Petroleum Development Corporation
2008 Analyst Day
February 7, 2008
NASDAQ GSM: PETD
Disclaimer
The following information contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on Management’s current expectations and beliefs, as well as a number of assumptions concerning future events.
These statements are based on certain assumptions and analyses made by Management in light of its experience and its perception of historical trends, current conditions and expected future developments as well as other factors it believes are appropriate in the circumstances. However, whether actual results and developments will conform with Management’s expectations and predictions is subject to a number of risks and uncertainties, general economic, market or business conditions; the opportunities (or lack thereof) that may be presented to and pursued by Petroleum Development Corporation; actions by competitors; changes in laws or regulations; and other factors, many of which are beyond the control of Petroleum Development Corporation.
You are cautioned not to put undue reliance on such forward-looking statements because actual results may vary materially from those expressed or implied, as more fully discussed in our safe harbor statements found in our SEC filings, including, without limitation, the discussion under the heading “Risk Factors” in the company’s annual report on Form 10-K. All forward-looking statements are based on information available to Management on this date and Petroleum Development Corporation assumes no obligation to, and expressly disclaims any obligation to, update or revise any forward looking statements, whether as a result of new information, future events or otherwise.
The SEC permits oil and gas companies to disclose in their filings with the SEC only proved reserves, which are reserve estimates that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. The Company uses in this presentation the terms “probable” and “possible” reserves, which SEC guidelines prohibit in filings of U.S. registrants. Probable reserves are unproved reserves that are more likely than not to be recoverable. Possible reserves are unproved reserves that are less likely to be recoverable than probable reserves. Estimates of probable and possible reserves which may potentially be recoverable through additional drilling or recovery techniques are by nature more uncertain than estimates of proved reserves and accordingly are subject to substantially greater risk of not actually being realized by the Company. In addition, the Company’s production forecasts and expectations for future periods are dependent upon many assumptions, including estimates of production decline rates from existing wells and the undertaking and outcome of future drilling activity, which may be affected by significant commodity price declines or drilling cost increases.
This material also contains certain non-GAAP financial measures as defined under the Securities and Exchange Commission rules.
Welcome
| · | Celesta Miracle, VP Investor Relations and Communications |
| · | Introductions |
| o | Steve Williams, Chairman and CEO |
| o | Rick McCullough, Vice Chairman and CFO |
| o | Eric Stearns, Executive Vice President of Exploration and Production |
See Slide 2 regarding Forward Looking Statements
Presentation Overview
| · | YE 2007 snapshot, history and elements of strategy |
| o | Steve Williams |
| · | Areas of operations, opportunities and operating parameters, reserves |
| o | Eric Stearns |
| · | Preliminary 2007 Results, 2008 Guidance, 2008-2010 Outlook |
| o | Rick McCullough |
See Slide 2 regarding Forward Looking Statements
2008 Analyst Day
Steve Williams, Chairman and CEO
Company Snapshot
| · | Market Cap (12/31/07) |
| o | $ 881 million |
| · | 2007 Year-end Proved Reserves 686 Bcfe |
| · | 3-P Reserves @ YE2007 |
| o | 1.044 TCFE* |
| · | Annual Production |
| o | 28 Bcfe (2007) |
| · | Rocky Mountains |
| o | 2007 Proved Reserves: 559 Bcfe |
| o | 2006 Production: 14.1 Bcfe |
| o | 2007 Production: 23.5 Bcfe |
| · | Michigan Basin |
| o | 2007 Proved Reserves: 24 Bcfe |
| o | Production: 1.4 Bcfe |
| o | Production: 1.7 Bcfe |
| · | Barnett Shale |
| o | Exploratory project |
| o | December 2007/January drilling- 2 horizontal wells |
| · | Appalachian Basin |
| o | 2006 Proved Reserves: 103 Bcfe |
| o | 2006 Production: 1.5 Bcfe |
| o | Production: 2.7 Bcfe |
See Slide 2 regarding Forward Looking Statements
See Slide 27 regarding reserves included in probably and possible categories.
PDC Investment Theme
| · | PDC has |
| o | Large inventory of low-risk, high quality development prospects in Colorado |
| o | Staff and expertise to predictably execute the development plan |
| o | Capital to fund development at aggressive 2007 levels through 2010 |
