updated 11/3/2010 10:16:29 AM ET 2010-11-03T14:16:29

DENVER, Nov. 3, 2010 (GLOBE NEWSWIRE) -- PDC Energy ("PDC" or the "Company") (Nasdaq:PETD) today announced the Company has signed an agreement with a private company to acquire producing assets and undeveloped acreage located in the Wolfberry oil trend in West Texas for $40 million in cash.

Key Highlights of the Transaction

  • The Company will increase its position in the oil and liquid-rich gas Wolfberry trend by acquiring current net production of approximately 330 barrels of oil equivalent ("BOE") per day from six Wolfberry wells. A seventh well was recently completed and is currently on flowback. All assets acquired will be operated by PDC with essentially a 100% working interest.
  • The assets are located on a primarily contiguous 5,760 net acre block, with 122 identified Wolfberry oil drilling locations on 40-acre spacing. The Company expects the assets will add approximately 10 million barrels of oil equivalent ("MMBOE") in proved plus probable reserves.
  • The reserves are estimated to be approximately 90% crude oil and natural gas liquids, and are projected to have a full-cycle cash margin of about $60/BOE using current strip pricing.
  • These assets are expected to provide the Company with multi-year production growth in the Permian Basin.
  • The acquisition will be funded with a draw from the Company's revolving credit facility. The acquisition is projected to be immediately cash flow accretive.
  • The closing date is projected to be November 19, 2010, with an effective date of November 1, 2010.
  • PDC is planning to spud its first well in the fourth quarter, 2010.

Richard W. McCullough, Chairman and Chief Executive Officer, stated, "We are very pleased with this privately negotiated Wolfberry acquisition which fits our short-term objective of scaling up our project inventory in the Permian Basin. When combined with our initial Wolfberry acquisition announced earlier this year, we now have about 250 Wolfberry drilling locations in inventory on 40-acre spacing which we believe will deliver strong production growth from the Permian Basin for the next several years. We commenced drilling within our initial Wolfberry acquisition having spud our first operated well last week. We plan to integrate this current acquisition's Wolfberry production and acreage into our 2011 development plans. We operate 100% of our production in the Permian Basin where we anticipate production of approximately 900 BOE/D net from these two acquisitions upon closing. This transaction fits our stated strategy to increase our percentage of oil and natural gas liquid reserves within our corporate portfolio."

About PDC Energy

PDC Energy is an independent energy company engaged in the development, production and marketing of natural gas and oil. Its operations are focused in the Rocky Mountains with additional operations in the Appalachian and Permian Basins. PDC is included in the S&P SmallCap 600 Index and the Russell 3000 Index of Companies.

NOTE REGARDING FORWARD-LOOKING STATEMENTS

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 ("Securities Act") regarding the Company'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 release are forward-looking statements. Words such as expects, anticipates, intends, plans, believes, projects, seeks, estimates and similar expressions or variations of such words are intended to identify forward-looking statements herein, which include statements of estimated natural gas and oil production and reserves, drilling plans, future cash flows, anticipated liquidity, anticipated capital expenditures and PDC's 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 release reflect the Company's good faith judgment, such statements can only be based on facts and factors currently known to us. 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, worldwide demand and commodity prices for natural gas and oil;
  • changes in estimates of proved reserves;
  • declines in the values of our natural gas and oil properties resulting in impairments;
  • the timing and extent of our success in discovering, acquiring, developing and producing natural gas and oil reserves;
  • the Company's ability to acquire leases, drilling rigs, supplies and services at reasonable prices;
  • the availability and cost of capital to the Company;
  • 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 availability of sufficient pipeline and other transportation facilities to carry our production and the impact of these facilities on price;
  • the effect of existing and future laws, governmental regulations and the political and economic climate of the United States of America ("U.S.");
  • changes in environmental laws and the regulations and enforcement related to those laws;
  • the identification of and severity of environmental events and governmental responses to the events;
  • the effect of natural gas and oil derivatives activities;
  • conditions in the capital markets; and
  • losses possible from pending or future litigation.

Further, we urge you to carefully review and consider the cautionary statements made in this release, PDC's annual report on Form 10-K for the year ended December 31, 2009, filed with the Securities and Exchange Commission ("SEC") on March 4, 2010 ("2009 Form 10-K"), and the Company's other filings with the SEC and public disclosures. The Company cautions you not to place undue reliance on forward-looking statements, which speak only as of the date of this report. Other than as required under the securities laws, PDC undertakes no obligation to update any forward-looking statements in order to reflect any event or circumstance occurring after the date of this report or currently unknown facts or conditions or the occurrence of unanticipated events.

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