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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended March 31, 2005

Or

For the transition period from              To             

Commission File Number 1-13283

PENN VIRGINIA CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

THREE RADNOR CORPORATE CENTER, SUITE 230

100 MATSONFORD ROAD

RADNOR, PA 19087

(Address of Principal Executive Office) (Zip Code)

(610) 687-8900

(Registrant’s Telephone Number, Including Area Code)

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    Yes  x    No  ¨

As of May 2, 2005, 18,509,723 shares of common stock of the Registrant were issued and outstanding.

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PENN VIRGINIA CORPORATION

INDEX

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PART I. Financial Information

Item 1. Financial Statements

PENN VIRGINIA CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME – Unaudited

(in thousands, except per share data)

The accompanying notes are an integral part of these consolidated financial statements.

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PENN VIRGINIA CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

The accompanying notes are an integral part of these consolidated financial statements.

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PENN VIRGINIA CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS - Unaudited

(in thousands)

The accompanying notes are an integral part of these consolidated financial statements.

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PENN VIRGINIA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - Unaudited

March 31, 2005

1. BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements include the accounts of Penn Virginia Corporation (“Penn Virginia,” “PVA,” the “Company,” “we” or “our”), all wholly-owned subsidiaries of the Company, and Penn Virginia Resource Partners, L.P. (the “Partnership” or “PVR”) of which we indirectly own the sole two percent general partner interest and an approximately 37 percent limited partner interest. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial reporting and Securities and Exchange Commission (“SEC”) regulations. These statements involve the use of estimates and judgments where appropriate. In the opinion of management, all adjustments, consisting of normal recurring accruals, considered necessary for a fair presentation have been included. These financial statements should be read in conjunction with our consolidated financial statements and footnotes included in our Annual Report on Form 10-K for the year ended December 31, 2004. Our accounting policies are consistent with those described in our Annual Report on Form 10-K for the year ended December 31, 2004. Please refer to such Form 10-K for further discussion of those policies. Operating results for the three months ended March 31, 2005, are not necessarily indicative of the results that may be expected for the year ended December 31, 2005. Certain reclassifications have been made to conform to the current period’s presentation.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting polices are consistent with those described in our Annual Report on Form 10-K for the year ended December 31, 2004, except as discussed below. Please refer to such Form 10-K for a further discussion of those policies.

Natural Gas Midstream Revenues

Revenues from the sale of natural gas liquids (“NGLs”) and residue gas is recognized when the NGLs and residue gas produced at PVR’s gas processing plants are sold. Gathering and transportation revenues are recognized based upon actual volumes delivered. Because it takes time to gather information from various purchasers and measurement locations and to calculate volumes delivered, the collection of natural gas midstream revenues may take up to 30 days following the month of production. Therefore, accruals for revenues and accounts receivable and the related cost of gas purchased and accounts payable are made based on estimates of natural gas purchased and NGLs and natural gas sold. Since the settlement process may take up to 30 days following the month of actual production, PVR’s financial results include estimates of production and revenues for the period of actual production. Any differences, which are not expected to be significant, between the actual amounts ultimately received or paid and the original estimates are recorded in the period they become finalized.

Goodwill

We had approximately $8.0 million of goodwill at March 31, 2005, based on the preliminary purchase price allocation for the Cantera Acquisition (as defined in Note 3) in March 2005. This amount may change based on the final purchase price allocation. The goodwill has been allocated to the midstream segment. In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 142, Goodwill and Other Intangible Assets, goodwill will be assessed at least annually for impairment. We intend to test goodwill for impairment during the fourth quarter of our fiscal year.

Intangibles

Intangible assets at March 31, 2005, included $35.5 million for customer contracts and relationships and $4.6 million for rights of way. These amounts may change based on the final purchase price allocation as described in Note 3. Customer contracts and relationships are amortized on a straight-line basis over the expected useful lives of the individual contracts and relationships, which do not exceed 15 years. Rights of way are amortized on a straight-line basis over a period of 15 years. Total intangible amortization was approximately $0.4 million during the quarter ended March 31, 2005. There were no intangible assets or related amortization in 2004. As of March 31, 2005, accumulated amortization of intangible assets was $0.4 million.