| · | The Company is positioned for significant value creation in 2008 and beyond without any additions to its prospect inventory |
| · | Acquisitions, exploration or exploitation success in the Barnett or Marcellus shale or other new areas will add to anticipated future reserves and production levels |
See Slide 2 regarding Forward Looking Statements
Additional 2008 Value Enhancers
| · | Improving margin on production |
| o | Increased Rocky Mountain gas pricing with start-up of Rocky Mountain Express pipeline (December 2007) |
| o | G&A unit costs decreasing with increasing production rates |
| o | Production unit costs decreasing with increasing production rates |
| · | Potential exploration and exploitation success in new areas |
| · | Possible acquisitions |
See Slide 2 regarding Forward Looking Statements
Recent Developments
| · | Priced $203 million of senior notes due in 2018 at 12% |
| · | Announced Company will not offer a 2008 drilling partnership |
| · | Sold Bakken Shale acreage in North Dakota for $34.7 million |
| · | Named Rick McCullough to succeed Steve Williams as CEO later in 2008 |
| · | Considering formation of MLP |
| · | Monitoring market developments |
See Slide 2 regarding Forward Looking Statements
Overview
| · | Pre 2007 growth was through partnerships and drilling and acquisitions |
| o | High growth with low financial risk |
| o | Began E&P transition in 2002 |
| · | $354 million Piceance sale in July 2006 was a transformational event |
| o | $ 192M in acquisitions completed in early 2007 through like-kind exchange |
| o | Monetized unrecognized value |
| o | Increased 2007 capital expenditures to ~$270 million from $148 Million in 2006 |
| o | Increasing use of debt in capital structure |
| · | E&P will underpin future growth |
| o | Accelerated development of high-quality prospect inventory |
| o | Bolt-on acquisitions |
| o | Limited exploration (~10% of capital budget) |
See Slide 2 regarding Forward Looking Statements
Business Segments
| · | Business divided into four main segments : |
| o | Oil and Gas Sales |
| o | Drilling and Development |
| o | Natural Gas Marketing |
| o | Well Operations |
See Slide 2 regarding Forward Looking Statements
Business Segment Contribution {Graphic}
| · | Decreasing relative impact of Drilling and Development and increasing impact of Oil & Gas Sales reflect transition from drilling program syndicator to E&P company away from partnership syndication |
See Slide 2 regarding Forward Looking Statements
Core Operating Regions {Graphic}
Rocky Mountains
| 2007 Proved Reserves: | 559 Bcfe |
| 2006 Production: | 14.1 Bcfe |
| 2007 Production: | 23.5 Bcfe |
Michigan Basin
| 2007 Proved Reserves: | 24 Bcfe |
| 2006 Production: | 1.4 Bcfe |
| 2007 Production: | 1.7 Bcfe |
Appalachian Basin
| 2007 Proved Reserves: | 103 Bcfe |
| 2006 Production: | 1.5 Bcfe |
| 2007 Production: | 2.7 Bcfe |
See Slide 2 regarding Forward Looking Statements
Energy Market Exposure {Graphic}
Percentage of Sales by Market (Sales in Mcf equivalents as of 9/30/07)
| Oil: | 21.6% |
| Northern Border: | 0.5% |
| Midcontinent: | 14.3% |
| Colorado Liquids: | 3.0% |
| Nymex Gas: | 12.4% |
| Michigan: | 5.9% |
| Colorado: | 42.3% |
See Slide 2 regarding Forward Looking Statements
Consistent Growth {Graphic}
| · | PDC has had consistent reserve and production growth through developmental drilling, opportunistic acquisitions and focusing on core operational efficiencies |
See Slide 2 regarding Forward Looking Statements
Drilling Activity
| · | Low risk drilling inventory results in high completion rates |
| Total Wells | |||||
| Total | % Productive | ||||
| Year | Drilled | Net | Drilled | Net | |
| 2002 | 70.0 | 13.7 | 100% | 100% | |
| 2003 | 111.0 | 29.5 | 99% | 97% | |
| 2004 | 158.0 | 45.0 | 96% | 98% | |
| 2005 | 242.0 | 110.7 | 97% | 95% | |
| 2006 | 231.0 | 137.7 | 97% | 97% | |
| 2007 | 343.0 | 277.0 | 95% | 96% | |
See Slide 2 regarding Forward Looking Statements
YE2007 Proved Reserve Summary
| · | Added to Reserves and Production through acquisitions and development in 2007 |
| · | 2007 acquisitions added 195 Bcfe proved reserves |
| Summary Reserve Data | |||||
Proved Reserves (Bcfe) (1) | |||||
| 2006 YE | 2007 YE | % Growth | % Developed | % Natural Gas | |
| Rockies | 175.5 | 558.6 | 195% | 47.0% | 83.6% |
| Appalachia | 36.0 | 102.7 | 185% | 72.4% | 99.8% |
| Michigan | 21.2 | 24.3 | 15% | 100% | 98.6% |
| Total | 322.7 | 685.6 | 112% | 53.6% | 86.6% |
| 1) | Independent reserve engineer’s estimates |
See Slide 2 regarding Forward Looking Statements
Unproved Potential
| · | Over 358 Bcfe of Probable and Possible Reserves for Future Development |
| o | Grand Valley offset locations |
| o | Wattenberg field locations (5th spot, rule 318A and 40 acre locations) |
| o | Locations identified by seismic and offsets to producing wells in NE Colorado |
{Graphic} Distribution of 2P and 3P Reserves
| o | Piceance Basin 57% |
| o | NE Colorado 15% |
| o | Wattenberg Field 28% |
See Slide 2 regarding Forward Looking Statements
See Slide 2 regarding reserve estimate limitations
Key Value Drivers
| · | Proven Track Record |
| o | 5-year 940% return to shareholders through stock price appreciation (1/03- 12/07) |
| o | 66% year-over-year production growth (2006-2007) |
| o | 112% year-over-year reserve growth (2006-2007) |
| · | Visible Built-in-Growth |
| o | More than 1 Tcfe of 3P reserves provides significant near-term growth potential |
| o | Large multi-year, low risk drilling inventory |
| o | Investments in new areas with substantial growth potential |
| · | Strong Financial Position |
| o | Strong balance sheet |
| o | Debt-to-cap 27% (12/31/2007) |
See Slide 2 regarding Forward Looking Statements
Growth Strategy
| · | PDC’s primary goal is to create economic value by continuing to grow reserves, production, net income and cash flow |
| · | To increase these key performance measures |
| o | PDC maintains an active drilling program focusing on low-risk development of gas and oil reserves |
| o | Acquires producing properties with development potential |
| o | Limited exploratory drilling |
See Slide 2 regarding Forward Looking Statements
2008 and Beyond
| · | Develop operations in core areas |
| o | Integrate and accelerate development of legacy and acquired properties |
| · | Identify and execute strategic acquisitions |
| o | Bolt-on acquisitions in core areas |
| o | Acquisitions with similar geologic and operational characteristics to bootstrap new areas |
| · | Pursue select high potential exploration and exploitation opportunities |
| · | Maintain focus on increasing long-term stakeholder value |
See Slide 2 regarding Forward Looking Statements
2008 Analyst Day
Eric Stearns, EVP, Exploration & Production
2007 Operations Highlights
| Operations CAPEX | $261M |
| Net Production | 28 Bcfe |
| Proved Reserves | 686 Bcfe |
| Total 3P Reserves | 1.04 Tcfe |
| Wells Drilled | 356 Gross 278 Net |
| Re-Completions/Fracs | 165 Gross 160 Net |
See Slide 2 regarding Forward Looking Statements
2007 CAPEX Summary
| Development Net Capital | $224M |
| Exploration, Land, G&G | $24M |
| Misc. Capital | $12M |
| Total Net Capital | $261M |
See Slide 2 regarding Forward Looking Statements
2007 Production Summary
2007 Forecast by Area (MMcfe)
| Area | 1Q Actual | 1Q Forecast | 2Q Actual | 2Q Forecast | 3Q Actual | 3Q Forecast | 4Q Actual | 4Q Forecast | Total Actual | Total Forecast |
| Rocky Mtn | 4,290 | 4,435 | 5,322 | 5,041 | 6,683 | 6,794 | 7232 | 7,405 | 23,527 | 23,675 |
| Appalachian | 617 | 625 | 687 | 640 | 610 | 680 | 830 | 689 | 2,744 | 2,634 |
| Michigan | 426 | 415 | 427 | 424 | 428 | 456 | 423 | 459 | 1,704 | 1,754 |
| Total | 5,333 | 5,475 | 6,436 | 6,105 | 7,721 | 7,930 | 8,485 | 8,553 | 27,975 | 28,063 |
2007 Rocky Mountain Forecast by Area (MMcfe)
| Area | 1Q Actual | 1Q Forecast | 2Q Actual | 2Q Forecast | 3Q Actual | 3Q Forecast | 4Q Actual | 4Q Forecast | Total Actual | Total Forecast |
| Wattenberg | 2,209 | 2,314 | 2,623 | 2,586 | 2,963 | 3,149 | 3337 | 3,361 | 11,132 | 11,410 |
| Grand Valley | 1,246 | 1,064 | 1,590 | 1,245 | 2,622 | 2,086 | 2770 | 2,094 | 8,228 | 6,489 |
| NECO | 677 | 834 | 942 | 954 | 960 | 1,203 | 1030 | 1,492 | 3,609 | 4,483 |
| North Dakota | 158 | 224 | 165 | 256 | 138 | 355 | 95 | 458 | 556 | 1,293 |
| Total | 4,290 | 4,436 | 5,320 | 5,041 | 6,683 | 6,793 | 7,232 | 7,405 | 23,525 | 23,675 |
See Slide 2 regarding Forward Looking Statements
YE2007 Proved Reserves
| MMcfe | MMcf Gas | Mbo Oil | |
| Proved Developed | 367,688 | 314,123 | 8,927 |
| 85% | 15% | ||
| Proved Undeveloped | 317,904 | 279,440 | 6,411 |
| 88% | 12% | ||
| Total Proved | 685,592 | 593,563 | 15,338 |
| 87% | 13% |
| · | Net Weighted Average Oil Price $80 / Bbl |
| · | Net Weighted Average Gas Price $6.75 / Mcf |
| o | Year-end Nymex less applicable area differential |
See Slide 2 regarding Forward Looking Statements
YE2007 3P Reserve Summary
| Proved Dev Producing | Proved Dev Non-Producing | Proved Undeveloped | Probable | Possible | |||||||||||
| Oil | Gas | Mmcfe | Oil | Gas | Mmcfe | Oil | Gas | Mmcfe | Oil | Gas | Mmcfe | Oil | Gas | Mmcfe | |
| Appalachian Basin | 35 | 59,295 | 59,502 | 0 | 21,060 | 21,060 | 0 | 22,115 | 22,115 | 0 | 0 | 0 | 0 | 0 | 0 |
| Michigan | 58 | 23,492 | 23,839 | 0 | 487 | 487 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Wattenberg | 4,633 | 42,762 | 70,558 | 3,840 | 24,465 | 47,507 | 6,210 | 40,729 | 77,988 | 7,102 | 43,354 | 85,965 | 1,446 | 6,953 | 15,629 |
| Piceance | 99 | 83,126 | 83,718 | 8 | 8,201 | 8,250 | 201 | 200,988 | 202,204 | 148 | 148,478 | 149,369 | 55 | 54,705 | 55,034 |
| NE Colorado | 0 | 43,330 | 43,330 | 0 | 7,612 | 7,612 | 0 | 15,598 | 15,598 | 0 | 27,468 | 27,468 | 0 | 24,860 | 24,860 |
| ND Bakken Shale | 138 | 29 | 854 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| ND Burbak Nesson | 106 | 263 | 902 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Powder River Basin | 5 | 0 | 29 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| ND Non-Operated | 6 | 2 | 40 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Total All Fields | 5,079 | 252,298 | 282,771 | 3,849 | 61,825 | 84,916 | 6,411 | 279,440 | 317,904 | 7,250 | 219,299 | 262,801 | 1,501 | 86,518 | 95,523 |
| Proved Developed | Total Proved | Total 2P | Total 3P | |||||||||
| Oil | Gas | Mmcfe | Oil | Gas | Mmcfe | Oil | Gas | Mmcfe | Oil | Gas | Mmcfe | |
| Appalachian Basin | 35 | 80,355 | 80,563 | 35 | 102,470 | 102,678 | 35 | 102,470 | 102,678 | 35 | 102,470 | 102,678 |
| Michigan | 58 | 23,979 | 24,326 | 58 | 23,979 | 24,326 | 58 | 23,979 | 24,326 | 58 | 23,979 | 24,326 |
| Wattenberg | 8,473 | 67,227 | 118,065 | 14,683 | 107,956 | 196,052 | 21,784 | 151,310 | 282,017 | 23,231 | 158,263 | 297,646 |
| Piceance | 107 | 91,327 | 91,968 | 308 | 292,324 | 294,171 | 456 | 440,802 | 443,540 | 511 | 495,507 | 498,573 |
| NE Colorado | 0 | 50,942 | 50,942 | 0 | 66,540 | 66,540 | 0 | 94,007 | 94,007 | 0 | 118,867 | 118,867 |
| ND Bakken Shale | 138 | 29 | 854 | 138 | 29 | 854 | 138 | 29 | 854 | 138 | 29 | 854 |
| ND Burbak Nesson | 106 | 263 | 902 | 106 | 263 | 902 | 106 | 263 | 902 | 106 | 263 | 902 |
| Powder River Basin | 5 | 0 | 29 | 5 | 0 | 29 | 5 | 0 | 29 | 5 | 0 | 29 |
| ND Non-Operated | 6 | 2 | 40 | 6 | 2 | 40 | 6 | 2 | 40 | 6 | 2 | 40 |
| Total All Fields | 8,927 | 314,123 | 367,688 | 15,338 | 593,563 | 685,592 | 22,588 | 812,862 | 948,393 | 24,089 | 899,380 | 1,043,915 |
See Slide 2 regarding Forward Looking Statements
2007 Drilling Summary (Operated Wells)
| Operating Area | Gross Wells | Net Wells |
| Appalachia | 8 | 8 |
| Michigan | 3 | 3 |
| Wattenberg | 153 | 110 |
| Grand Valley | 53 | 42 |
| NECO | 122 | 111 |
| North Dakota | 3 | 2 |
| Texas | 1 | 1 |
| Non-Operated | 13 | 1 |
| Total | 356 | 278 |
See Slide 2 regarding Forward Looking Statements
Historical Drilling Activity {Graphic}
2007 Re-Completion Summary
| Area | # Projects | # Net Projects |
| Appalachian | 30 | 30 |
| Wattenberg Codell | 45 | 44 |
| Wattenberg Niobrara | 62 | 61 |
| Wattenberg Cod / Nio | 28 | 25 |
| Total | 165 | 160 |
See Slide 2 regarding Forward Looking Statements
2006-2007 Acquisition Summary
| DJ Acquisitions | Partnership Buy-Back | Castle | |
| Purchase Price | $160M | $58M | $53M |
| YE2007 Proved Reserves | 105 Bcfe | 50e Bcfe | 31 Bcfe |
| Total 3P Reserves | 152 Bcfe | 50e Bcfe | 47 Bcfe |
| Purchased Wells | 379 | Interest in 718 | 741 |
| Drilled wells 2007 | 106 | ||
| Re-Work Projects | 89 | ||
| Net Acres Acquired | 20,200 | 39,640 | |
| Developed | 7,662 | 29,640 | |
| Undeveloped | 12,583 | 10,000 | |
| Proved Drilling Locations | 266 | 188 | |
| Proved Re-Works | 172 | ||
| Probable Projects | 394 | 32 |
See Slide 2 regarding Forward Looking Statements
2008 Operations Forecast
2008 CAPEX
| 2007 | 2008 | %Change | |
| Development Net Capital (MM$) | 224 | 194 | -13% |
| Exploration, Land, G&G (MM$) | 24 | 50 | 109% |
| Miscellaneous Capital (MM$) | 12 | 11 | -8% |
| Total Net Capital (MM$) | $261 | $255 | -2% |
See Slide 2 regarding Forward Looking Statements
2008 Operation and Production Forecast
| CAPEX | $255M ($194M Drilling & Re-Works) |
| Net Production | 38 Bcfe |
| Proved Reserves | 750+ Bcfe |
| Total 3P Reserves | 1.2+ Tcfe |
| Wells Drilled* | 360 Gross / 330 Net |
| Re-Completions/Fracs | 130 Gross / 116 Net |
See Slide 2 regarding Forward Looking Statements
Operations Forecast 2008 vs 2007
| 2007 | 2008 | % Change | |
| Total Net Production (BCFE) | 28 | 38 | 36% |
| Net Exit Rate (MMCFE/D) | 100 | 122 | 22% |
| Gross Exit Rate (MMCFE/D) | 187 | 211 | 13% |
| Development Net Capital (MM$) | $224 | $194 | -13% |
| Number of Drilling Projects Gross (Net)* | 356 (278) | 360 (330) | 5% (19%) |
| Number of Other Projects Gross (Net)* | 165 (160) | 130 (116) | -21% (-28%) |
* Does not include exploitation / exploration wells
See Slide 2 regarding Forward Looking Statements
2008 Estimated Production
| Gas, Mmcf | 1Q08 | 2Q08 | 3Q08 | 4Q08 | Total |
| Castle | 258 | 270 | 370 | 426 | 1,324 |
| Appalachian | 712 | 727 | 789 | 833 | 3,061 |
| Michigan | 383 | 382 | 382 | 378 | 1,526 |
| Wattenberg | 1,901 | 2,035 | 2,012 | 2,043 | 7,991 |
| Piceance | 2,817 | 2,782 | 3,443 | 3,723 | 12,765 |
| NECO | 1,077 | 1,370 | 1,583 | 1,735 | 5,765 |
| Bakken | 2 | 1 | 1 | 1 | 6 |
| Nesson | 10 | 17 | 14 | 21 | 63 |
| Powder River | 0 | 0 | 0 | 0 | 0 |
| ND Non-Op | 0 | 0 | 0 | 0 | 0 |
| Total | 7,159 | 7,585 | 8,595 | 9,161 | 32,500 |
| Oil, Mbbl | 1Q08 | 2Q08 | 3Q08 | 4Q08 | Total |
| Castle | 0 | 0 | 0 | 0 | 0 |
