UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 WASHINGTON,
DC 20549
 
 FORM
10-K
  x  ANNUAL REPORT PURSUANT TO
SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 For the
fiscal year ended December 31, 2007
 or
 o 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
 
 Commission
File Number  000-51959
 
 Rockies
Region Private Limited Partnership
 (Exact
name of registrant as specified in its charter)
 West Virginia
                      20-3890540(State
      or other jurisdiction of incorporation or organization)
                      (I.R.S. Employer Identification
      No.)
  1775
Sherman Street, Suite 3000, Denver, Colorado 80203
 (Address
of principal executive offices)     (zip
code)
 
 Registrant's
telephone number, including area code        (303)
860-5800
 
 Securities
registered pursuant to Section 12(b) of the Act:  None
 
 Securities
registered pursuant to Section 12(g) of the Act:
 
 Title
      of Each ClassLimited
      Partnership Interests
 
 Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.  Yes £  No
S
 
 Indicate
by check mark if registrant is not required to file reports pursuant to Section
13 or Section 15(d) of the Act. Yes £ No
S
 
 Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months and (2) has been subject to such filing requirements for the
past 90 days.  Yes £      No
S
 
 Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  x
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
the definition of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act:
 
 Large
      accelerated filer     £
                Accelerated
      filer     £Non-accelerated
      filer     £
                Smaller
      reporting company     S
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).  Yes £  No
S
 
 State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of the
last business day of the registrant's most recently completed second fiscal
quarter.  There is no trading market in the Partnership’s
securities.  Therefore, there is no aggregate market
value.
 
 As
of February 28, 2009 the Partnership had 1,787 units of limited
partnership interest and no share of general partnership interest
outstanding.
  
 
  ROCKIESREGION PRIVATE LIMITED PARTNERSHIP
 INDEX
TO REPORT ON FORM 10-K
  PagePART
      IExplanatory Note
                                      1Item
      1
                                      Business
                                      3Item
      1A
                                      Risk Factors
                                      14Item
      1B
                                      Unresolved Staff Comments
                                      21Item
      2
                                      Properties
                                      21Item
      3
                                      Legal Proceedings
                                      23Item
      4
                                      Submission of Matters to a Vote of Security
      Holders
                                      23PART
      IIItem
      5
                                      Market for Registrant’s Common Equity, Related Stockholder
      Matters and Issuer Purchases of Equity Securities
                                      24Item
      6
                                      Selected Financial Data
                                      25Item
      7
                                      Management’s Discussion and Analysis of Financial Condition and
      Results of Operations
                                      26Item
      7A
                                      Quantitative and Qualitative Disclosures about Market
      Risk
                                      36Item
      8
                                      Financial Statements and Supplementary Data
                                      40Item
      9
                                      Changes in and Disagreements With Accountants on Accounting and
      Financial Disclosure
                                      40Item
      9A(T)
                                      Controls and Procedures
                                      42Item
      9B
                                      Other Information
                                      45PART
      IIIItem
      10
                                      Directors, Executive Officers and Corporate
      Governance
                                      45Item
      11
                                      Executive Compensation
                                      49Item
      12
                                      Security Ownership of Certain Beneficial Owners and Management
      and Related Stockholder Matters
                                      49Item
      13
                                      Certain Relationships and Related Transactions, and Director
      Independence
                                      50Item
      14
                                      Principal Accountant Fees and Services
                                      50PART
      IVItem
      15
                                      Exhibits, Financial Statement Schedules
                                      51Signatures
                                      53Financial Statements
                                      F-1
  Index
  PART
I
  ExplanatoryNote
  Rockies
Region Private Limited Partnership (the “Partnership” or the “Registrant”),
which was formed on December 6, 2005, filed a Registration statement on Form
10/A which included financial statements for the period from December 6, 2005
(date of inception) to December 31, 2005, as well as unaudited condensed
financial statements for the quarter ended March 31, 2006. In addition, the
Partnership filed a Form 10-Q for the quarter ended June 30, 2006 on December 8,
2006.
  In the
course of preparing its financial statements for the year ended December
31, 2006, Petroleum Development Corporation ("PDC"), the Managing General
Partner, identified accounting errors in its previously issued financial
statements. In 2007, PDC undertook an evaluation to determine whether
previously issued financial statements for various limited partnerships, which
are subject to Securities and Exchange Commission ("SEC") requirements, required
restatement. Until its evaluation was completed, the Partnership suspended its
periodic filings.
 
 As a
result of its evaluation, Management determined that the only
previously issued financial statements for the Partnership that required
restatement were for the unaudited interim condensed financial statements
included in the Partnership's Form 10-Q for the quarter ended June 30,
2006.  This annual report on Form 10-K for the years ended December
31, 2005, 2006 and 2007 is the first periodic report the Partnership has filed
with the SEC since its Quarterly Report on Form 10-Q for the Quarter ended June
30, 2006.  The financial information presented in this Annual Report
on Form 10-K includes audited financial statements for the period from the
Partnership's inception in December 2005 through December 31, 2005, and each of
the years ended December 31, 2006 and 2007, as well as unaudited interim
condensed financial information for each applicable interim period in 2006 and
2007.  Additionally, this Annual Report includes information on the
restatement of the Partnership's unaudited interim condensed financial
statements for the three and six month periods ended June 30, 2006,
which have been restated to properly reflect the over-withholding of
production taxes from revenue distributions made to the limited partners of the
Partnership and accounting for the Partnership's derivatives.
 
