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Credit Suisse Shale Day – PDC Energy, Inc.

PDC Energy, Inc. · May 18, 2016 · 46 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Credit Suisse Shale Day – PDC Energy, Inc. – slide 1
    CREDIT SUISSE: SHALE DAY May 18, 2016
  2. Credit Suisse Shale Day – PDC Energy, Inc. – slide 2
    PDC Energy Company Overview 2.7B Core Wattenberg Market Cap(1) 96,000 net acres 3.1B Enterprise Value(1) 273 YE15 Proved Reserves (MMBoe) 2,150 2P Horizontal Locations Utica Shale 20 22 65,000 net acres 2016…
  3. Credit Suisse Shale Day – PDC Energy, Inc. – slide 3
    Track Record of Operational Execution 2P Watt. Locations/Section Middle Core SRL(1) EURs (MBoe) Avg. Feet Drilled/Day/Well 30 500 2,100 20 400 1,400 10 300 700 0 200 0 2012 2013 2014 2015 2016e 2012 2013 2014 2015 2016e 2012…
  4. Credit Suisse Shale Day – PDC Energy, Inc. – slide 4
    2016 Capital and Production Outlook Targeting cash flow neutrality 425 2016e capital budget: 410 440 2016e Capex Midpoint 35% production growth yearoveryear Initiating new technological advancements Drill and complete first XRL…
  5. Credit Suisse Shale Day – PDC Energy, Inc. – slide 5
    WATTENBERG GEOLOGY 6
  6. Credit Suisse Shale Day – PDC Energy, Inc. – slide 6
    80 to 88 Million Years Ago Late Cretaceous Paleogeography Extensive Chalk Deposition Light blue shallow seas were areas of chalk deposition Niobrara Play 5/18/16 7
  7. Credit Suisse Shale Day – PDC Energy, Inc. – slide 7
    80 to 88 Million Years Ago Late Cretaceous Paleogeography: Extensive worldwide chalk deposition DJ Basin 5/18/16 8
  8. Credit Suisse Shale Day – PDC Energy, Inc. – slide 8
    Regional Niobrara Deposition Niobrara section is uniformly present across entire DJ Basin Only economically productive in certain areas of the basin 5/18/16 9
  9. Credit Suisse Shale Day – PDC Energy, Inc. – slide 9
    Colorado Mineral Belt Wattenbergs Heat Source CMB heat flow runs continuously from southwest Colorado, thru central Colorado and extends to the plains under Core Wattenberg Field then dies out further northeast CMB heat…
  10. Credit Suisse Shale Day – PDC Energy, Inc. – slide 10
    Core Wattenberg Productivity A Thermal Maturity Bull'sEye is centered under the Core Wattenberg Field The location of the BullsEye is due to the high heat flow that generated substantial recoverable oil and gas across the Core…
  11. Credit Suisse Shale Day – PDC Energy, Inc. – slide 11
    Wattenberg Field Stratigraphy Rocky Mountains created the current western boundary of the DJ basin Zones of basement weakness directly below Core Wattenberg Field enabled high heatflow from the Mantle to thermally generate recoverable…
  12. Credit Suisse Shale Day – PDC Energy, Inc. – slide 12
    Depositional Setting of the Niobrara Average depth of +/ 7,200 in Core Wattenberg Field Organic Rich Source Rx Chalky Benches created from skeletal debris of planktonic Organic Rich Source Rx organisms deposited in shallow marine…
  13. Credit Suisse Shale Day – PDC Energy, Inc. – slide 13
    Core Wattenberg Niobrara Composition Benches are not pure chalks, they contain abundant organics Many interbedded chalks / shales / marls make up the entire Niobrara section Niobrara outcrop in cement quarry near Lyons, CO A -…
  14. Credit Suisse Shale Day – PDC Energy, Inc. – slide 14
    Codell Geologic Summary Considered same petroleum system as Niobrara zones Composition is silty, shaly, very fine grained, claycemented sandstone Source of deposition was a shallow marine environment Average depth of 7,300…
  15. Credit Suisse Shale Day – PDC Energy, Inc. – slide 15
    Niobrara Gas-Oil Ratio (GOR) Discussion Niobrara GOR variation in Wattenberg critical for accurate forecasting Varying Liquids Content Across Core Areas Range of Area Inner Middle Outer Producing GOR Stable After 1 2 Years…