| Appalachian | 1 | 1 | 1 | 1 | 3 |
| Michigan | 1 | 1 | 1 | 1 | 4 |
| Wattenberg | 198 | 218 | 222 | 234 | 872 |
| Piceance | 3 | 3 | 2 | 2 | 10 |
| NECO | 0 | 0 | 0 | 0 | 0 |
| Bakken | 4 | 3 | 3 | 3 | 13 |
| Nesson | 3 | 8 | 7 | 12 | 30 |
| Powder River | 0 | 0 | 0 | 0 | 1 |
| ND Non-Op | 0 | 0 | 0 | 0 | 0 |
| Total | 209 | 234 | 237 | 252 | 932 |
| Mmcfe | 1Q08 | 2Q08 | 3Q08 | 4Q08 | Total |
| Castle | 258 | 270 | 370 | 426 | 1,324 |
| Appalachian | 716 | 732 | 793 | 838 | 3,078 |
| Michigan | 389 | 388 | 387 | 383 | 1,547 |
| Wattenberg | 3,088 | 3,344 | 3,347 | 3,446 | 13,224 |
| Piceance | 2,833 | 2,797 | 3,457 | 3,736 | 12,824 |
| NECO | 1,077 | 1,370 | 1,583 | 1,735 | 5,765 |
| Bakken | 23 | 21 | 20 | 18 | 83 |
| Nesson | 28 | 66 | 54 | 91 | 240 |
| Powder River | 1 | 1 | 1 | 1 | 4 |
| ND Non-Op | 1 | 1 | 1 | 1 | 3 |
| Total | 8,414 | 8,990 | 10,014 | 10,674 | 38,092 |
See Slide 2 regarding Forward Looking Statements
Projected 2008 Production {Graphic}
Proposed Development Projects {Graphic}
2008 Operations by Area
Area | Drilling * Gross (Net) | Re-Works Gross (Net) | Net Production (Bcfe) | Operated Wells YE07 |
| Appalachian | 23 (23) | 30 (25) | 3.1 | 1361 |
| Michigan | 2 (2) | 1.5 | 209 | |
| Wattenberg | 115 (92) | 100 (91) | 13.2 | 1212 |
| Grand Valley | 42 (36) | 12.8 | 227 | |
| NECO | 125 (125) | 5.8 | 457 | |
| North Dakota | 3 (2) | 0.4 | 7 | |
| Texas Barnett | 1 | |||
| Castle | 50 (50) | 1.3 | 741 | |
| Total | 364 (334) | 130 (116) | 38.1 | 4215 |
* Does not include exploitation / exploration wells
See Slide 2 regarding Forward Looking Statements
Acreage Inventory
| AREA | Lease Gross Acres | Lease Net Acres | Net Developed Acres | Net Undeveloped Acres | State |
| Grand Valley | 7,804 | 7,804 | 2,994 | 4,810 | Colorado |
| Wattenberg | 64,953 | 63,486 | 47,440 | 13,143 | Colorado |
| Neco | 80,000 | 51,000 | 16,800 | 34,200 | Colorado |
| Neco | 24,539 | 23,000 | 1,880 | 21,120 | Kansas |
| Michigan | 8,680 | 8,680 | 8,240 | 440 | Michigan |
| New York | 19,500 | 16,575 | 0 | 16,575 | New York |
| North Dakota | 101,267 | 68,474 | 4,767 | 59,972 | North Dakota |
| Appalachian Basin | 54,600 | 54,600 | 54,600 | 0 | WV / PA |
| Castle Gas | 39,640 | 39,640 | 29,640 | 10,000 | Pennsylvania |
| Wyoming | 31,945 | 31,945 | 0 | 31,945 | Wyoming |
| Texas Barnett | 10,804 | 8,868 | 0 | 8,868 | Texas |
| Total | 443,732 | 374,072 | 166,361 | 201,073 | |
| PDC TOTAL NET | 367,434 | ||||
See Slide 2 regarding Forward Looking Statements
2008 Rockies Operating Areas
| · | Greater Wattenberg Field Area, DJ Basin |
| o | Adams, Weld County, Colorado |
| § | Niobrara, Codell, J Sand |
| · | Grand Valley Field, Piceance Basin |
| o | Garfield County, Colorado |
| § | Mesaverde Section |
| · | NECO Area, eastern DJ Basin |
| o | Yuma County, Colorado & Cheyenne County, KS |
| § | Niobrara |
| · | North Dakota, Western Williston Basin |
| o | Burke County |
| § | Nesson, Midale, Bakken |
See Slide 2 regarding Forward Looking Statements
2008 Grand Valley Field {Graphic}
Grand Valley Field {Graphic}
| · | Operated wells year end 227 |
| · | Remaining Acreage Developable 4,810 |
| · | 481 - 10 acre locations |
| · | 372 PDC, 109 PDC and Partners (22 net PDC) 394 total net PDC |
| · | Number of net remaining locations |
| o | Net PDC PUD 200 |
| o | Probable 144 |
| o | Possible 50 |
See Slide 2 regarding Forward Looking Statements
2008 Proposed Development - Grand Valley Field
| 2007 | 2008 | % Change | |
| Total Net Production (BCFE) | 8.2 | 12.8 | 56% |
| Net Exit Rate (MMCFE/D) | 35.4 | 43.0 | 21% |
| Total Net Capital (MM$) | $99.2 | $74.0 | -25% |
| Drilling Projects, Gross (Net) | 53 (42) | 42 (36) | -21% |
See Slide 2 regarding Forward Looking Statements
2008 Proposed Development - Grand Valley Projects {Graphic}
Project Profile - Grand Valley Drilling
| IP Rate | 1250 Mcfe/d |
| Production Profile | Hyperbolic |
| EUR | 1500 Mmcfe |
| Life of Well | 24.5 years |
| Severance Tax | 2.05% |
| Ad Valorem Tax | 3.43% |
| Production Expense | $2900/mo & $0.10/mcf |
| Gas Index | 80% CIG; 20% MidCon |
| Gathering | ($0.41) |
| BTU Factor | 1.067 |
| Fuel | 3.9% |
| Capital Cost of Well | $2300k |
| Net Direct F&D Cost | $1.87/Mcfe |
| Working Interest | 100% |
| NRI | 82% |
See Slide 2 regarding Forward Looking Statements
Grand Valley Well Type Curve {Graphic}
Wattenberg Field {Graphic}
2008 Wattenberg Field
| Operated wells year end | 1212 |
| Undeveloped acreage | 13,143 |
| Number of remaining net locations | 914 |
| Net PUD | 325 |
| Net Probable | 476 |
| Net Possible | 50 |
See Slide 2 regarding Forward Looking Statements
2008 Proposed Development – Wattenberg Field Area
| 2007 | 2008 | % Change | |
| Total Net Production (BCFE) | 11.1 | 13.2 | 19% |
| Net Exit Rate (MMCFE/D) | 36.6 | 40.4 | 10% |
| Total Net Capital (MM$) | $90.9 | $61.6 | -32% |