Aggregate amortization expense for the year ending December 31, 2005, is estimated to be approximately $4.1 million. The following table summarizes our estimated aggregate amortization expense for the next five years (in thousands):

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3. ACQUISITION OF NATURAL GAS MIDSTREAM BUSINESS

On March 3, 2005, PVR completed the acquisition (the “Cantera Acquisition”) of Cantera Gas Resources, LLC (“Cantera”), a midstream gas gathering and processing company with primary locations in the mid-continent area of Oklahoma and the panhandle of Texas. The midstream business operates as PVR Midstream LLC, a subsidiary of Penn Virginia Operating Co. LLC, which is a wholly owned subsidiary of the Partnership. As a result of the Cantera Acquisition, PVR owns and operates a significant set of midstream assets that includes approximately 3,400 miles of gas gathering pipelines and three natural gas processing facilities, which have 160 million cubic feet per day (MMcfd) of total capacity. The midstream business derives revenues primarily from gas processing and gas purchase contracts with natural gas producers and from fees charged for gathering natural gas volumes and providing other related services. The Partnership believes the Cantera Acquisition will establish a platform for future growth in the natural gas midstream sector and will diversify its cash flows into another long-lived asset base. The results of operations of PVR Midstream LLC since March 3, 2005, the closing date of the Cantera Acquisition, are included in the accompanying consolidated statements of income.

Total cash paid for the Cantera Acquisition was approximately $196 million, which PVR funded with a $110 million term loan and with borrowings under the Partnership’s revolving credit facility. The purchase price allocation for the Cantera Acquisition has not been finalized because PVR is still in the process of settling various post-closing adjustments with the seller and obtaining final appraisals of assets acquired and liabilities assumed. PVR used proceeds of $127.7 million, including a $2.5 million contribution from the general partner, from PVR’s sale of common units in a subsequent public offering in March 2005 to repay the term loan in full and to reduce outstanding indebtedness under its revolving credit facility. The total purchase price was allocated to the assets purchased and the liabilities assumed in the Cantera Acquisition based upon preliminary fair values on the date of acquisition, as follows (in thousands):

The preliminary purchase price allocation includes approximately $8.0 million of goodwill. The significant factors that contributed to the recognition of goodwill include entering into the natural gas midstream business and the ability to acquire an established business with an assembled workforce. Under SFAS No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets, goodwill recorded in connection with a business combination is not amortized, but rather is tested for impairment at least annually. Accordingly, the unaudited pro forma financial information presented below does not include amortization of the goodwill recorded in the acquisition.

The preliminary purchase price allocation includes approximately $40.1 million of intangible assets that are primarily associated with assumed customer contracts, customer relationships and rights of way. These intangible assets are being amortized over periods of up to 15 years, the period in which benefits are derived from the contracts and relationships assumed, and will be reviewed for impairment under SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets.

The following unaudited pro forma financial information reflects the consolidated results of operations of the Company as if the Cantera Acquisition, the closing of PVR’s amended credit facility and the public offering of PVR’s common units had occurred on January 1 of the reported period. The pro forma information includes primarily adjustments for depreciation of acquired property and

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equipment, amortization of intangibles, interest expense for acquisition debt and the change in weighted average common units resulting from the public offering. The pro forma financial information is not necessarily indicative of the results of operations as it would have been had these transactions been effected on the assumed date.

4. SALE OF TEXAS PROPERTIES

On January 24, 2005, we completed the sale of certain oil and gas properties in Texas for cash proceeds of $9.7 million. These properties were classified as assets held for sale as of December 31, 2004, on the consolidated balance sheet. As part of the sale agreement, we will receive a 20 percent net profits interest in one of the properties beginning January 1, 2006. In addition, the buyer has agreed to perform a waterflood technique on this property. If the buyer fails to complete the waterflood technique subject to certain deadlines, then under certain conditions the buyer would be liable to pay us additional proceeds of $0.5 million.

5. STOCK-BASED COMPENSATION

We have stock compensation plans that allow, among other grants, incentive and nonqualified stock options to be granted to key employees and officers and nonqualified stock options to be granted to directors. We account for those plans under the recognition and measurement principles of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations. No stock-based employee compensation cost related to stock options is reflected in net income, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant. The table below illustrates the effect on net income and earnings per share as if we had applied the fair value recognition provision of SFAS No. 123, Accounting for Stock-Based Compensation, to stock-based employee options (in thousands, except per share data).

6. ASSET RETIREMENT OBLIGATIONS

We account for asset retirement obligations in accordance with SFAS No. 143, Accounting for Asset Retirement Obligations, which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. The Standard applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development or normal use of such assets.

The fair value of a liability for an asset retirement obligation is recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The fair value of the liability is also added to the carrying amount of the associated asset and is depreciated over the life of the asset. The liability is accreted through a charge to accretion expense, which is recorded as additional depreciation, depletion and amortization. If the obligation is settled for other than the carrying amount of the liability, we will recognize a gain or loss on settlement.

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Below is a reconciliation of the beginning and ending aggregate carrying amount of our asset retirement obligations as of March 31, 2005 (in thousands).

7. HEDGING ACTIVITIES

Commodity Cash Flow Hedges

Oil and Gas Segment. The fair values of our oil and gas hedging instruments are determined based on third party forward price quotes for NYMEX Henry Hub gas and West Texas Intermediate crude oil closing prices as of March 31, 2005. The following table sets forth our positions as of March 31, 2005:

Based upon our assessment of our derivative contracts designated as cash flow hedges at March 31, 2005, we reported (i) a net hedging liability of approximately $7.6 million, (ii) a loss in accumulated other comprehensive income of $5.0 million, net of a related income tax benefit of $2.6 million and (iii) an unrealized loss on derivatives of $0.4 million for hedge ineffectiveness. In connection with monthly settlements, we recognized net hedging losses in natural gas and oil revenues of $0.3 million for the three months ended March 31, 2005. Based upon future oil and natural gas prices as of March 31, 2005, $7.6 million of hedging losses are expected to be realized within the next 12 months. The amounts that we ultimately realize will vary due to changes in the fair value of the open derivative contracts prior to settlement. We recognized net hedging losses of $1.2 million for the three months ended March 31, 2004.

Natural Gas Midstream Segment. When PVR agreed to acquire the midstream business from Cantera, one of its objectives was to support the economics of that acquisition. This objective was achieved by entering into pre-closing commodity price hedging agreements covering approximately 75 percent of the net volume of NGLs expected to be sold from April 2005 through December 2006. Rising commodity prices resulted in an increase in the market value of those hedging agreements before they qualified for hedge accounting. This change in market value resulted in a $13.9 million non-cash charge to earnings for the unrealized loss on derivatives. Subsequent to the Cantera Acquisition, PVR evaluated the effectiveness of the derivative contracts in relation to the

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underlying commodities and designated the contracts as cash flow hedges in accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. Upon qualifying for hedge accounting, changes in the derivative contracts’ market value are accounted for as other comprehensive income or loss to the extent they are effective rather than a direct impact on net income. SFAS No. 133 requires the Partnership to continue to measure the effectiveness of the derivative contracts in relation to the underlying commodity being hedged, and it will be required to record the ineffective portion of the contracts in net income for the respective period. Cash settlements with the counterparties to the hedging agreements will occur monthly in the future over the life of the agreements, with PVR receiving a correspondingly higher or lower amount for the physical sale of the commodity over the same period. Several derivative contracts for ethane, propane, crude oil and natural gas entered into subsequent to the Cantera Acquisition have been designated as cash flow hedges.

The fair values of PVR’s hedging instruments are determined based on third party forward price quotes for the respective commodities as of March 31, 2005. The following table sets forth PVR’s positions as of March 31, 2005:

Based upon the assessment of derivative contracts designated as cash flow hedges at March 31, 2005, PVR reported (i) a net hedging liability related to the natural gas midstream segment of approximately $16.7 million and (ii) a loss in accumulated other comprehensive income of $1.8 million, net of a related income tax benefit of $0.9 million. Because all hedged volumes relate to April 1, 2005, and later periods, PVR had no monthly settlements and recognized no net hedging losses in natural gas midstream revenues, during the three months ended March 31, 2005 and 2004. Based upon future commodity prices as of March 31, 2005, $9.4 million of natural gas midstream hedging losses are expected to be realized within the next 12 months. The amounts that are ultimately realized will vary due to changes in the fair value of the open derivative contracts prior to settlement.

In May 2005, PVR entered into another contract to hedge 3,500 MMbtu per day of natural gas at $7.15 per MMbtu in the form of a fixed price swap for third quarter 2005 through fourth quarter 2006.

Interest Rate Swap

In connection with its senior unsecured notes, PVR entered into an interest rate swap agreement with an original notional amount of $30 million to hedge a portion of the fair value of those notes. The notional amount decreases by one-third of each principal payment. Under the terms of the interest rate swap agreement, the counterparty pays a fixed rate of 5.77 percent on the notional amount and receives a variable rate equal to the floating interest rate which will be determined semi-annually and will be based on the six month London Interbank Offering Rate plus 2.36 percent. Settlements on the swap are recorded as interest expense. In conjunction with the closing of the Cantera Acquisition on March 3, 2005, PVR entered into an amendment in which it agreed to a 0.25 percent increase in the fixed interest rate on the notes, from 5.77 percent to 6.02 percent. At March 31, 2005, the notional amount was $29.0 million. This swap was designated as a fair value hedge because it has been determined that it is highly effective in mitigating the change in fair value of the hedged portion of the notes, and it has been reflected as a decrease in long-term debt of approximately $1.4 million as of March 31, 2005.

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8. LONG-TERM DEBT

At March 31, 2005, and December 31, 2004, long-term debt consisted of the following (in thousands):

Concurrent with the closing of the Cantera Acquisition, Penn Virginia Operating Co., LLC, the parent of PVR Midstream LLC and a subsidiary of the Partnership, entered into a new unsecured $260 million, five-year credit agreement. The new credit agreement consists of a $150 million revolving credit facility and a $110 million term loan. The term loan and a portion of the revolving credit facility were used to fund the Cantera Acquisition and to repay borrowings under PVR’s previous credit facility. The revolving credit facility is available for general partnership purposes, including working capital, capital expenditures and acquisitions, and includes a $10 million sublimit for the issuance of letters of credit. PVR has a one-time option under the revolving credit facility to increase the facility by up to $100 million upon receipt by the credit facility’s administrative agent of commitments from one or more lenders.

