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CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc.

PDC Energy, Inc. · May 12, 2014 · 55 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 SYMPOSIUM – PDC Energy, Inc. – slide 1
    CREDIT SUISSE: SHALE SYMPOSIUM MAY 12, 2014 NASDAQ:PDCE
  2. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 2
    Company Overview NASDAQ:PDCE Strategic Core Areas Market cap 2.2 Billion (1) Colorado and Appalachian Basin Enterprise value 2.7 Billion WATTENBERG UTICA Proved reserves (YE2013) 266 MMBoe 97,000 Net Acres Liquid 54,000 Net Acres…
  3. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 3
    PDCs Transition to Horizontal Drilling Potential Vertical Locations Potential HZ Locations 2,000 4,000 3,600 1,800 3,500 1,600 2,800 1,430 1,354 3,000 1,400 1,200 2,500 1,000 2,000 800 1,500 600 966 400 1,000 189 131 200…
  4. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 4
    Core Wattenberg Geology Overview 5/12/2014 5
  5. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 5
    80 to 88 Million Years Ago Late Cretaceous Paleogeography Extensive Chalk Deposition Light blue shallow seas were areas of chalk deposition Niobrara Play 5/12/2014 6
  6. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 6
    80 to 88 Million Years Ago Late Cretaceous Paleogeography: Extensive worldwide chalk deposition DJ Basin 5/12/2014 7
  7. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 7
    Regional Niobrara Deposition Niobrara section is uniformly present across entire DJ Basin Only economically productive in certain areas of the basin 5/12/2014 8
  8. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 8
    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 organisms deposited in shallow marine Organic Rich Source Rx…
  9. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 9
    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 heat-flow from the Mantle to thermally generate…
  10. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 10
    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 Denver CMB heat…
  11. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 11
    Core Wattenberg Productivity A Thermal Maturity Bull's-Eye is centered under the Core Wattenberg Field The location of the Bulls-Eye is due to the high heat flow that generated substantial recoverable oil and gas across the Core…
  12. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 12
    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 -…
  13. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 13
    Codell Geologic Summary Considered same petroleum system as Niobrara zones Composition is silty, shaly, very fine grained, clay-cemented sandstone Source of deposition was a shallow marine environment Average depth of 7,300 (base…
  14. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 14
    Niobrara & Codell Hz Results Comparable Strong Codell results across entire PDC acreage Avg NIOBRARA Hz Type Well position Net acres: 97,000 PDC second in horizontal Codell development Gross 3P Locations: 2,013 Provides second…
  15. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 15
    Horizontal Development Highlights Drill site considerations for multi-well pad Larger pad size to accommodate drilling equipment Less surface footprint than equivalent number of vertical wells Reduce size of pad for production…
  16. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 16
    General Horizontal Wattenberg Well Design Well design Premium grade tubulars and connections minimize mechanical risks Packer-and-sleeve design preferred over plug-and-perf completion Frac design Number of stages varies due to…
  17. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 17
    Crude Oil Takeaway & Gas Processing Crude Takeaway Optionality Provides Support for Long-Term Wellhead Deduct Estimated at 9-11 per Barrel New Crude Oil Takeaway Tampa Rail Expansion Multiple delivery points 70,000 Bbl/d Delivery…
  18. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 18
    Core Wattenberg Drilling & Production 5/12/2014 19
  19. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 19
    Horizontal Program DJ Basin PDCs Core Wattenberg Field Position Regional Horizontal Development Overview(1) 97,000 net acres, 97% HBP Third largest leaseholder and producer Strong repeatable lower risk projects 2,000 horizontal…
  20. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 20