| Drilling Projects, Gross (Net) | 153 (110) | 115 (92) | -25% |
| Other Projects, Gross (Net) | 135 (130) | 100 (91) | -26% |
See Slide 2 regarding Forward Looking Statements
2008 NECO Area {Graphic}
NECO Area
| Operated wells year end | 457 |
| Undeveloped acreage | 34,200 |
| Number of remaining net locations | 481 |
| PUD | 90 |
| Probable | 173 |
| Possible | 160 |
See Slide 2 regarding Forward Looking Statements
2008 Proposed Development – NECO Area
| 2007 | 2008 | % Change | |
| Total Net Production (BCFE) | 3.6 | 5.8 | 61% |
| Net Exit Rate (MMCFE/D) | 12.7 | 19.6 | 54% |
| Total Net Capital (MM$) | $26.8 | $31.3 | 17% |
| Drilling Projects, Gross (Net) | 122 (111) | 125 (125) | 2% |
See Slide 2 regarding Forward Looking Statements
Appalachian Basin Operating Area {Graphic}
Appalachian Basin
| · | Operated wells year end 1361 |
| · | Evaluating Undeveloped Acreage Position |
| · | Number of remaining locations |
| o | PUD 25 |
| o | Other opportunities not fully evaluated. |
See Slide 2 regarding Forward Looking Statements
2008 Proposed Development – Appalachian Basin
| 2007 | 2008 | % Change | |
| Total Net Production (BCFE) | 2.5 | 3.1 | 24% |
| Net Exit Rate (MMCFE/D) | 7.0 | 9.1 | 30% |
| Total Net Capital (MM$) | $5.0 | $8.9 | 78% |
| Drilling Projects, Gross (Net) | 8 (8) | 23 (23) | 130% |
| Other Projects, Gross (Net) | 30 (30) | 30 (25) | 0% |
See Slide 2 regarding Forward Looking Statements
2008 Appalachian – Castle Operating Area {Graphic}
Appalachian Basin – Castle Area
| · | Appalachian Basin - Castle: |
| · | Operated wells year end 741 |
| · | Undeveloped acreage 10,000 |
| · | Number of remaining locations |
| o | PUD 188 |
| o | Other opportunities not fully evaluated |
See Slide 2 regarding Forward Looking Statements
2008 Proposed Development – Castle Area
| 2008 | |
| Total Net Production (BCFE) | 1.3 |
| Net Exit Rate (MMCFE/D) | 4.4 |
| Total Net Capital (MM$) | $12.7 |
| Drilling Projects, Gross (Net) | 50 (50) |
See Slide 2 regarding Forward Looking Statements
2008 North Dakota {Graphic}
North Dakota
| 2007 | 2008 | % Change | |
| Total Net Production | 0.6 | 0.3 | -50% |
| Net Exit Rate (MMCFE/D) | 1.2 | 1.3 | -8% |
| Total Net Capital (MM$) | 2.0 | 4.2 | 110% |
| Drilling Projects, Gross (Net) | 3 (2) | 3 (2) | 0% |
| Operated Wells year end | 7 |
| Undeveloped Acreage | 59,972 |
| Number of remaining locations | |
| PUD | 0 |
See Slide 2 regarding Forward Looking Statements
Michigan
| · | Operated wells year end 209 |
| · | Undeveloped acreage 440 |
| · | Number of remaining locations 3 |
| o | PUD 2 |
| o | Probable 1 |
See Slide 2 regarding Forward Looking Statements
2008 Proposed Development – Michigan Basin
| 2007 | 2008 | % Change | |
| Total Net Production (BCFE) | 1.7 | 1.5 | -12% |
| Net Exit Rate (MMCFE/D) | 4.6 | 4.2 | -9% |
| Total Net Capital (MM$) | $1.2 | $0.8 | -33% |
| Drilling Projects, Gross (Net) | 3 (3) | 2 (2) | -33% |
See Slide 2 regarding Forward Looking Statements
2008 Proposed Exploration / Exploitation Activity
2008 Proposed Exploration / Exploitation Budget
| MM$ | |
| Exploration | 11.4 |
| Exploitation | 13.7 |
| G & G | 6.1 |
| Land | 19.2 |
| Total | $50.4 |
| · | Budget 2X 2007 Level |
| · | Addition of geological and geophysical professionals |
| · | No Reserve adds modeled |
See Slide 2 regarding Forward Looking Statements
2008 Proposed Exploration Budget
Exploration:
MM$
| · | North Dakota (Midale) 2.6 |
| · | New York (Trenton BR) 1.5 |
| · | Unnamed Opportunities 7.3 |
Total Exploration Capital $11.4
See Slide 2 regarding Forward Looking Statements
2008 Proposed Exploitation Budget
Exploitation:
MM$
| · | Barnett Shale (4 wells) 8.6 |
| · | Marcellus Shale (1 well) 1.5 |
| · | Unnamed Opportunities 3.6 |
Total Exploitation Capital $13.7
See Slide 2 regarding Forward Looking Statements
Barnett Shale Project {Graphic}
| · | 8,868 Acres under Lease |
| · | 1,500 Acres seismic option |
| · | 3D Seismic acquired under both lease blocks |
| · | 2 drilled horizontal wells |
| · | Completion operations expected to commence late 1Q or early 2Q as 3rd party pipeline construction complete |
| · | No reserve value in current 3P |
See Slide 2 regarding Forward Looking Statements
Marcellus Shale “Fairway” - PDC Areas of Operation {Graphic}
| · | PDC operates over 2100 wells within the Marcellus “Fairway” area |
| · | Leasehold combination of lease, farmout and wellbore ownership |
| · | Potential of 10-40,000 acres within “Fairway”, pending full determination of leasehold rights |
| · | No reserve value in current 3P |
See Slide 2 regarding Forward Looking Statements
2008 – 2010 Operating Estimate
2008 – 2010 Operating Estimate
| 2008 | 2009 | 2010 | |
| Total Net Capital (MM$) | 254 | 315 | 315 |
| Net Production (BCFE) | 38 | 48 | 56 |
| % Production Growth | 36% | 26% | 17% |
