oil and gas acquisitions. 2. Drastically cut back on the company's drilling program. 3. Contemplate the sale of some or all oil and gas assets. 4. Use the cash flow freed up by steps 1, 2 and possibly 3 above to repurchase the Company undervalued stock in the open market. 5. Increase value of the Company via its General Partnership interest in PVR. Although we applaud the separation of the Company's coal and timber assets into a separate public entity, Penn Virginia Resource Partners, L.P. (the "Partnership" or "PVR") in which the Company owns roughly half the units and retains a General Partnership interest, we believe that this transaction represents only an initial step to value creation for shareholders. The next step is to deploy the company's free cash flow in a way that immediately reduces the value gap between the company's share price and its intrinsic value. Unfortunately, this seemingly obvious exigency has not been the Company's modus operandi. The ill conceived and poorly timed $112.0 million acquisition of Synergy Oil & Gas ("Synergy") appears to bode poorly for this management team's ability to complete accretive corporate transactions. First, the transaction was consummated at a time when natural gas prices were near all time highs which resulted in a subsequent write down of $35.0 million within four months of closing. Second, the subsequent low prices of natural gas have left the Company unable to sell off marginal properties as anticipated at the time of the acquisition. Third, to add insult to (shareholder's) injury, the first three exploratory holes drilled came up dry and four material wells went off-line, a circumstance that you described as a "perfect storm" scenario during your fourth quarter conference call. More terrifying, notwithstanding the financial and strategic blunder of the Synergy acquisition, you remain undeterred saying that the setbacks "have not lowered [your] expectations by one molecule." Compounding our fear is your stated objective of using Synergy as a platform for further wildcatting adventures. We will not stand by and allow management to waste another dollar on expensive acquisitions while our stock languishes at a fraction of its intrinsic value. With all due respect, the sophisticated Texas oilmen (Synergy C.E.O., Eric Pitcher and the individuals at Natural Gas Partners) that sold their interest in Synergy saw the Appalachian coal men coming with aspirations to wear crocodile skin cowboy boots, silver spurs and ten-gallon hats. No doubt the folks at NGP who sold Synergy so near the top tick of the natural gas bubble had quite a hootenanny at Penn Virginia shareholders' expense. Your drilling program does not seem to be motivated by a desire to find the cheapest reserves available to you. For 2001, your finding costs were $1.56 per Mcfe (per your fourth quarter release) and you anticipate that they will be $1.22 per Mcfe in 2002 (as indicated in the conference call on February 14th). By contrast, the cost of buying back your own reserves via a share repurchase is about $0.50 per Mcfe (which calculation we set forth several paragraphs below). Mr. Dearlove acknowledged as much on the most recent conference call, in response to the suggestion by another large shareholder that the company invest in share repurchases rather than in drilling for new reserves: "I surely got the conceptually same answer you got, that right now, the cheapest reserves maybe that we can lay our hands on are to buy our own stock back in." We can only surmise that management's goal in making corporate acquisitions and in spending shareholder's capital on extensive exploration rather than reinvesting in Company stock, is to expand the size of the Company to inflate your egos, rather than your shareholder's pocketbooks. We believe the Company's shares are worth at least $50.00 and that the best immediate use of the company's cash remains repurchase of its own shares. If the company's stake in PVR is valued by using the market value of the common units as a proxy for the value of PVA's common units, the value of the PVR stake is worth roughly $175 million (7,649,880 subordinated units and 174,880 common units at $22.50 per Partnership Unit; this valuation ascribes no value to the 2% general partner interest that the Company maintains in PVR, which certain analysts have valued at more than $30 million or $3.00 per share. This valuation is reinforced by the ultimate conversion of subordinated units into common stock that will occur over the period 2004-2006 and the fact that the GP ownership has incentive distributions that should garner cash flows equal to more than 2% of the outstanding LP units when certain benchmarks are met.) Subtracting $175 million from the company's market value of approximately $300 million, we arrive at a $125 million valuation attributable to the roughly 250 Bcfe of its oil and gas assets or about $0.50 per Mcfe. Given