Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of the financial condition and results of operations of Penn Virginia Resource Partners, L.P. and its subsidiaries (the "Partnership," "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 Business

We are a publicly traded Delaware limited partnership formed by Penn Virginia 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. Both in our current limited partnership form and in our previous corporate form, we have managed coal properties since 1882. We currently conduct operations in two business segments: (i) coal and natural resource management and (ii) natural gas midstream. Our operating income was $115.6 million for the nine months ended September 30, 2008, compared to $81.5 million for the nine months ended September 30, 2007. In the nine months ended September 30, 2008, our coal and natural resource management segment contributed $67.9 million, or 59%, to operating income, and our natural gas midstream segment contributed $47.7 million, or 41%, to operating income.

The following table presents a summary of certain financial information relating to our segments for the nine months ended September 30, 2008 and 2007: