Petroleum Development Corporation
2007 Annual Meeting of Shareholders
August 28, 2007
NASDAQ GSM:PETD
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.
Contact Information
Investor Relations
Petroleum Development Corporation
120 Genesis Boulevard, PO Box 26, Bridgeport, West Virginia 26330
Phone: 304.842.3597, Fax: 304.842.0913, www.petd.com
Company Snapshot
v Market Cap (08/27/07) | ü Approx. $600 Million |
v Proved Reserves (12/31/06) | ü 323 Bcfe (2006 58% PD) |
Ø 500+ Bcfe (2007E) | |
v Production (2006) | ü 16.9 Bcfe |
Ø 28 Bcfe (2007E) | |
v Production Profile (2Q07) | ü 78% N. Gas / 22% Oil |
v Rocky Mountains | ü 85%+ (2007) |
v Diluted Average Shares | ü 14,860,000 |
Outstanding (2007) | Ø (Down 8%) |
2007 Overview
§ Watershed year
| o | Invest 2006 Piceance lease sale proceeds |
§ Dramatic multi-year production and reserve increases
| o | Primarily drill bit growth |
| o | 2007 CAPEX increase to $225 from $210 million |
§ Tremendous increase in organization strength and capabilities
| o | Investing in the future |
Core Operating Areas
Rocky Mountains
§ 2006 Proved Reserves: 265.5 Bcfe
§ 2006 Production: 14.1 Bcfe
§ 2007E Production: 24 Bcfe
Michigan Basin
§ 2006 Proved Reserves: 21.2 Bcfe
§ 2006 Production: 1.4 Bcfe
§ 2007E Production: 1.8 Bcfe
Appalachian Basin
§ 2006 Proved Reserves: 36.0 Bcfe
§ 2006 Production: 1.5 Bcfe
§ 2007E Production: 2.6 Bcfe
See slide 2 regarding Forward Looking Statements
Acquisitions Summary
§ Proceeds from 2006 lease sale funded $209 Million in acquisitions ($191 Million Like-kind exchange tax deferred)
| o | During December 2006 and January 2007 |
| o | 3P reserves acquired total an estimated 153 Bcfe (84% proved) |
| o | Acquisitions primarily in existing operating areas |
| § | Wattenberg Field, DJ Basin Colorado |
| § | Appalachian and Michigan Basins |
§ Additional properties acquired in February 2007
| o | Estimated 26.6 Bcfe proved and probable reserves |
| o | $11.8 million purchase price |
See slide 2 regarding Forward Looking Statements
Increasing Production {Graphic}
Increasing Estimated Proved Reserves {Graphic}
Energy Market Exposure
Percentage of Production by Market (Based on Mcfe)
| Oil | 21.7% |
| Northern Border | 0.5% |
| Mid-continent | 15.9% |
| Colorado Liquids | 3.7% |
| Nymex | 12.4% |
| Michigan | 8.5% |
| Colorado Interstate Gas | 37.2% |
See slide 2 regarding Forward Looking Statements
Operations Update
Thomas E. Riley
President
2007 Actual vs. Production Forecast
§ Estimated 2007
| o | Production of 28 Bcfe |
| o | Exit Rate of 100 Mmcfe/d |
Mid-year production increase from:
§ Late 2Q2007 Garden Gulch compression facility start-up (Grand Valley)
| o | Gross capacity increased from 17 to 50 MMcf/d |
| o | Reduced line pressure in Grand Valley |
§ Addition of new wells to production in all producing areas of Rocky Mountain Region
See slide 2 regarding Forward Looking Statements
Production Rate Progression {Graphic}
Drilling Activity {Graphic}
Grand Valley Field
Piceance Basin, Colorado
§ July 2007 net daily production 27 Mmcfe/d(2006 exit rate was 15.4 Mmcfe/d)
§ Approximately 355 net locations on 10-acre spacing
| o | 148 net PUD locations |
| o | 207 remaining unproved locations |
§ Drill 41 Net wells
| o | 50 Bcfe added by drilling |
| o | $93 Million D&C cost |
See slide 2 regarding Forward Looking Statements
Grand Valley Well Achievements
Reduced drilling time
§ Valley floor directional wells drilled in 11 days (2007) vs 18 day average in 2005
§ Early directional well drilling results on Mesa top are averaging 15 days
Improved Completion Design
§ Slick Water Fracs: Cleaner, non-gelled fluid results in improved EURS
§ 20% increase of average per-well EURs from 1.25 Bcfe to 1.5 Bcfe
§ Increase in average IP rate from 820 Mcfd to 1,100 Mcfd
See slide 2 regarding Forward Looking Statements
Wattenberg Field
DJ Basin, Colorado
§ July 2007 net daily production 28 Mmcfe/d (2006 net exit rate 18.6 Mmcfe/d)
§ 9,000 acres available for drilling
§ Over 450 undeveloped locations
| o | 154 40 acre PUD locations |
| o | Over 300 remaining other locations (Rule 318A and other) |
| o | 800 Codell and/or Niobrara refracs |
See slide 2 regarding Forward Looking Statements
Wattenberg Field
DJ Basin, Colorado
2007 Plan
§ Drill 108 net wells
§ 164 re-completions and re-fracs
§ 33.9 Bcfe added by drilling
§ $86 Million D&C cost
See slide 2 regarding Forward Looking Statements
NECO Field Area
Eastern DJ Basin, Colorado
§ July net daily production 11.6 Mmcfe/d (2006 net exit rate 8.5 Mmcfe/d)
§ 29,160 acres available for drilling
§ 8 defined structures (3D and 2D seismic)
§ 100 PUD locations
§ 200 potential locations
See slide 2 regarding Forward Looking Statements
NECO Field Area
Eastern DJ Basin, Colorado
2007 Plan
§ Drill 141 wells, PDC 100%WI
§ 31 Bcfe added by drilling
§ $33 Million D&C cost
§ Acquiring 50 square miles of additional 3D seismic
| o | Potential addition of 100-200 locations |
See slide 2 regarding Forward Looking Statements
Current New Exploration Projects
Barnett Shale – Erath County, Texas
§ Two project acreage blocks
§ Approximately 7,000 acres under lease and 2,000 acres under seismic option
§ Currently acquiring and interpreting seismic data
§ Anticipate spud first horizontal test well 4th Quarter 2007
§ Acquiring additional acreage
Trenton/Black River – Allegany County, NY
§ Seismic acquired and initial drilling location selected
§ Anticipated spud date 4th Quarter 2007
See slide 2 regarding Forward Looking Statements
Appalachian and Michigan Operation Areas
Appalachian | Michigan | |
Operated Wells | 1365 | 206 |
2006 YE Proved Reserves | 36.0 Bcfe | 21.2 Bcfe |
2007 Acquisition Proved Reserves * | 30.1 Bcfe | 4.6 Bcfe |
% of 2006 YE Proved | 84% | 22% |
2007E Production* | 2.6 Bcfe | 1.8 Bcfe |
Increase from 2006* | 86% | 20% |
See slide 2 regarding Forward Looking Statements
Continuing Our Success
§ Low-risk resource plays
§ Strong development inventory
| o | Piceance, Wattenberg and NECO all have significant proved and unproved potential |
§ Proven multi-basin operator
| o | Barnett shale activity planned |
§ Strong balance sheet
§ Skilled and experienced management and technical team
See slide 2 regarding Forward Looking Statements
Petroleum Development Corporation
2007 Annual Meeting of Shareholders
August 28, 2007
NASDAQ GSM:PETD