The following discussion and analysis of the financial condition and results of operations of Penn Virginia GP Holdings, L.P. and its subsidiaries ("we," "us" or "our") should be read in conjunction with our condensed consolidated financial statements and the accompanying notes in Item 1, "Financial Statements."

Overview of Our Business

General

We are a publicly traded Delaware limited partnership formed in June 2006. Our only cash generating assets consist of our interests in Penn Virginia Resource Partners, L.P., or PVR, which consist of the following:

• a 2% general partner interest in PVR, which we hold through our 100% ownership interest in Penn Virginia Resource GP, LLC, PVR's general partner;

• all of the incentive distribution rights, or IDRs, in PVR, which we hold through our 100% ownership interest in PVR's general partner; and

• 19,587,049 common units of PVR, representing an approximately 37% limited partner interest in PVR.

All of our cash flows are generated from the cash distributions we receive with respect to the PVR equity interests we own. PVR is required by its partnership agreement to distribute, and it has historically distributed within 45 days of the end of each quarter, all of its cash on hand at the end of each quarter, less cash reserves established by its general partner in its sole discretion to provide for the proper conduct of PVR's business or to provide for future distributions. While we, like PVR, are structured as a limited partnership, our capital structure and cash distribution policy differ materially from those of PVR. Most notably, our general partner does not have an economic interest in us and is therefore not entitled to receive any distributions from us and our capital structure does not include IDRs. Accordingly, our distributions are allocated exclusively to our common units.

Because we control the general partner of PVR, the financial results of PVR are included in our condensed consolidated financial statements. However, we and PVR both function with capital structures that are independent of each other, with both of us having publicly traded common units and PVR having its own debt instruments. We do not have any debt instruments on a stand-alone basis.

Financial Presentation

We reflect our ownership interest in PVR on a consolidated basis, which means that our financial results are combined with PVR's financial results. The approximately 61% limited partner interest in PVR that we do not own, after the effect of IDRs, is reflected as noncontrolling interests in our results of operations. We have no separate operating activities apart from those conducted by PVR, and our cash flows currently consist of distributions from PVR on the partner interests, including the IDRs, that we own. Accordingly, the discussion and analysis of our financial position and results of operations in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" reflects the operating activities and results of operations of PVR.

Overview of PVR's Business

PVR is a publicly traded Delaware limited partnership formed by Penn Virginia Corporation in 2001 that is principally engaged in the management of coal and natural resource properties and the gathering and processing of natural gas in the United States.

Selected Financial Data - Consolidated

Summary operating results for the three and six months ended June 30, 2009 and
2008 were as follows (in thousands):



                                       Three Months Ended                            Six Months Ended
                                            June 30,                                     June 30,
                                      2009           2008         % Change         2009           2008         % Change
Revenues                            $ 149,419      $ 276,505           (46 )%    $ 306,178      $ 433,319           (29 )%
Expenses                              128,588        232,738           (45 )%      263,957        358,934           (26 )%

Operating income                       20,831         43,767           (52 )%       42,221         74,385           (43 )%
Other income (expense)                 (8,052 )      (34,815 )         (77 )%      (20,500 )      (31,426 )         (35 )%

Net income                          $  12,779      $   8,952            43 %     $  21,721      $  42,959           (49 )%
Net income attributable to
noncontrolling interest                (4,440 )       (2,890 )          54 %        (6,533 )      (20,095 )         (67 )%

Net income attributable to
Penn Virginia GP Holdings, L.P.     $   8,339      $   6,062            38 %     $  15,188      $  22,864           (34 )%

PVR currently conducts operations in two business segments: (i) coal and natural resource management and (ii) natural gas midstream.

• Coal and Natural Resource Management-management and leasing of coal properties and subsequent collection of royalties; other land management activities such as selling standing timber; leasing of fee-based coal-related infrastructure facilities to certain lessees and end-user industrial plants; collection of oil and gas royalties; and coal transportation, or wheelage, fees. Both in its current limited partnership form and in its previous corporate form, PVR has managed coal properties since 1882.

• Natural Gas Midstream-natural gas processing, gathering and other related services. PVR entered this business segment in 2005.

The following table presents a summary of certain financial information relating to our segments: