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TheStreet Open House

PDC Energy Announces 2013 First Quarter Results; Average Daily Production Increased 19%

Cost, Production and Sales Data Related to Oil and Gas Operations

The following table provides the components of production costs for the three months ended March 31, 2013:

  Three Months Ended
  March 31,
  2013 2012
  (in millions)
Lease operating expenses  $ 7.5  $ 6.9
Production taxes 5.4 4.5
Cost of well operations, overhead and other production expenses 3.0 1.5
Total production costs  $ 15.9  $ 12.9
Total production costs per Boe  $ 9.52  $ 9.12

The following table provides production from continuing operations by area, as well as the weighted-average sales price, for the three months ended March 31, 2013 and 2012, excluding realized derivative gains or losses:

  Three Months Ended
  March 31,
  2013 2012 Percent
       
Natural gas (MMcf)      
Western - Wattenberg Field 2,975.5 2,398.4 24.1%
Eastern - Appalachian Basin 1,574.3 1,486.1 5.9%
Total 4,549.8 3,884.5 17.1%
       
Weighted-Average Sales Price  $ 3.09  $ 2.58 19.8%
       
Crude oil (MBbls)      
Western - Wattenberg Field 650.7 541.3 20.2%
Eastern - Appalachian Basin 17.6 3.1 *
Total 668.3 544.4 22.8%
       
Weighted-Average Sales Price  $ 86.96  $ 92.86 (6.4)%
       
NGLs (MBbls)      
Western - Wattenberg Field 238.3 227.2 4.9%
       
Weighted-Average Sales Price  $ 30.48  $ 28.01 8.8%
       
Crude oil equivalent (MBoe)      
Western - Wattenberg Field 1,385.0 1,168.2 18.6%
Eastern - Appalachian Basin 280.0 250.8 11.6%
Total 1,665.0 1,419.0 17.3%
       
Weighted-Average Sales Price  $ 47.71  $ 47.18 1.1%
       
       
* Percentage change is not meaningful or equal to or greater than 300%.

Commodity Price Risk Management Activities

The Company uses various derivative instruments to manage fluctuations in natural gas and crude oil prices. PDC has in place a series of floors, collars, fixed price and basis swaps on a portion of its natural gas and crude oil production. A complete listing of the Company's derivative positions as of March 31, 2013 is included in the Company's Quarterly Report on Form 10-Q, available at the Company's website at www.pdce.com .

Non-GAAP Financial Measures

PDC uses "adjusted cash flows from operations," "adjusted net income (loss)," and "adjusted EBITDA," non-U.S. GAAP financial measures, for internal management reporting, when evaluating period-to-period changes and providing public guidance on possible future results. PDC believes that each of these measures is useful in providing transparency with respect to certain aspects of its operations. Each of these measures is calculated by eliminating the items set forth in the relevant table below from the most closely comparable U.S. GAAP measure. See Management's Discussion and Analysis of Financial Condition and Results of Operation - Reconciliation of Non-U.S. GAAP Financial Measures in PDC's Annual Report on Form 10-K for the year ended December 31, 2012, and other subsequent filings with the SEC for additional disclosure concerning these non-U.S. GAAP measures. These measures are not measures of financial performance under U.S. GAAP and should be considered in addition to, not as a substitute for, net income, cash flows from operations, investing or financing activities or other U.S. GAAP financial measures, and should not be viewed as liquidity measures or indicators of cash flows reported in accordance with U.S. GAAP. The non-U.S. GAAP financial measures that PDC uses may not be comparable to similarly titled measures reported by other companies. Also, in the future, PDC may disclose different non-U.S. GAAP financial measures in order to help its investors more meaningfully evaluate and compare its future results of operations to its previously reported results of operations. PDC strongly encourages investors to review the Company's financial statements and publicly filed reports in their entirety and not to rely on any single financial measure.

The following tables provide reconciliations of adjusted cash flows from operations, adjusted net income (loss), and adjusted EBITDA to their most comparable U.S. GAAP measures (in millions, except per share data):

Adjusted Cash Flows from Operations
  Three Months Ended 
  March 31,
  2013 2012
Adjusted cash flows from operations:    
Net cash flows from operating activities  $ 44.3  $ 44.3
Changes in assets and liabilities 8.1 5.4
Adjusted cash flows from operations  $ 52.4  $ 49.7
     
     
Adjusted Net Income (Loss)
  Three Months Ended
  March 31,
  2013 2012
Adjusted net income (loss):    
Net income (loss)  $ (39.4)  $ 15.8
Unrealized (gain) loss on derivatives, net 30.7 (1.5)
Tax effect of above adjustments (11.7) 0.6
Adjusted net income (loss)  $ (20.4)  $ 14.9
Weighted-average diluted shares outstanding 30.3 23.9
Adjusted diluted net income (loss) per share  $ (0.67)  $ 0.62
     
