UNITED STATES

SECURITIES AND EXCHANGECOMMISSION

Washington, D.C. 20549

**FORM 10-K/A**

ANNUAL REPORT 

PURSUANT TO SECTIONS 13OR 15(d)

OF THE SECURITIESEXCHANGE ACT OF 1934

                               (Mark One)

[X]ANNUAL REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACTOF 1934

For the fiscal yearended **December 31, 2005**

OR

[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGEACT OF 1934 

For the transitionperiod from                 to

Commission File Number  000-51309

**PDC 2005-A LIMITEDPARTNERSHIP**

(Exact name ofregistrant as specified in its charter)

|                                                                                                                                   |                                                                               |
|----------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------|
|         West  Virginia             |       20-2088347       |
| (State or other  jurisdiction of                                                                                                       | (I.R.S. Employer                                                                   |
| incorporation or  organization)                                                                                                        | Identification No.)                                                                |

103 East Main Street,Bridgeport, West Virginia  26330

(Address of principalexecutive offices)     (zip code)

Registrant's telephonenumber, including area code        (304)842-3597

SECURITIES REGISTEREDPURSUANT TO SECTION 12(b) OF THE ACT:  NONE

SECURITIES REGISTEREDPURSUANT TO SECTION 12(g) OF THE ACT:

General and LimitedPartnership Interest

(Title of class)

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Indicate by check mark ifthe registrant is a well-known seasoned issuer, as defined in Rule 405 of theSecurities Act.  Yes       No   X  

Indicate by check mark ifregistrant is not required to file reports pursuant to Section 13 or Section15(d) of the Act. Yes       No   X  

Indicate by check markwhether the registrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months and (2) has been subject to such filing requirements for the past 90days.  Yes        No    X      

Indicate by check mark ifdisclosure of delinquent filers pursuant to Item 405 of Regulation S-K is notcontained herein, and will be contained, to the best of registrant's knowledge,in definitive proxy or information statements incorporated by reference in PartIII of this Form 10-K or any amendment to this Form 10-K.  [ X ]

Indicate by check markwhether the registrant is a large accelerated filer, an accelerated filer, ornon-accelerated file. See definition of "acceleratedfiler and larger accelerated filer" in Rule 12b-2 of the Exchange Act.(Check one):

Large AcceleratedFiler   [ ]                         AcceleratedFiler  [ ]                          Non-Accelerated Filer [ X ]

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act).  

Yes       No   X  

There is no trading market for the registrant'ssecurities.

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TABLE OF CONTENTS

**PART I**

                  

Item1                Business

Item1A             Risk Factors

Item1B              Unresolved Staff Comments

Item2                Properties

Item3                Legal Proceedings

Item4                Submission of Matters to a Vote of Security Holders

**PART II**

Item5                Market for Registrant's Common Equity and Related Stockholder Matters andIssuer Purchases of Equity Securities 

Item6                Selected Financial Data

Item7                Management's Discussion and Analysis of Financial Condition and Results ofOperations

Item7A             Quantitative and Qualitative Disclosures About MarketRisk

Item8                Financial Statements and Supplementary Data

Item9                Changes in and Disagreement with Accountants on Accounting and FinancialDisclosure

Item9A             Controls and Procedures

Item9B              Other Information

**PART III**

Item10              Directors and Executive Officers of the Registrant

Item11              Executive Compensation

Item12              Security Ownership of Certain Beneficial Owners and Management and RelatedStockholders Matters

Item13              Certain Relationships and Related Transactions

Item14              Principal Accountant Fees and Services

**PART IV**

Item15              Exhibits and Financial Statement Schedules

Signatures

FinancialStatements

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**PART I**

##  

## Overview

ThisAnnual Report on Form 10-K for the year ended December 31, 2005, includes thefinancial statements of PDC 2005-A Limited Partnership ("thePartnership") for the year ended December 31, 2005 and substantially allof the information for the quarters ended June 30, 2005 and September 30, 2005that would normally be contained in Quarterly Reports on Form 10-Q.  

As previously reported in anupdate included in Form 12b-25 (Notification of Late Filing) filed with the SECon March 31, 2006, the Managing General Partner had suspended filing financialreports pending the complete assessment of its Partnership oil and gas propertyaccounting and to correct potential errors related to depreciation, assetimpairments, asset retirement obligations and hedge accounting.  As aresult of this review of our accounting policies and practices, we determinedthat the Partnership's previously filed financial statements do not requirerestatement.

** **

**ITEM1.****  BUSINESS**

General

PDC 2005-A LimitedPartnership was organized as a limited partnership pursuant to the WestVirginia Uniform Limited Partnership Act for the purpose of aggregating fundsfor the exploration and production of oil and natural gas. Businessoperations of the Partnership commenced on February 9, 2005, upon the closingof the offering for the sale of partnership units. 

Pursuant to a registrationstatement filed with the Securities and Exchange Commission, limited andgeneral partnership interests were registered for an offering under the PDC2004-2006 Drilling Program for the formation of a series of limitedpartnerships.  PDC 2005-A Limited Partnership was formed with totalcapital contributions of $39,937,470 from limited partners and additionalgeneral partners (collectively, the "Investor Partners") and$8,829,000 in capital contributed by Petroleum Development Corporation("PDC"), the Managing General Partner. Total funding of thePartnership was $48,766,470.  The capital contributions from the InvestorPartners consisted of 1,996.87 partnership units at a unit price of $20,000each. After syndication costs of $4,022,407 and a one time management fee tothe Managing General Partner of $599,062, the Partnership had available cash of$44,145,001 to commence Partnership activities for the drilling of natural gasand oil wells. During 2006, all additional general partners were converted tolimited partners under provisions of the partnership agreement.

Under the terms of the partnership agreement, theallocation of production revenues among the Investor Partners and the ManagingGeneral Partner is as follows:

|                           |  Allocation  |
|--------------------------------|-------------------|
|                           |  of Revenues |
| Investor Partners         | 80%               |
| Managing General Partner  | 20%               |

Operating and direct costsare allocated and charged to the Investor Partners and the Managing GeneralPartner in the same percentages as revenues are allocated.  See "Note4 - Allocation of Partners' Interests" in the Notes to the FinancialStatements for a complete description of the allocation of all Partnershiprevenues and costs.

Drilling Activities

Since its formation, thePartnership has been engaged in onshore, domestic oil and natural gasexploration and production exclusively in the Rocky Mountain Region. ThePartnership participated in the drilling of only development wells.  Dueto natural gas being the predominant production, all wells are classified asgas wells, although significant amounts of oil can be produced in associationwith the gas. The following table summarizes the Partnership's drillingactivities during 2005 related to its 49 wells:

 

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|                             | Wattenberg Field (DJ  Basin) | Grand Valley Field (Piceance Basin) |  

Total |
|----------------------------------|------------------------------|-------------------------------------|---------------|
| Drilled, completed and producing | 36                           | 12                                  | 48            |
| Drilled but not  completed       | -                            | 1                                   | 1             |
| Dry holes                        | -                            | -                                   | -             |
| Totals                           | 36                           | 13                                  | 49            |

 

As of December 31, 2005,completion of one well was delayed until the spring of 2006 due to weatherconditions restricting access to the well site.  As of the filing of thisreport, all 49 wells have been completed.  The 49 wells in the table aboveare the only wells the Partnership will drill because all of the capitalcontributions provided by the partnership offering will have been utilized uponcompletion of the remaining well. 

Additional information concerning the Partnership'sgas wells is contained in "Item 2 - Properties" below.

Plan of Operations

Under agreement with theInvestor Partners, the Managing General Partner serves as operator for the drillingof the Partnership's wells and for the production and sale of natural gas andoil from the wells. Once producing, the Partnership's wells will be produceduntil they are depleted or until they are uneconomical to produce.  PDCplans to recomplete the Codellformation in most of the wells in the Wattenberg Field after five or more yearsof production because these wells will usually have experienced a significantdecline in production in that time period.  These Codellrecompletions typically increase the production ratesand recoverable reserves.  Prior experience of PDC and other producerswith Codell recompletionshas resulted in significant production increases for most wells, although notall recompletions have been successful. The cost of aCodell recompletion isabout one-third of the cost of a new well (currently about $180,000).  TheManaging General Partner will arrange for contractors to perform the work, thecost of which will be paid out of overall revenues of the Partnership. PDC will pay its proportionate share of costs based on the operating costssharing ratios of the Partnership.

Employees

The Partnership has noemployees. Services to the Partnership are provided by PDC, which has a totalof approximately 170 employees, including personnel in accounting and finance,administration, engineering, geology, field operations, and natural gasmarketing. 

Markets for Oil and Gas

The availability of a marketfor any oil and natural gas produced from the operation of the Partnership'swells will depend upon a number of factors beyond the control of thePartnership which cannot be accurately predicted.  These factors includethe proximity of the Partnership wells to and the capacity of natural gaspipelines, the availability and price of competitive fuels, fluctuations inseasonal supply and demand, and government regulation of supply and demandcreated by its pricing and allocation restrictions.  Oversupplies of gascan be expected to occur from time to time and may result in the Partnership'swells being shut-in or production being curtailed.  Increased imports ofoil and natural gas have occurred and are expected to continue. The effects ofsuch imports could adversely impact the market for domestic oil and naturalgas. 

PDC utilizes the services ofits wholly-owned subsidiary, Riley Natural Gas (RNG), in marketing the oil andnatural gas produced from Partnership wells.  RNG has been in the gasmarketing business since 1986. All oil and natural gas is sold under contractsbased on market sensitive indexes that vary from month to month. No fixed pricecontracts are in place.  Purchase contracts for the sale of oil arecancelable on 30 days notice, whereas purchase contracts for the sale ofnatural gas may range from spot market sales of short duration to contractswith a term of a number of years and that may require the dedication of the gasfrom a well for a period ranging up to the life of the well.  PDC will notmake any commitment of future production that does not primarily benefit the Partnership. RNG is entitled to charge reasonable fees for its services, includingout-of-pocket costs, which will be equal to or less than fees charged tonon-affiliated producers for similar services. The Partnership sold its oil andnatural gas to three customers during 2005, which accounted for 49%, 33% and18% of the Partnership's total oil and natural gas sales for the period.

 

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Derivatives and Hedging Activities

Historically, PDC and RNGhave utilized commodity based derivative instruments to manage a portion of theexposure to price volatility stemming from natural gas and crude oilproduction.  In order to provide a more predictable cash flow stream, PDCexpects to continue the use of derivative instruments, including thePartnership's production of natural gas and oil, and will enter into derivativecontracts on behalf of the Partnership.  PDC may use financial hedges, putoptions, call options, and other derivative instruments to offset variations inprices.  The contracts hedge committed and anticipated natural gas and oilsales generally forecasted to occur within the next two-year period. TheManaging General Partner does not hold or issue derivatives for trading orspeculative purposes and permits utilization of hedges only if there is anunderlying physical position.  See "Commodity Price Risk" underItem 7A below.

Competition

ThePartnership competes in marketing its gas and oil with numerous companies andindividuals, many of which have financial resources, staffs and facilitiessubstantially greater than those of the Partnership or PDC.

GovernmentalRegulations

Federaland state regulatory authorities have established rules and regulationsrequiring permits for well operations, reclamation bonds and reports concerningoperations.  States also have statutes and regulations concerning thespacing of wells, environmental matters and conservation, and have establishedregulations concerning the unitization and pooling of oil and gas propertiesand maximum rates of production from oil and gas wells. 

Natural Gas Regulation. Sale of natural gas by the Partnership is subject to regulation of production,transportation and pricing by governmental regulatory agencies. Generally, the regulatory agency in the state where a producing well is locatedregulates production activities and, in addition, the transportation of gassold intrastate.  The Federal Energy Regulatory Commission (FERC)regulates the operation and cost of interstate pipeline operators who transportgas.  Currently, the price of gas sold by the Partnership is not regulatedby any state or federal agency.

Environmental and Safety Regulations. The Partnership believes that it complies, in all material respects, with alllegislation and regulations relating to environmental and safety matters in thedrilling and production of oil and gas wells and the discharge of wastes. Compliance with such provisions and regulations is significant during welldevelopment but has not had a material effect upon the Partnership'sexpenditures for capital equipment, its operations or its competitiveposition.  The cost of such compliance is not anticipated to be materialin the future.

The Partnership believes ithas complied in all material respects with applicable state and federalregulations. The Partnership estimates it has spent approximately $580,000 in2005 to comply with federal and state regulations, primarily relating toenvironmental permitting and compliance.

**ITEM 1A.****  RISK FACTORS**

In thecourse of its normal business, the Partnership is subject to a number of risksthat could adversely impact its business, operating results, financialcondition, and cash distributions.  The following risk factors should beconsidered carefully in addition to the other information included in thisreport.

Drillingnatural gas and oil wells is speculative and may be unprofitable or result inthe total loss of investment. The drilling and completion operations undertakenby the Partnership for the development of natural gas and oil reserves areinherently speculative and involve a high degree of risk and the possibility ofa total loss of investment.  Drilling activities may result inunprofitable well operations, not only from non-productive wells, but also fromwells that do not produce natural gas or oil in sufficient quantities orquality to return a profit on the amounts expended.  Consequently,Partnership wells may not produce sufficient natural gas and oil for investorsto receive a profit or even to recover their initial investment.  Only oneof the prior Partnerships sponsored by PDC has, to date, generated cashdistributions in excess of investor subscriptions without tax savings. PDC cannot predict whether any prospect will produce commercial quantities ofnatural gas or oil.  PDC cannot predict the life and the ultimateproduction of any well, and the actual lives could differ from thoseanticipated.

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Thepartnership units are not registered, there will be no public market for theunits, and as a result, an Investor Partner may not be able to sell his or herunits.  There is and will be no public market for the units nor will apublic market develop for the units.  Investor Partners may not be able tosell their Partnership interests or may be able to sell them only for less thanfair market value.  The offer and sale of units have not been, and willnot in the future, be registered under the Securities Act or under any statesecurities laws.  Each purchaser of units has been required to representthat such investor has purchased the units for his or her own account forinvestment and not with a view to resale or distribution.  No transfer ofa unit may be made unless the transferee is a "qualified investor"and such transfer is registered under the Securities Act and applicable statesecurities laws, or an exemption therefrom isavailable.  The Partnership may require that the transferor provide anopinion of legal counsel stating that the transfer complies with all applicablesecurities laws.  A sale or transfer of units by an investor requires PDC's prior written consent.  For these and otherreasons, an investor must anticipate that he or she will have to hold his orher Partnership interests indefinitely and will not be able to liquidate his orher investment in the Partnership.  Consequently, an investor must be ableto bear the economic risk of investing in the Partnership for an indefiniteperiod of time.

