EX-99.2 3 ppt20210_0511.htm EX 99.2 ppt20210_0511.htm
NASDAQ:PETD
PETROLEUM DEVELOPMENT
CORPORATION
2010 First Quarter Teleconference
May 11, 2010
•Richard W. McCullough, Chairman & CEO
•Barton R. Brookman, SVP Exploration & Production
•Gysle R. Shellum, Chief Financial Officer
 
 
 
See Slide 2 regarding Forward Looking Statements
The following information contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements are based on Management’s current expectations and beliefs, as well as a number
of assumptions concerning future events.
These statements are based on certain assumptions and analyses made by Management in light of its experience and its
perception of historical trends, current conditions and expected future developments as well as other factors it believes are
appropriate in the circumstances. However, whether actual results and developments will conform with Management’s
expectations and predictions is subject to a number of risks and uncertainties, general economic, market or business
conditions; the opportunities (or lack thereof) that may be presented to and pursued by Petroleum Development Corporation;
actions by competitors; changes in laws or regulations; and other factors, many of which are beyond the control of Petroleum
Development Corporation.
You are cautioned not to put undue reliance on such forward-looking statements because actual results may vary materially
from those expressed or implied, as more fully discussed in our safe harbor statements found in our SEC filings, including,
without limitation, the discussion under the heading “Risk Factors” in the Company’s 2009 annual report on Form 10-K and in
subsequent Form 10-Qs. All forward-looking statements are based on information available to Management on this date
and Petroleum Development Corporation assumes no obligation to, and expressly disclaims any obligation to, update
or revise any forward looking statements, whether as a result of new information, future events or otherwise.
The SEC permits oil and gas companies to disclose in their filings with the SEC proved reserves, probable reserves and
possible reserves.  SEC regulations define “proved reserves” as those quantities of oil or gas which, by analysis of geoscience
and engineering data, can be estimated with reasonable certainty to be economically producible in future years from known
reservoirs under existing economic conditions, operating methods and government regulations; “probable reserves” as
unproved reserves which, together with proved reserves, are as likely as not to be recovered; and “possible reserves” as
unproved reserves which are less certain to be recovered than probable reserves.  Estimates of probable and possible reserves
which may potentially be recoverable through additional drilling or recovery techniques are by nature more uncertain than
estimates of proved reserves and accordingly are subject to substantially greater risk of not actually being realized by the
Company. In addition, the Company’s reserves and production forecasts and expectations for future periods are dependent
upon many assumptions, including estimates of production decline rates from existing wells and the undertaking and outcome
of future drilling activity, which may be affected by significant commodity price declines or drilling cost increases.
This material also contains certain non-GAAP financial measures as defined under the Securities and Exchange Commission
rules.
Disclaimer
2
 
 
 
See Slide 2 regarding Forward Looking Statements
Rick McCullough
Chairman & Chief Executive Officer
3
 
 
 
See Slide 2 regarding Forward Looking Statements
First Quarter 2010 Highlights
4
• Net income of $23.7 million, or $1.23 per diluted share
• Gas and oil revenues up 52% over same period 2009 on Q1 2010
 realized prices of $9.20 per Mcfe over Q1 2009 realized prices of
 $7.08 per Mcfe
 
• Adjusted cash flow of $49.3 million, or $2.56 per diluted share
 
• Q1 2010 adjusted cash flow up approximately $10 million over same
 period 2009 on 20% lower volumes
• Production of 9.1 Bcfe, 7% above Q1 guidance of 8.5 Bcfe
• Drilled 38.6 net wells vs. 24.9 net wells in Q1 2009
• Liquidity improved to $254 million
 
 
 
See Slide 2 regarding Forward Looking Statements
7/15/10 Analyst Day Colorado - Preview
• Results from five-year business plan
 – Multi-year projections
 – Peer analysis
• Status update
 – Marcellus horizontal well results
 – Piceance margin enhancement initiatives
 – Exploration projects
 – Niobrara horizontal potential in Wattenberg
• Partnership repurchase status
• Second-half 2010 update
 – Capital plans, operations, and guidance
• PDC drilling/field operations tour
5
 
 
 
See Slide 2 regarding Forward Looking Statements
Bart Brookman
SVP - Exploration and Production
6
 
 
 
See Slide 2 regarding Forward Looking Statements
Core Operating Regions
7
See Slide 2 regarding Forward Looking Statements
2009 Proved Reserves:
 641
Bcfe
Rocky Mountains & Other
2009 Proved Reserves:
 
15 Bcfe
Q1 2010 Production:
 
.4 Bcfe
Michigan Basin
2009 Proved Reserves:
 61
Bcfe
Q1 2010 Production:
 .6
Bcfe
2010E Production:
 3.2
Bcfe
Appalachian Basin*
Q1 2010 Production
9.1 Bcfe
Appalachian Basin (7%)
*Appalachian Basin includes 100% of PDC Mountaineer JV Reserves at Year-End 2009.
 
 
 
See Slide 2 regarding Forward Looking Statements
Q1 2010 Production
• Q1 2010 production exceeded
 forecast by 7%
• Wattenberg continues to
 outperform expectations
 – Mild weather
 – Strong oil production
 – Completion technology continues
 to enhance performance
 – Modest line pressure
 improvements
• Appalachia and NECO are on
 budget
8
 
 
 
See Slide 2 regarding Forward Looking Statements
9
Actual
Non-Op
Actual
Operated
Forecast
Operated
Forecast
Non-Op
 
 
 
See Slide 2 regarding Forward Looking Statements
Production By Area - Bcfe
10
Area
Q1 2010
Actual
Q1 2010
Estimate
% Increase/
(Decrease)
Wattenberg
3.9
3.3
18%
Piceance
3.0
3.1
-3%
NECO
1.1
1.1
0 %
Michigan
.4
.3
33%
Other (ND, TX, WY)
.1
.1
0%
Appalachia
.6
.6
0%
TOTAL
9.1
8.5
7%
 
 
 
See Slide 2 regarding Forward Looking Statements
Lifting Costs
11
Area
Full Year
2008 Actual
Full Year
2009 Actual
Q1 2010
Actual
Direct Costs ($/Mcfe)
$0.84
$0.59
$0.75
Indirect Costs ($/Mcfe)
$0.23
$0.24
$0.29
Total Lifting Cost ($/Mcfe)
$1.07
$0.83
$1.04
Production (MMcfe/d)
106
119
101
• Q1 2010 per unit costs increased as a result of:
 • Winter operations
 • Decreased production
 • EH&S expenses
 • Location and road maintenance
 • Water hauling and disposal
 
 
 
See Slide 2 regarding Forward Looking Statements
Q1 2010 Net Capital
12
*Not Included in original 2010 guidance and very little volume in Q1 2010.
 
 
 
See Slide 2 regarding Forward Looking Statements
2010 Q1 Operations Highlights
• Quarterly production exceeded budget by 7%
• Integrated $10MM Wattenberg acquisition
 – Preferential right
• Marcellus
 – Drilled first horizontal well with completion pending
 – Drilling second horizontal well
• Wattenberg
 – Major gas system operator is installing pipe and compression that
 will reduce line pressure and may further enhance production
 – Completion practices continue to improve
 – Second rig reached efficiency very quickly
• Piceance
 – Fit for purpose rig achieving new level of drilling pace
 – Anticipating permit of water disposal well in next 30 days
13
 
 
 
See Slide 2 regarding Forward Looking Statements
Gysle Shellum
Chief Financial Officer
14
 
 
 
See Slide 2 regarding Forward Looking Statements
Summary Financial Results
(1) O&G operating margin is defined as O&G revenue less O&G production and well operations costs.
(2) See appendix for GAAP reconciliation of Adjusted Cash Flow and Adjusted EBITDA, respectively.
15
 
Three Months Ended
March 31,
 ($ in millions)
2010
2009
 O&G revenues
$60.4
$39.7
 O&G production & well operations costs
$15.7
$16.4
 O&G operating margin(1)
$44.7
$23.3
 Adjusted cash flow from operations(2)
$49.3
$39.7
 Adjusted EBITDA(2)
$53.7
$46.2
 DD&A
$28.4
$34.4
 G&A
$10.7
$12.1
 
