Operations

Overview

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Growing reserves and production

PDC Energy follows a simple but effective business strategy: grow reserves and production while increasing margins and cash flow. The Company is focused on horizontal drilling and low-risk organic development of oil and natural gas reserves from shales and tight reservoir rocks.

Geographical diversity

PDC Energy operates in two geographically distinct areas of the country to reduce the risk level associated with oil and natural gas drilling, production and marketing:

  • Colorado
    • Wattenberg Field
    • Piceance Basin (pending announced divestiture)
    • NECO (Northeast Colorado) (pending announced divestiture)
  • Appalachian Basin
    • Marcellus Shale – West Virginia
    • Utica Shale – Southeast Ohio

Emphasis on oil and NGLs

PDC is currently focused on horizontal Niobrara and Codell development in the liquid-rich Wattenberg Field, where liquid content in new horizontal wells has averaged 70%-80% of the production stream. Additionally, the Company is running a one-rig program in the wet gas window of its Utica Shale position.

Drilling and development

PDC Energy is a cost-efficient producer with three-year all-in Finding and Development (“F&D”) costs of $12.62 per Boe and three-year development F&D of $11.27 per Boe. Annual production from continuing operations for 2012 was 49.6 Bcfe, or 8.3 MMboe, and proved reserves at year-end 2012 totaled 1,157 Bcfe, or 193 MMboe. During 2012, the Company drilled 42 gross horizontal wells, executed 160 net refrac/recomplete stages, and participated in 19 non-operated projects.

Fiscal management and marketing strategy

PDC Energy is committed to maintaining a conservative balance sheet as part of its fiscal strategy. PDC utilizes an active hedging program for oil and natural gas to reduce the effects of variable commodity prices and lock in its capital expenditure program. The Company also markets a portion of its natural gas and oil through a wholly owned subsidiary, Riley Natural Gas (“RNG”) as part of its risk management strategy. With RNG managing natural gas and oil marketing, PDC maintains better control over sales and derivative activities.