Theadditional general partners will be individually liable for Partnershipobligations and liabilities that arose prior to conversion to limited partners(which can occur only after the drilling completion operations are finished)that are beyond the amount of their subscriptions, partnership assets, and theassets of the Managing General Partner.  Under West Virginia law, thestate in which the Partnership has organized, general partners of a limitedpartnership have unlimited liability with respect to the partnership. Therefore, the additional general partners of the Partnership will be liableindividually and as a group for all obligations and liabilities of creditorsand claimants, whether arising out of contract or tort or in the conduct of thePartnership's operations, until such time as the additional general partnersare converted to limited partners.  Under the Partnership Agreement, thisconversion is not scheduled to occur until the drilling and completionoperations are finished.  Irrespective of conversion, the additionalgeneral partners will remain fully liable for obligations and liabilities thatarose prior to conversion.  Investors as additional general partners maybe liable for amounts in excess of their subscriptions, the assets of thePartnership, including insurance coverage, and the assets of the ManagingGeneral Partner.

ThePartnership may retain Partnership revenues if needed for Partnershipoperations to fully develop the Partnership's wells; if full development of thePartnership's wells proves commercially unsuccessful, an investor mightanticipate a reduction in cash distributions.  The Partnership intends toutilize substantially all available capital raised inthe offering for the drilling and completion of wells and will have onlynominal funds available for Partnership purposes prior to the time ofproduction from Partnership well operations.  In the future, PDC may wishto rework or recomplete Partnership wells but PDC hasnot held money from the initial investment for that future work.  There isno assurance that future development of the Partnership's wells will provecommercially successful and that the further-developed Partnership wells willgenerate sufficient funds from production to increase distributions to theinvestors to cover revenues retained.  If future development of thePartnership's wells is not commercially successful, the use of funds retainedfrom production revenues could result in a reduction of cash distributions tothe Investor Partners. 

Increasesin prices of oil and natural gas have increased the cost of drilling anddevelopment and may affect the performance of the Partnership in both the shortand long term.  In the current high price environment, most oil and gascompanies have increased their expenditures for drilling new wells.  Thishas resulted in increased demand and higher cost for leases, oilfield servicesand well equipment.  Because of these higher costs, the risk to thePartnership of decreased profitability from future decreases in oil and naturalgas prices is increased.

Reductionsin prices of oil and natural gas reduce the profitability of the Partnership'sproduction operations.  Global economic conditions, political conditions,and energy conservation have created unstable prices.  Revenues of thePartnership are directly related to natural gas and oil prices for which PDCcannot predict.  The prices for domestic natural gas and oil productionhave varied substantially over time and by location, and are likely to remainextremely unstable.  Revenue from the sale of oil andnatural gas increases when prices for these commodities increase and declines whenprices decrease.  These unpredictable price changes can occurrapidly and are not within the control of the Partnership.  A decline innatural gas and/or oil prices would result in lower revenues for thePartnership and a reduction of cash distributions to the partners of thePartnership.

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Thehigh level of drilling activity could result in an oversupply of natural gas ona regional or national level, resulting in much lower commodity prices. Recently, the natural gas market has been characterized by excess demandcompared to the supplies available, leading in general to higher prices fornatural gas.  The high level of drilling, combined with a reduction indemand resulting from higher prices, could result in an oversupply of naturalgas.  In the Rocky Mountain region, rapid growth of production andincreasing supplies may result in lower prices and production curtailment dueto limitations on available pipeline facilities or markets not developed toutilize or transport the new supplies.  In both cases, the result wouldprobably be lower prices for the natural gas the Partnership produces,reduced profitability for the Partnership and reduced cash distributions to theInvestor Partners.

Sufficientinsurance coverage may not be available for the Partnership, thereby increasingthe risk of loss for the Investor Partners.  It is possible that some orall of the insurance coverage which the Partnership has available may becomeunavailable or prohibitively expensive.  In that case, PDC might elect to changethe insurance coverage.  The additional general partners could be exposedto additional financial risk due to the reduced insurance coverage and due tothe fact that additional general partners would continue to be individuallyliable for obligations and liabilities of the Partnership.  InvestorPartners could be subject to greater risk of loss of their investment becauseless insurance would be available to protect the Partnership from casualtylosses.  Moreover, should the Partnership's cost of insurance become moreexpensive, the amount of cash distributions to the investors will be reduced.

Through their involvement in Partnership and othernon-partnership activities, the Managing General Partner and its affiliateshave interests which conflict with those of the Investor Partners; actionstaken by the Managing General Partner in furtherance of its own interests couldresult in the Partnership's being less profitable and a reduction in cashdistributions to the investors.  PDC's continuedactive participation in oil and natural gas activities for its own account andon behalf of other partnerships organized or to be organized by PDC and themanner in which Partnership revenues are allocated create conflicts of interestwith the Partnership.  PDC has interests which inherently conflict withthe interests of the investor partners.  In operating the Partnership, theManaging General Partner and its affiliates could take actions which benefitthemselves and which do not benefit the Partnership.  These actions couldresult in the Partnership's being less profitable.  In that event, anInvestor Partner could anticipate a reduction of cash distributions.

The Partnership and other partnerships sponsored bythe Managing General Partner may compete with each other for prospects,equipment, contractors, and personnel; as a result, the Partnership may find itmore difficult to operate effectively and profitably.  During and after2006, PDC plans to offer interests in other partnerships to be formed for substantiallythe same purposes as those of the Partnership.  Therefore, a number ofpartnerships with unexpended capital funds, including those partnerships formedbefore and after the Partnership, may exist at the same time.  ThePartnership may compete for equipment, contractors, and PDC personnel (when thePartnership is also needful of equipment, contractors and PDC personnel), whichmay make it more difficult and more costly to obtain services for thePartnership.  In that event, it is possible that the Partnership would beless profitable.  Additionally, because PDC must divide its attention inthe management of its own affairs as well as the affairs of the 74 otherlimited partnerships PDC has organized, the Partnership will not receive PDC's full attention and efforts at all times.

ThePartnership's derivative activities could result in reduced revenue compared tothe level the Partnership might experience if no derivative instruments were inplace.  The Partnership expects to use derivative instruments to reducethe impact of price movements on revenue.  While these derivativeinstruments protect the Partnership against the impact of declining prices,they also may limit the positive impact of price increases.  As a result,the Partnership may have lower revenues when prices are increasing than mightotherwise be the case, and may also reduce the Partnership's cash flows andcash distributions to the Investor Partners.

Hedgingtransactions have in the past and may in the future impact our cash flow fromoperations.  Our commodity hedging may prevent us from benefiting fullyfrom price increases and may expose us to other risks.  PDC will enterinto hedging arrangements to reduce the Partnership's exposure to fluctuationsin natural gas and crude oil prices and to achieve more predictable cashflow.  Although the Partnership's hedging activities may limit thePartnership's exposure to declines in natural gas and crude oil prices, theseactivities may also limit and have in the past limited, additional revenuesfrom increases in natural gas and crude oil prices.  To the extent thatthe Partnership engages in hedging activities to protect itself from commodityprice volatility, the Partnership may be prevented from realizing the benefitsof price increases above the levels of the hedges.  

 

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Additionally,the hedging transactions PDC has entered into, or will enter into, may notadequately protect the Partnership from financial loss due to circumstancessuch as:

•        Highly volatile natural gas and crude oil prices;

•        Production being less than expected; or

•        A counterparty defaults on its contractual obligations.

A significant financial loss by the Managing GeneralPartner could result in PDC's inability to indemnifyadditional general partners for personal losses suffered because of Partnershipliabilities.  As a result of PDC's commitmentsas Managing General Partner of several partnerships and because of theunlimited liability of a general partner to third parties, PDC'snet worth is at risk of reduction if PDC suffers a significant financialloss.  Because PDC is primarily responsible for the conduct of thePartnership's affairs as well as the affairs of other partnerships for whichPDC serves as managing general partner, a significant adverse financialreversal for PDC could result in PDC's inability topay for Partnership liabilities and obligations.  The additional generalpartners of the Partnership might be personally liable for payments of thePartnership's liabilities and obligations.  Therefore, the ManagingGeneral Partner's financial incapacity could increase the risk of personalliability as an additional general partner because PDC would be unable toindemnify the additional general partners for any personal losses they sufferedarising from Partnership operations.

TheManaging General Partner may not have sufficient funds or budget to repurchaselimited partnership units.  As aresult of the Managing General Partner being a general partner in severalpartnerships, the Partnership's net worth is at risk of reduction if PDCsuffers a significant financial loss.  Because the investors may requestthe Managing General Partner to repurchase the units in the Partnership,subject to certain conditions and restrictions, a significant adverse financialreversal could result in the Managing General Partner's inability to pay forPartnership obligations or the repurchase of investor units.  

Fluctuatingmarket conditions and government regulations may cause a decline in theprofitability of the Partnership. The sale of any natural gas and oil produced by the Partnership will beaffected by fluctuating market conditions and governmental regulations,including environmental and safety standards set by state and federalagencies.  From time-to-time, a surplus of natural gas or oil may occur inareas of the United States.  The effect of a surplus may be to reduce theprice the Partnership receives for the natural gas or oil production, or toreduce the amount of natural gas or oil that the Partnership may produce andsell.  As a result, the Partnership may not be profitable.  Lowerprices and/or lower production and sales will result in lower revenues for thePartnership and a reduction in cash distributions to the partners of the Partnership.

Environmentalhazards involved in drilling natural gas and oil wells may result insubstantial liabilities for the Partnership.  There are numerous naturalhazards involved in the drilling of wells, including unexpected or unusualformations, pressures, blowouts involving possible damages to property andthird parties, surface damages, personal injury or loss of life, damage to andloss of equipment, reservoir damage and loss of reserves.  Uninsuredliabilities would reduce the funds available to the Partnership, may result inthe loss of Partnership properties, and may create liability for additionalgeneral partners.  The Partnership may become subject to liability forpollution, abuses of the environment and other similar damages and insurancecoverage may be insufficient to protect the Partnership against all potentiallosses.  In that event, Partnership assets would be used to pay personalinjury and property damage claims and the costs of controlling blowouts orreplacing destroyed equipment rather than for drilling activities.  Thesepayments would cause an otherwise profitable partnership to be less profitableor unprofitable and would result in a reduction of cash distributions to thepartners of the Partnership.

Informationconcerning our reserves and future net revenues estimates is inherentlyuncertain.  The accuracy ofproved reserves estimates and estimated future net revenues from such reservesis a function of the quality of available geological, geophysical, engineeringand economic data and is subject to various assumptions, including assumptionsrequired by the SEC relating to oil and gas prices, drilling and operatingexpenses, and other matters. Although we believe that our estimated provedreserves represent reserves that we are reasonably certain to recover, actualfuture production, oil and gas prices, revenues, taxes, developmentexpenditures, operating expenses and quantities of recoverable oil and gasreserves will most likely vary from the assumptions and estimates used todetermine proved reserves. Any significant variance could materially affect theestimated quantities and value of our oil and gas reserves, which in turn couldadversely affect our cash flow, results of operations and the availability ofcapital resources. In addition, we may adjust estimates of proved reserves toreflect production history, results of exploration and development, prevailingoil and gas prices and other factors, many of which are beyond our control.Downward adjustments to our estimated proved reserves could require us to writedown the carrying value of our oil and gas properties, which would reduce ourearnings and our partners' equity.

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Thepresent value of proved reserves will not necessarily equal the current fairmarket value of our estimated oil and gas reserves. In accordance with thereserve reporting requirements of the SEC, the estimated discounted future netcash flows from proved reserves are based on prices and costs as of the date ofthe estimate. Actual future prices and costs may be materially higher or lowerthan those as of the date of the estimate. The timing of both the productionand the expenses with respect to the development and production of oil and gasproperties will affect the timing of future net cash flows from proved reservesand their present value.

Seasonalweather conditions may adversely affect the Partnership's ability to conductdrilling, completion and production activities in some of the areas where weoperate.  Oil and natural gasoperations in the Rocky Mountains are adversely affected by seasonal weatherconditions. In certain areas, drilling and other oil and natural gas activitiesare restricted or prevented by weather conditions for up to 6 months out of theyear. This limits operations in those areas and can intensify competitionduring those months for drilling rigs, oil field equipment, services, suppliesand qualified personnel, which may lead to periodic shortages. Theseconstraints and the resulting shortages or high costs could delay operations andmaterially increase operating and capital costs and therefore, adversely affectprofitability. 

**ITEM 1B.****  UNRESOLVED STAFF COMMENTS**

None.

**ITEM 2.****  PROPERTIES**

ThePartnership's properties consist of oil and gas wells, associated wellequipment, and the ownership in leasehold acreage assigned to the spacing unitson which the 49 wells were drilled.  The Partnership has no undevelopedacreage.

Drilling Activity

The Partnership commenced drilling activities on March 5, 2005, followingfunding of the Partnership, and as of December 31, 2005, all wells had beencompleted except for one well that was in progress at year end.  All ofthe Partnership's wells are located in Colorado. The following table sets forththe results of the Partnership's drilling activity as of December 31,2005.  

|                                                                                              |  Gross  Wells                  |  Net  Wells                                    |
|--------------------------------------------------------------------------------------------------------|---------------------------------------------------------|-----------------------------------------------------|
| Development  wells:                                                                                    |                                                    |                                                |
| Drilled,  completed and producing.......................................                               |  48                  |  46.01                                         |
| Drilled  and not completed...........................                                                  |  1         |  0.10                                          |
| Dry  hole..................................................................................            |    -       |           - |
| Total  Wells  Drilled................................................................................. | 49                   |  46.11                                    |

As of the date of thisreport, all 49 of the total wells drilled by the Partnership are consideredproductive wells.  The Partnership did not participate in the drilling ofany exploratory wells. The one well in progress at year end was drilled in late2005, but the completion was delayed until the spring of 2006 due to weatherconditions restricting access to the well site.  The 49 wells in the tableabove are the only wells to be drilled by the Partnership since all of thefunds raised in the Partnership offering of $44,145,001 will have been utilizedupon the completion of the one remaining well.  

A development well is a wellthat is drilled close to and into the same formation as wellswhich have already produced and sold oil or natural gas.  An exploratorywell is one which is drilled in an area where there has been no oil or naturalgas production, or a well which is drilled to a previously untested ornon-producing zone in an area where there are wells producing from otherformations.  Productive wells consist of producing wells and wells capableof producing oil and gas in commercial quantities, including gas wells awaitingpipeline connections to commence deliveries.  A gross well refers to thenumber of wells in which the Partnership has an interest.  A net wellrefers to a gross well multiplied by the percentage working interest in thewells owned by the Partnership.

 

 

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Reserves 

See "Note 7 -Supplemental Reserve Information (Unaudited)" inthe Financial Statements for information related to the Partnership's oil andgas reserves as of December 31, 2005.

### Production

See"Item 7 - Management's Discussion and Analysis and Results ofOperations" below for information related to volumes, prices and productioncosts. 

Title to Properties 

ThePartnership's interests in producing acreage are in the form of assigned directinterests in leases. Such properties are subject to customary royalty interestsgenerally contracted for in connection with the acquisition of properties andcould be subject to liens incident to operating agreements, liens for currenttaxes, and other burdens.  The Partnership believes that none of theseburdens materially interfere with the use of such properties in the operationof the Partnership's business.

