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PDC Energy, Inc. (“PDC,” the “Company,” “we” or “us”) (PDCE) today announced its capital budget and production guidance for 2015.

2015 Capital Budget and Production Guidance

PDC’s capital budget for 2015 is approximately $557 million, a decrease of 14% compared to its 2014 capital budget. The Company’s 2015 budget includes $526 million of development capital and $31 million for lease maintenance, exploration and other expenditures. The 2015 capital budget is focused on organic growth opportunities in PDC’s Inner and Middle core areas of the Wattenberg Field.

The Company estimates net production volumes for 2015 will be between 13.8 million and 14.5 million barrels of oil equivalent (“MMboe”) and expects production growth throughout the year. The Company anticipates a commodity mix of approximately 45% crude oil, 20% natural gas liquids and 35% natural gas. The commodity mix reflects the Company’s increased focus on allocating capital towards its highest-value drilling opportunities in both the Inner and Middle core areas of the Wattenberg Field. For 2015, the Company projects it will drill approximately 90% of its wells in the Inner and Middle Core areas, up from about 67% in those areas in 2014.

PDC estimates its 2014 production exit rate to be approximately 32,500 Boe per day and its full-year 2014 production volumes to be within its guidance range of 9.3 to 9.5 MMoe. The Company’s 2015 production exit rate is anticipated to be approximately 46,500 Boe per day.

2015 — 2016 Hedge and Financial Positioning

PDC has very substantial hedge positions in place for 2015 and 2016. For 2015, PDC has approximately 80% of expected crude oil production hedged at a weighted average floor of approximately NYMEX $89 per barrel and approximately 75% of expected natural gas production hedged at a weighted average floor of approximately NYMEX $4 per thousand cubic feet (“Mcf”). For 2016, the Company has approximately 4.1 million barrels of crude oil hedged at a weighted average floor of approximately NYMEX $85 per barrel and approximately 27.5 billion cubic feet (“Bcf”) of natural gas hedged at a weighted average floor price of approximately NYMEX $4 per Mcf. The mark-to-market value for the Company’s existing crude oil and natural gas hedges is approximately $200 million using the November 30, 2014 NYMEX forward strip. Additionally, PDC expects a strong netback on its Wattenberg natural gas price realizations, as pricing is based on the CIG index, which current future markets project at only $0.25/Mcf below NYMEX for 2015.

The Company is focused on maintaining its very strong balance sheet, liquidity and debt metrics. As of September 30, 2014, PDC had liquidity of approximately $789 million, pro-forma for the October 14, 2014 Marcellus asset sale. PDC’s 2015 capital budget is based on an estimated full-year 2015 NYMEX price on November 30, 2014 of $67 per barrel and $3.80 per Mcf. Factoring in the beneficial impact of its existing 2015 hedges, the Company projects it will end 2015 with a capital outspend of approximately $165 million and a debt to EBITDAX ratio of less than 2.0x.

Wattenberg Field Overview

PDC plans to invest a total of $516 million in the Wattenberg Field in 2015 consisting of $415 million for its operated drilling program and $101 million for non-operated projects. The Company’s 2015 operated program is to continue utilizing its current five horizontal drilling rigs throughout the year; there are no plans to add a sixth horizontal drilling rig. The Wattenberg budget for 2015 includes turning-in-line approximately 110 gross operated Niobrara and Codell horizontal wells of which 40% are expected to be extended length laterals of approximately 6,500 feet to 7,000 feet. Approximately 60% of those wells are expected to be targeting the Niobrara with the remainder targeting the Codell. The Company’s non-operated program is projected to include approximately 100 horizontal wells turned-in-line at an average working interest of about 20%.