  16. Credit Suisse Shale Day – PDC Energy, Inc. – slide 16
    Updated 2016 Core Wattenberg EUR Analysis Based on Evaluation of Public Production Data 2,500 Wells Included in Study 2016 EUR ANALYSIS 2.63.6 EUR Variability Ratio Range for Inner Core Middle Core Outer Core Represents…
  17. Credit Suisse Shale Day – PDC Energy, Inc. – slide 17
    WATTENBERG ASSETS 18
  18. Credit Suisse Shale Day – PDC Energy, Inc. – slide 18
    Core Wattenberg Asset Summary Wattenberg 2P Inventory 96,000 Inner Middle Net Acres Outer 100% 2016e TIL Breakdown SRLs Acreage HBP MRLs XRLs 135/160 Spuds TILs 2,150 2P Hz Locations (4,700 avg. lateral…
  19. Credit Suisse Shale Day – PDC Energy, Inc. – slide 19
    2015 Downspacing Projects 20 Wells/Section Sustained well performance over 10 months MRL downspacing test 6,700 laterals 10 wells 1 plugnperf well 9 sliding sleeve wells 22 Wells/Section Consistent performance from all…
  20. Credit Suisse Shale Day – PDC Energy, Inc. – slide 20
    Monobore Drilling Gains To-Date Current Implementation Monobore drilling saves 1 day in spudtospud times 50100k savings per well realized todate All 2016 SRL and MRL wells expected to be drilled using monobore 95/8 casing cemented…
  21. Credit Suisse Shale Day – PDC Energy, Inc. – slide 21
    Middle Core Inventory Provides Resilient Returns Type Well Profile Comparison Type Well IRR Comparison(1) 35 Flat 37 / 45 / 55 45 / 55 / 65 2.00 Flat 2.13 / 2.50 / 2.75 2.50 / 3.00 / 3.50 NYMEX Pricing NYMEX Pricing NYMEX…
  22. Credit Suisse Shale Day – PDC Energy, Inc. – slide 22
    UTICA GEOLOGY 23
  23. Credit Suisse Shale Day – PDC Energy, Inc. – slide 23
    What is the Point Pleasant The Big Picture and Historical Context Productive for more than 100 years Well-known Source Rock with many Marathon HQ Standard HQ published studies SPE, AAPG, etc. Source Rock for an 1.2 billion…
  24. Credit Suisse Shale Day – PDC Energy, Inc. – slide 24
    The Point Pleasant What it is & Where it is Core showing shale and interbedded limestone Patchen et al., 2006; Pope and Read, 1997; and Wickstrom et al. (2012) 5/18/16 25
  25. Credit Suisse Shale Day – PDC Energy, Inc. – slide 25
    Utica: Local Stratigraphy Southern Ohio 1. Queenston Shale Classic Mudstone Null TOC & low resistivity 2. Upper Utica Shale Mudstone with null limestone content Some TOC & low resistivity High clay content Lower Youngs Modulus…
  26. Credit Suisse Shale Day – PDC Energy, Inc. – slide 26
    Micro CT & SEM 2 Well Comparison from Joel Walls, DUG East 2012 5/18/16 27
  27. Credit Suisse Shale Day – PDC Energy, Inc. – slide 27
    Geothermal Gradient Image Courtesy of Dolan Integration Group (DIG) 5/18/16 28
  28. Credit Suisse Shale Day – PDC Energy, Inc. – slide 28
    UTICA ASSETS 29
  29. Credit Suisse Shale Day – PDC Energy, Inc. – slide 29
    Utica Asset Summary Producing Pads 65,000 2016 Pad Locations PDC Acreage Cole 4 wells Net Acres Neff 10,000 well Commissioners 3 wells Detweiler 3 wells Dynamite 4 wells 52% Steirs 3 wells Miley 2 wells (6,000) Acreage…
  30. Credit Suisse Shale Day – PDC Energy, Inc. – slide 30
    Utica Testing New Areas & Designs in 2016 Approximately 35 million capital plan for 2016 Mason 2well pad Delineate condensate fairway in southern acreage Test new completion design from Cole & Dynamite wells Miley 2well pad Well…
  31. Credit Suisse Shale Day – PDC Energy, Inc. – slide 31
    Investor Relations Mike Edwards, Senior Director Investor Relations michael.edwardspdce.com Kyle Sourk, Manager Investor Relations kyle.sourkpdce.com Corporate Headquarters PDC Energy, Inc. 1775 Sherman Street Suite 3000 Denver,…
  32. Credit Suisse Shale Day – PDC Energy, Inc. – slide 32
    APPENDIX 33
  33. Credit Suisse Shale Day – PDC Energy, Inc. – slide 33