As is customary in the oiland gas industry, little or no investigation of title is made at the time ofacquisition of undeveloped properties (other than a preliminary review of localmineral records).  Investigations are generally made, including in mostcases receiving a title opinion of legal counsel, before commencement ofdrilling operations.  A thorough examination of title has been made withrespect to all of the Partnership's producing properties and the Partnershipbelieves that it has satisfactory title to such properties.

**ITEM 3.****  LEGAL PROCEEDINGS**

The Registrant is not a party to any legalproceedings.

PDC, as Managing General Partner andoperator of the Partnership's wells, may be subject to various legal proceedingsfrom time to time arising in the normal course of business.  Anyoutstanding and pending legal actions are not considered material to theoperations of the Partnership or PDC.

**ITEM 4.****  SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS**

** **

None.

**PART II**

**ITEM 5.**** MARKET FOR REGISTRANT'S COMMON EQUITY ANDRELATED STOCKHOLDER MATTERS**

At December 31, 2005, thePartnership had one Managing General Partner and 1,523 Investor Partnersholding a total of 1,996.87 units.  No established public trading marketexists for the interests, nor will a public trading market ever develop for theinterests.  Limited and additional general partnership interests are transferable, however no assignee of an interest in thePartnership can become a substituted partner without the written consent of thetransferor and the Managing General Partner. 

**ITEM6.****  SELECTEDFINANCIAL DATA**

** **

The selected financial data presented below has beenderived from audited financial statements of the Partnership.  See theFinancial Statements included with this Form 10-K.

 

 

-11-

----

|                                        |   |                                                                                                                              |                                                                                                                                                    | Period From                                                                                                       |
|---------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------|
|                                        |   |                                                                                                                              |                                                                                                                                                    | February 9, 2005                                                                                                  |
|                                        |   |                                                                                                                              |                                                                                                                                                    | (date of inception)                                                                                               |
|                                        |   |                                                                                                                              |                                                                                                                                                    | Through                                                                                                           |
|                                        |   |                                                                                                                              |                                                                                                                                                    | December 31, 2005                                                                                                 |
|                                        |   |                                                                                                                              |                                                                                                                                                    |                                                                                                              |
| Oil and gas sales                           |   |                                                                                                                              |                                                                                                                                                    |  $              11,625,503                       |
| Costs and expenses                          |   |                                                                                                                              |                    6,541,310                                       |
| Oil and gas price risk management loss, net |   |                       181,625 |
| Net income                                  |   |                                                                                                                              |                                                                                                                                                    |                    5,182,895 |
| Allocation of net income:                   |   |                                                                                                                              |                                                                                                                                                    |
| Managing General Partner                    |   |                    1,156,391                 |
| Investor Partners                           |   |                                                                                                                              |                    4,026,504                                       |
| Per Investor Partner Unit                   |   |                                                                                                                              |                           2,016 |
| Total assets at year end                    |   |                                                                                                                              |                  46,744,341                                                  |
| Cash distributions:                         |   |                                                                                                                              |                                                                                                                                                    |
| Managing General Partner                    |   |                       882,769 |
| Investor Partners                           |   |                                                                                                                              |                    3,531,086                                       |
| Per Investor Partner unit                   |   |                                                                                                                              |                           1,768 |
|                                        |   |                                                                                                                              |                                                                                                                                                    |                                                                                                              |

 

 

**ITEM 7.****MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIALCONDITION AND RESULTS OF OPERATIONS**

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

Statements,other than historical facts, contained in this Annual Report on Form 10-K,including statements of estimated oil and gas production and reserves, futurecash flows and the Partnership's strategies, plans and objectives, are"forward-looking statements" within the meaning of Section 27A of theSecurities Act of 1933, as amended (the "Securities Act"), andSection 21E of the Securities Exchange Act of 1934, as amended (the"Exchange Act").  Although the Partnership believes that itsforward looking statements are based on reasonable assumptions, it cautionsthat such statements are subject to a wide range of risks, trends anduncertainties, incidental to the production and marketing of oil and gas thatcould cause actual results to differ materially from those projected. Among those risks, trends and uncertainties are important factors that couldcause actual results to differ materially from the forward looking statements,including, but not limited to, changes in production volumes, worldwide demandand commodity prices for petroleum natural resources; risks incidental to theoperation of oil and gas wells; future production and development costs; theeffect of existing and future laws, governmental regulations and the politicaland economic climate of the United States; the effect of derivative activities;and conditions in the capital markets.  In particular, carefulconsideration should be given to cautionary statements made in this Form 10-Kand in the various reports the Partnership has filed with the Securities andExchange Commission.  The Partnership undertakes no duty to update orrevise these forward-looking statements.

When used in this Form 10-K,the words, "expect," "anticipate," "intend,""plan," "believe," "seek," "estimate"and similar expressions are intended to identify forward-looking statements,although not all forward-looking statements contain these identifying words.Because these forward-looking statements involve risks and uncertainties,actual results could differ materially from those expressed or implied by theseforward-looking statements for a number of important reasons, including thosediscussed under "Item 1A - Risk Factors"  and elsewhere in thisForm 10-K.

Overview

The Partnership was fundedon February 9, 2005, with initial Investor Partner contributions of $39,937,470and the Managing General Partner's cash contribution of $8,829,000.  Afterpayment of syndication costs of $4,022,407 and a one-time management fee to theManaging General Partner of $599,062, the Partnership had available cash of$44,145,001 to commence the Partnership's drilling activities.

 

-12-

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The drilling of oil and gaswells on prospects evaluated and designated by PDC commenced on March 5, 2005.Forty-nine wells have been drilled, and as of December 31, 2005, forty-eightwells have been completed and are producing. The completion work on one of thewells drilled in 2005 has been delayed until the spring of 2006 due to weatherconditions restricting access to the well site. The Managing General Partneranticipates that the remaining uncompleted well will be commercially productiveupon completion.  The Partnership drilled only development wells and didnot participate in the drilling of exploratory wells.  No additional wellswill be drilled by the Partnership.  The table in "Item 1 -Business" above summarizes the Partnership's drilling activity during2005.

Results of Operations 

The following table presentssignificant operational information for the above referenced period in thePartnership's first year of operations:

| Oil and gas sales                            |  $         11,625,503                                                             |
|----------------------------------------------|---------------------------------------------------------------------------------------------------------------------------|
| Gas sales - Mcf                              |                  706,083                       |
| Average gas price/Mcf                        |  $                    8.32 |
| Oil sales - Bbls                             | 103,859                                                                                                                   |
| Average oil price/Bbl                        |  $                  55.38            |
|                                         |                                                                                                                      |   |
| Production and operating costs               |  $           1,537,310                                                  |
| Production and operating costs/Mcfe          |  $                    1.16 |
| Depreciation, depletion and amortization     |  $           4,367,052                                                  |
|                                         |                                                                                                                      |   |
| Net income                                   |  $           5,182,895                                                  |
| Partnership cash distributions               |  $           4,413,855                                                  |
|                                         |                                                                                                                      |   |
| Oil and gas price risk management loss, net: |                                                                                                                      |
| Realized loss                                |  $              159,037                                  |
| Unrealized loss                              |  $                22,588                       |
|                                         |                                                                                                                      |   |
| Working capital at year end                  |  $           5,745,650                                                  |

 

*Definitions: 

•        Bbl - One barrel or 42 U.S. gallons of liquid volume.

•        Mcf - One thousand cubic feet.

•        Mcfe - One thousand cubic feet of natural gasequivalents, based on a ratio of 6 Mcf for eachbarrel of oil, which reflects the relative energy content.

Initial production from thePartnership wells commenced during the second quarter of 2005, as wells weredrilled, completed and connected to pipelines. Sales of natural gas and oilfrom the Partnership's wells increased steadily during 2005 as additional wellswere completed and placed into production.  The last well to commenceproduction during the year occurred in the fourth quarter.  The tablebelow reflects the production volumes, net to the Partnership, for each of thequarters in  2005.  

|        | No. of    |   | Gas     |                                              | Oil    |    |                                   |
|-------------|-----------|--------|---------|---------------------------------------------------|--------|---------|----------------------------------------|
|        | Producing |   |    | Average                                           |   |    | Average                                |   | Oil and Gas |
|        | Wells     |   | Mcf     | Price                                             |   | Bbls    | Price                                  |   | Sales |
| Quarter 2   | 26        |   | 42,005  | $         6.17 |   | 20,562  | $       50.41 |   | $        1,295,587 |
| Quarter 3   | 40        |   | 185,654 | 7.10                                              |   | 45,694  | 56.57                                  |   | 3,903,750 |
| Quarter 4   | 48        |   | 478,424 | 8.98                                              |   | 37,603  | 56.65                                  |   | 6,426,166 |
| Total  2005 |      |   | 706,083 | $         8.32 |   | 103,859 | $       55.38 |   | $      11,625,503 |
|        |      |   |    |                                              |   |    |                                   |   |   |

 

-13-

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The Partnership's futurerevenues from oil and natural gas sales will be affected by changes inprices.  As a result of changes in market conditions, gas prices arehighly dependent on the balance between supply and demand. The Partnership'ssales prices for natural gas and oil are subject to increases and decreasesbased on various market sensitive indices.

Interestincome was earned by the Partnership during 2005 on bank balances that existedwhile awaiting capital expenditures on the drilling of the remaining oil andgas wells.

Inaccordance with the Partnership Agreement, a one-time management fee equal to11⁄2% of investors' subscriptions, or $599,062, was paid by thePartnership to the Managing General Partner upon funding of the Partnership.

The net loss of $181,625from oil and gas price risk management is comprised of the change in fair valueof oil and natural gas derivatives related to the Partnership's oil and gasproduction for derivative contracts entered into on behalf of the Partnershipby the Managing General Partner.  The Partnership views these transactionsas a gain or loss on financial instruments and not a part of oil and gas sales.

Liquidity and CapitalResources

The Partnership had aworking capital balance at December 31, 2005, of $5,745,650, which wasprimarily the result of receivables from oil and gas sales during the fourthquarter. Future operations are expected to be conducted with available fundsand revenues generated from oil and gas production activities.  As of thedate of this report, the Partnership has substantially finished the drillingand completion of its 49 wells and all partner contributions will have beenutilized in this process.  Other than the planned future recompletions in the Codellformation, there is no provision in the Partnership Agreement for additionaldevelopment or exploration beyond these 49 wells and there are no presentcapital needs of the Partnership. Current production revenues exceed operatingcosts by a wide margin. However, PDC plans to recompletethe Codell formation in most of the 36 wells in theWattenberg Field after five years or more of production. These Codell recompletions typicallyincrease the production rates and recoverable reserves.  Prior experienceof PDC and other producers with Codell recompletions has resulted in significant productionincreases for most wells, although not all recompletionshave been successful.  The cost of a Codell recompletion is about one-third of the cost of a new well(currently about $180,000 for the recompletion). ThePartnership is not permitted to borrow under the Partnership Agreement;therefore, the cost of the recompletions will be paidout of overall revenues of the Partnership.  The Managing General Partneris allowed to and may withhold production revenues in advance of recompletion work.  This would reduce cashdistributions to the partners at the time of the recompletions,but should result in additional cash distributions following the recompletions.

Oil and Gas Reserves

Proved oil and gas reservesof the Partnership have been estimated at December 31, 2005, to include 690,000barrels of oil and 15,197,000 Mcfs of naturalgas.  See "Note 7 - Supplemental Reserve Information (Unaudited)" in the Financial Statements for additionalreserve information.

#  

# -14-

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# The following table sets forth the quarterlyinformation for each of the quarters during the year ended December 31,2005.   See also "Note 9 - Quarterly Financial Data (Unaudited)" in the Financial Statements.

|                                         |                                                                                                                                                                  | February 9, 2005                                                                                                                   |                                                                                        |                                                                                        |         |
|----------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------|--------------|
|                                         |                                                                                                                                                                  | (inception)                                                                                                                        | For the Three Months  Ended                                                                 |
|                                         |                                                                                                                                                                  | to March 31,                                                                                                                       | June 30,                                                                                    | September 30,                                                                               | December 31, |
|                                         |                                                                                                                                                                  | 2005                                                                                                                               | 2005                                                                                        | 2005                                                                                        | 2005         |
|                                         |                                                                                                                                                                  |                                                                                                                               |                                                                                        |                                                                                        |         |
| Oil and gas sales                            |  $                          -            |  $      1,295,587                                                                                    |  $     3,903,750                                                   |  $     6,426,166                                                   |
| Gas sales - Mcf                              |                              - | 42,005                                                                                                                             |             185,654                       |             478,424                       |
| Average gas price/Mcf                        |  $                          -            |  $                6.17                                  |  $               7.10 |  $               8.98 |
| Oil sales - Bbls                             |                              - | 20,562                                                                                                                             |               45,694            |               37,603            |
| Average oil price/Bbl                        |  $                          -            |  $              50.41                                             |  $             56.57            |  $             56.65            |
|                                         |                                                                                                                                                                  |                                                                                                                               |                                                                                        |                                                                                        |         |
| Production and operating costs               |  $                          -            |  $          172,836                                                                   |  $         535,162                                  |  $         829,312                                  |
| Production and operating costs/Mcfe          |  $                          -            |  $                1.05                                  |  $               1.16 |  $               1.18 |
| Depreciation, depletion and amortization     |  $                          -            |  $          525,500                                                                   |  $     1,932,450                                                   |  $     1,909,102                                                   |
|                                         |                                                                                                                                                                  |                                                                                                                               |                                                                                        |                                                                                        |         |
| Net income (loss)                            |  $             (533,293)                                                                                  |  $          615,697                                                                   |  $     1,477,379                                                   |  $     3,623,112                                                   |
| Partnership cash distributions               |  $                          -            |  $                    -   |  $     1,079,425                                                   |  $     3,334,430                                                   |
|                                         |                                                                                                                                                                  |                                                                                                                               |                                                                                        |                                                                                        |         |
| Oil and gas price risk management loss, net: |                                                                                                                                                                  |                                                                                                                               |                                                                                        |                                                                                        |
| Realized loss                                |  $                          -            |  $            43,328                                                        |  $           34,172                       |  $           81,537                       |
| Unrealized loss (gain)                       |  $                          -            |  $            67,976                                                        |  $          (24,105)                           |  $         (21,283)                                 |
|                                         |                                                                                                                                                                  |                                                                                                                               |                                                                                        |                                                                                        |         |
| Working capital at end of period             |  $         44,196,670                                                                                                         |  $    14,484,792                                                                                               |  $     3,527,994                                                   |  $     5,745,650                                                   |
|                                         |                                                                                                                                                                  |                                                                                                                               |                                                                                        |                                                                                        |         |

 

Management's Discussion andAnalysis- Three Months Ended June 30, 2005

*Results of Operation -*During the**quarter, the Partnership had netincome of $615,697 resulting from the commencement of production of oil andgas.  Production commenced as wells were drilled, completed and connectedto a pipeline.  During the quarter 26 wells began producing. Totalproduction for the Partnership during the quarter was 42,005 Mcf of gas and 20,562 barrels of oil. The results includednet losses related to oil and gas price risk management of $111,304 whichincluded an unrealized loss of $67,976 and a realized loss of $43,328. The Partnership's strategy in its derivative policy is to provide protection ondeclining oil and natural gas prices.  During this period of rising oiland natural gas prices, the Partnership recorded losses as market pricesexceeded contract prices related to the Partnership's oil and gas sales. The Partnership made no partner cash distributions during the quarter.

