PDC Energy Offers 2013 Capital Budget, Production Guidance

PDC Energy, Inc. 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 Shale for 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.