PDC Energy Announces 2016 Capital Budget of $450 to $500 Million; Anticipates 35% to 40% Annual Production Growth With Projected Year-End 2016 Debt to EBITDA of Approximately 1.4x

DENVER, December 7, 2015 (GLOBE NEWSWIRE) -- PDC Energy, Inc. ("PDC", the "Company", "we" or "us") (NASDAQ:PDCE) today reported its 2016 capital budget and production forecast.

2016 Highlights

• Targeted cash flow neutrality with planned capital budget of $450 to $500 million.
   
• Anticipated annual production of 20.0 to 22.0 MMBoe, 35% to 40% year-over-year growth.
   
• Projected 2016 year-end debt to EBITDA of approximately 1.4x.
   
• Hedged approximately 50% of 2016 oil volumes and 62% of natural gas volumes at nearly $85 per barrel and $3.65 per Mcf, respectively.
   
• Continued improvements in capital efficiencies through anticipated reductions in drilling times and well costs, enhanced completion designs and extended reach lateral development.

CEO Commentary

Bart Brookman, President and Chief Executive Officer, commented, "Our ability to execute our 2015 plan has positioned us to carry a lot of momentum into 2016. Our drilling program remains extremely flexible and we are committed to continue delivering shareholder value in these challenging times through the development of our best-in-class assets and continued focus on our cost structure. The balance sheet and financial strength of the Company will remain our top priorities in 2016. We are extremely excited about the prospect of once again delivering peer leading production growth in a safe, responsible manner, while continuing to test new well designs and completion methods. With the continued hard work and dedication of our employees, we are positioned for another strong year at PDC." 

2016 Capital Plan and Production Guidance

PDC's 2016 capital budget, of $475 million at the mid-point, is focused on continuing to provide value-driven production growth by exploiting the Company's extensive inventory of high rate-of-return projects in the Wattenberg Field. Capital spending is expected to be weighted to the front half of 2016 as the Company completes in-process wells spud in 2015. The Company remains very flexible in terms of rig activity and capital deployment due to short-term rig contracts and held-by-production acreage.

PDC's 2016 production guidance of 20.0 to 22.0 million barrels of oil equivalent ("MMBoe"), or 54,650 to 60,100 Boe per day, represents an increase of 35 to 40 percent over anticipated 2015 levels. The commodity mix is expected to be approximately 42 percent oil, 20 percent NGLs and 38 percent natural gas. The mix is slightly gassier than 2015 due to a number of higher GOR Inner Core Wattenberg wells being turned-in-line in the second half of 2015 and first half of 2016. The Company's long-term commodity mix expectation remains approximately 45 percent oil and 65 percent liquids.

The majority of production growth in 2016 is expected to occur in the second and third quarters while the first and fourth quarters are expected to show relatively flat sequential quarter-over-quarter growth.

2016 Financial Positioning

PDC is projected to exit 2016 with a debt to EBITDA ratio of approximately 1.4 times and total liquidity of approximately $500 million, based upon its current $700 million borrowing base and the pricing assumptions described below. PDC's $115 million of convertible notes mature in May 2016 and the Company has elected to redeem the face value of the notes in cash with excess value above the conversion price paid in PDC common stock.  

Based on the mid-point of PDC's production guidance, nearly 50 percent of 2016 expected crude oil volumes are hedged at approximately $85 per barrel and approximately 62 percent of anticipated gas volumes are hedged at nearly $3.65 per thousand cubic foot, including CIG basis swaps. The mark-to-market value of future hedges exceeds $250 million, as of November 30, 2015.  

Using internal weighted-average NYMEX pricing of $53 per barrel of oil, $2.60 per Mcf of natural gas and NGL realizations of approximately 18% of NYMEX oil, the Company expects to outspend cash flow in the first half of the year and be cash flow positive in the second half. The Company anticipates the Wattenberg well-head oil differential to NYMEX to be under $8 per barrel in 2016. Using the mid-point of production guidance, a $10 per barrel change in oil price results in an approximate $40 million change to anticipated cash flow, as seen in the table below:

(1) Assumes four rig program throughout 2016; Natural gas and NGL prices held constant at $2.60 per Mcf and 18% NYMEX Oil, respectively; (2) The Company maintains flexibility to adjust capital program downward in response to lower pricing environments

Wattenberg Operations Details

In 2016, the Company plans to spend approximately $440 million running a four-rig program in the Wattenberg Field after reducing its rig count from five in November 2015. The 2016 Wattenberg budget reflects a 13 percent reduction compared to 2015 and is comprised of nearly $380 million for drilling and completions and approximately $40 million for non-operated projects. The remainder of the budget is expected to be used for leasing, workover projects and capital improvements.

The Company plans to drill standard reach lateral ("SRL"), mid-length lateral ("ERL") and extended reach lateral ("XRL") wells in 2016. Reduced drill times, from spud-to-spud, have led to an approximate 25% increase in lateral feet drilled per rig-year compared to 2015. In 2016, the Company plans to spud and turn-in-line approximately 135 and 160 wells, respectively.

