PDC Energy Positioning Itself to Focus on Utica Shale
PDC Energy to Sell Non-Core Colorado Natural Gas Assets for Approximately $200 Million; Positions Company to Accelerate Development of Its Liquid-Rich Horizontal Programs in Core Wattenberg and Utica Shale
The effective date of the transaction is
January 1, 2013 and it is expected to close in the second quarter of 2013, subject to customary closing conditions. The assets to be sold are approximately 99% natural gas and include an estimated 85 billion cubic feet equivalent ("Bcfe") of net proved developed producing reserves as of December 31, 2012. The assets currently produce approximately 42 million cubic feet equivalent per day net and the sale is expected to reduce PDC's net production volume in 2013 by approximately 10 Bcfe. Petrie Partners LLC advised PDC on the sale.
2012 Year-End SEC Proved Reserves — Pro Forma
Total proved reserves as of
December 31, 2012 pro forma for the sale are estimated to be 1.07 trillion cubic feet equivalent or 179 million barrels of oil equivalent with the Company's pro forma proved reserve liquid mix increasing from 48% to 52% as a result of the planned natural gas asset divestiture. Proved developed reserves pro forma for the sale will be reduced to approximately 37% of total proved reserves as the assets planned for sale are 100% proved developed producing reserves. As stated in PDC's reserves press release issued earlier today, the Company's 2012 year-end proved reserves do not include anticipated future contributions from PDC's emerging liquid-rich Utica Shale position.
Total Proved Reserves
Total Proved Reserves (1P)
2012 Year-End 2012 Pro Forma Wattenberg 894 893 Appalachia 179 179 Piceance 66 --- NECO 18 --- Total Reserves (Bcfe): 1,157 1,072
PDC Energy, Inc.
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release contains 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 regarding PDC's business, financial condition, results of operations, prospects and the proposed transaction. 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 closing of the proposed transaction and the final purchase price, PDC's 2013 capital expenditure plans and the financing of those plans, future financial and operational results and reserves, future cash flows, 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:
- potential impediments to completing the proposed transaction on the expected timeframe or at all, or greater than expected purchase price adjustments;
- 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. Estimates of non-proved reserves are subject to significantly greater risk of not being produced than proved reserves. Initial and test results from a well are not necessarily indicative of the well's long-term performance.
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