Management's Discussion andAnalysis- Three Months Ended September 30, 2005

*Results of Operation -*During the**quarter, the Partnership had netincome of $1,477,379 as more wells commenced production of oil and gas. During the quarter, 14 wells began producing and an additional 8 wells weredrilled, completed but not yet connected to a pipeline.   Only onewell remained to be drilled at September 30, 2005, to complete thePartnership's drilling program.  Total production for the Partnershipduring the quarter was 185,654 Mcf of gas and 45,694barrels of oil. The results included net losses related to oil and gas pricerisk management of $10,067 which included an unrealized gain of $24,105 and arealized loss of $34,172.  The Partnership's strategy in its derivativepolicy is to provide protection on declining oil and natural gas prices. During periods of rising oil and natural gas prices, the Partnership may recorded losses as market prices exceed contract pricesrelated to the Partnership's derivatives.  In periods of declining prices,the Partnership may record gains in its derivative transactions. Partnership revenue is affected by changes in oil and natural gas prices.

The Partnership distributed$1,079,425 to partners during the quarter.

 

-15-

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# Critical Accounting Policies and Estimates

We have identified thefollowing policies as critical to the understanding of the results ofoperations. This is not a comprehensive list of all of our accounting policies.In many cases, the accounting treatment of a particular transaction isspecifically dictated by accounting principles generally accepted in the UnitedStates, with no need for management's judgment in their application. There arealso areas in which management's judgment in selecting any availablealternative would not produce a materially different result. However, certainaccounting policies are important to the portrayal of the Partnership'sfinancial condition and results of operations and require management's mostsubjective or complex judgments. In applying those policies, management usesits judgment to determine the appropriate assumptions to be used in thedetermination of certain estimates. Those estimates are based on our historicalexperience, our observance of trends in the industry, and information availablefrom other outside sources, as appropriate. For a more detailed discussion onthe application of these and other accounting policies, see "Note 2 -Summary of Significant Accounting Policies" and other related notes in theFinancial Statements. The Partnership's critical accounting policies andestimates are as follows:

Oil and Gas Properties 

The Partnership accounts forits oil and gas properties under the successful efforts method ofaccounting.  Costs of proved developed producing properties, successfulexploratory wells and development dry hole costs are depreciated or depleted bythe unit-of-production method based on estimated proved developed producing oiland gas reserves.  Property acquisition costs are depreciated or depletedon the unit-of-production method based on estimated proved oil and gasreserves.  The Partnership obtains new reserve reports from independentpetroleum engineers annually as of December 31st of each year.  ThePartnership adjusts for any major acquisitions, new drilling and divesturesduring the year as needed.  The Partnership does not maintain an inventoryof undrilled leases.

Uponsale or retirement of significant or entire portions of fields of depreciableor depletable property, the book value thereof, lessproceeds, is credited or charged to income.  Upon sale of a partial unitof property, the proceeds are credited to accumulated depreciation anddepletion.

Use of Estimates in Testing forImpairment in Long-Lived Assets

Impairmenttesting for long-lived assets is required when circumstances indicate thoseassets may be impaired.  The Partnership assesses impairment ofcapitalized costs of proved oil and gas properties by comparing net capitalizedcosts to the estimated undiscounted future net cash flows on a field-by-fieldbasis using estimated production and based upon prices at which managementreasonably estimates such products will be sold. These estimates of futureproduct prices may differ from current market prices of oil and gas. Anydownward revisions to the Partnership's estimates of future production orproduct prices could result in an impairment of the Partnership's oil and gasproperties in subsequent periods. If net capitalized costs exceed undiscountedfuture net cash flows, the measurement of impairment is based on estimated fairvalue calculated using future discounted cash flows.

Revenue Recognition

Sales of natural gas arerecognized when natural gas has been delivered to a custody transfer point,persuasive evidence of a sales arrangement exists, the rights andresponsibility of ownership pass to the purchaser, collection of revenue fromthe sale is reasonably assured, and the sales price is fixed or determinable. Natural gas is sold by the Managing General Partner under contracts with termsranging from one month up to the life of the well.  Virtually all of theManaging General Partner's contracts' pricing provisions are tied to a marketindex with certain adjustments based on, among other factors, whether a welldelivers to a gathering or transmission line, quality of natural gas andprevailing supply and demand conditions, so that the price of the natural gasfluctuates to remain competitive with other available natural gassupplies.  As a result, the Partnership's revenues from the sale ofnatural gas will suffer if market prices decline and benefit if theyincrease.  However, the Managing General Partner may from time to timeenter into derivative agreements, usually with a term of two years or lesswhich may either fix or collar a price in order to reduce market pricefluctuations. The Partnership believes that the pricing provisions of itsnatural gas contracts are customary in the industry. 

 

-16-

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The Managing General Partnercurrently uses the "Net-Back" method of accounting for transportationarrangements of natural gas sales.  The Managing General Partner sells gasat the wellhead and collects a price and recognizes revenues based on the wellheadsales price since transportation costs downstream of the wellhead are incurredby the Managing General Partner's customers and reflected in the wellheadprice.

Sales of oil are recognizedwhen persuasive evidence of a sales arrangement exists, the oil is verified asproduced and is delivered from a stock tank to a purchaser, collection ofrevenue from the sale is reasonably assured, and the sales price isdeterminable.  The Partnership does not refine any of its oilproduction.  The Partnership's crude oil production is sold to purchasersat or near the Partnership's wells under short-term purchase contracts atprices and in accordance with arrangements that are customary in the oilindustry.

Derivative FinancialInstruments

The Partnership accounts forderivative financial instruments in accordance with FAS Statement No. 133"Accounting for Derivative Instruments and Certain HedgingActivities" as amended.  During 2005, none of the derivativecontracts qualified for hedge accounting under the terms of FAS No. 133. Accordingly, the derivative instruments are recorded as an asset or liabilityon the balance sheet at fair value and the change in the fair value is recordedin oil and gas price risk management loss (gain), net.  Because derivativearrangements are entered into by the Managing General Partner on behalf of thePartnership, the fair value of open derivative positions is reported on thebalance sheet as a net short-term or long-term receivable due from or payabledue to the Managing General Partner.  

The measurement of fairvalue is based on actively quoted market prices, if available. Otherwise, theManaging General Partner seeks indicative price information from externalsources including broker quotes and industry publications. If pricinginformation from external sources is not available, measurement involvesjudgment and estimates. These estimates are based on valuation methodologiesconsidered appropriate by the Managing General Partner. 

By using derivativefinancial instruments to manage exposures to changes in commodity prices, thePartnership exposes itself to credit risk.  Credit risk is the failure ofthe counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owesthe Managing General Partner, which in turn owes the Partnership thus creatingrepayment risk.  The Managing General Partner minimizes the credit orrepayment risk in derivative instruments by entering into transactions withhigh-quality counterparties.

Recently IssuedAccounting Standards

In June 2005, theFASB issued SFAS No. 154, "Accounting Changes and Error Corrections"- a replacement of APB Opinion No. 20 and FASB Statement No. 3, which replacesAccounting Principles Board Opinion No. 20, "Accounting Changes," andSFAS No. 3, "Reporting Accounting Changes in Interim FinancialStatements," and changes the requirements for the accounting for andreporting of a change in accounting principle. SFAS No. 154 requiresretrospective application for voluntary changes in accounting principle unlessit is impracticable to do so, and it applies to all voluntary changes inaccounting principle.  SFAS No. 154 is effective for accounting changesand corrections of errors made in fiscal years beginning after December 15,2005. Consequently, we will adopt the provisions of SFAS 154 for our fiscalyear beginning January 1, 2006. We currently believe that adoption of theprovisions of SFAS No. 154 will not have a material impact on our financialstatements.

**Item 7A.****  Quantitative and Qualitative Disclosure About Market Risk**

Market-Sensitive Instruments and Risk Management

The Partnership's primarymarket risk exposure is commodity price risk for the oil and gas thePartnership produces and sells.  

Commodity Price Risk

The Managing General Partnerutilizes commodity-based derivative instruments, entered into on behalf of thePartnership, to manage a portion of the Partnership's exposure to price riskfrom oil and natural gas sales.  These instruments consist of CIG (ColoradoInterstate Gas) index-based contracts traded by JP Morgan for Colorado naturalgas production. These derivative instruments have the effect of locking in forspecified periods (at predetermined prices or ranges of prices) the prices theManaging General Partner will receive for the volume of oil and natural gas towhich the derivative relates.  As a result, while these derivativeinstruments are structured to reduce Partnership's exposure to changes in priceassociated with the derivative commodity, they also limit the benefit thePartnership might otherwise have received from price changes associated withthe commodity.  The Partnership has adopted the policy of the ManagingGeneral Partner prohibiting the use of oil and natural gas future and option contractsfor speculative purposes.

 

-17-

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Derivative arrangements are entered into by theManaging General Partner on behalf of the Partnership and are reported on thePartnership's balance sheet at fair value as a net short-term or long-termreceivable due from or payable to the Managing General Partner.  Changesin the fair value of the Partnership's share of derivatives are recorded in thestatement of operations. The following table summarizes the open derivativepositions for the Partnership as of December 31, 2005.

| Open Derivative  Positions                                                                       |
|--------------------------------------------------------------------------------------------------|
|                                                                                             |   |   |   |   |   |
|                                                                                             |   |   |   | Weighted |   |
|                                                                                             |   |   | Quantity | Average | Fair |
| Commodity                                                                                        |   | Type | (Gas-MMBtu) | (per Mcf) | Value |
|                                                                                             |   |   |   |   |   |
| Total Positions as of December 31, 2005:                                                         |   |   |   |
|  Natural Gas                                                                                | Sale Option |               52,932 | $6.03 |  $              11,465 |
| Natural Gas                                                                                      | Purchase Option |               20,606 | $7.61 |                (34,053) |
|                                                                                             | Due to Managing General Partner - Derivatives, Total |  $            (22,588) |
|                                                                                             |   |   |   |   |   |
| Positions maturing in 12 months following December  31, 2005:                                    |   |
| Natural Gas                                                                                      | Sale Option |               48,830 | $6.03 |  $              10,167 |
| Natural Gas                                                                                      | Purchase Option |               18,556 | $7.53 |                (29,142) |
|                                                                                             | Due to Managing General Partner - Derivatives,  Short-term |  $            (18,975) |
|                                                                                             |   |   |   |   |   |
| (a) Mmbtu - one million  British thermal units. One British thermal unit is the heat required to |
| raise the temperature of a one-pound mass of water from  58.5 to 59.5 degrees Fahrenheit.        |
|                                                                                             |   |   |   |   |   |

 

At December 31, 2005, themaximum term for the derivative positions listed above is 15 months.

The annual average ColoradoInterstate Gas closing price for natural gas for 2005 was $6.96 per Mmbtu.  The average NYMEX closing price for oil for2005 was $55.34 per barrel.  Future near-term gas and oil prices will beaffected by various supply and demand factors such as weather, government andenvironmental regulations and new drilling activities within the industry.

Disclosure of Limitations

As the information aboveincorporates only those exposures that exist at December 31, 2005, it does notconsider those exposures or positions which could arise after that date. As aresult, the Partnership's ultimate realized gain or loss with respect tocommodity price fluctuations will depend on the exposures that arise during theperiod, the Partnership's hedging strategies at the time and commodity pricesat the time.

**ITEM 8.****  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA**

The financial statements areattached to this Form 10-K beginning at page F-1.

 

 

-18-

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**ITEM9.****  CHANGESIN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND****FINANCIAL DISCLOSURE**

None.

**ITEM 9A.****CONTROLS AND PROCEDURES **

*Introductory Explanation* - As disclosed in more detail in "Item 1 -Business" above, the Partnership has no management or officers because allof the management, officers and other employees that may provide services to oron behalf of the Partnership are employed by the Managing GeneralPartner.  As used for the disclosures in this Item 9A, management andofficers of the Partnership refers to the management and officers of theManaging General Partner.  

*Evaluation of disclosurecontrols and procedures* - ThePartnership carried out an evaluation, under the supervision and with the participationof management including the Chief Executive Officer and the Chief FinancialOfficer, of the effectiveness of the design and operation of its disclosurecontrols and procedures pursuant to Exchange Act Rule 13a-14(a) as of the endof the period covered by this Annual Report on Form 10-K. Based upon and as ofthe date of this evaluation, the Chief Executive Officer and the ChiefFinancial Officer concluded that as of the date of this report, thePartnership's disclosure controls and procedures were not effective because ofthe material weaknesses described below.

*Material weaknesses ininternal control -*During 2005, thePartnership identified material weaknesses related to its policies andprocedures and technical expertise in U.S. generally accepted accountingprinciples to ensure the preparation of accurate and reliable interim andannual financial statements. Specifically, the Partnership lacked personnelwith sufficient technical accounting and financial reporting expertise andpolicies and procedures in place to determine and document the appropriateapplication of accounting principles. These deficiencies impacted thePartnership's accounting for derivatives, asset retirement obligations anddepreciation, depletion and amortization, and result in more than a remotelikelihood that a material misstatement of the annual or interim financialstatements would not be prevented or detected.  

In light of the materialweaknesses described above, the Partnership performed additional analyses andother post-closing procedures to ensure its financial statements are preparedin accordance with generally accepted accounting principles. Accordingly,notwithstanding the material weaknesses discussed in this Item 9A, managementbelieves that the financial statements included in this report fairly presentin all material respects our financial position, results of operations and cashflows for the periods presented. 

* *

*Changesin internal control over financial reporting* - 

 

There have not been anychanges in the Partnership's internal control over financial reporting (as suchterm is defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Actof 1934) during the most recent fiscal quarter that have materially affected orare reasonably likely to materially affect internal control over financialreporting, except for changes in the fourth quarter of 2005 as notedbelow.  

•       The Partnership hasincreased its technical expertise through development of training programs andacquisition of accounting research software during the fourth quarter of2005.  Training will be on-going; however, programs provided during 2005included oil and gas accounting, general accounting and SEC financialreporting.

•       The Partnership hasenhanced the documentation of its policies and procedures and related templatesand analyses that support the application of accounting principles in severalareas, including derivatives, oil and gas properties, and asset retirementobligations.