| Gross Drilling Projects | 360 | 360 | 360 |
| Net Drilling Projects | 330 | 358 | 358 |
| · | Considered baseline outcome with no additions from Barnett, Marcellus or other exploration, exploitation activity or acquisitions |
| · | Assumes constant drilling level & cost in 2009 & 2010 equal to 2008 level including Partnership carry-over activity |
| · | Assumes development of identified proved and probable reserves in current areas of operations |
See Slide 2 regarding Forward Looking Statements
Estimated 2008-2010 Production {Graphic}
2008 Analyst Day
Rick McCullough, Vice Chairman and CFO
Analysis of 2007 Forecast
| 2007 Guidance ($MM) | 2007 Actual ($MM) | |
| Revenues | $167 – 197 | $170 - 200 |
| Expenses | ||
| DD&A | 58 – 65 | 70 – 75 |
| G&A | 14 – 16 | 28 – 30 |
| Operating Income | 82 – 95 | 63 – 75 |
| Net Income | 47 – 54 | 36 – 42 |
| · | Actual DD&A higher than Guidance due to acquisitions and greater development drilling |
| · | Actual G&A higher than Guidance due to estimate not reflecting increase cost of financial statements audits, increased legal expenses and staffing up of accounting and financial infrastructure |
| · | Non operating gain on sale of leasehold added approximately $15 Million to net income |
See Slide 2 regarding Forward Looking Statements
2008 Budget Assumptions(1)
| · | Reserves, production and capital expenditures per the internal operational plan |
| · | Production taxes and direct operating costs on a field-by-field basis |
| · | SG&A of $30.0M up from $28M in 2007 |
| · | DD&A based on field-by-field depreciation analysis |
1) The Company has no intent to update or correct these estimates during the year
See Slide 2 regarding Forward Looking Statements
2008 Budget Assumptions
| · | Revolver interest rate at pricing grid plus LIBOR spread |
| · | $203.0MM Senior Notes issuance at 12.0% |
| · | 2008 commodity pricing based on NYMEX |
| strips as of 12/7/07 |
| o | NYMEX Gas/Oil - $7.60 / $87.85 |
| o | Differentials (NYMEX Gas/Oil) - 16% / 10% |
| · | Assumed 50% of exploration expenditures expensed and no production or reserves |
See Slide 2 regarding Forward Looking Statements
2006-2008E Financial Metrics {Graphic}
2006-2008E Operating & Credit Metrics {Graphic}
Debt Maturity Schedule {Graphic}
| · | $234MM Revolver matures November 4, 2010 |
| · | Majority of $195MM net note proceeds will pay down $175MM drawn balance |
| · | $203MM 12% Senior Notes mature February 2018 |
| · | Note proceeds provide: |
| o | Mitigation of liquidity risk |
| o | Diversification of funding sources |
| o | Capital for aggressive organic development program |
| o | Capacity/Flexibility to pursue opportunistic non-organic growth opportunities |
See Slide 2 regarding Forward Looking Statements
Hedging Program
| · | PDC’s currently implemented hedging schedule helps to ensure stable, predictable cash flows(1) |
| Floors | Ceilings | Swaps (Fixed Prices) | ||||||
Hedging Schedule (as of 2/4/08) | Begin | End | Monthly Qty MMBtu | Floor Price | Monthly Qty MMBtu | Ceiling Price | Monthly Qty MMBtu | Fixed Price |
| Colorado Interstate Gas (CIG) Based Derivatives (Piceance Basin) | ||||||||
Nov-07 Nov-07 Apr-08 Apr-08 Nov-08 Apr-09 | Mar-08 Mar-08 Oct-08 Oct-08 Mar-09 Oct-09 | 100,000 100,000 197,250 - 272,600 272,600 | $5.25 $5.25 $5.50 - $6.50 $5.75 | - 100,000 197,250 - 272,600 272,600 | - $9.80 $10.35 - $10.15 $8.75 | - - - 294,000 - - | - - - $6.54 - - | |
| NYMEX Based Derivatives (Appalachian & Michigan Basins) | ||||||||
Nov-07 Nov-07 Apr-08 Apr-08 Nov-08 Apr-09 | Mar-08 Mar-08 Oct-08 Oct-08 Mar-09 Oct-09 | 144,500 144,500 144,500 120,000 123,000 123,000 | $7.00 $7.00 $6.50 $7.00 $7.50 $6.75 | - 144,500 144,500 120,000 123,000 123,000 | - $13.70 $10.80 $13.00 $14.20 $12.45 | - | - | |
| Panhandle Based Derivatives (NECO) | ||||||||
Nov-07 Nov-07 Apr-08 Apr-08 Apr-08 Nov-08 Apr-09 | Mar-08 Mar-08 Oct-08 Oct-08 Oct-08 Mar-09 Oct-09 | 70,000 90,000 90,000 90,000 - 110,000 100,000 | $5.75 $6.00 $5.50 $6.00 - $6.75 $6.00 | - 90,000 90,000 90,000 - 110,000 110,000 | - $11.25 $9.85 $11.25 - $10.05 $9.70 | - - - - 120,000 - - | - - - - $6.80 - - | |
| Colorado Interstate Gas (CIG) Based Derivatives (Wattenberg Basin) | ||||||||
Nov-07 Apr-08 Apr-08 Nov-08 Apr-09 | Mar-08 Oct-08 Oct-08 Mar-09 Oct-09 | 120,000 306,000 - 199,800 199,800 | $5.25 $5.50 - $6.50 $5.75 | 120,000 306,000 - 199,800 199,800 | $9.80 $10.35 - $10.15 $8.75 | - - 206,000 - - | - - $6.54 | |
| Oil – NYMEX Based (Wattenberg Basin) | ||||||||
Jan-08 Jan-09 Jan-09 Jan-10 Jan-10 | Dec-08 Dec-09 Dec-09 Dec-10 Dec-10 | - - - 18,700 18,700 | - - - $70.00 $70.00 | - - - 18,700 18,700 | - - - $102.25 $103.00 | 29,070 18,700 18,700 - - | $84.20 $84.90 $85.40 - - | |
Note: Current hedges in place cover 29.2 Bcfe of total future production from January 1, 2008 forward.
