2020 Development Plans Update
The Company has reduced its 2020 capital budget by approximately 30% from its original budget. Penn Virginia's drilling rig and completion contracts are structured to provide ongoing flexibility, generally requiring approximately 30 days' notice for cancelation. Penn Virginia currently expects to have one active rig beginning in April and through the balance of 2020. The Company plans to provide a detailed update to its 2020 guidance by its first quarter 2020 earnings release. Penn Virginia may further reduce its revised capital budget based on market conditions.
Penn Virginia recently restructured its oil hedge positions to move hedge positions from the second half of 2021 into the second and the fourth quarters of 2020. As a result, Penn Virginia is currently hedged for more than 80% of its expected 2020 oil production under its reduced drilling program. In addition to these hedges, the Company has also mitigated additional oil price exposure below $30 per barrel on 250,000 barrels of oil per month for the second and the third quarters of 2020 using put spreads. These hedge positions provide additional downside protection between $20 - $30 per barrel WTI but allow for full upside price exposure. As of March 13, 2020, the mark-to-market value of the Company's commodity hedge position was approximately $109 million.
John A. Brooks, President and Chief Executive Officer of Penn Virginia commented, "In response to the recent volatility in oil prices, we have reduced our capital budget by approximately 30% to ensure we maintain capital discipline. This is clearly a challenging time for the industry, but we believe Penn Virginia is well positioned to weather this storm. With our strong balance sheet, significant hedge position, low-cost structure, and short-term nature of our service contracts, we believe we can operate within cash flow in 2020 even in a $30 - $35 WTI oil environment. We will continue to monitor the environment, having significant flexibility to further adjust our capital as warranted."
Year-End 2019 Proved Reserves
Penn Virginia's total proved reserves as of December 31, 2019 were approximately 133.1 million barrels of oil equivalent ("MMBOE"). The proved reserves were calculated in accordance with Securities and Exchange Commission ("SEC") guidelines using the pricing of $55.67 per barrel for crude oil and $2.58 per million British Thermal Units (MMBtu) for natural gas.
The Company's standardized measure of total proved reserves was $1.5 billion and the standardized measure of total proved developed ("PD") reserves was $1.0 billion as of December 31, 2019. The value of the Company's total proved reserves, utilizing the SEC price guidelines, discounted at 10% and before tax ("PV-10 value")(1), was $1.6 billion as of December 31, 2019. The PV-10 value(1) of the Company's PD reserves utilizing the SEC price guidelines was $1.0 billion as of December 31, 2019(1). Using strip pricing and anticipated differentials as of March 13, 2020 (see the Appendix of this release for pricing information), the PV-10 value(1) of the Company's PD reserves at December 31, 2019 was $610 million before giving effect to hedges.
As of December 31, 2019, Penn Virginia had cash of $7.8 million and total debt of $562.4 million. The ratio of the PV-10 value(1) of the Company's PD reserves adjusted for March 13, 2020 strip pricing and anticipated differentials, after giving effect to the Company's hedge position, to the Company's net debt(2) at year-end of approximately $555 million, yields a ratio of approximately 1.3x(3).