Due to successful testing of new completion technologies in 2015, projected well costs are now inclusive of plug-and-perf technology and production guidance now includes an associated uplift from plug-and-perf completions of up to 15 percent. The Company plans to test the potential additive effect of AccessFrac with plug-and-perf completions but has not included any potential impact of such completions in its 2016 guidance.

Utica Operations Update

Early in 2016, PDC plans to spend approximately $34 million in the Utica to drill, complete and turn-in-line five wells. The planned activity will focus on further delineation of its southern acreage, determining the impact of well-orientation on productivity and testing improved capital efficiency of 10,000 foot laterals. All wells in the 2016 budget are expected to provide a rate-of-return in excess of the Company's cost-of-capital. Approximately 20 percent of the 2016 Utica budget is allocated for land and selective lease renewals.

Upcoming Investor Conferences

PDC is scheduled to present at the following conferences: Wells Fargo's 2015 Energy Symposium in New York on Wednesday, December 9, 2015; and the Capital One Energy Conference in New Orleans on Wednesday, December 9, 2015. An updated presentation will be posted to the Company's website, www.pdce.com, prior to the start of each conference.

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 operations in the Wattenberg Field in Colorado and in the Utica Shale in southeastern Ohio. Its operations are focused on the liquid-rich horizontal Niobrara and Codell plays in the Wattenberg Field and the condensate and wet gas portion of the Utica Shale play. PDC is included in the S&P SmallCap 600 Index and the Russell 2000 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 and Section 21E of the Securities Exchange Act of 1934 regarding PDC'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, forecast, guidance, anticipates, intends, plans, believes, seeks, estimates and similar expressions or variations of such words are intended to identify forward-looking statements herein, which may include statements regarding PDC's future production, cash flows, capital expenditures and projects, cost-saving initiatives, operational enhancements, rates-of-return, debt metrics, liquidity, future differentials and 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 press release reflect the Company's good faith judgment, such statements can only be based on facts and factors currently known to PDC. 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 crude oil, natural gas and NGLs, 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: unanticipated changes relating to the following:

• 2016 capital budget and production forecasts, including anticipated liquidity;
• year-end debt to EBITDA range;
• future exploration, drilling and development activities, including expected rig counts;
• potential additional revisions to the 2016 capital and production forecasts, including anticipated exit rates;
• anticipated number of wells spud and turned-in-line and growth level expectation;
• anticipated commodity mix in 2016;
• anticipated cash flow and spend rates, targeting cash flow neutrality;
• changes in hydrocarbon production volumes and demand, including economic conditions that might impact demand;
• volatility of commodity prices for crude oil, natural gas and NGLs, including the risk of an extended period of low commodity prices;
• the impact of governmental policies and/or regulations, including changes in environmental and other laws, the interpretation and enforcement related to those laws and regulations, liabilities arising thereunder and the costs to comply with those laws and regulations;
• potential declines in the value of crude oil, natural gas and NGLs properties resulting in impairments;
• potential inability to achieve expected improvements in efficiency and drilling results;
• changes in estimates of proved reserves;
• inaccuracy of reserve estimates and expected production rates;
• potential for production decline rates from wells being greater than expected;
• timing and extent of success in discovering, acquiring, developing and producing reserves;
• ability to secure leases, drilling rigs, supplies and services at reasonable prices;
• impact of high line pressure;
• availability of sufficient pipeline, gathering and other transportation facilities and related infrastructure to process and transport our production and the impact of these facilities and regional capacity on the prices received for production;
• timing and receipt of necessary regulatory permits;
• risks incidental to the drilling and operation of crude oil and natural gas wells;
• future cash flows, liquidity and financial condition;
• competition within the oil and gas industry;
• cost and availability of capital;
• reductions in the borrowing base under the revolving credit facility;
• success in marketing crude oil, natural gas and NGLs;
• effect of crude oil and natural gas derivatives activities;
• impact of environmental events, governmental and other third-party responses to such events, and the ability to insure adequately against such events;
• cost of pending or future litigation;
• effect that acquisitions we may pursue have on capital expenditures;
• ability to retain or attract senior management and key technical employees; and
• success of strategic plans, expectations and objectives for future operations.

Further, PDC urges you to carefully review and consider the cautionary statements made in this press release and the Company's filings with the SEC for further information on risks and uncertainties that could affect the Company's business, financial condition and results of operations, which are incorporated by this reference as though fully set forth herein. The Company cautions you not to place undue reliance on the forward-looking statements, which speak only as of the date hereof. PDC undertakes no obligation to update any forward-looking statements in order to reflect any event or circumstance occurring after the date of this release or currently unknown facts or conditions or the occurrence of unanticipated events. All forward-looking statements are qualified in their entirety by this cautionary statement.

CONTACTS: Michael Edwards
          Senior Director Investor Relations
          303-860-5820
          michael.edwards@pdce.com
         
          Kyle Sourk
          Manager Investor Relations
          303-318-6150
          kyle.sourk@pdce.com