     
Adjusted EBITDA
  Three Months Ended
  March 31,
  2013 2012
Net income (loss) to adjusted EBITDA:    
Net income (loss)  $ (39.4)  $ 15.8
Unrealized (gain) loss on derivatives, net 30.7 (1.5)
Interest expense, net 13.4 10.4
Income tax provision (21.5) 9.5
Impairment of natural gas and crude oil properties 46.5 0.7
Depreciation, depletion and amortization 30.2 39.8
Accretion of asset retirement obligations 1.2 0.8
Adjusted EBITDA  $ 61.1  $ 75.5
     
Cash from operating activities to adjusted EBITDA:    
Net cash from operating activities  $ 44.3  $ 44.3
Interest expense, net 13.4 10.4
Exploratory dry hole costs (0.1)
Stock-based compensation (2.6) (1.9)
Amortization of debt discount and issuance costs (1.8) (1.6)
Gain on sale of properties and equipment 20.5
Other (0.2) (1.6)
Changes in assets and liabilities 8.1 5.4
Adjusted EBITDA  $ 61.1  $ 75.5
 
PDC ENERGY, INC.
Condensed Consolidated Statements of Operations
(unaudited; in thousands, except per share data)
     
  Three Months Ended
  March 31,
  2013 2012
     
Revenues:    
Natural gas, NGL and crude oil sales  $ 79,439  $ 66,955
Sales from natural gas marketing 13,670 11,381
Commodity price risk management gain (loss), net (22,355) 11,501
Well operations, pipeline income and other 1,072 1,169
Total revenues 71,826 91,006
     
Costs, expenses and other:    
Production costs 15,858 12,936
Cost of natural gas marketing 13,736 11,091
Exploration expense 1,689 1,872
Impairment of natural gas and crude oil properties 46,459 588
General and administrative expense 15,115 14,708
Depreciation, depletion and amortization 27,949 27,912
Accretion of asset retirement obligations 1,148 727
Gain on sale of properties and equipment (38) (154)
Total costs, expenses and other 121,916 69,680
     
Income (loss) from operations (50,090) 21,326
Interest expense (13,357) (10,444)
Interest income 2
Income (loss) from continuing operations before income taxes (63,447) 10,884
Provision for income taxes 22,492 (4,120)
Income (loss) from continuing operations (40,955) 6,764
Income from discontinued operations, net of tax 1,537 9,071
Net income (loss) $ (39,418) $ 15,835
     
Earnings per share:    
Basic    
Income (loss) from continuing operations  $ (1.35)  $ 0.29
Income from discontinued operations 0.05 0.38
Net income (loss)  $ (1.30)  $ 0.67
Diluted    
Income (loss) from continuing operations  $ (1.35)  $ 0.28
Income from discontinued operations 0.05 0.38
Net income (loss)  $ (1.30)  $ 0.66
     
Weighted-average common shares outstanding:    
Basic 30,270 23,609
Diluted 30,270 23,889

2013 First Quarter Teleconference and Webcast

PDC plans to host a conference call with investors to discuss 2013 first quarter results. The Company invites you to join James Trimble, Chief Executive Officer and President; Gysle Shellum, Chief Financial Officer; Barton Brookman, Senior Vice President Exploration and Production; and Lance Lauck, Senior Vice President Corporate Development, for a conference call on Wednesday, May 1, 2013, for a discussion of its results. The related slide presentation will also be available on PDC's website at www.pdce.com .

Conference Call and Webcast:
 
Date/Time: Wednesday, May 1, 2013, 11:00 a.m. ET
Webcast available at: www.pdce.com
Domestic (toll free): 877-312-5520
International: 253-237-1142
Conference ID: 40123574
 
Replay Numbers:
 
Domestic (toll free): 855-859-2056
International: 404-537-3406
Conference ID: 40123574

The replay of the call will be available for six months on PDC's website at www.pdce.com .

Upcoming Investor Presentations

PDC management is scheduled to present at the Bank of America Merrill Lynch Global Energy & Power Leveraged Finance Conference in New York, New York, on Tuesday, May 14, 2013, and at the Credit Suisse Shale Revolution: Symposium with 'Best of Breed' E&P's in New York, New York, on Wednesday, May 15, 2013. Please see the Company's website at www.pdce.com for full details. The related slide presentations are expected to be available on the Company's website immediately prior to the events.

About PDC Energy, Inc.

PDC Energy is a domestic independent energy company engaged in the exploration, development and production of crude oil, NGLs and natural gas. Its operations are focused primarily in the liquid-rich Wattenberg Field of Colorado, including the horizontal Niobrara and Codell plays, the Utica Shale in Ohio and the Marcellus Shale in West Virginia. PDC is included in the S&P SmallCap 600 Index and the Russell 3000 Index of Companies.

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