 
 
See Slide 2 regarding Forward Looking Statements
Summary Financial Results
 
Three Months Ended
March 31,
 (in millions except per share data)
2010
2009
 Income (loss) from operations
$45.7
($1.6)
 Net Income (loss) attributable to
 shareholders
$23.7
($5.7)
 Diluted earnings (loss) per share attributable
 to shareholders
$1.23
($0.38)
 
Three Months Ended
March 31,
 
2010
2009
 Adjusted net income attributable to
 shareholders(1)
$10.9
$4.1
 Adjusted earnings per share attributable to
 shareholders(1)
$0.57
$0.27
16
(1) See appendix for GAAP reconciliation of Adjusted Net Income.
 
 
 
See Slide 2 regarding Forward Looking Statements
17
Debt Maturity Schedule
$59
$203
$305
See Slide 2 regarding Forward Looking Statements
$
• $305 million revolver matures
  in May 2012
 
• Maturity schedule reflects:
 – Mitigation of liquidity risk
 
 – Diversification of funding
 sources
 
• As of March 31, 2010
 ($ in millions):
 – $59 drawn balance
 – $19 undrawn L.O.C
 – $27 cash balance
 – $254 available liquidity
 
 
 
 
See Slide 2 regarding Forward Looking Statements
Quarterly Realized Hedge Price
(as of 4/30/10)
18
Weighted average for full-year 2010 is $6.81/Mcfe.
 
 
 
See Slide 2 regarding Forward Looking Statements
19
Oil and Gas Per Unit Costs
 
Three Months Ended
March 31,
(per Mcfe)
2010
2009
Average lifting costs(1)
$1.04
$0.93
DD&A (O&G Properties Only)
$2.91
$2.90
(1) Lifting costs represent natural gas and oil lease operating expenses, exclusive of production taxes, on a per unit basis.
 
 
 
See Slide 2 regarding Forward Looking Statements
A P P E N D I X
20
 
 
 
See Slide 2 regarding Forward Looking Statements
Adjusted Net Income Reconciliation
21
(1) Includes natural gas marketing activities.
 
Three Months Ended
March 31,
 (in millions, except per share data)
2010
2009
Net income (loss) attributable to shareholders
$23.7
($5.7)
Unrealized loss (gain) on derivatives, net (1)
(20.5)
13.2
Provision for underpayment of gas sales
-
2.6
Tax effect of above adjustments
7.7
(6.0)
Adjusted net income attributable to shareholders
$10.9
$4.1
Weighted average diluted shares outstanding
19.3
14.8
Adjusted diluted earnings per share
$0.57
$0.27
* Amounts may not foot due to rounding.
 
 
 
See Slide 2 regarding Forward Looking Statements
Adjusted Cash Flow Reconciliation
22
 
Three Months Ended
March 31,
 (in millions, except per share data)
2010
2009
Net cash provided by operating activities
$51.3
$35.9
Changes in assets and liabilities related to
operations
(2.0)
3.9
Adjusted cash flow from operations
$49.3
$39.7
* Amounts may not foot due to rounding.
 
 
 
See Slide 2 regarding Forward Looking Statements
Adjusted EBITDA Reconciliation
(1) Includes natural gas marketing activities.
23
 
Three Months Ended
March 31,
 (in millions, except per share data)
2010
2009
Net income (loss) attributable to shareholders
$23.7
($5.7)
Unrealized loss (gain) on derivatives, net(1)
(20.5)
13.2
Interest expense, net
7.8
8.4
Income tax expense (benefit)
14.3
(4.0)
Depreciation, depletion & amortization
28.4
34.4
Adjusted EBITDA
$53.7
$46.2
Weighted average diluted shares outstanding
19.3
14.8
Adjusted EBITDA per share
$2.78
$3.12
* Amounts may not foot due to rounding.
 
 
 
NASDAQ:PETD
PETROLEUM DEVELOPMENT
CORPORATION
2010 First Quarter Teleconference
May 11, 2010