IPAA
Oil & Gas Investment Symposium
April 20, 2005
Forward-Looking Statements
This information contains predictions, estimates and other forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although the company believes that its expectations are based on reasonable assumptions, it can give no assurance that its goals will be achieved. Important factors that could cause actual results to differ materially from those included in the forward-looking statements include the timing and extent of changes in commodity prices for oil and gas, the need to develop and replace reserves, environmental risks, drilling and operating risks, risks related to exploration and development, uncertainties about the estimates of reserves, competition, government regulation and the ability of the company to meet its stated business goals.
Financial Highlights
uRecord fourth quarter and full year revenue
uRecord fourth quarter and full year net income
uLong-term debt at year end $21 million
udown from $53 million in 2003
uTotal oil and gas property capital expenditures for year of $42.2 million
Major Sources and Uses of Cash
uSources
uAdjusted Cash Flow* from Operations- $62.5 million
uUses
uDrilling and development- $36.9 million
uUndeveloped properties- $4.6 million
uProducing properties-$0.7 million
uLong term debt reduction- $32 million
*Adjusted Cash Flow is Net Income plus non-cash charges (Depreciation, Depletion and Amortization and Deferred Income Taxes)
Revenue
u Fourth Quarter Revenue of $72.6 million
u $59.5 million in 2003
u Revenue reflects higher O&G prices, increased production and more drilling activity
u Full year Revenue up to $290.7 million from $202.9 million in 2003
Net Income
u2004 Net Income of $34.1 million
u$22.6 million in 2003
u$2.05 per share vs. $1.39 in 2003
uFourth Quarter Net Income of $8.3 million
u$8.0 million in 2003
u$0.49 per share in 2003 and 2004 (diluted)
uSOX compliance and tax rate
Adjusted Cash Flow
u Full year Adjusted Cash Flow of $62.5 million
u Up from $45.6 million in 2003
u Fourth Quarter 2004 Adjusted Cash Flow of $14.6 million
u Adjusted Cash Flow is income before deferred income taxes, depreciation, depletion and amortization
u Management believes Adjusted Cash Flow is a useful measure in estimating the value of the company's operations
2004 Operating Highlights
uProduction 12.7 Bcfe, up 21% year-to-year
uRocky Mountain Region production increased 36.5% year-to-year (12 months)
uRocky Mountain Region produced 72% of total
u158 wells drilled in 2004 vs. 111 in 2003
u97% drilling success on 157 gross development wells
uAll wells were in Colorado
u137 wells were drilled with partnerships
uSand Wash Basin exploratory test drilled in fourth quarter
uTesting delayed by environmental restrictions
Core Operating Areas
Production
u Full year 2004 production 12.7 Bcfe
u Up 22% from 10.4 Bcfe in 2003
u 82% natural gas
u Fourth Quarter 2004 production of 3.17 Bcfe
Regional Production Trends
u Rocky Mountains region was 2004 growth area
u Partnership development focus in 2005 will continue in Rocky Mountain Denver-Julesburg & Piceance Basins
u Additional PDC activities underway on NECO properties and Wattenberg Field
u Rocky Mountain region produced 72% of production in 2004
u Up from 63% in 2003
Geographic Diversity
u Drilling and acquisition focus is Rocky Mountain Region
u Limited development activity in other areas
u Selected Appalachian Basin behind pipe recompletions
u No new activities planned for Michigan
u Will consider acquisitions in all areas
Sustaining Growth
uInvestments in 2004 included:
uDrilling, Codell recompletions, and other capital assets- $42 million
uDebt at year end- $21 million
uTotal available credit over $80 million
uMany economically attractive development opportunities in Wattenberg and Grand Valley Fields
uResources to make additional acquisitions
uRecord program sales of 2004 partnerships totaled $100 million up from $78 million
uPlan to offer up to $115 million in 2005
uFirst partnership fully subscribed in 2 days
uRocky Mountains exploratory drilling program
uSand Wash Basin- second well underway
uOther wells planned in several areas
uDry holes are expensed under successful efforts accounting
2005 Drilling Plans
u Rockies: Plan partnership drilling in Wattenberg & Grand Valley Fields
u Funds split equally between areas
u About 3-4 Wattenberg wells per Piceance well
u PDC will have a 20% interest in partnerships
u Other development drilling planned in non-partnership areas (not in competition with partnerships)
u Continuing NECO down spacing (~65 wells)
u Exploratory and new areas
u Sand Wash Basin- 1 drilled and 1 underway
u Other opportunities
Rocky Mountain
Prospect Areas
Bakken Shale
North Dakota
Project | State | County | Well Depth Range (ft.) | Reservoir |
Legacy | Colorado | Moffat |
| Lance |
Coffepot Springs | Colorado | Moffat | 8,000 to 13,000 | Lewis / Fox Hills |
Sweetwater | Wyoming | Sweetwater |
| Almond / Mesaverde |
Bakken Shale | North Dakota | Mckenzie Montrail Williams Dunn | 9000 | Bakken Shale |
IPAA
Oil & Gas Investment Symposium
April 20, 2005
