Petroleum Development Corporation (dba PDC Energy) ("PDC" or the
"Company") (Nasdaq:PETD) today reported 2011 key operating results
including production and year-end reserves, and provided 2012
capital budget details and production estimates.
2011 Reserves
The Company's independent reserve engineers completed their
estimate of PDC's year-end 2011 proved reserves in accordance with
SEC guidelines. Total proved reserves as of December 31, 2011
increased 18% to slightly over one trillion cubic feet equivalent
("Tcfe"), from 861 billion cubic feet equivalent ("Bcfe") reported
as of December 31, 2010. Reserve replacement from all sources was
435% of 2011 production. Proved developed (PD) reserves increased
to 46% of total reserves at December 31, 2011 compared to 35% of
total reserves at December 31, 2010. The increase in the proved
developed reserve percentage was attributable to the Company's
development drilling program and the reclassification of refracs
and recompletions in the Wattenberg Field from the proved
undeveloped ("PUD") category to the proved developed non-producing
(PDNP) category. PDC's 2011 year-end proved reserves of over one
Tcfe were comprised of approximately 66% natural gas, 22% crude
oil, and 12% natural gas liquids ("NGLs"). The Company's
internal estimate of proved, probable and possible (3P) reserves
increased from 1.4 Tcfe at December 31, 2010 to 2.1 Tcfe at
December 31, 2011.
The Company's PV-10 value of proved reserves increased 95% to
approximately $1.4 billion at December 31, 2011, from $693 million
at December 31, 2010, primarily driven by reserve additions in the
liquid-rich Wattenberg Field, particularly from the horizontal
Niobrara program.
Reserve values in 2011 were calculated utilizing NYMEX prices(1)
of $4.12 per million British Thermal Units (MMBtu) for natural gas
and $96.19 per barrel ("Bbl") for crude oil. The Company's
average realized prices were $3.41/Mcf for natural gas, $88.94/Bbl
for crude oil, and $39.59/Bbl for NGLs, after adjustments to NYMEX
prices for energy content, quality and basis
differentials. Average realized prices in 2010 were $3.54/Mcf
for natural gas, $71.95/Bbl for crude oil, and $34.12/Bbl for
NGLs.
(1) Reflects the previous twelve months'
first of the month price average based on SEC pricing
parameters.
2011 Proved
Reserves Summary |
|
Proved Reserves
(Bcfe) |
SEC PV-10
($MM) |
SEC PV-10
($/Mcfe) |
Beginning balance, at December 31, 2010 |
861 |
$ 693 |
$ 0.80 |
Drilling, improved well performance and
pricing revisions |
159 |
|
|
Acquisitions |
48 |
|
|
Divestitures |
(5) |
|
|
Production |
(47) |
|
|
Ending balance, at December 31, 2011 |
1,016 |
$ 1,350 |
$ 1.33 |
During 2011, PDC added 159 Bcfe of proved reserves through a
combination of drilling, improved well performance and commodity
price changes, which was offset partially by the assumption of
reduced investments in the Piceance Field over the next five years.
In addition, the Company added 48 Bcfe of proved reserves
from its portion of the Seneca Upshur acquisition by its
Appalachian joint venture and partnership purchases. Proved
reserves were decreased by five Bcfe in 2011 for the divestiture of
non-core assets.
The following table provides PDC's 2011 total proved reserves
(1P) by major operating area:
Total Proved Reserves
(1P) at December 31, |
(Bcfe) |
|
Total Proved Reserves (1P) |
|
2010 |
2011 |
Wattenberg |
303 |
459 |
Piceance |
414 |
322 |
NECO |
44 |
35 |
Appalachian/Marcellus Shale JV |
66 |
135 |
Permian |
32 |
65 |
Other Areas |
2 |
-- |
Total: |
861 |
1,016 |
On December 22, 2011, the Company announced the signing of a
definitive agreement to sell its remaining Permian Basin assets for
approximately $174 million. The sale is scheduled to close
during the first quarter of 2012. The reserve report for
December 31, 2011 includes these Permian reserves. The
following table outlines the proforma effect of the anticipated
sale of Permian assets:
Permian Basin
Divestiture Summary |
|
Pre-Permian Asset Sale |
Post-Permian Asset Sale |
Proved reserves (Bcfe) |
1,016 |
951 |
Before tax, PV-10 ($MM) |
$ 1,350 |
$ 1,235 |
Percent proved developed |
46% |
48% |
Percent crude oil / NGLs |
34% |
30% |
Net production exit rate (MMcfe/d at Y-E
2011) |
146 |
139 |
2011 Production and Activity
Total 2011 production, including the Permian Basin, increased
26% from 2010 production to 47.5 Bcfe compared to PDC's guidance of
46.5 Bcfe. The daily exit rate for net production on December
31, 2011, including the Permian Basin, was 146 million cubic feet
equivalent ("MMcfe"), which was comprised of 62% natural gas, 27%
crude oil and 11% NGLs.
