SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) February 22, 2005
Petroleum Development Corporation
(Exact Name of Registrant as Specified in Charter)
Nevada 0-7246 95-2636730
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
103 East Main Street; Bridgeport, WV 26330
(Address of Principal Executive Offices)
Registrant's telephone number, including area code 304-842-3597
no change
(Former Name or Former Address, if Changed Since Last Report)
Item 701. Regulation FD Disclosure.
On February 18, 2005, Thomas E. Riley, President of the Company made a presentation at the C.K. Cooper & Co. Small-Cap Oil and Gas Conference held in Palm Desert, CA. The transcript of Mr. Riley's presentation follows.
Forward-Looking Statements
Financial Highlights
Major Sources and Uses of Cash
Sources (9 months)
Adjusted Cash Flow* from Operations- $47.9 million
Uses (9 months)
Drilling and development- $26.5 million
Debt retirement- $26 million
Stock Repurchase- $2.7 million
*Adjusted Cash Flow is Net Income plus non-cash charges (Depreciation, Depletion and Amortization and Deferred Income Taxes)
2005 Capital Budget
2005 Capital Budget is set at $108 million
$80 million for exploration and development
$10 million for lease acquisition
$18 million for infrastructure projects
Wattenberg and Grand Valley Fields
Continue development in conjunction with public drilling partnerships
$115 million of partnership units to be offered
Continue recompletion program (non-partnership activity)
NECO (Eastern D-J Basin)
Non-partnership activity
Continue drilling infill wells
70-75 wells planned
Sand Wash Basin
Non-partnership activity
Legacy Project - testing will resume in late second quarter on exploratory well
Coffeepot Springs Project - 13,500 feet exploratory well underway
Revenue
Net Income
Third Quarter Net Income of $8.7 million compared to $5.2 million in 2003
$25.7 million for 9 months compared to $14.6 million in 2003
Third Quarter EPS of $0.52 compared to $0.31 in 2003 (diluted)
$1.56 for 9 months vs. $0.90 in 2003
73.3% increase in EPS
Other Recent News
Sale of portion of undeveloped lease in 2005
Located in Garfield County, CO (Piceance Basin)
Results in additional net income of approximately $0.20 per fully diluted share in first quarter 2005
Consisted of half leasehold interest (checkerboard)
Requires purchaser to drill a number of wells over a period of time or lease will revert to PDC
Will help evaluate remaining lease position
2004 Operating Highlights
Core Operating Areas
Strong partnership sales will continue to fund drilling revenue in second and third quarters
$26.5 million partnership drilling carryover at end of third quarter
Fourth 2004 partnership closed with $35 million in subscriptions in early October
Total partnership sales of $100 million in 2004, up from record $78.3 million in 2003. $115 million planned for 2005
First 2005 partnership closed with $40 million in subscriptions in early February
Favorable year-to-year production comparison likely to continue
Futures prices currently reflect expectations for continuing high prices through 2005
Strong balance sheet allows ample funding for additional drilling and acquisitions if available
PDC Overview
Business Segments
Oil and gas well drilling
Oil and gas production and sales
Natural gas marketing
Well operations
Oil and Gas Well Drilling
"Service" business
Raise money through public partnerships
140 NASD broker/dealers
Sold by financial planners
$100 million sold in 2004
$115 million planned for 2005
First 2005 partnership received orders for $40 million in 48 hours
73 partnerships and over 28,000 investors
PDC earns profit for managing drilling and completion activity
Other benefits
Scale economies
Prospect access
"Growth accelerator"
Only PDC interest in partnership is included in PDC financial reports
Oil and Gas Production
Production from PDC interest in wells
Includes production from over 2700 wells in three production regions
For 2004 70% of production is in Rocky Mountain region
Rockies also focus of drilling and acquisition efforts
PDC owns average working interest of approximately 50% overall (ranging from 10-100%)
80%+ natural gas
2003 reserves 199 Bcfe, 76% proved developed
2003 production 10.4 Bcfe
2004 9 month production 9.49 Bcfe
Natural Gas Marketing
Well Operations
"Service" Business
Charge for operating portion of well not owned by PDC
Stable predictable business- bills get paid before owners
Growing with addition of partnership well operations
Operating over 2700 wells
Wattenberg Field
Through December 2004, drilled over 380 successful wells and only six dry holes.
27 Successful wells drilled to date in 2005 with zero dry holes.
Estimate approximately 87 wells to be drilled in calendar 2005
Current prospect inventory of more than 100 drilling locations.
Ongoing lease evaluation and acquisition program to secure additional drilling prospects.
Through December 2004 PDC drilled over 90 successful wells with one dry hole.
6 successful wells drilled to date in 2005.
Estimate approximately 40 wells to be drilled in calendar 2005.
Approximately 14,000 acres available to develop.
Several hundred undeveloped locations. Many more with increased well density.
Decreasing Niobrara spacing to 40 acres from 80 acres creating approximately 100 additional developmental infill locations.
Approximately 20 wells were drilled in the fourth quarter 2004 and early 2005.
Estimate approximately 70 - 75 wells to be drilled in calendar 2005 if production results continue to meet expectations.
Located in Moffat county approximately 40 miles northwest of Craig, CO
Legacy Project
Well TD'ed October 27 at 12,778'
Preliminary testing conducted in late December and early January
Testing suspended due to Federal lease restrictions preventing use of heavy equipment in winter and spring months
Testing will resume late second quarter
Coffeepot Springs Project
Testing Upper Cretaceous Sands to a depth of approximately 13,500'
Estimated Well cost is approximately $2.5 million
Spudded Coffeepot Springs February 3, 2005.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Petroleum Development Corporation
Date February 22, 2005
By /s/ Darwin L. Stump
Darwin L. Stump
Chief Financial Officer