 

 

-19-

----

 

Inaddition, during the third quarter of fiscal 2005 and subsequently in 2006, thePartnership made the following changes and remediation:

 

At thedirection of the board of directors and audit committee, the Partnership hasspent and continues to spend a significant amount of time and resources toimprove its control environment.  The Partnership is committed toinstilling strong internal control policies and procedures and ensuring thatthe "tone at the top" fully supports accuracy and completeness in allfinancial reporting.  In support of this position, the Partnership'sprogress toward improving internal control over financial reporting has beenopenly communicated with the Audit Committee, and the Partnership hasundertaken to improve the design and effectiveness of its internal control overfinancial reporting. The initiatives developed were both organizational andprocess focused.  Organizational changes made during 2005 and through thedate of this filing include, among others:

 

•       ThePartnership has enhanced the corporate accounting and reporting functions inthe third quarter of 2005 by creating and filling several new positions withprofessionals highly experienced in oil and gas accounting. Two newprofessionals hold degrees in accounting and are Certified Public Accountants.One additional Certified Public Accountant and a financial reporting directorwere hired during 2006.

 

•       ThePartnership engaged a team of highly experienced advisors in early 2006 toassist with various accounting research, projects and monitoringactivities.  They assist with accounting and reporting issues including,but not limited to, derivatives, oil and gas activities, new accountingstandards or rules, SEC reporting and on-going monitoring of changes that mayimpact the Partnership's application of accounting principles.

 

•       ThePartnership began the process of implementing measures related to documentationof its controls and procedures, segregation of duties, timely reconciliationsand the use of disclosure checklists to support the financial reportingprocess.

 

ThePartnership has also implemented or is planning to implement several processchanges to improve the documentation supporting certain accounting andreporting activities as well as to improve the documentation of its applicationof accounting principles.

 

•       ThePartnership has evaluated and selected a third-party integrated oil and gasaccounting software system, which it plans to implement during 2006.

 

ThePartnership believes the measures taken to date and planned for the future willaddress the reported material weaknesses and intends to complete theremediation efforts during 2006.  In addition, the Partnership willcontinue to develop and implement other initiatives during 2006 that willfurther improve both the effectiveness and efficiency of its internal controlover financial reporting. 

 

Beginningwith the fiscal year ending December 31, 2007, Section 404 of theSarbanes-Oxley Act of 2002 will require us to include an internal controlreport of management with our Annual Report on Form 10-K. The internal controlreport must contain (1) a statement of management's responsibility forestablishing and maintaining adequate internal control over financialreporting, (2) a statement identifying the framework used by management toconduct the required evaluation of the effectiveness of our internal controlover financial reporting, (3) management's assessment of the effectiveness ofour internal control over financial reporting as of the end of our most recentfiscal year, including a statement as to whether or not our internal controlover financial reporting is effective, and (4) a statement that our independentregistered public accountants have issued an attestation report on management'sassessment of our internal control over financial reporting.

In orderto achieve compliance with Section 404 within the prescribed period, managementhas begun to assess the adequacy of our internal control over financialreporting, remediate any control weaknesses that may be identified, andimplement a continuous reporting and improvement process for internal controlover financial reporting. We expect to continue to make changes in our internalcontrol over financial reporting during the periods prior to December 31, 2007,in connection with our Section 404 compliance efforts. Except as describedabove, there have been no changes in our internal control over financialreporting (as defined in Rule 13(a)-15(f) under the Exchange Act) that occurredduring the quarters ended June 30, 2005, September 30, 2005 and December 31,2005, that have materially affected or are reasonably likely to materiallyaffect our internal control over financial reporting. 

 

-20-

 

----

 

*Limitationson the effectiveness of internal control.* A control system, no matter how well conceived andoperated, can provide only reasonable, not absolute, assurance that theobjectives of the internal control system are met. Because of the inherentlimitations of any internal control system, no evaluation of controls canprovide absolute assurance that all control issues, if any, within a companyhave been detected.

**ITEM9B.****  OTHERINFORMATION**

None.

**PART III**

**ITEM 10.****DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT**

The Partnership has nodirectors or executive officers.  The Partnership is managed by PetroleumDevelopment Corporation ("PDC"), the Managing General Partner.  PDC's common stock is listed on the NASDAQ Global SelectMarket and Form 10-K for 2005 has been filed with the Securities and ExchangeCommission.  

Although the Partnership hasno Code of Ethics, PDC has a Code of Ethics that applies to its seniorexecutive officers.  The Code of Ethics, and other information related toPDC, is posted on PDC's website at www.petd.com. 

**ITEM 11.****  EXECUTIVE COMPENSATION**

The Partnership, having noexecutive officers or directors, pays no executive compensation.  None of PDC's officers or directors received any directremuneration or other compensation from the Partnership. These persons receiveremuneration and compensation solely from PDC.

**ITEM12.****  SECURITYOWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERMATTERS**

The Partnership has noequity compensation plans.

PDC owns a 20%partnership interest in the Partnership.

**ITEM 13.****CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**

PDC, as the Managing GeneralPartner, and its wholly-owned subsidiaries, Riley Natural Gas and PDCSecurities Incorporated, are reimbursed for certain Partnership operatingexpenses and receive fees for services as provided for in the partnershipagreement. The following table presents reimbursements and service fees paid bythe Partnership to PDC or its affiliates during 2005. 

|                                                     |                               |
|----------------------------------------------------------|------------------------------------|
| February 9, 2005 (inception) through December 31,  2005: |                               |
|       Management fee       | $      599,062 |
|       Drilling  services   | 44,145,001                         |
|       Syndication  costs*  | 798,749                            |
|      Well operations fees       | 110,698                            |
|                                                     |                               |

*      Consists of organizationand offering costs, excluding costs of organizing and selling the offering paiddirectly to non-affiliated broker dealers as provided in the dealer/manager andselling agreements.

Additional information concerning commodity-based derivativeinstruments entered into by the Managing General Partner on behalf of thePartnership is contained in Item 7A.

** **

-21-

----

 

**ITEM14.****  PRINCIPALACCOUNTANT FEES AND SERVICES**

For the period frominception to December 31, 2005, there have been billings of $6,958 from thePartnership's independent auditors for professional services rendered to thePartnership.

Pre-Approval Policiesand Procedures

TheSarbanes-Oxley Act of 2002 requires that all services provided to thePartnership by its independent accountants be subject to pre-approval by theAudit Committee or authorized members of the Committee. The Partnership doesnot have an Audit Committee; however, the Managing General Partner's AuditCommittee also serves for the Partnership.  The Audit Committee hasadopted policies and procedures for pre-approval of all audit services andnon-audit services to be provided by the Partnership's independent accountants.Actual fees incurred for all services performed by the independent accountantare reported to the Audit Committee after the services are fully performed.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-22-

 

----

**PART IV**

** **

**ITEM 15.****EXHIBITS AND FINANCIAL STATEMENT SCHEDULES**

(1)   Financial Statements

The Indexto Financial Statements is located at F-2. 

(2)   Financial Statement Schedules

Allfinancial statement schedules are omitted because they are not required,inapplicable, or the information is included in the Financial Statements orNotes thereto.

(3)   Exhibits 

| Exhibit |                                                                                                                                                                                                                                                                                 |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| No.     | Description                                                                                                                                                                                                                                                                          |
| 4.1     | Form of Limited Partnership Agreement (incorporated  by reference to Appendix A to Post-Effective Amendment No. 2 to Form S-1, SEC  File No. 333-111260, and Rule 424 final prospectus, dated May 25, 2004, of  PDC 2004-2006 Drilling Program, filed with the SEC on May 21, 2004). |
|    |                                                                                                                                                                                                                                                                                 |
| 14      | Code of Ethics of Petroleum Development Corporation,  the Managing General Partner of the limited partnership (incorporated by  reference to the code posted on the web site of Petroleum Development  Corporation at www.petd.com).                                                 |
|    |                                                                                                                                                                                                                                                                                 |
| 31.1    | Rule 13a-14(a)/15d-14(c) Certification of Chief  Executive Officer of Petroleum Development Corporation, the Managing General  Partner of the limited partnership.                                                                                                                   |
|    |                                                                                                                                                                                                                                                                                 |
| 31.2    | Rule 13a-14(a)/15d-14(c)  Certification of Chief Financial Officer of Petroleum Development Corporation,  the Managing General Partner of the limited partnership.                                                                                                                   |
|    |                                                                                                                                                                                                                                                                                 |
| 32      | Title 18 U.S.C. Section 1350 (Section 906 of  Sarbanes-Oxley Act of 2002) Certifications by Chief Executive Officer and  Chief Financial Officer of Petroleum Development Corporation, the Managing  General Partner of the limited partnership.                                     |
|    |                                                                                                                                                                                                                                                                                 |

 

 

-23-

----

 

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) ofthe Securities Exchange Act of 1934, the Registrant has duly caused this reportto be signed on its behalf by the undersigned, thereunto duly authorized.

PDC 2005-A LimitedPartnership

By its Managing GeneralPartner

Petroleum DevelopmentCorporation

By /s/ Steven R.Williams

Steven R. Williams, CEO

September 21, 2006

     Pursuant to therequirements of the Securities Exchange Act of 1934, this report has beensigned below by the following persons on behalf of the Registrant and in thecapacities and on the dates indicated:

|                                                                                                                                                                                                                                 |                                           |               |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------|--------------------|
| Signature                                                                                                                                                                                                                       | Title                                     |  Date         |
|                                                                                                                                                                                                                                 |                                           |               |
|                                                                                                                                                                                                                                 |                                           |               |
|                                                                                                                                                                                                                                 |                                           |               |
| /s/ Steven R. Williams                                                                                                                     | Chairman, Chief Executive Officer and          | September 21, 2006 |
|    Steven R.  Williams                                                                                                                          | Director of Petroleum Development Corporation, |               |
|                                        | the Managing General Partner of the            |               |
|                                                                                     | Registrant                                     |               |
|                                                                                                                                                                                                                                 |                                           |               |
| /s/ Darwin L. Stump                                                                                                                                                                                              | Chief Financial Officer and Treasurer          | September 21, 2006 |
|    Darwin L. Stump                                                                                                                                                                 | of Petroleum Development Corporation,          |               |
|                                                                                     | the Managing General Partner of the            |               |
|                                                                                                                                       | Registrant                                     |               |
|                                                                                                                                       | (Principal Financial and Accounting Officer)   |               |
|                                                                                                                                                                                                                                 |                                           |               |
|                                                                                                                                                                                                                                 |                                           |               |
| /s/ Thomas E. Riley                                                                                                                                                                                                   | President and Director                    | September 21, 2006 |
|    Thomas E.  Riley                                                                                                                                                                | of Petroleum Development Corporation,          |               |
|                                                                                     | the Managing General Partner of the            |               |
|                                                                                                                                                                                                                                 | Registrant                                     |               |
|                                                                                                                                                                                                                                 |                                           |               |
| /s/ Jeffrey C. Swoveland                                                                                                                                                                                                        | Director of Petroleum Development Corporation, |               |
|    Jeffrey C. Swoveland                                                                                                                                                                 | the Managing General Partner of the            |               |
|                                                                                     | Registrant            | September 21, 2006 |
|                                                                                                                                                                                                                                 |                                           |               |
|                                                                                                                                                                                                                                 |                                           |               |
| /s/ Vincent F. D'Annunzio                                                                                                                                                                                        | Director of Petroleum Development Corporation, |               |
|     Vincent F.  D'Annunzio                                                                                                                                     | the Managing General Partner of the            |               |
|                                        | Registrant                           | September 21, 2006 |

 

 

 

 

 

 

 

-24-

----

 

PDC 2005-A LIMITEDPARTNERSHIP

(A West Virginia LimitedPartnership)

Financial Statements forAnnual Report

on Form 10-K to Securities and Exchange

Commission

February 9, 2005 (dateof inception) Through December 31, 2005

(With IndependentRegistered Public Accounting Firm's Report Thereon)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

F-1

----

 PDC 2005-A LIMITEDPARTNERSHIP

 (A West VirginiaLimited Partnership)

Notes to FinancialStatements

Index to FinancialStatements

|                                                                              |   |
|-----------------------------------------------------------------------------------|--------|
| Report of Independent Registered Public Accounting  Firm                          | F-3    |
|                                                                              |   |
| Balance Sheet - December 31, 2005                                                 | F-4    |
|                                                                              |   |
| Statement of Operations - Period from February 9,  2005 (date of inception)       | F-5    |
| to December 31, 2005                                                              |   |
|                                                                              |   |
| Statement of Partners' Equity - Period from February  9, 2005 (date of inception) | F-6    |
| to December 31, 2005                                                              |   |
|                                                                              |   |
| Statement of Cash Flows - Period from February 9,  2005 (date of inception)       | F-7    |
| to December 31, 2005                                                              |   |
|                                                                              |   |
| Notes to Financial Statements                                                     | F-8    |
|                                                                              |   |

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

F-2

----

 

 PDC 2005-A LIMITEDPARTNERSHIP

 (A West VirginiaLimited Partnership)

Notes to FinancialStatements

 

Report of Independent RegisteredPublic Accounting Firm

To the Partners

PDC 2005-A LimitedPartnership:

We have audited theaccompanying balance sheet of PDC 2005-A Limited Partnership as of December 31,2005, and the related statements of operations, partners' equity and cash flowsfor the period from February 9, 2005 (date of inception) to December 31,2005.  These financial statements are the responsibility of thePartnership's management.  Our responsibility is to express an opinion onthese financial statements based on our audit.

We conducted our audit inaccordance with the standards of the Public Company Accounting Oversight Board(United States).  Those standards require that we plan and perform theaudit to obtain reasonable assurance about whether the financial statements arefree of material misstatement.  An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significantestimates made by management, as well as evaluating the overall financialstatement presentation.  We believe that our audit provides a reasonablebasis for our opinion.

In our opinion, thefinancial statements referred to above present fairly, in all materialrespects, the financial position of PDC 2005-A Limited Partnership as ofDecember 31, 2005, and the results of its operations and its cash flows for theperiod from February 9, 2005 (date of inception) to December 31, 2005, inconformity with U.S. generally accepted accounting principles.