the option of seeking to find assets of unknown quality at a cost of $1.22 per Mcfe, or acquiring known assets at a cost of $0.50 per Mcfe, we insist that management and the Board choose the lower cost and more certain method of increasing reserves per share and shareholder value, by buying back its own shares. If we place a value of only $1.05 per Mcfe on the Company's reserves, we arrive at a minimum pre-tax valuation of $49 per share base on a sum of the parts analysis. (Reserves of 250 Bcfe X $1.05=$262.5 million plus $175 million for the stake in PVR divided by 8.9 million shares) Our financial advisors, seasoned natural resources investment bankers, have completed an independent Present Value analysis that concludes that the assets are worth a minimum of $52 per share. Our assumptions regarding minimum valuation per Mcfe is also confirmed by discussions with industry participants who are knowledgeable about the Company's primary market area. Although we believe repurchasing shares with available cash is preferable in the near term to dissipating corporate assets via foolhardy acquisitions or wildcatting adventures, we recommend that Penn Virginia take immediate steps to explore the sale of its oil and gas assets to a strategic buyer who would benefit from the potential efficiencies of such a combination. Indeed, Third Point has had informal discussions with a public competitor in the oil and gas industry with significant reserves complimentary to the Company's Appalachian properties. Third Point would entertain working with this or another strategic buyer to assist in financing the acquisition of some or all of the Company's oil and gas reserves. We recommend that proceeds from such a sale be used to buy in shares via a tender offer or open market purchases and that management focus its efforts on making acquisitions using the currency of the Partnership and increase value to the Company by maximizing its General Partner's fees due from PVR. Lest you dismiss our efforts as that of a corporate gadfly who will go away if ignored, let me disabuse you of that notion right away by providing you with some background on our firm and several of our past 13D initiatives. Third Point manages in excess of $500 million for institutional investors, roughly 4 times the implied stock market value of the Company's oil and gas reserves. We have compounded our investors' money at a rate of over 30% since inception in 1995 via our value oriented investment style. Our record in effecting change, identifying and realizing value is evident in the following selected prior 13D filings: o In September 1999, Third Point filed a 13D on Agribrands Inc. in which we complained that a transaction to sell the company to an affiliate of the Chairman for $39.00 per share was woefully inadequate and not in the best interest of shareholders. We contacted other potential acquirers and three months later one of the companies that we contacted, Cargill, acquired Agribrands for $54.50 per share. This was a 40% premium over the insider transaction and resulted in an incremental $150 million in profits for shareholders. o In March of 2001, Third Point and an allied firm filed a 13D on Bindview Inc. in which we demanded the resignation of then Chief Executive Officer for his apparently incompetent management and the bloated cost structure that he had created. The C.E.O's employment was terminated several months later, excellent management was hired who met with our approval and Bindview adopted the very cost cutting strategies that we suggested in our filing. o In November 2001, Third Point filed a 13D on Stage Stores, a Houston based retailer, in which we articulated our belief that the company's shares were significantly undervalued. Stage Stores shares have risen 90% since our filing and 400% from our cost. Please note that our 5.6% position is significant relative to the combined Board and senior management's stake of only 5% but represents only 3% of our capital base. We have the resources to significantly increase our stake should we so choose. Mr. Dearlove, while I appreciate your offer to come to our offices in New York to talk about the company, I believe that the time for discussion has long passed and the time for action has arrived. I imagine this letter will provide for interesting discussion for the factions that we hear are split between a growth versus value enhancing strategy at the next Board meeting scheduled for March 27th. In the meantime, we may increase our stake in the company, which you will be kept apprised of via the appropriate S.E.C. filings. In addition, we plan to continue our discussions with other large shareholders, potential strategic buyers, and financial and legal advisors in order to determine a course of action to maximize value for all shareholders. Sincerely, /s/ Daniel S. Loeb Daniel S. Loeb, Managing Member -----END PRIVACY-ENHANCED MESSAGE-----