In 2014, PDC’s drilling program has delivered cost efficiencies which have improved drilling economics in the core Wattenberg Field. The average drilling and completion costs for the Company’s standard length lateral of approximately 4,200 feet have decreased from $4.2 million to $4.0 million per well. Additionally, the Company estimates that expected average reserves for its Inner Core wells have increased 500 thousand barrels of oil equivalent (“Mboe”) to 580 Mboe per well. The reserve increase is based on current data from peers as well as early results from PDC’s Inner core wells. These current enhancements are included in the updated core Wattenberg economics table highlighted below:

Updated Core Wattenberg Economics Niobrara Areas
Inner Middle Outer Codell
Gross 3-Phase EUR: 580 Mboe 400 Mboe 285 Mboe 370 Mboe
IRR Estimates: $90/Bbl & $4/Mcf 122% 83% 52% 79%
$80/Bbl & $4/Mcf 85% 60% 36% 58%
$70/Bbl & $4/Mcf 64% 42% 24% 41%
$60/Bbl & $4/Mcf 47% 28% 14% 28%
$50/Bbl & $4/Mcf 33% 16% 6% 16%
IRR estimates in this table are based on: $4.0 million well cost, 4,200 foot lateral, 16-frac stages and reflect long-term differential of $10/Bbl for oil. Prices are NYMEX held flat. IRR estimates are not based on expected costs or efficiency benefits from tighter frac spacing or extended laterals and do not include corporate or lease acquisition costs.

In 2015, PDC expects to realize additional capital efficiencies through drilling extended laterals and tighter frac spacing. The Company plans to enhance its completion design decreasing the spacing between frac stages from 250 feet to 200 feet. With the modified completion design of more frac stages, the Company’s gross drilling and completion costs per well for a standard length lateral is $4.3 million and $5.5 million for an extended length lateral. PDC expects improved reserves from tighter frac spacing and extended laterals of approximately 10% and 30 to 50%, respectively, compared to its current type curves.

Utica Shale Overview

Based on current low commodity prices and large natural gas differentials in Appalachia, the Company has elected to temporarily idle its drilling rig in the Utica Shale in favor of allocating a higher percent of its 2015 capital budget to its highest return projects in the Wattenberg Inner and Middle core areas. For 2015, the Company plans to invest a total of $38 million compared to approximately $190 million in 2014 in its Utica Shale play which includes completing and turning-in-line the 4-well Cole pad and lease maintenance costs. PDC expects to resume its Utica Shale drilling program when commodity prices and netback realizations rebound. The Company remains committed to the strong Utica Shale resource it is developing in the condensate and wet gas windows of the play where its per-well reserves are projected at 680 Mboe and 1.2 MMboe respectively. In 2015, the Company will develop production, reservoir and completion analyses from its recently drilled wells and will incorporate the data into its future drilling programs.

President & COO Comments

Bart Brookman, President, COO and incoming CEO said, “We are pleased with our strong value-added production growth in 2015, even after limiting our planned capital expenditures. By focusing our 2015 capital investment on the Company’s highest rate-of-return projects in the Inner and Middle core areas of the Wattenberg Field, we expect to deliver strong cash flow per share growth using our existing liquidity. We are encouraged with the technical advancements and improved capital efficiencies we’ve gained in the Wattenberg Field. We are well positioned to add value in the current low commodity price environment with our industry-leading hedge program, strong balance sheet, limited 2015 outspend of cash flow, and top-tier core Wattenberg drilling opportunities. We will continue to monitor crude oil and natural gas pricing and have the operational flexibility to adjust capital spending in Wattenberg or Utica should commodity prices change materially.”

Upcoming Investor Presentations

PDC is scheduled to present at the following conferences: Wells Fargo 2014 Energy Symposium in New York, New York, and Capital One Energy Conference in New Orleans, Louisiana, both on Wednesday, December 10, 2014. The related slide presentations will be available on PDC’s website, at, at the start of each presentation.

About PDC Energy, Inc.

PDC Energy, Inc. is a domestic independent exploration and production company that produces, develops, acquires and explores for crude oil, natural gas and NGLs with primary operations in the Wattenberg Field in Colorado and in the Utica Shale in southeastern Ohio. Our operations in the Wattenberg Field are focused on the liquid-rich horizontal Niobrara and Codell plays and our Ohio operations are focused on the liquid-rich portion of the Utica Shale play. PDC is included in the S&P SmallCap 600 Index and the Russell 2000 Index of Companies.