KPMG LLP

Pittsburgh, Pennsylvania

July 20, 2006

 

 

 

 

F-3

 

----

PDC 2005-A LIMITEDPARTNERSHIP

 (A West VirginiaLimited Partnership)

Notes to FinancialStatements

 

| Balance Sheet                                              |
|------------------------------------------------------------|
| December 31, 2005                                          |
|                                                       |   |   |   |   |   |   |
|                                                       |   |   |   |   |   |   |
|                                                       |   |   |   |   |   |   |
| Assets                                                     |   |   |   |   |   |   |
|                                                       |   |   |   |   |   |   |
| Current assets:                                            |   |   |   |   |   |   |
| Cash and cash equivalents                                  |   |   |   |   |  $            277,240 |
| Accounts receivable - oil  and gas sales                   |   |   |   | 6,426,166 |
| Due from Managing General  Partner - other                 |   |   |   | 3,042 |
| Total current assets                                       |   |   |   |   |             6,706,448 |
|                                                       |   |   |   |   |   |   |
| Oil and gas properties, successful efforts method          |   |   |   |           44,404,945 |
| Less accumulated depreciation, depletion and  amortization |   |           (4,367,052) |
|                                                       |   |   |   |   |   |           40,037,893 |
|                                                       |   |   |   |   |   |   |
| Total Assets                                               |   |   |   |   |   |  $       46,744,341 |
|                                                       |   |   |   |   |   |   |
|                                                       |   |   |   |   |   |   |
| Liabilities and Partners' Equity                           |   |   |   |   |   |
|                                                       |   |   |   |   |   |   |
| Current liabilities:                                       |   |   |   |   |   |   |
| Accounts payable and  accrued expenses                     |   |   |   |  $            941,823 |
| Due to Managing General  Partner - derivatives             |   |   |   | 18,975 |
| Total current liabilities                                  |   |   |   |   | 960,798 |
|                                                       |   |   |   |   |   |   |
| Due to Managing General Partner - derivatives,  long-term  |   | 3,613 |
| Asset retirement obligations                               |   |   |   |   | 266,827 |
|                                                       |   |   |   |   |   |   |
| Partners' equity                                           |   |   |   |   |   | 45,513,103 |
|                                                       |   |   |   |   |   |   |
| Total Liabilities and Partners' Equity                     |   |   |   |   |  $       46,744,341 |
|                                                       |   |   |   |   |   |   |
|                                                       |   |   |   |   |   |   |
| See accompanying notes to financial statements.            |   |
|                                                       |   |   |   |   |   |   |

 

F-4

----

PDC 2005-A LIMITEDPARTNERSHIP

 (A West VirginiaLimited Partnership)

Notes to FinancialStatements

 

| Statement of  Operations                                                     |
|------------------------------------------------------------------------------|
|                                                                         |   |   |   |   |
| Period from February  9, 2005 (date of inception) to  December 31, 2005 |
|                                                                         |   |   |   |   |
|                                                                         |   |   |   |   |
|                                                                         |   |   |   |   |
| Revenues:                                                                    |   |   |   |   |
| Oil and gas sales                                                            |   |   |   |  $      11,625,503 |
|                                                                         |   |   |   |   |
| Costs and Expenses:                                                          |   |   |   |   |
| Production and operating  costs                                              |   |   |             1,537,310 |
| Management fee                                                               |   |   |   |                599,062 |
| Direct costs                                                                 |   |   |   |                  31,004 |
| Depreciation, depletion  and amortization                                    |   |             4,367,052 |
| Accretion of asset  retirement obligations                                   |   |                    6,882 |
| Total costs and expenses                                                     |   |   |             6,541,310 |
|                                                                         |   |   |   |   |
| Income from operations                                                       |   |   |             5,084,193 |
|                                                                         |   |   |   |   |
| Interest income                                                              |   |   |   |                280,327 |
| Oil and gas price risk management loss, net                                  |   |              (181,625) |
|                                                                         |   |   |   |   |
| Net income                                                                   |   |   |   |  $         5,182,895 |
|                                                                         |   |   |   |   |
| Net income per Investor Partner unit                                         |   |   |  $                2,016 |
|                                                                         |   |   |   |   |
| See accompanying notes to financial statements.                              |   |   |
|                                                                         |   |   |   |   |

 

F-5

----

 

PDC 2005-A LIMITEDPARTNERSHIP

 (A West VirginiaLimited Partnership)

Notes to FinancialStatements

 

| Statement of Partners'  Equity                                               |
|------------------------------------------------------------------------------|
|                                                                         |   |   |   |   |   |   |   |   |
| Period from February  9, 2005 (date of inception) to  December 31, 2005 |
|                                                                         |   |   |   |   |   |   |   |   |
|                                                                         |   |   |   |   |   | Managing |   |   |
|                                                                         |   |   |   | Investor |   | General |   |   |
|                                                                         |   |   |   | Partners |   | Partner |   | Total |
|                                                                         |   |   |   |   |   |   |   |   |
| Partners' initial capital contributions                                      |   |   |  $      39,937,470 |   |  $         8,829,000 |   |  $       48,766,470 |
|                                                                         |   |   |   |   |   |   |   |   |
| Syndication costs                                                            |   |   |   |           (4,022,407) |   |                            - |   |           (4,022,407) |
|                                                                         |   |   |   |   |   |   |   |   |
| Distributions to partners                                                    |   |   |           (3,531,086) |   |              (882,769) |   |           (4,413,855) |
|                                                                         |   |   |   |   |   |   |   |   |
| Net income                                                                   |   |   |   |             4,026,504 |   |             1,156,391 |   |             5,182,895 |
|                                                                         |   |   |   |   |   |   |   |   |
| Balance, December 31, 2005                                                   |   |   |  $       36,410,481 |   |  $         9,102,622 |   |  $       45,513,103 |
|                                                                         |   |   |   |   |   |   |   |   |
| See accompanying notes to financial statements.                              |   |   |   |   |   |   |
|                                                                         |   |   |   |   |   |   |   |   |

 

F-6

----

 

PDC 2005-A LIMITEDPARTNERSHIP

 (A West VirginiaLimited Partnership)

Notes to FinancialStatements

 

| Statement of Cash  Flows                                                        |
|---------------------------------------------------------------------------------|
|                                                                            |   |   |   |   |
| Period from February  9, 2005 (date of inception) to  December 31, 2005    |
|                                                                            |   |   |   |   |
|                                                                            |   |   |   |   |
|                                                                            |   |   |   |   |
| Cash flows from operating activities:                                           |   |   |   |   |
| Net income                                                                      |   |   |   |  $            5,182,895 |
| Adjustments to reconcile net income to                                          |   |   |   |   |
|       net cash  provided by operating activities: |   |   |   |
| Depreciation, depletion  and amortization                                       |   |   |                4,367,052 |
| Accretion of asset  retirement obligation                                       |   |   |                       6,882 |
| Unrealized loss on  derivative transactions                                     |   |   |                     22,588 |
| Changes in operating  assets and liabilities:                                   |   |   |   |
| Increase in accounts  receivable -                                              |   |   |   |   |
| oil and gas sales                                                               |   |   |   |              (6,426,166) |
| Increase in due from  Managing General Partner - other                          |   |                     (3,042) |
| Increase in accounts  payable and accrued expenses                              |   |                   941,823 |
| Net cash provided by  operating activities                                      |   |   |                4,092,032 |
|                                                                            |   |   |   |   |
| Cash flows from investing activities:                                           |   |   |   |   |
| Expenditures for oil and  gas properties                                        |   |   |   |            (44,145,000) |
| Net cash used in investing  activities                                          |   |   |            (44,145,000) |
|                                                                            |   |   |   |   |
| Cash flows from financing activities:                                           |   |   |   |   |
| Investor Partners  contributions                                                |   |   |   |              39,937,470 |
| Managing General Partner  contribution                                          |   |   |                8,829,000 |
| Syndication costs paid                                                          |   |   |   |              (4,022,407) |
| Distributions to partners                                                       |   |   |   |              (4,413,855) |
| Net cash provided by  financing activities                                      |   |   |              40,330,208 |
|                                                                            |   |   |   |   |
| Net increase in cash and cash equivalents                                       |   |   |                   277,240 |
| Cash and cash equivalents at beginning of period                                |   |   |                               - |
| Cash and cash equivalents at end of period                                      |   |   |  $               277,240 |
|                                                                            |   |   |   |   |
| See accompanying notes to financial statements.                                 |   |   |   |
|                                                                            |   |   |   |   |

F-7

----

 

PDC 2005-A LIMITEDPARTNERSHIP

 (A West VirginiaLimited Partnership)

Notes to FinancialStatements

 

 

(1)   Organization

The PDC 2005-A Limited Partnership (the"Partnership") was organized as a limited partnership in accordancewith the laws of the State of West Virginia for the purpose of engaging in thedrilling, completion and operation of oil and gas development and exploratorywells in the Rocky Mountain Region. Business operations ofthe Partnership commenced on February 9, 2005, upon the closing of an offeringfor the sale of partnership units.

Purchasers of partnership units subscribed to andfully paid for 124.79 units of limited partner interests and 1,872.08 units ofadditional general partner interests at $20,000 per unit. Petroleum DevelopmentCorporation ("PDC") has been designated the Managing General Partnerof the Partnership.  Generally, throughout the term of the Partnership,revenues, costs and cash available for distributions are allocated 80% to thelimited and additional general partners pro rata based on their investment inthe Partnership and 20% to the Managing General Partner.  The limited andadditional general partners are referred to collectively as "InvestorPartners."

In accordance with the terms of the LimitedPartnership Agreement (the "Agreement"), the Managing General Partnermanages all activities of the Partnership and acts as the intermediary forsubstantially all Partnership transactions.

 (2) Summary of Significant Accounting Policies

Partnership Financial Statement Presentation Basis

The financial statements include only those assets,liabilities and results of operations of the partners which relate to thebusiness of the Partnership.  The statements do not include any assets,liabilities, revenues or expenses attributable to any of the partners' otheractivities. 

Oil and Gas Properties

The Partnership accounts for its oil and gasproperties under the successful efforts method of accounting. Costs of proveddeveloped producing properties and development dry hole costs are depreciated ordepleted by the unit-of-production method based on estimated proved developedproducing oil and gas reserves.  Property acquisition costs aredepreciated or depleted on the unit-of-production method based on estimatedproved oil and gas reserves.  The Partnership obtains new reserve reportsfrom independent petroleum engineers annually as of December 31st of eachyear.  The Partnership adjusts for any major acquisitions, new drillingand divestures during the year as needed.  The Partnership does not maintainan inventory of undrilled leases.

Upon sale or retirement of significant or entireportions of fields of depreciable or depletableproperty, the book value thereof less proceeds, iscredited or charged to income.  Upon sale of a partial unit of property,the proceeds are credited to accumulated depreciation and depletion.

Impairment of Long-Lived Assets

Impairment testing for long-lived assets is requiredwhen circumstances indicate those assets may be impaired.  The Partnershipassesses impairment of capitalized costs of proved oil and gas properties bycomparing net capitalized costs to estimated undiscounted future net cash flowson a field-by-field basis using estimated production based upon prices at whichmanagement reasonably estimates such products will be sold. These estimates offuture product prices may differ from current market prices of oil and gas. Anydownward revisions to the Partnership's estimates of future production orproduct prices could result in an impairment of the Partnership's oil and gasproperties in subsequent periods. If net capitalized costs exceed undiscountedfuture net cash flows, an impairment isrecorded.  The measurement of impairment is based on estimated fair valuewhich may consider future discounted cash flows.

 

F-8

 

----

 

PDC 2005-A LIMITEDPARTNERSHIP

 (A West VirginiaLimited Partnership)

Notes to FinancialStatements

 

Revenue Recognition

Sales of natural gas are recognized when natural gashas been delivered to a custody transfer point, persuasive evidence of a salesarrangement exists, the rights and responsibility of ownership pass to thepurchaser upon delivery, collection of revenue from the sale is reasonablyassured, and the sales price is fixed or determinable.  Natural gas issold by the Managing General Partner under contracts with terms ranging fromone month up to the life of the well (see Note 3).  Virtually all of theManaging General Partner's contracts pricing provisions are tied to a marketindex with certain adjustments based on, among other factors, whether a welldelivers to a gathering or transmission line, quality of natural gas andprevailing supply and demand conditions, so that the price of the natural gasfluctuates to remain competitive with other available natural gas supplies. As a result, the Partnership's revenues from the sale of natural gas willsuffer if market prices decline and benefit if they increase.  However,the Managing General Partner may from time to time enter into derivativeagreements, usually with a term of two years or less which may either fix orcollar a price in order to reduce market price fluctuations. The Partnershipbelieves that the pricing provisions of its natural gas contracts are customaryin the industry. 

The Managing General Partner currently uses the"Net-Back" method of accounting for transportation arrangements ofnatural gas sales.  The Managing General Partner sells gas at the wellheadand collects a price and recognizes revenues based on the wellhead sales pricesince transportation costs downstream of the wellhead are incurred by theManaging General Partner's customers and reflected in the wellhead price.

Sales of oil are recognized when persuasive evidenceof a sales arrangement exists, the oil is verified as produced and is deliveredin a stock tank, collection of revenue from the sale is reasonably assured andthe sales price is determinable.  The Partnership is currently able tosell all the oil that it can produce under existing sales contracts withpetroleum refiners and marketers.  The Partnership does not refine any ofits oil production.  The Partnership's crude oil production is sold topurchasers at or near the Partnership's wells under short-term purchasecontracts at prices and in accordance with arrangements that are customary in theoil industry.

The Partnership sold oil and natural gas to threecustomers, during 2005, which accounted for 49%, 33% and 18% of thePartnership's total oil and natural gas sales for the period.

Asset Retirement Obligations

The Partnership accounts for asset retirementobligations by recording the fair value of its plugging and abandonmentobligations when incurred, which is at the time the well is completely drilled.Upon initial recognition of an asset retirement obligation, the Partnershipincreases the carrying amount of the long-lived asset by the same amount as theliability. Over time, asset retirement obligations are accreted for the changein their present value. The initial capitalized costs are depleted over theuseful lives of the related assets, through charges to depreciation, depletionand amortization. 

####  

Derivative Financial Instruments

The Partnership accounts for derivative financialinstruments in accordance with FAS Statement No. 133 "Accounting forDerivative Instruments and Certain Hedging Activities" as amended. During 2005, none of the derivative contracts qualified for hedge accountingunder the terms of FAS No. 133.  Accordingly, the derivative instrumentsare recorded as an asset or liability on the balance sheet at fair value andthe change in the fair value is recorded in oil and gas price risk managementloss (gain), net.  Because derivative arrangements are entered into by theManaging General Partner on behalf of the Partnership, the fair value of openderivative positions is reported on the balance sheet as a net short-term orlong-term receivable due from or payable due to the Managing GeneralPartner.  Amounts due to the Managing General Partner for realized lossesand gains on closed derivative positions are included in accounts payable inthe amount of $81,537 at December 31, 2005. 

The measurement of fair value is based on activelyquoted market prices, if available. Otherwise, the Managing General Partnerseeks indicative price information from external sources including brokerquotes and industry publications. If pricing information from external sourcesis not available, measurement involves judgment and estimates. These estimatesare based on valuation methodologies considered appropriate by the ManagingGeneral Partner. 

 

F-9

 

----

 

PDC 2005-A LIMITEDPARTNERSHIP

 (A West VirginiaLimited Partnership)

Notes to FinancialStatements

 

 

By using derivative financial instruments to manageexposures to changes in commodity prices, the Partnership exposes itself tocredit risk.  Credit risk is the failure of the counterparty to performunder the terms of the derivative contract.  When the fair value of aderivative contract is positive, the counterparty owes the Managing GeneralPartner, which in turn owes the Partnership.  The Managing General Partnerminimizes this credit risk by entering into transactions with high-qualitycounterparties.