Proceeds of $125.2 million received from a subsequent public offering of 2,511,842 of PVR’s common units in March 2005 were used to repay the $110 million term loan and a portion of the amount outstanding under the revolving credit facility. The term loan cannot be re-borrowed.

The interest rate under the credit agreement will fluctuate based on the Partnership’s ratio of total indebtedness to EBITDA. At PVR’s option, interest shall be payable at a base rate plus an applicable margin ranging up to 1.00 percent or a rate derived from the London Interbank Offering Rate plus an applicable margin ranging from 1.00 percent to 2.00 percent.

In conjunction with the closing of the Cantera Acquisition, Penn Virginia Operating Co., LLC also amended its senior unsecured notes to allow PVR to enter the natural gas midstream business and to increase certain covenant coverage ratios, including the debt to EBITDA test. In exchange for this amendment, PVR agreed to a 0.25 percent increase in the fixed interest rate on the notes, from 5.77 percent to 6.02 percent. The amendment to the notes also requires that the Partnership obtain an annual confirmation of its credit rating, with a 1.00 percent increase in the interest rate payable on the notes in the event the Partnership’s credit rating falls below investment grade. On March 15, 2005, PVR’s investment grade credit rating was confirmed by Dominion Bond Rating Services.

9. COMMITMENTS AND CONTINGENCIES

We are involved, from time to time, in various legal proceedings arising in the ordinary course of business. While the ultimate results of these proceedings cannot be predicted with certainty, management believes these claims will not have a material effect on our financial position, liquidity or operations.

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10. PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS

In accordance with SFAS No. 132 (revised 2003), Employers’ Disclosures about Pensions and Other Postretirement Benefits, the following table provides the components of net periodic benefit costs for the respective plans shown for the three months ended March 31, 2005 and 2004 (in thousands):

Contributions paid to the pension and post-retirement healthcare plans during the three months ended March 31, 2005, were $0.2 million. We expect to contribute a total of approximately $0.7 million to our pension and other postretirement benefit plans during 2005.

11. EARNINGS PER SHARE

Following is a reconciliation of the numerators and denominators used in the calculation of basic and diluted earnings per share for the three months ended March 31, 2005 and 2004 (in thousands, except per share data):

12. STOCK SPLIT AND CHANGE IN PAR VALUE

On May 4, 2004, the Board of Directors approved a two-for-one split of the Company’s common stock in the form of a 100 percent stock dividend payable on June 10, 2004 to shareholders of record on June 3, 2004. Shareholders received one additional share of common stock for each share held on the record date. All common shares and per share data have been retroactively adjusted to reflect the stock split. Also effective June 10, 2004, the Company changed the par value of its common stock from $6.25 to $0.01 per share.

13. COMPREHENSIVE INCOME

Comprehensive income represents changes in equity during the reporting period, including net income and charges directly to equity which are excluded from net income. For the three months ended March 31, 2005 and 2004, the components of comprehensive income were as follows (in thousands):

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14. SEGMENT INFORMATION

Segment information has been prepared in accordance with SFAS No. 131, Disclosure about Segments of an Enterprise and Related Information. Under SFAS No. 131, operating segments are defined as components of an enterprise about which separate financial information is available and is evaluated regularly by the chief operating decision maker, or decision-making group, in assessing performance. Our chief operating decision-making group consists of the Chief Executive Officer and other senior officials. This group routinely reviews and makes operating and resource allocation decisions among our oil and gas operations, PVR’s coal royalty, land leasing and coal services operations and PVR’s recently acquired natural gas midstream operations. Accordingly, our reportable segments are as follows:

Oil and Gas – crude oil and natural gas exploration, development and production.

Coal Royalty, Land Leasing and Coal Services (the “PVR Coal” segment) – the leasing of mineral interests and subsequent collection of royalties, the providing of fee-based coal handling, transportation and processing infrastructure facilities, and the development and harvesting of timber.

Natural Gas Midstream (the “PVR Midstream” segment) – gas processing, gathering and other related services.

Corporate and Other – primarily represents corporate functions.

In our annual report on Form 10-K for the year ended December 31, 2004, we reported three segments – oil and gas, coal, and corporate and other. As a result of the Cantera Acquisition, we added the natural gas midstream segment. The following segment information for the three months ended March 31, 2004, has been restated to conform to the current period’s presentation. Following is a summary of certain financial information relating to our segments:

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