PDC Energy Executes an Agreement to Acquire Liquid-Rich Assets in the Core Wattenberg Field; Increases 2012 Operational Guidance

Petroleum Development Corporation

announced today that the Company has executed a definitive agreement to acquire Core Wattenberg assets that contain significant liquid-rich horizontal drilling opportunities from a private party for a purchase price of approximately $330.6 million, subject to customary terms and adjustments. The effective date of the transaction is April 1, 2012 with closing currently scheduled for June 29, 2012, subject to customary closing conditions. Key Highlights of the Acquisition: The assets are located almost entirely in the Core Wattenberg Field of Weld and Adams Counties, Colorado and are approximately 94% operated. The acquired assets include an estimated 35,000 net acres prospective for horizontal development of the Niobrara and Codell formations. The acquired leasehold is 100% held by production ("HBP") and has an average working interest of approximately 93% with an average net revenue interest of approximately 81%. Current net production is approximately 2,800 barrels of oil equivalent per day ("Boepd") from approximately 700 wells producing primarily from the Niobrara and Codell formations. Ryder Scott, the Company's independent petroleum engineering consulting firm, completed an engineered reserve analysis of the acquired assets and estimates net proved reserves of 29.2 million barrels of oil equivalent ("MMBoe") using year-end 2011 SEC flat pricing and an effective date of April 1, 2012. The proved reserves are approximately 58% crude oil and natural gas liquids, and are approximately 54% proved developed. The Company has identified 180 gross proven plus probable Horizontal Niobrara drilling locations on the acquisition properties using current PDC spacing methodology of five gross (four net) wells per 640-acre section. The Company anticipates the acquired Horizontal Niobrara acreage will deliver, on a gross well basis, reserves of 300 to 500 thousand barrels of oil equivalent (MBoe) per well and generate an estimated $4 to $8 million of present value per well, discounted at 10% and further assuming current cost estimates of $4.2 million dollars per well and utilizing the January 31, 2012 NYMEX commodity price strip. A significant portion of the leasehold is in close proximity to PDC's current position in the Core Wattenberg Field which should provide opportunities for operational, midstream and marketing synergies. Additionally, the acquired assets include acreage that directly offsets some of the industry's best results in the Core Horizontal Niobrara to date. PDC Combined Wattenberg Position upon closing: The Company's Wattenberg leasehold position is estimated to increase to about 109,000 net acres (103,000 net acres in the Core Wattenberg) with a current combined inventory of 546 gross liquid-rich Horizontal Niobrara drilling locations. The Company's net production from Wattenberg is estimated to increase to approximately 15,600 Boepd, comprised of approximately 60% liquids. The Company's net proved reserves from Wattenberg are estimated to increase to 106 MMBoe, comprised of approximately 60% liquids. The Company anticipates substantial upside to its current inventory through Horizontal Niobrara downspacing and Horizontal Codell development. Both pilot programs are being tested within the Company's 2012 capital budget and could significantly increase PDC's current 546 gross horizontal well inventory of liquid-rich drilling projects. PDC Corporate 2012 Operational Update: PDC plans to deploy a second horizontal rig beginning in the third quarter to accelerate value within its Core Wattenberg Field. The Company plans to spud approximately 37 Horizontal Niobrara wells in 2012 as it transitions to a more efficient pad-drilling operation. PDC anticipates the addition of a third horizontal Niobrara rig in 2013. The Company plans to fund its second horizontal Niobrara rig by reallocating capital investment from its Wattenberg refrac / recomplete program and redeploying capital expenditures from the suspension of its Marcellus dry gas drilling program. PDC reaffirms its 2012 non-acquisition capital budget guidance of approximately $284 million. The Company estimates that its 2012 net production will increase to approximately 54.5 billion cubic feet equivalent (Bcfe) from continuing operations (55 Bcfe including production from its divested Permian Basin assets which is reflected as discontinued operations). The revised estimate incorporates production from the acquired properties as of the close date and the capital expenditure redeployments set forth above. The Company projects that its 2012 net exit rate will increase to approximately 160 million cubic feet equivalent per day (MMcfepd) (or 26,500 Boepd) with a 41% liquids component. In addition, PDC's 2012 liquids-only exit rate is estimated to increase from 8,900 barrels per day to 10,900 barrels per day, resulting in a 22% increase over prior 2012 net exit rate guidance. James Trimble, President and Chief Executive Officer of PDC Energy, stated, "This Core Wattenberg acquisition provides substantial upside opportunities and is a very significant step towards completing our transition to a liquid-rich company. We now have the capability to reach a 50% liquids production mix over the next several years. The acquisition solidifies PDC's position as the third largest leaseholder with about 103,000 net acres in the highly sought after Core Wattenberg Field. The E&P industry is achieving some of the strongest and most consistent economic results in the Core Wattenberg Field as compared to other resource plays in the United States. This acquisition should enable the Company to deliver double-digit liquid-rich production growth for the next several years without requiring significant capital investment in the Company's large HBP gas assets. The 546 gross Horizontal Niobrara locations, along with potential additional upside from Niobrara downspacing and Horizontal Codell development, should provide substantial reserve growth and position us to add shareholder value for many years to come."