#### IncomeTaxes

Since the taxable income or loss of thePartnership is reported in the separate tax returns of the partners, noprovision has been made for income taxes on the Partnership's books.

Use of Estimates

The Partnership has made a number of estimates andassumptions relating to the reporting of assets and liabilities and revenuesand expenses and the disclosure of contingent assets and liabilities to preparethese financial statements in conformity with accounting principles generallyaccepted in the United States of America. Actual results could differ fromthose estimates. Estimates which are particularly significant to the financialstatements include estimates of oil and gas reserves and future cash flows fromoil and gas properties which are used in assessing impairment of long-livedassets.

Fair Value of FinancialInstruments

The carrying values of the Company's receivables,payables and debt obligations are estimated to be substantially the same as thefair values as of December 31, 2005.

Recently Issued Accounting Standards

In June 2005, the FASB issued SFAS No.154, "Accounting Changes and Error Corrections" - a replacement ofAPB Opinion No. 20 and FASB Statement No. 3, which replaces AccountingPrinciples Board Opinion No. 20, "Accounting Changes," and SFAS No.3, "Reporting Accounting Changes in Interim Financial Statements,"and changes the requirements for the accounting for and reporting of a changein accounting principle. SFAS No. 154 requires retrospective application forvoluntary changes in accounting principle unless it is impracticable to do so,and it applies to all voluntary changes in accounting principle. SFAS No. 154is effective for accounting changes and corrections of errors made in fiscalyears beginning after December 15, 2005. Consequently, we will adopt theprovisions of SFAS 154 for our fiscal year beginning January 1, 2006. We currentlybelieve that adoption of the provisions of SFAS No. 154 will not have amaterial impact on our financial statements.

(3)  Transactions with Managing General Partner and Affiliates

The Managing General Partner and its wholly-ownedsubsidiaries, Riley Natural Gas and PDC Securities Incorporated, are regularlyreimbursed for operating expenses and receive fees for services as provided forin the Agreement. The table below presents transactions with the ManagingGeneral Partner as of December 31, 2005 and for the period from February 9,2005, through December 31, 2005. 

|     As of  December 31, 2005:                                                                                                                                                                                                  |                                                           |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------|
| Due from Managing General  Partner                                                                                    |  $          3,042 |
| Due to Managing General  Partner                                                                                                |  22,588                                                   |
|                                                                                                                                                                                                                                          |                                                           |
|      February 9, 2005 (inception) through December 31, 2005:                                                                                                                                                                   |                                                           |
|        Management  fee                               |  $      599,062                       |
|        Drilling  services                                                                         | 44,145,001                                                     |
|        Syndication  costs                                                                                                                                     | 798,749                                                        |
|        Well  operations fees                                                                                                                                                                | 110,698                                                        |

In addition, as the operator of the Partnership'swells, the Managing General Partner receives all  proceeds from the saleof oil and gas produced and pays for all costs incurred related to services,equipment and supplies from vendors for all well production and operating costsand other direct costs for the Partnership.  Net revenue from oil and gasoperations is generally distributed monthly to all partners based on theirshare of costs and revenues.  

 

F-10

----

 

PDC 2005-A LIMITEDPARTNERSHIP

 (A West VirginiaLimited Partnership)

Notes to FinancialStatements

 

 

Asdescribed above, the Managing General Partner utilizes commodity-basedderivative instruments, entered into on behalf of the Partnership, to manage aportion of the Partnership's exposure to price risk from oil and natural gassales.  These instruments consist of CIG (Colorado Interstate Gas) index-basedcontracts traded by JP Morgan for Colorado natural gas production. Thesederivative instruments have the effect of locking in for specified periods (atpredetermined prices or ranges of prices) the prices the Managing GeneralPartner will receive for the volume of oil and natural gas to which thederivative relates.  

The fair value of the commodity based derivatives was$(22,588) at December 31, 2005.  The Partnership recognized in thestatement of operations a realized loss on commodity based derivatives of$159,037 for the year ended December 31, 2005.  The following tablesummarizes the open derivative positions for the Partnership as of December 31,2005.

| Open Derivative  Positions                                    |
|---------------------------------------------------------------|
|                                                          |   |   |   |   |   |
|                                                          |   |   |   | Weighted |   |
|                                                          |   |   | Quantity | Average | Fair |
| Commodity                                                     |   | Type | (Gas-MMBtu) | (per Mcf) | Value |
|                                                          |   |   |   |   |   |
| Total Positions as of December 31, 2005:                      |   |   |   |
|  Natural Gas                                             | Sale Option |               52,932 | $6.03 |  $              11,465 |
| Natural Gas                                                   | Purchase Option |               20,606 | $7.61 |                (34,053) |
|                                                          | Due to Managing General Partner - Derivatives, Total |  $            (22,588) |
|                                                          |   |   |   |   |   |
| Positions maturing in 12 months following December  31, 2005: |   |
| Natural Gas                                                   | Sale Option |               48,830 | $6.03 |  $              10,167 |
| Natural Gas                                                   | Purchase Option |               18,556 | $7.53 |                (29,142) |
|                                                          | Due to Managing General Partner - Derivatives,  Short-term |  $            (18,975) |
|                                                          |   |   |   |   |   |

 

AtDecember 31, 2005, the maximum term for the derivative positions listed aboveis 15 months.

(4)  Allocation of Partners' Interests

The table below summarizes the participation of theManaging General Partner and the Investor Partners in the costs and revenues ofthe Partnership.  At December 31, 2005, the Managing General Partner'sowns a 20% equity ownership in the Partnership.

 

F-11

----

 

PDC 2005-A LIMITEDPARTNERSHIP

 (A West VirginiaLimited Partnership)

Notes to FinancialStatements

 

|                                                             |   |   |   |   |         |     |        |  Managing |
|------------------------------------------------------------------|--------|--------|--------|--------|--------------|----------|-------------|----------------|
|                                                             |   |   |   |   |         | Investor |        | General        |
| Partnership Costs                                                |   |   |   |   | Partners (e) |     | Partner (e) |
| Offering Costs -  Commissions, Due Diligence and Wholesaling (a) |   | 100%   |   | 0%     |
| Other Organization and  Offering Costs (a)                       |   |   |   | 0%     |         | 100%     |
| Management Fee (b)                                               |   |   |   |   | 100%         |     | 0%          |
| Lease Costs                                                      |   |   |   |   |         | 0%       |        | 100%           |
| Tangible Well Costs                                              |   |   |   |   | 0%           |     | 100%        |
| Intangible Drilling Costs                                        |   |   |   |   | 100%         |     | 0%          |
| Operating Costs (c)                                              |   |   |   |   | 80%          |     | 20%         |
| Direct Costs (d)                                                 |   |   |   |   | 80%          |     | 20%         |
|                                                             |   |   |   |   |         |     |        |           |
| Partnership Revenues                                             |   |   |   |   |         |     |        |
| Sale of Oil and Gas  Production                                  |   |   |   | 80%    |         | 20%      |
| Sale of Productive  Properties                                   |   |   |   | 80%    |         | 20%      |
| Sale of Equipment                                                |   |   |   |   | 0%           |     | 100%        |
| Interest Income                                                  |   |   |   |   | 80%          |     | 20%         |
|                                                             |   |   |   |   |         |     |        |           |
|                                                             |   |   |   |   |         |     |        |           |

 

(a)  The Managing General Partner paid all legal, accounting,printing, and filing fees associated with the organization of the Partnershipand the offering of units and is allocated 100% of these costs.  TheInvestor Partners paid all dealer manager commissions, discounts, and duediligence reimbursements and are allocated 100% of these costs. 

(b)  Represents a one-time fee paid to the Managing GeneralPartner upon the funding of the Partnership equal to 1-1/2% of total InvestorPartner subscriptions.

(c)   Represents operating costs incurred after thecompletion of productive wells, including monthly per-well charges paid to theManaging General Partner for well tending fees and Partnership administrationfees.

(d)   The Managing General Partner is reimbursed by thePartnership for direct costs incurred by the Managing General Partner on behalfof the Partnership, such as for independent auditor, reserve engineer and taxpreparation fees.

(e)  To the extent that Investor Partners receive preferredcash distributions, the allocations for Investor Partners will be increasedaccordingly and the allocation for the Managing General Partner will likewisebe decreased.  See "Performance Standard Obligation of ManagingGeneral Partner" below.

Performance Standard Obligation of Managing GeneralPartner

The Agreement provides for the enhancement of investorcash distributions if the Partnership does not meet a performance standarddefined in the Agreement during the first 10 years beginning 6 months after theclose of the Partnership.  In general, if the average annual rate ofreturn to the Investor Partners is less than 12.5% of their subscriptions, theallocation rate of cash distributions to Investor Partners will increase byone-half of the Managing General Partner's interest until the average annualrate increases to 12.5%, with a corresponding decrease to the Managing GeneralPartner.  The 12.5% rate of return is calculated by including theestimated benefit of a 25% income tax savings on the investment in the first yearin addition to cash distributions made to the Investor Partners.  During2005, no obligation of the Managing General Partner arose under this provision.

 

F-12

----

 

PDC 2005-A LIMITEDPARTNERSHIP

 (A West VirginiaLimited Partnership)

Notes to FinancialStatements

 

 

Unit Repurchase Provisions

Investor Partners may request that theManaging General Partner repurchase units at any time beginning with the thirdanniversary of the first cash distribution of the Partnership.  Therepurchase price is set at a minimum of four times the most recent twelvemonths' of cash distributions from production.  The Managing GeneralPartner is obligated to purchase in any calendar year Investor Partner unitsaggregating to 10% of the initial subscriptions if requested by the InvestorPartners, subject to its financial ability to do so and opinions ofcounsel.  No partnership units can be purchased under this provision bythe Managing General Partner until 2008.

(5) Asset Retirement Obligations

Changes in carrying amounts of the asset retirement obligationsassociated with our oil and gas properties are as follows:

|                                            |   |                                                                                                |                                                                                                                                                       | Period from                                                                                                               |   |
|-------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------|--------|
|                                            |   |                                                                                                |                                                                                                                                                       | February 9, 2005                                                                                                          |   |
|                                            |   |                                                                                                |                                                                                                                                                       | (date of inception)                                                                                                       |   |
|                                            |   |                                                                                                |                                                                                                                                                       | through                                                                                                                   |   |
|                                            |   |                                                                                                |                                                                                                                                                       | December 31, 2005                                                                                                         |   |
| Balance at beginning of year                    |   |                                                                                                |  $                        -   |                                                                                                                      |
| Obligations assumed with development activities |   |                  259,945 |                                                                                                                                                       |
| Accretion expense                               |   |                                                                                                |                                                                                                                                                       |                      6,882 |   |
| Balance at end of year                          |   |                                                                                                |                                                                                                                                                       |  $              266,827                                  |   |
|                                            |   |                                                                                                |                                                                                                                                                       |                                                                                                                      |   |
|                                            |   |                                                                                                |                                                                                                                                                       |                                                                                                                      |   |

 

The discount rate used incalculating the asset retirement obligations was 5%. This rate approximates theborrowing rate of the Managing General Partner.

 (6)  Costs Relating to Oil and GasActivities

The Partnership is engaged solely in oil and gasactivities, all of which are located in the continental United States. Information regarding aggregate capitalized costs and results of operations forthese activities is located in the basic financial statements.  Costscapitalized for these activities are as follows:

|              |   | Period from                                                                                                                             |
|-------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------|
|              |   | February 9, 2005                                                                                                                        |
|              |   | (date of inception)                                                                                                                     |
|              |   | through                                                                                                                                 |
|              |   | December 31, 2005                                                                                                                       |
| Leasehold costs   |   |  $                    489,256            |
| Development costs |   |                   43,605,448                            |
| Wells in progress |   |                        310,241 |
|              |   |  $               44,404,945                                       |
|              |   |                                                                                                                                    |

 

(7)   Supplemental Reserve Information (Unaudited)

Proved oil and gasreserves of the Partnership have been estimated at December 31, 2005, byindependent petroleum engineers. These reserves have been prepared incompliance with the Securities and Exchange Commission rules based on year endprices. All of the Partnership's reserves are proved developed reserves. An analysis of the change in estimated quantities of proved developed oil andgas reserves is shown below:

 

F-13

----

 

PDC 2005-A LIMITEDPARTNERSHIP

 (A West VirginiaLimited Partnership)

Notes to FinancialStatements

 

 

|                             |                                                                                                                                                                                                | Oil (Bbls)                                                                                                                                                                                          |   |
|----------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                             |                                                                                                                                                                                                | 2005                                                                                                                                                                                                |   |
| Proved developed reserves:       |                                                                                                                                                                                                |                                                                                                                                                                                                |   |
| Beginning of year                |                                                                                                                                                                                                |                                 -   |   |
| Revisions of previous  estimates |                                 -   |                                                                                                                                                                                                |
| New discoveries and  extensions  |                        794,000                                                             |                                                                                                                                                                                                |
| Production                       |                                                                                                                                                                                                |                      (104,000)                                                                       |   |
| End of Year                      |                                                                                                                                                                                                |                        690,000                                                             |   |
|                             |                                                                                                                                                                                                |                                                                                                                                                                                                |   |
|                             |                                                                                                                                                                                                |  Gas (MCF)                                                                                                                                                                                     |   |
|                             |                                                                                                                                                                                                | 2005                                                                                                                                                                                                |   |
| Proved developed reserves:       |                                                                                                                                                                                                |                                                                                                                                                                                                |   |
| Beginning of year                |                                                                                                                                                                                                |                                 -   |   |
| Revisions of previous  estimates |                                 -   |                                                                                                                                                                                                |
| New discoveries and  extensions  |                   15,903,000                                                                                        |                                                                                                                                                                                                |
| Production                       |                                                                                                                                                                                                |                      (706,000)                                                                       |   |
| End of Year                      |                                                                                                                                                                                                |                   15,197,000                                                                                        |   |
|                             |                                                                                                                                                                                                |                                                                                                                                                                                                |   |

 

(8)   Standardized Measure of DiscountedFuture Net Cash Flows and Changes Therein Relating to Proved Oil

andGas Reserves (Unaudited)

Summarized in the following table is information forthe Partnership with respect to the standardized measure of discounted futurenet cash flows relating to proved oil and gas reserves.  Future cashinflows are computed by applying year-end prices of oil and gas relating to thePartnership's proved reserves to the year-end quantities of thosereserves.  Future production, development, site restoration andabandonment costs are derived based on current costs assuming continuation ofexisting economic conditions. 

|                                                    |   |                                                                      |   | As of             |   |
|---------------------------------------------------------|--------|---------------------------------------------------------------------------|--------|-------------------|--------|
|                                                    |   |                                                                      |   | December 31, 2005 |   |
| Future estimated revenues                               |   |  $       161,879,000                        |   |
| Future estimated production costs                       |   |           (32,845,000)            |   |
| Future estimated development costs                      |   |             (5,514,000) |   |
|    Future net cash flows                 |   |           123,520,000             |   |
| 10% annual discount for estimated timing of cash  flows |   |           (61,701,000)            |   |
| Standardized measure of discounted future               |   |                                                                      |   |
|    estimated net cash flows              |   |  $         61,819,000             |   |
|                                                    |   |                                                                      |   |              |   |

The following table summarizes the principal sourcesof change in the standardized measure of discounted future estimated net cashflow:

|                                                      |                                                                     |   |   | As of                                                         |   |
|-----------------------------------------------------------|--------------------------------------------------------------------------|--------|--------|---------------------------------------------------------------|--------|
|                                                      |                                                                     |   |   | December 31, 2005                                             |   |
|                                                      |                                                                     |   |   |                                                          |   |
| Sales of oil and gas production, net of production  costs |  $       (10,089,000)                      |   |
| Discoveries, less related costs                           |             71,908,000 |   |
|                                                      |                                                                     |   |   |  $         61,819,000 |   |
|                                                      |                                                                     |   |   |                                                          |   |

 

 

It is necessary to emphasize that the data presentedshould not be viewed as representing the expected cash flow from, or currentvalue of, existing proved reserves since the computations are based on a largenumber of estimates and arbitrary assumptions.  Reserve quantities cannotbe measured with precision and their estimation requires many judgmentaldeterminations and frequent revisions.  The required projection ofproduction and related expenditures over time requires further estimates withrespect to pipeline availability, rates of demand and governmental control.Actual future prices and costs are likely to be substantially different fromthe current prices and costs utilized in the computation of reportedamounts.  Any analysis or evaluation of the reported amounts should givespecific recognition to the computational methods utilized and the limitationsinherent therein.

