Petroleum Development (PETD) to Acquire $330.5M of Core Wattenberg Assets

Petroleum Development Corporation (Nasdaq: PETD) has executed a definitive agreement to acquire Core Wattenberg assets that contain significant liquid-rich horizontal drilling opportunities from a private party for a purchase price of approximately $330.6 million, subject to customary terms and adjustments. The effective date of the transaction is April 1, 2012 with closing currently scheduled for June 29, 2012, subject to customary closing conditions.

Key items:

• The assets are located almost entirely in the Core Wattenberg Field of Weld and Adams Counties, Colorado and are approximately 94% operated. The acquired assets include an estimated 35,000 net acres prospective for horizontal development of the Niobrara and Codell formations. The acquired leasehold is 100% held by production ("HBP") and has an average working interest of approximately 93% with an average net revenue interest of approximately 81%.
  
  
• Current net production is approximately 2,800 barrels of oil equivalent per day ("Boepd") from approximately 700 wells producing primarily from the Niobrara and Codell formations.
  
  
• Ryder Scott, the Company's independent petroleum engineering consulting firm, completed an engineered reserve analysis of the acquired assets and estimates net proved reserves of 29.2 million barrels of oil equivalent ("MMBoe") using year-end 2011 SEC flat pricing and an effective date of April 1, 2012. The proved reserves are approximately 58% crude oil and natural gas liquids, and are approximately 54% proved developed.
  
  
• The Company has identified 180 gross proven plus probable Horizontal Niobrara drilling locations on the acquisition properties using current PDC spacing methodology of five gross (four net) wells per 640-acre section. The Company anticipates the acquired Horizontal Niobrara acreage will deliver, on a gross well basis, reserves of 300 to 500 thousand barrels of oil equivalent (MBoe) per well and generate an estimated $4 to $8 million of present value per well, discounted at 10% and further assuming current cost estimates of $4.2 million dollars per well and utilizing the January 31, 2012 NYMEX commodity price strip.
  
  
• A significant portion of the leasehold is in close proximity to PDC's current position in the Core Wattenberg Field which should provide opportunities for operational, midstream and marketing synergies. Additionally, the acquired assets include acreage that directly offsets some of the industry's best results in the Core Horizontal Niobrara to date.

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