PDC Energy Pleased with Initial Utica Shale Results

PDC Energy Announces 2013 Capital Budget of $324 Million and Production Guidance of 55 to 57 Bcfe; Successful Initial Utica Shale Results; Update of Activity in the Wattenberg Field and Marcellus Shale

DENVERDec. 11, 2012 (GLOBE NEWSWIRE) -- PDC Energy, Inc. ("PDC" or the "Company") (Nasdaq:PDCE) today reported its capital budget and production estimates for 2013, strong test results of its first horizontal Utica Shale well, the Onega Commissioners 14-25H, and updated operating results in the Wattenberg Field and Marcellus Shale.
2013 Capital Budget
PDC's capital budget for 2013 is approximately $324 million, including $290 million of development capital and $34 million for leasehold acquisitions, exploration and other expenditures. Ninety-five percent of the budget is dedicated to organically growing PDC's portfolio of high-return liquid-rich projects. The Company plans to invest $254 million in the Wattenberg Field in Colorado to add a third rig, drill 63 operated horizontal wells, execute a limited number of refrac/recompletes, and fund non-operated drilling projects and other miscellaneous expenditures. Approximately $53 million is expected to be invested in the Utica Shale in Ohio to drill and complete five horizontal wells and to acquire small leasehold acreage tracts that are contiguous to the Company's existing position. The remaining $17 million will fund a series of recompletion projects, environmental upgrades and other miscellaneous projects related to the Company's operations.
In addition, the Company has budgeted approximately $48 million for its 50% share of PDC Mountaineer ("PDCM") joint venture in the Marcellus Shalefor drilling and completing 14 wells and for midstream infrastructure. PDCM's capital budget is expected to be funded by the joint venture's cash flow and borrowings under the joint venture's revolving credit facility.
2013 Production Guidance
PDC estimates its net production volumes for 2013 will be in the range of 55 to 57 billion cubic feet equivalent ("Bcfe"). The range of production reflects uncertainty around capacity constraints of third party gathering and processing facilities in the Wattenberg Field until planned expansions are completed in mid-to-late 2013. The Company anticipates that the exit rate for 2013 production will be approximately 175 million cubic feet equivalent ("MMcfe") per day, of which 45% is expected to be comprised of crude oil and natural gas liquids ("NGLs").
Utica Shale
PDC's Onega Commissioners 14-25H well in Guernsey County, Ohio tested through tubing at a peak rate of 1,796 barrels of oil equivalent ("Boe") per day on a 26/64" choke with an average rate of 1,501 Boe per day for 24 consecutive hours. The Onega Commissioners 14-25H well flow test was conducted following a 60-day resting period.
Based upon composition analysis, the gas being produced is 1254 BTU rich gas. Assuming full ethane recovery with a natural gas shrink of 20%, the composition mix of the production is 56% condensate, 23% NGLs and 21% residue gas. The well was drilled to a lateral length of 3,950 feet and completed with 13 frac stages.
PDC is currently evaluating midstream options and anticipates the Onega Commissioners 14-25H will begin flowing into a sales pipeline during the second quarter of 2013. The Company's second horizontal well, the Detweiler 42-3H, is expected to be completed in mid-December and should be flow tested in the first quarter of 2013 following a 60-day rest period.
The Company plans to begin drilling a three-well pad in Guernsey County in the first quarter of 2013 followed by two horizontal wells in Washington County, Ohio to further delineate its 45,000 net acre position in the Utica Shale play.