See Slide 2 regarding Forward Looking Statements
2009 – 2010 Assumptions
| · | Not Company Forecast; simply illustration of growth associated with replication of 2008 drilling program |
| · | Operating and finance teams extended their 2008 projections through 2010 utilizing consistent methodologies |
| · | 2008-2010 commodity prices based on NYMEX strip prices as of 12/7/07 adjusted for historical differentials by area |
| · | 2009 and 2010 CAPEX and production increased to reflect impact of elimination of interests assigned to the drilling program partnership in 2008 drilling programs |
See Slide 2 regarding Forward Looking Statements
2007-2010 Financial Metrics {Graphic}
2007-2010 Operating & Credit Metrics {Graphic}
2008-2010 Forecast Qualitative Comments
| · | Strong financial position |
| o | Healthy balance sheet |
| o | Consistently low debt metrics support opportunistic growth strategy |
| · | Reserve base provides significant growth potential |
| o | Predictable low-risk production profile |
| · | Realized prices will have greatest impact on execution results |
See Slide 2 regarding Forward Looking Statements
PDC Investment Theme
| · | PDC has: |
| o | Large inventory of low-risk, high quality development prospects in Colorado |
| o | Staff and expertise to predictably execute the development plan |
| o | Capital to fund development at aggressive 2007 levels through 2010 |
| · | The Company is positioned for significant value creation in 2008 and beyond without any additions to its prospect inventory |
| · | Acquisitions, exploration or exploitation success in the Barnett or Marcellus shale or other new areas will add to anticipated future reserves and production levels |
See Slide 2 regarding Forward Looking Statements
Operations Appendix
Additional Prospect Area Information
Project Profile – Wattenberg Drilling
| Codell / Niobrara | Codell | |
| IP Rate | 295 Mcfe/d | 195 Mcfe/d |
| Production Profile | Hyperbolic | Hyperbolic |
| EUR | 300 Mmcfe | 200 Mmcfe |
| Life of Well | 23.5 years | 9.5 years |
| Severance Tax | 2.05% | 2.05% |
| Ad Valorem Tax | 5.54% | 5.54% |
| Production Expense | $612 / month | $612 / month |
| Gas Index | CIG | CIG |
| Gathering | $0.00 | $0.00 |
| BTU Factor | 1.000 | 1.000 |
| Fuel | 0.0% | 0.0% |
| Capital Cost of Well | $610k | $510k |
| Working Interest | 100% | 100% |
| NRI | 80% | 80% |
| Net F&D Cost | $2.54 / Mcfe | $3.19 / Mcfe |
See Slide 2 regarding Forward Looking Statements
Wattenberg Well Type Curve {Graphic}
Wattenberg Codell Well Type Curve {Graphic}
Project Profile - Wattenberg Codell Re-Frac
| IP Rate | 109 Mcfe/d |
| Production Profile | Hyperbolic |
| EUR | 185 Mmcfe |
| Life of Well | 27 years |
| Severance Tax | 2.05% |
| Ad Valorem Tax | 5.54% |
| Production Expense | $612 / month |
| Gas Index | CIG |
| Gathering | $0.00 |
| BTU Factor | 1.000 |
| Fuel | 0.0% |
| Capital Cost of Well | $195k |
| Working Interest | 100% |
| NRI | 80% |
| Net F&D Cost | $1.32 / Mcfe |
See Slide 2 regarding Forward Looking Statements
Wattenberg Codell Re-Frac - Type Curve {Graphic}
2008 Proposed Development – Wattenberg Projects {Graphic}
Project Profile – NECO Area Drilling -
| IP Rate | 92 Mcf/d |
| Production Profile | Hyperbolic |
| EUR | 192 MMcf |
| Life of Well | 27.92 years |
| Severance Tax | 2.05% |
| Ad Valorem Tax | 5.91% |
| Production Expense | $685 / month |
| Gas Index | 20% MidCon; 80% CIG |
| Gathering | ($0.45) |
| BTU Factor | 1.000 |
| Fuel | 4.8% |
| Capital Cost of Well | $250k |
| Working Interest | 100% |
| NRI | 80% |
| Net F&D Cost | $1.62 / Mcfe |
See Slide 2 regarding Forward Looking Statements
NECO Type Well {Graphic}
2008 Proposed Development NECO Projects {Graphic}
Project Profile – Appalachian Basin Drilling
| IP Rate | 59 Mcf/d |
| Production Profile | Hyperbolic |
| EUR | 177 MMcf |
| Life of Well | 59.1 years |
| Severance Tax | 5.0% and $0.047/mcf |
| Ad Valorem Tax | 3.0% |
| Production Expense | $552 / month |
| Gas Index | DTI Appal. Index |
| Gathering | $0.00 |
| BTU Factor | 1.07 |
| Fuel | 12% |
| Capital Cost of Well | $330k |
| Working Interest | 100% |
| NRI | 87.50% |
| Net F&D Cost | $2.33 / Mcfe |
See Slide 2 regarding Forward Looking Statements
Appalachian Type Well {Graphic}
Project Profile – Appalachian Re-Completions
| IP Rate | 44 Mcf/d |
| Production Profile | Hyperbolic |
| EUR | 75 MMcf |
| Life of Well | 30.6 years |
| Severance Tax | 5.0% and $0.047/mcf |
| Ad Valorem Tax | 3.0% |
| Production Expense | $544 / month |
| Gas Index | DTI Appal. Index |
| Gathering | $0.00 |
| BTU Factor | 1.07 |
| Fuel | 12.0% |
| Capital Cost of Well | $75k |
| Working Interest | 100% |
| NRI | 87.50% |
| Net F&D Cost | $1.00 / Mcfe |
See Slide 2 regarding Forward Looking Statements
2008 Proposed Development – Appalachian Projects {Graphic}
Project Profile – Castle Drilling
| IP Rate | 72 Mcf/d |
| Production Profile | Hyperbolic |
| EUR | 189 MMcf |
| Life of Well | 40.1 years |
| Severence Tax | 0.0% |
| Ad Valorem Tax | 0.0% |
| Production Expense | $250 / month |
| Gas Index | DTI Appal. Index |
| Gathering | $0.00 |
| BTU Factor | 1.07 |
| Fuel | 0.0% |
| Capital Cost of Well | $253k |
| Working Interest | 100% |
| NRI | 81.25% |
| Net F&D Cost | $1.67 / Mcfe |
See Slide 2 regarding Forward Looking Statements
Castle Area Type Curve {Graphic}
2008 Proposed Development – Castle Projects {Graphic}
2008 Proposed Development – Michigan Projects {Graphic}