    PDC Energy Vision and Strategy Delivering Stakeholders Delivering value added growth Value Community involvement/education Dedicated, highlyvalued employees Corporate Corporate Development Development Longterm/multiyear focus…
  34. Credit Suisse Shale Day – PDC Energy, Inc. – slide 34
    2016 Financial Guidance 2015 2016 Guidance(2) Actual Low High Production 15.4 20.0 22.0 Crude oil, natural gas and NGLs sales 379 366 402 Realized gain on derivatives 239 251 251 Other Income 2 1 1 Adjusted total revenue 620 618…
  35. Credit Suisse Shale Day – PDC Energy, Inc. – slide 35
    Financial Strength and Discipline Debt / EBITDAX(1) Debt / Flowing Boe 4.0x 40,000 3.1x 3.0x 30,000 2.7x 2.0x 1.8x 20,000 1.4x 1.15x 1.0x 10,000 0.0x 0 2012 2013 2014 2015 2016e 2012 2013 2014 2015 2016e Strong…
  36. Credit Suisse Shale Day – PDC Energy, Inc. – slide 36
    Low Costs Continue to Drive Margins Source: Wells Fargo Securities, LLC 20142016e AllIn Cash Cost Decrease/Boe(1) PDCE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 0% 10% 20% 30% 40% 50% 2016e AllIn Cash Costs/Boe(1) 25.00…
  37. Credit Suisse Shale Day – PDC Energy, Inc. – slide 37
    Pro Forma Debt and Liquidity As of 12/31/15, Pro Forma for March 2016 Equity Offering Pro Forma Debt Maturity Schedule (millions) Pro Forma 1,000 Available liquidity of 949 million(1) YE15 Debt / EBITDAX of 1.3x Current Borrowing…
  38. Credit Suisse Shale Day – PDC Energy, Inc. – slide 38
    Crude Oil and Natural Gas Hedging Summary Full-Year 2016 Hedge Volumes Including Hedges in Place as of March 7, 2016 60% of crude oil volumes at weighted average floor price of 76.29/Bbl 2016 67% of natural gas volumes at weight…
  39. Credit Suisse Shale Day – PDC Energy, Inc. – slide 39
    Significant Long-Term Crude Oil Takeaway in Wattenberg Multiple takeaway options (refinery, pipeline, trucking and rail) Expected takeaway capacity exceeds production forecasts for the basin well past 2020 PDC has firm capacity of…
  40. Credit Suisse Shale Day – PDC Energy, Inc. – slide 40
    Moving Beyond Wattenberg Line Pressure Constraints 2013 Processing AKA/APC DCP 2014 Processing AKA/APC DCP 2015 Processing AKA/APC Lucerne 2 plant provided significant relief to line pressure DCP during 2H 2015 2016e…
  41. Credit Suisse Shale Day – PDC Energy, Inc. – slide 41
    PDC Energy Modest Price Recovery Case Stable Capital Development Plan Production (MMBoe) 35 23% 3Year Production CAGR (midpoint) 30 Oil: 40% Gas: 40% NGLs:…
  42. Credit Suisse Shale Day – PDC Energy, Inc. – slide 42
    PDC Energy Price Rebound Case Increasing Capital Development Plan Production (MMBoe) 35 27% 3Year Production CAGR (midpoint) 30 Oil: 40% Gas: 40% NGLs:…
  43. Credit Suisse Shale Day – PDC Energy, Inc. – slide 43
    PDC Energy Balance Sheet Preservation Case (35/2 FLAT) Decreasing Capital Development Plan Debt / EBITDAX 5.0x 31% Average Annual DebttoCap 4.0x 3.0x 10mm Revolver balance YE18e 2.0x 1.0x 300 Spuds 0.0x 2016e 2017e…
  44. Credit Suisse Shale Day – PDC Energy, Inc. – slide 44
    Reconciliation of Non-GAAP Financial Measures In millions, except per share data Three Months Ended Year Ended Adjusted EBITDA from net income (loss): December 31, December 31, 2015 2014 2015 2014 Net income (loss) 3.0 131.8 (68.3)…
  45. Credit Suisse Shale Day – PDC Energy, Inc. – slide 45
    Reconciliation of Non-GAAP Financial Measures In millions, except per share data Three Months Ended Year Ended Adjusted net income (loss) from net income (loss): December 31, December 31, 2015 2014 2015 2014 Net income (loss) 3.0…
  46. Credit Suisse Shale Day – PDC Energy, Inc. – slide 46
    Production Costs Details In millions, except per share data Previous Method Current Method Three Months Ended Three Months Ended December 31, December 31, 2015 2014 2015 2014 Lease Operating Expense 13.2 10.8 14.2 11.1 Production…

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