    Wattenberg: Delivering Long-Term Growth 2014 Capital Budget Allocation Investing 467 million (72% of 2014 budget) 80% of PDCs total proved and 3P reserves 45% yearoveryear increase in 3P reserves in Utica Wattenberg Field…
  21. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 21
    Three Niobrara Core Areas in Wattenberg Continued Development Supporting Horizontal Niobrara Type Curve Boundaries Inner Core Type Well Summary 3Phase EUR: 500 Mboe Net Acres: 5,500 Gross 3P Locations: 90 IRR(1): 125% PV10:…
  22. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 22
    Quantifying Consistency in Core Wattenberg Niobrara Horizontals Inside and Outside Core Wattenberg EUR Variability Ratio Inner Core Represents 650+ ( P10 / P90 ) Middle Core Hz Niobrara wells Outer Core Calculated EURs on 800…
  23. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 23
    Horizontal Codell: Establishing Consistency Hz Codell Activity Map Represents 70+ Hz Codell Hz Codell industry wells Core Wattenberg Boundary (1) PDC Hz Codell (1) Industry Hz Codell EUR Variability Type Well Type…
  24. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 24
    Comparison of Well Performance Waste Management Section 16 Well Downspacing Project N 5280 Middle Core Type Well 3Phase EUR: 400 MBoe Well Capital: 4.2MM IRR(1): 75% PV10: 4.2MM Undiscounted Payout: 16 months…
  25. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 25
    Key PDC Projects Testing Tighter Downspacing PDC aggressively testing downspacing in multiple areas of Core Wattenberg Evaluating resource potential beyond current 3P inventory spacing Planned Wells per Section Equivalent 2014…
  26. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 26
    Niobrara Downspacing in Core Wattenberg MIDDLE CORE OUTER CORE Represents 300+ Hz Niobrara industry wells Represents 175+ Hz Niobrara industry wells Spacing Unit Performance Spacing Unit Performance 320 160 80 40 320 160 80 40…
  27. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 27
    Evaluating Niobrara Recovery Factors 1P Recovery 2P Recovery 3P Recovery 6 wells 10 wells 16 wells 10% Recovery Factors(1) 8% 6% 4% 9.0% 5.4% 2% 3.3% Low Niobrara recovery even at 3P downspacing of 16 wells per…
  28. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 28
    Core Wattenberg: Long-Term Growth Engine Demonstrated consistency in well costs, performance and economics High degree of confidence in predicting future well results Provides PDC with longterm, lowrisk growth potential Continuing…
  29. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 29
    Utica Operations Geology Overview 5/12/2014 30
  30. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 30
    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…
  31. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 31
    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) 5/12/2014 32
  32. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 32
    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…
  33. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 33
    Utica Open Hole Log Response Comparison Onega Palmer Hickenbottom A Morgan County Commissioners Belmont County A Guernsey County Utica Pt. Pleasant Trenton Resistivity (ohmm) 800 2,000 1,000 2,000+ 1,000 2,000+ Rock…
  34. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 34
    Micro CT & SEM 2 Well Comparison from Joel Walls, DUG East 2012 5/12/2014 35
  35. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 35
    Why We Are Active Where We Are Specifically, why the South and Washington County Historical Data Well drilled in 1994 for deeper target that was wet Patricia Hein Well Northern Washington County, Ohio Wet Gas Window Operator…
  36. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 36
    Why We Are Active Where We Are Specifically, why the South Seismic Data Seismic data confirms the presence of numerous faults over Southern portion of the play Natural fracturing and higher permeabilities very likely Next…
  37. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 37
    Utica Operations Drilling & Production 5/12/2014 38
  38. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 38
    Utica: Building a Core Asset PDCs LiquidRich Utica Position Currently Producing Wells 54,000 net acres Ohio Recently added 6,000 net acres (1) Commissioners 1425H 3,950 lateral PA 46% HBP, 98% WI, 16% royalty Commissioners 2H…
  39. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 39
    Flowback Management Enhancing Results New Well Average Production Rate Old Well Average Production Rate Commissioners Pad Detweiler Pad Old Wells New Wells Commissioners 2H Onega Commissioners 1425H Commissioners 3H…