 

 

F-14

----

 

PDC 2005-A LIMITEDPARTNERSHIP

 (A West VirginiaLimited Partnership)

Notes to FinancialStatements

 

 

 (9) Quarterly Financial Data (Unaudited)

Quarterly financial data forthe period from February 9, 2005 (date of inception) through December 31, 2005is as follows:

|                                        |                                                                                                                                                                              |                                                                                                                                                      |                                                                                                                                                |                                                                                                                                          |                                                                                                    |
|---------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------|
|                                        | Period February 9,                                                                                                                                                                | Three Months Ended                                                                                                                                        |                                                                                                                                                |
| Statements of Operations                    | to March 31,                                                                                                                                                                      | June 30,                                                                                                                                                  | September 30,                                                                                                                                       | December 31,                                                                                                                                  | Year                                                                                                    |
|                                        | 2005                                                                                                                                                                              | 2005                                                                                                                                                      | 2005                                                                                                                                                | 2005                                                                                                                                          |                                                                                                    |
| Revenues:                                   |                                                                                                                                                                              |                                                                                                                                                      |                                                                                                                                                |                                                                                                                                          |                                                                                                    |
| Oil and gas sales                           |  $                          -              |  $         1,295,587                                                                                              |  $         3,903,750                                                                                        |  $      6,426,166                                                                                               |  $     11,625,503                                                              |
|                                        |                                                                                                                                                                              |                                                                                                                                                      |                                                                                                                                                |                                                                                                                                          |                                                                                                    |
| Costs and Expenses:                         |                                                                                                                                                                              |                                                                                                                                                      |                                                                                                                                                |                                                                                                                                          |                                                                                                    |
| Production and operating  costs             |                                - |                172,836                                                                   |                535,162                                                             |              829,312                                                                   |            1,537,310                                       |
| Management fee                              |                    599,062                                                                   |                            - |                           - |                          - |               599,062                       |
| Direct costs                                |                             22                  |                            - |                           1 |                30,981                                                        |                 31,004            |
| Depreciation, depletion  and amortization   |                                - |                525,500                                                                   |             1,932,450                                                                             |           1,909,102                                                                                   |            4,367,052                                       |
| Accretion of asset  retirement obligations  |                                - |                    1,049                                             |                    2,896                                       |                  2,937                                             |                   6,882 |
| Total costs and expenses                    |                    599,084                                                                   |                699,385                                                                   |             2,470,509                                                                             |           2,772,332                                                                                   |            6,541,310                                       |
|                                        |                                                                                                                                                                              |                                                                                                                                                      |                                                                                                                                                |                                                                                                                                          |                                                                                                    |
| (Loss) income from operations               |                   (599,084)                                                                       |                596,202                                                                   |             1,433,241                                                                             |           3,653,834                                                                                   |            5,084,193                                       |
|                                        |                                                                                                                                                                              |                                                                                                                                                      |                                                                                                                                                |                                                                                                                                          |                                                                                                    |
| Interest income                             |                      65,791                                                        |                130,799                                                                   |                  54,205                                                  |                29,532                                                        |               280,327                       |
| Oil and gas price risk management loss, net |                              -   |              (111,304)                                                                             |                (10,067)                                                            |              (60,254)                                                                  |             (181,625)                                 |
|                                        |                                                                                                                                                                              |                                                                                                                                                      |                                                                                                                                                |                                                                                                                                          |                                                                                                    |
| Net (loss) income                           |  $               (533,293)                                                                                  |  $            615,697                                                                              |  $         1,477,379                                                                                        |  $      3,623,112                                                                                               |  $        5,182,895                                                  |
|                                        |                                                                                                                                                                              |                                                                                                                                                      |                                                                                                                                                |                                                                                                                                          |                                                                                                    |
| Net (loss) income per Investor Partner unit |  $                      (274)                                            |  $                   247                                        |  $                   592                                  |  $              1,452                                                        |  $               2,016            |
|                                        |                                                                                                                                                                              |                                                                                                                                                      |                                                                                                                                                |                                                                                                                                          |                                                                                                    |

 

F-15

----

 

PDC 2005-A LIMITEDPARTNERSHIP

 (A West VirginiaLimited Partnership)

Notes to FinancialStatements

 

 

Thefollowing presents substantially all of the information for the quarters endedJune 30, 2005 and September 30, 2005 that would normally be contained inquarterly reports on Form 10-Q but are instead reported as part of this 10-K.

 

|                                                       |                                                                                                                                                                                                                              |                                                                                                                                                                          |
|------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                       | June 30, 2005                                                                                                                                                                                                                     | September 30, 2005                                                                                                                                                            |
| Balance Sheets:                                            |                                                                                                                                                                                                                              |                                                                                                                                                                          |
|                                                       |                                                                                                                                                                                                                              |                                                                                                                                                                          |
| Cash and cash equivalents                                  |  $                  16,391,074                                                                                                               |  $                   3,232,619                                                      |
| Accounts receivable - oil and gas sales                    |                          1,295,587                                                                             |                       3,903,750                                           |
| Total current assets                                       |                        17,686,661                                                                                        |               7,136,369                                                                                           |
|                                                       |                                                                                                                                                                                                                              |                                                                                                                                                                          |
| Oil and gas properties, successful efforts method          |             25,135,719                                                                                                                                                          |                    41,612,307                                                            |
| Less accumulated depreciation, depletion and  amortization |              (525,500)                                                                                                                                                |                    (2,457,950)                                                           |
| Wells in progress                                          |              5,809,738                                                                                                                                                     |                2,792,638                                                                                     |
|                                                       |                        30,419,957                                                                                        |                     41,946,995                                                      |
|                                                       |                                                                                                                                                                                                                              |                                                                                                                                                                          |
| Total Assets                                               |  $                    48,106,618                                                                                                   |  $                 49,083,364                                                                 |
|                                                       |                                                                                                                                                                                                                              |                                                                                                                                                                          |
|                                                       |                                                                                                                                                                                                                              |                                                                                                                                                                          |
| Accounts payable and accrued expenses                      |  $                         216,164                                                                        |  $                      569,333                                      |
| Due to Managing General Partner - wells                    |                         2,917,729                                                                         |                       2,995,950                                           |
| Due to Managing General Partner - derivatives              |                               67,976                                                  |                            43,092                |
| Total current liabilities                                  |                         3,201,869                                                                                   |                       3,608,375                                           |
|                                                       |                                                                                                                                                                                                                              |                                                                                                                                                                          |
| Due to Managing General Partner - derivatives,  long-term  |                                      -   |                               778 |
| Asset retirement obligations                               |                               92,382                                                  |                        263,890                                       |
|                                                       |                                                                                                                                                                                                                              |                                                                                                                                                                          |
| Total partners' equity                                     |                            44,812,367                                                                |                            45,210,321            |
|                                                       |                                                                                                                                                                                                                              |                                                                                                                                                                          |
| Total Liabilities and Partners' Equity                     |  $                        48,106,618                                                                           |  $                        49,083,364                       |
|                                                       |                                                                                                                                                                                                                              |                                                                                                                                                                          |

 

|                                                              |                                                                                                                                                                  |                                                                                                                              |                                                                                                                      |
|-------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------|
|                                                              | Investor                                                                                                                                                              | Managing                                                                                                                          |                                                                                                                      |
| Statement of Partners' Equity:                                    | Partners                                                                                                                                                              | General Partner                                                                                                                   | Total                                                                                                                     |
|                                                              |                                                                                                                                                                  |                                                                                                                              |                                                                                                                      |
| Balance, April 1, 2005                                            |  $        35,357,335                                                                                                          |  $           8,839,335                                                          |  $        44,196,670                                                              |
|     Net income - quarter ended June  30, 2005      |                  492,558                                                                   |                  123,139                               |                  615,697                       |
|                                                              |                                                                                                                                                                  |                                                                                                                              |                                                                                                                      |
| Balance, June 30, 2005                                            |             35,849,893                                                                                              |               8,962,474                                               |    44,812,367                                                                                                   |
|     Distribution to partners                       |                (863,541)                                                                             |                (215,884)                                         |    (1,079,425)                                                                                                  |
|     Net income - quarter ended  September 30, 2005 |               1,181,903                                                                                   |                  295,476                               |      1,477,379                                                                                        |
| Balance, September 30, 2005                                       |             36,168,255                                                                                              |               9,042,066                                               |             45,210,321                                                  |
|                                                              |                                                                                                                                                                  |                                                                                                                              |                                                                                                                      |
|     Distribution to partners                       |             (2,667,545)                                                                                             |                (666,885)                                         |    (3,334,430)                                                                                                  |
|     Net income - quarter ended  December 31, 2005  |               2,898,490                                                                                   |                  724,622                               |               3,623,112                                       |
|     Contribution, Managing General  Partner        |                            -   |                      2,819         |                      2,819 |
|     Recovery of syndication costs                  |              11,281                                                                                            |                      -   |                    11,281            |
| Balance, December 31, 2005                                        |  $        36,410,481                                                                                                          |  $           9,102,622                                                          |  $        45,513,103                                                              |
|                                                              |                                                                                                                                                                  |                                                                                                                              |                                                                                                                      |

F-16

----

PDC 2005-A LIMITEDPARTNERSHIP

 (A West VirginiaLimited Partnership)

Notes to FinancialStatements

 

 

|                                                                                      |                                                                                                                                                                                                            |   |                                                                                                                                                                                                            |   |
|-------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                      | Period                                                                                                                                                                                                          |   | Period                                                                                                                                                                                                          |   |
| Statements of Cash Flows                                                                  | February 9, to                                                                                                                                                                                                  |   | February 9, to                                                                                                                                                                                                  |   |
|                                                                                      | June 30, 2005                                                                                                                                                                                                   |   | September 30, 2005                                                                                                                                                                                              |   |
| Cash flows from operating activities:                                                     |                                                                                                                                                                                                            |   |                                                                                                                                                                                                            |   |
| Net income                                                                                |  $                    82,404                                                                                     |   |  $               1,559,783                                                                                                                |   |
| Adjustments to reconcile net income to                                                    |                                                                                                                                                                                                            |   |                                                                                                                                                                                                            |   |
|       net cash (used  in) provided by operating activities: |                                                                                                                                                                                                            |   |                                                                                                                                                                                                            |   |
| Depreciation, depletion  and amortization                                                 |                      525,500                                                                                     |   |                   2,457,950                                                                                                     |   |
| Accretion of asset  retirement obligation                                                 |                          1,049                                                               |   |                          3,945                                                               |   |
| Unrealized loss on  derivative transactions                                               |                        67,976                                                                          |   |                        43,870                                                                          |   |
| Changes in operating  assets and liabilities:                                             |                                                                                                                                                                                                            |   |                                                                                                                                                                                                            |   |
| Increase in accounts  receivable -                                                        |                                                                                                                                                                                                            |   |                                                                                                                                                                                                            |   |
| oil and gas sales                                                                         |                 (1,295,587)                                                                                                               |   |                 (3,903,750)                                                                                                               |   |
| Increase in accounts  payable and                                                         |                                                                                                                                                                                                            |   |                                                                                                                                                                                                            |   |
| accrued expenses                                                                          |                      216,164                                                                                     |   |                      569,333                                                                                     |   |
| Net cash (used in)  provided by operating activities                                      |                    (402,494)                                                                                               |   |                      731,131                                                                                     |   |
|                                                                                      |                                                                                                                                                                                                            |   |                                                                                                                                                                                                            |   |
| Cash flows from investing activities:                                                     |                                                                                                                                                                                                            |   |                                                                                                                                                                                                            |   |
| Expenditures for oil and  gas properties                                                  |               (27,936,395)                                                                                                                          |   |               (41,149,050)                                                                                                                          |   |
| Net cash used in investing  activities                                                    |               (27,936,395)                                                                                                                          |   |               (41,149,050)                                                                                                                          |   |
|                                                                                      |                                                                                                                                                                                                            |   |                                                                                                                                                                                                            |   |
| Cash flows from financing activities:                                                     |                                                                                                                                                                                                            |   |                                                                                                                                                                                                            |   |
| Investor Partner  contributions                                                           |                 39,937,470                                                                                                                |   |                 39,937,470                                                                                                                |   |
| Managing General Partner  contribution                                                    |                   8,826,181                                                                                                     |   |                   8,826,181                                                                                                     |   |
| Syndication costs paid                                                                    |                 (4,033,688)                                                                                                               |   |                 (4,033,688)                                                                                                               |   |
| Distributions to partners                                                                 |                                -                     |   |                 (1,079,425)                                                                                                               |   |
| Net cash provided by  financing activities                                                |                 44,729,963                                                                                                                |   |                 43,650,538                                                                                                                |   |
|                                                                                      |                                                                                                                                                                                                            |   |                                                                                                                                                                                                            |   |
| Net increase in cash and cash equivalents                                                 |                 16,391,074                                                                                                                |   |                   3,232,619                                                                                                     |   |
| Cash and cash equivalents at beginning of period                                          |                                     - |   |                                     - |   |
| Cash and cash equivalents at end of period                                                |  $              16,391,074                                                                                                                     |   |  $                3,232,619                                                                                                          |   |
|                                                                                      |                                                                                                                                                                                                            |   |                                                                                                                                                                                                            |   |
|                                                                                      |                                                                                                                                                                                                            |   |                                                                                                                                                                                                            |   |
|                                                                                      |                                                                                                                                                                                                            |   |                                                                                                                                                                                                            |   |

|   |
|--------|

F-17