Wattenberg Field
PDC is presently drilling its 53rd horizontal well in the core area of the Wattenberg Field, including 45 Niobrara B wells and eight Codell wells. Early production results from the Codell wells are comparable to the average type curve of 350 thousand barrels of oil equivalent ("MBoe") for the Niobrara B wells and yielding 70%-80% liquids. The Company is drilling all wells from multi-well pads to improve drill times and other operating efficiencies. PDC has brought two downspacing projects online to test an increased density of 12 wells per 640 acres, targeting the Niobrara B and Codell formations. The Company is now developing horizontal wells in the Wattenberg Field based on an increased density of 12 or more wells per section, which could provide the Company with an estimated 1,800 or more potential horizontal locations on its 103,000 net acre position in the core Wattenberg. PDC is also conducting its first horizontal tests of the Niobrara A and C benches to evaluate their potential. As part of the Company's 2013 capital budget the Company plans to deploy a third drilling rig during the third quarter of 2013 to coincide with anticipated third-party midstream expansions.
Marcellus Shale
PDCM, the Company's 50-50 joint venture in the Appalachian Basin, recently completed a three-well pad in Harrison County, West Virginia, which was hooked up to sales in mid-November of 2012. The three-well pad came on-line at an initial 24-hour combined rate of approximately 19 million cubic feet ("MMcf") per day of natural gas. PDCM anticipates the resumption of drilling in Harrison County in the first quarter of 2013 in response to well performance in that area and improving natural gas prices.
CEO Comment
James Trimble, President and Chief Executive Officer, stated, "We are very excited with the results from our first horizontal well in the Utica Shale inOhio. The Onega Commissioners well is estimated to be approximately 79% liquids and has the potential to be one of the highest return wells in the Company's history. Based on our early production, geological data and other reported industry results, we believe the Utica Shale will complement our success in the Wattenberg Field and provide PDC with a significant additional organic growth platform to continue our transition to a more balanced portfolio of oil and natural gas production and reserves. Our horizontal Wattenberg development continues to be very successful. The early performance of our recently drilled Codell wells and downspacing initiatives set the stage for a significant increase in recoverable reserves in this resource-rich field. Our 2013 budget should allow us to accelerate development of our substantial leasehold position in the predictable liquid-rich Wattenberg Field and further de-risk and delineate our Utica Shale position."
Upcoming Industry Conference Participation
PDC management is scheduled to present at the BMO's 10th Annual Unconventional Resource Conference in New York, New York on Tuesday, January 8, 2013. Please see the Company's website at www.pdce.com for full details.
About PDC Energy, Inc.
PDC Energy is a domestic independent energy company engaged in the exploration, development and production of crude oil, NGLs and natural gas. Its operations are focused primarily in the liquids-rich Wattenberg Field of Colorado, including the horizontal Niobrara and Codell plays, the Utica Shalein Ohio and the Marcellus Shale development in West Virginia. PDC is included in the S&P SmallCap 600 Index and the Russell 3000 Index of Companies.
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 PDC's 2013 capital budget, projected natural gas and oil production, including net production volumes and exit rate for 2013, future financial results, drilling plans in the Utica and Wattenberg field in 2013, expected 2013 investment in the Utica Shale, future cash flows, anticipated liquidity, anticipated increased locations as a result of downspacing initiatives in the Wattenberg field, anticipated increases in midstream capacity, including timing expectations for sales from our Utica wells, our plans to deploy a third drilling rig during the third quarter of 2013 in the Wattenberg, PDCM's plans to resume in 2013 in response to well performance in that area and improving natural gas price, performance expectations from our Utica wells, 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 report reflect the Company's good faith judgment, such statements can only be based on facts and factors currently known to PDC. 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, demand and commodity prices for natural gas, oil and NGLs;
  • the availability of sufficient pipeline, gathering and other transportation facilities and related infrastructure to process and transport PDC's production, particularly in the Wattenberg Field and Utica Shale; the impact of these facilities and infrastructure on price and possible impediments to anticipated increases in midstream capacity;
  • changes in estimates of proved reserves;
  • declines in the values of PDC's natural gas and oil properties resulting in impairments;
  • the timing and extent of the Company's success in discovering, acquiring, developing and producing natural gas and oil reserves;
  • PDC's ability to acquire leases, drilling rigs, supplies and services at reasonable prices;
  • reductions in the borrowing base under the Company's credit facility;
  • risks incident to the drilling and operation of natural gas and oil wells;
  • future production and development costs;
  • the effect of existing and future laws, governmental regulations and the political and economic climate of the United States of America;
  • changes in environmental laws and the regulations and enforcement related to those laws and the timely receipt of permits under 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 2011 Annual Report on Form 10-K for the year ended December 31, 2011, filed with the Securities and Exchange Commission ("SEC") on March 1, 2012, and other 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. 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

         Vice President Finance and Treasurer



         Marti Dowling

         Investor Relations Manager


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Source: PDC Energy
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