The Company drilled 200 gross wells in 2011, compared to 213
gross wells in 2010. The Company's 2011 operating focus was
primarily in the Wattenberg Field where PDC drilled 17 horizontal
Niobrara wells, 80 vertical wells, 190 refrac/recomplete projects,
and participated in 49 non-operated drilling projects.
In the core Wattenberg Field, 14 of the Company's horizontal
Niobrara wells were on-line with reportable production averaging
peak 24-hour rates of 600 barrels of oil equivalent per day
("Boe/d") and 30-day initial production (IP) rates of 470
Boe/d. Based on these results, the Company has increased its
internal type curve estimate for horizontal Niobrara wells in the
core Wattenberg area to a range of 300 to 500 thousand barrels of
oil equivalent (MBoe). PDC also drilled 23 wells and
recompleted two wells in the Permian Basin, and 17 wells in the
Piceance Basin.
In 2011, the Company's 50-50 joint venture in the Appalachian
Basin ("PDCM") spud ten horizontal Marcellus wells, completed six
horizontal Marcellus wells and initiated certain midstream
projects. The most recent three-well pad, which came on-line
at year-end 2011 and early 2012, was producing at an initial
combined rate of approximately 18 MMcf/d.
2012 Plans
PDC's capital budget for 2012, as previously announced, has been
approved for approximately $284 million, including $198 million of
development capital and $86 million for acquisitions, leasehold,
exploration and other expenditures. Approximately 85% of the
development capital, or $168 million, will be invested in the
Wattenberg Field to drill 27 horizontal wells, complete
approximately 210 refracs/recompletes and fund $26 million of
non-operated drilling projects. The development capital budget
also includes $12 million to complete nine wells in the Piceance
Basin which were drilled in the first half of 2011. The
Company plans to invest up to $12 million in PDCM for drilling
and midstream initiatives. The balance of PDCM's capital
budget will be provided by the joint venture's cash flow from
operations and borrowings under the joint venture's revolving
credit facility. Depending on the timing, structure and size
of the Company's consummation of a joint venture in the Utica
Shale, the remaining capital budget of $86 million may be invested
in Utica acreage purchases and development, a second rig in the
liquids-rich horizontal Niobrara play in the Wattenberg Field, or
used to fund the purchase of additional partnerships.
The Company previously estimated 2012 production will increase
approximately 21% to 53 Bcfe, proforma for the sale of the Permian
Basin assets. Based on actual net production for 2011 of 47.5
Bcfe, or 45 Bcfe net of Permian Basin production for 2011, PDC
estimates net production will increase approximately 18% in 2012
compared to 2011 production net of Permian. The 2012
production estimate excludes production volumes which could be
added in the event the Company operates an additional rig to drill
horizontal Niobrara wells in the Wattenberg Field or completes
additional partnership purchases in 2012.
James Trimble, President and Chief Executive Officer, stated,
"Our 2011 operating results were very positive and exceeded our
expectations. We realized strong double-digit increases in both
production and reserve volumes from 2010, and our PV-10 value of
proved reserves nearly doubled to approximately $1.4
billion. Reserve replacement was an impressive 435%. In
2012, we plan to accelerate our drilling in the liquid-rich
horizontal Niobrara development in the Wattenberg Field and expect
to further develop and de-risk our PDCM Marcellus Shale
position. We continue to build our acreage position in the
Utica Shale play as we implement our 2012 drilling program. We
look forward to forming a joint venture to accelerate the
development of the Utica Shale play."
Upcoming Conference
Presentations
PDC is scheduled to attend the Credit Suisse Energy Summit in
Vail, Colorado and host a dinner on February 6, 2012 and present at
EnerCom's Oil and Services Conference in San Francisco, California
on Tuesday, February 21, 2012. Please see the Company's
website at www.petd.com for full details and webcast
information.
PDC Analyst Day
PDC plans to host an analyst day in Boston on Tuesday, March 13,
2012. This event is scheduled to be held at the Boston Harbor
Hotel, 70 Rowes Wharf, Boston, Massachusetts, 02110. The
related slide presentation will be available on the Company's
website immediately prior to the event.
