Radnor energy firm to buy W.Va. land for $91 million

Penn Virginia Resource Partners L.P. said it would buy 62,000 acres of forestland in West Virginia for $91.3 million in the Radnor company's first purchase of land for the sake of timber rather than coal, oil or natural gas.

For decades, Penn Virginia, which traces its roots to 1882, has harvested timber from its landholdings, but this deal is expected to triple the size of that operation.

The current timber business is "less than 1 percent of revenue, but the people that run that business are capable of running a much larger venture," said James W. Dean, Penn Virginia Resource Partners' director of investor relations.

The company had $506.7 million in revenue last year.

Penn Virginia estimated the timber inventory on the land at 240 million board feet of hardwood saw timber that can be used for premium furniture and veneer, and about two million tons of hardwood and conifer pulpwood.

The land in Randolph, Upshur, Barbour and Tucker Counties, to be purchased from MeadWestvaco Corp., is expected to generate $8 million in cash flow, before financing costs, Penn Virginia said.

The forestland does not overlap with other Penn Virginia operations in West Virginia, where the company produces natural gas.

"The timber business is attractive due to the stable and long-lived production, generally increasing prices for timber over the past several years, the nondepleting nature of the asset base, and potential upside opportunities which we expect to arise over time," said A. James Dearlove, Penn Virginia Resource's chief executive officer.

Penn Virginia Resource's shares closed yesterday at $28.65, up $1.41, or 5.2 percent, on the New York Stock Exchange. Shares of MeadWestvaco closed at $31.73, up 20 cents.