2010-11-18-2010-11-03

To buy 100% WI in a primarily contiguous 5,760 net-acre block in the W TX Wolfberry oil trend featuring six wells, gaining 330 BOE/d, 10 MMBOE 2P.

PDC Energy, Denver, (Nasdaq: PETD) plans to acquire Wolfberry oil trend asset in West Texas from a private company for $40 million in cash.

The assets includes 100% working interest in a primarily contiguous 5,760 net-acre block in the oil and liquid-rich gas Wolfberry trend. The assets feature six producing wells. Production is 330 barrels of oil equivalent per day. Proved and probable reserves are 10 million barrels equivalent per day (90% oil and gas liquids).

Upside includes a seventh well that was recently completed and is currently on flowback and an additional 122 identified Wolfberry oil drilling locations on 40-acre spacing. PDC will be operator on all the assets. It plans to spud its first well in the fourth quarter.

The company will full the acquisition with a draw from its revolving credit facility.

PDC Energy chairman and chief executive Richard W. McCullough says, "We are very pleased with this privately negotiated Wolfberry acquisition which fits our short-term objective of scaling up our project inventory in the Permian Basin. When combined with our initial Wolfberry acquisition announced earlier this year, we now have about 250 Wolfberry drilling locations in inventory on 40-acre spacing which we believe will deliver strong production growth from the Permian Basin for the next several years. We commenced drilling within our initial Wolfberry acquisition having spud our first operated well last week."

PDC will integrate the acquisition's Wolfberry production and acreage into its 2011 development plans. McCullough anticipates production of approximately 900 net barrels equivalent per day net from its two Wolfberry acquisition.

The deal is expected to close Nov. 19. The effective date is Nov. 1.

KeyBanc Capital Markets analyst Mitchell Wurschmidt values the deal at $6,944 per acre or $121,212 per flowing barrel of oil.