About PDC Energy
PDC Energy is an independent energy company engaged in the
development, production and marketing of natural gas and oil.
Its operations are focused primarily in the Wattenberg Field
of Colorado, including the horizontal Niobrara, the Marcellus Shale
development in West Virginia and the Utica Shale in Ohio. PDC
is included in the S&P SmallCap 600 Index and the Russell 3000
Index of Companies.
NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933
("Securities Act") and Section 21E of the Securities Exchange Act
of 1934 ("Exchange Act") regarding PDC's business, financial
condition, results of operations and prospects. All statements
other than statements of historical facts included in and
incorporated by reference into this report are forward-looking
statements. Words such as expects, anticipates, intends, plans,
believes, seeks, estimates and similar expressions or variations of
such words are intended to identify forward-looking statements
herein, which include statements regarding the Company's future
financial and operating results; the successful closing of the
Permian divestiture in the first quarter; PDC's expected use of
proceeds from such divestiture, PDC's continuing efforts to seek a
working interest partner in the Utica and the timing of finalizing
such plans; PDC's expected 2012 capital budget,including
anticipated liquidity and capital expenditures; 2012 drilling and
operations plans, including plans to accelerate drilling in the
liquid-rich horizontal Niobrara development in the Wattenberg
Field; 2012 estimated natural gas and oil production and reserves,
including expected 2012 production, anticipated oil and NGLs mix,
and approximated increase over estimated 2011 production; planned
investment in our joint venture, PDCM, and our plan to continue to
develop and de-risk our Marcellus Shale position through PDCM;
potential investment in additional Utica acreage and development;
the potential purchase of additional partnerships; availability of
capital future cash flows; anticipated liquidity, anticipated
capital expenditures and management's strategies, plans and
objectives. However, these are not the exclusive means of
identifying forward-looking statements herein. Although
forward-looking statements contained in this press release reflect
the Company's good faith judgment, such statements can only be
based on facts and factors currently known to it. Consequently,
forward-looking statements are inherently subject to risks and
uncertainties, including risks and uncertainties incidental to the
exploration for, and the acquisition, development, production and
marketing of natural gas and oil, and actual outcomes may differ
materially from the results and outcomes discussed in the
forward-looking statements. Important factors that could cause
actual results to differ materially from the forward-looking
statements include, but are not limited to:
- changes in production volumes, worldwide demand and commodity
prices for natural gas and oil;
- changes in estimates of proved reserves and internal estimates
of probable and/or possible reserves;
- declines in the values of our natural gas and oil properties
resulting in impairments;
- the timing and extent of our success in discovering, acquiring,
developing and producing natural gas and oil reserves;
- the ability to acquire leases, drilling rigs, services and
supplies, including water rights, at reasonable prices;
- reductions in the borrowing base under the credit
facility;
- risks incident to the drilling and operation of natural gas and
oil wells;
- future production and development costs;
- the availability of sufficient pipeline and other
transportation facilities to carry our production and the impact of
these facilities on price;
- the effect of existing and future laws, governmental
regulations and the political and economic climate of the United
States;
- changes in environmental laws and the regulations and
enforcement related to those laws;
- the identification of and severity of environmental events and
governmental responses to the events;
- the effect of natural gas and oil derivative activities;
- conditions in the capital markets; and
- losses possible from pending or future litigation.
Further, PDC urges you to carefully review and consider the
cautionary statements made in this press release, the Item 1-A Risk
Factors in the 2010 annual report on Form 10-K for the year ended
December 31, 2010, filed with the Securities and Exchange
Commission ("SEC") on February 24, 2011, as amended on April 21,
2011 and May 18, 2011, and other subsequent filings with the SEC
for further information on risks and uncertainties that could
affect the Company's business, financial condition and results of
operations, which are incorporated by this reference as though
fully set forth herein. The Company cautions you not to place
undue reliance on forward-looking statements, which speak only as
of the date made. Other than as required under the
securities laws, PDC undertakes no obligation to update any
forward-looking statements in order to reflect any event or
circumstance occurring after the date of this release or currently
unknown facts or conditions or the occurrence of unanticipated
events. All forward looking statements are qualified in their
entirety by this cautionary statement.
CONTACT: Ron Wirth
Director Investor Relations
(303)860-5830
rwirth@petd.com
Marti Dowling
Investor Relations Manager
(303)831-3926
mdowling@petd.com
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