  40. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 40
    Neill 1H Learnings: Landing Zone is Critical Utica Type Log Landed Neill 1H out of Pt. Pleasant target zone Analysis shows lateral permeability orders of 7,150 magnitude lower than other PDC Utica wells Palmer wells drilled to the…
  41. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 41
    Well Results Driving Refined Type Curve Windows Wet Gas Window Summary New Type Curve Areas CONDENSATE WET GAS PDC Position WINDOW WINDOW Commissioners 1425H 3,950 lateral 3Phase EUR(1): 1,200 MBoe Commissioners 2H 4,300 lateral…
  42. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 42
    2014 Development Plan 2014 Pad Location 2014 development (18 spuds) Wet Gas: 30% (5 wells) CONDENSATE WET GAS WINDOW WINDOW Condensate: 70% (13 wells) Increasing lateral length in 2014 2013 average: 4,700 Cole 2014 est. average:…
  43. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 43
    Midstream Options MarkWest (MWE) MWE PDC volumes flow to Seneca Plant Cadiz Plant MWE has current capacity of 585 MMcf/d with MWE Hopedale planned expansion to 1.0+ Bcf/d by 2015 Fractionator Access to all major NGL…
  44. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 44
    Solid Exposure to High-Return Plays PDC positioned in two of the top PDC Horizontal Inventory As of 4/17/14 3,700 three basins in U.S. onshore Locations Wattenberg Focused on liquidrich shale plays 2,800 locations Marcellus 600…
  45. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 45
    Investor Relations Mike Edwards, Senior Director Investor Relations michael.edwardspdce.com Marti Dowling, Manager Investor Relations marti.dowlingpdce.com Corporate Headquarters PDC Energy, Inc. 1775 Sherman Street Suite 3000…
  46. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 46
    Appendix 5/12/2014 47
  47. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 47
    2014 Net Production Guidance 28% - 35% projected increase in production from continuing operations (9.5 10.0 MMBoe in 2014 versus 7.4 MMBoe in 2013) 2014 Quarter Comments Q1 2014 Strong Dec13 exit rate; overperformance of Waste…
  48. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 48
    2014 Consolidated Financial Guidance (from continuing operations) In Millions, Except for Per Share Data YE 2013 2014 Guidance (3) Actual Low High Production (MMBoe) 7.4 (1) 9.5 10.0 Crude oil, natural gas and NGLs sales 359 458…
  49. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 49
    Debt Maturity Schedule in Millions 115 million 3.25% convertible Debt Maturity Schedule debentures mature in May 2016 3.25% Convertible Notes due 2016 600 Drawn 03/31/2014 PDCM PDCM: 53 million revolver matures in Undrawn Revolver…
  50. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 50
    Crude Oil and Natural Gas Hedges Hedges in place as of April 15, 2014 Apr Dec Crude Oil (includes NGL) FY2015 FY2016 2014 NYMEX Average (1) 98.58 90.69 84.98 WeightedAverage Hedge Price With Ceilings 93.55 89.35 94.50…
  51. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 51
    Current Type Curve Estimates Condensate Window Estimates Wet Gas Window Estimates Average Production Rate Average Production Rate Type Curve Estimate Type Curve Estimate Condensate Estimated Economics Wet Gas Estimated…
  52. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 52
    PDCE + PDCM = PDC Consolidated In Millions Except For Per Share Data PDC Year Ended 12/31/2013 PDCE Net PDCM Consolidated (1) Statement of Operations Natural gas, NGL and Crude oil sales 334 25 359 Commodity price risk management…
  53. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 53
    Reconciliation of Non-GAAP Financial Measures in millions, except share and per share data Year Ended December 31 Adjusted net income (loss) from net income (loss): 2011 2012 2013 Net income (loss) 13.4 (130.7) (22.3) (Gain) loss on…
  54. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 54
    Reconciliation of Non-GAAP Financial Measures in millions, except share and per share data Year Ended December 31 Adjusted EBITDA from net income (loss): 2011 2012 2013 Net income (loss) 13.4 (130.7) (22.3) (Gain) loss on commodity…
  55. CREDIT SUISSE: SHALE SYMPOSIUM – PDC Energy, Inc. – slide 55
    Reconciliation of Non-GAAP Financial Measures in millions, except share and per share data Year Ended December 31 Adjusted EBITDAX from net income (loss): 2011 2012 2013 Net income (loss) 13.4 (130.7) (22.3) (Gain) loss on…

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