 In 2007,
PDC determined that it had over-withheld production taxes from distributions to
the limited partners of the Partnership during 2006.  The total
misstatement for the production tax over-withholding was $213,276, including
$4,719 in interest during the three and six month periods ended June
30, 2006.  Management determined that the misstatement for the
production tax over-withholding for the
first quarter of 2006 of $15,625, including $346 in related
interest, was immaterial for restatement of the Partnership's
unaudited condensed financial statements for the three month period
ended March 31, 2006 and thus was recorded in the second quarter of
2006.  Additionally, the Partnership determined that there was
an error in the Partnership’s derivative valuation methodology. The
resultant misstatement for unrealized gains and losses due to the net error in
the derivative valuation methodologywas an unrecorded gain of $111,781
during the second quarter of 2006. There was
no error for the derivative position for the three month period ended March 31,
2006.
  -1-
 Index
  The
following tables reflect the effects of the restatements on the Condensed
Balance Sheet as of June 30, 2006 and the Condensed Statements of Operations for
the three and six month periods ended June 30, 2006:
 
 Quarter
      ended 6/30/2006Amount
      as Previously Reported Including Reclassifications
                                                                                
                                                                                
                                                                                Unrealized
      Derivatives Gain (Loss), Net
                                                                                
                                                                                
                                                                                Production
      Tax Withholding
                                                                                
                                                                                
                                                                                Restated
      BalanceStatement
      of OperationsOil
      and gas price risk management gain, net*
                                                                                
                                                                                $
                                                                                8,135
                                                                                
                                                                                
                                                                                $
                                                                                111,781
                                                                                
                                                                                
                                                                                
                                                                                -
                                                                                
                                                                                
                                                                                $
                                                                                119,916Total
      revenues
                                                                                
                                                                                
                                                                                5,783,815
                                                                                
                                                                                
                                                                                
                                                                                111,781
                                                                                
                                                                                
                                                                                
                                                                                -
                                                                                
                                                                                
                                                                                
                                                                                5,895,596Production
      and operating costs
                                                                                
                                                                                
                                                                                846,418
                                                                                
                                                                                
                                                                                
                                                                                -
                                                                                
                                                                                
                                                                                $
                                                                                (223,836
                                                                                )
                                                                                
                                                                                
                                                                                622,582Total
      costs and expenses
                                                                                
                                                                                
                                                                                3,221,314
                                                                                
                                                                                
                                                                                
                                                                                -
                                                                                
                                                                                
                                                                                
                                                                                (223,836
                                                                                )
                                                                                
                                                                                
                                                                                2,997,478Income
      from operations
                                                                                
                                                                                
                                                                                2,562,501
                                                                                
                                                                                
                                                                                
                                                                                111,781
                                                                                
                                                                                
                                                                                
                                                                                223,836
                                                                                
                                                                                
                                                                                
                                                                                2,898,118Interest
      income
                                                                                
                                                                                
                                                                                1,269
                                                                                
                                                                                
                                                                                
                                                                                -
                                                                                
                                                                                
                                                                                
                                                                                5,065
                                                                                
                                                                                
                                                                                
                                                                                6,334Net
      income
                                                                                
                                                                                
                                                                                2,563,770
                                                                                
                                                                                
                                                                                
                                                                                111,781
                                                                                
                                                                                
                                                                                
                                                                                228,901
                                                                                
                                                                                
                                                                                
                                                                                2,904,452Managing
      General Partner income
                                                                                
                                                                                
                                                                                769,131
                                                                                
                                                                                
                                                                                
                                                                                33,535
                                                                                
                                                                                
                                                                                
                                                                                68,670
                                                                                
                                                                                
                                                                                
                                                                                871,336Investor
      Partner income
                                                                                
                                                                                
                                                                                1,794,639
                                                                                
                                                                                
                                                                                
                                                                                78,246
                                                                                
                                                                                
                                                                                
                                                                                160,231
                                                                                
                                                                                
                                                                                
                                                                                2,033,116Net
      income per Investor Partner unit
                                                                                
                                                                                
                                                                                1,004
                                                                                
                                                                                
                                                                                
                                                                                44
                                                                                
                                                                                
                                                                                
                                                                                90
                                                                                
                                                                                
                                                                                
                                                                                1,138Six
      Months ended 6/30/2006
                                                                                
                                                                                Amount
      asPreviously
      ReportedIncluding
      Reclassifications
                                                                                
                                                                                
                                                                                UnrealizedDerivatives Gain (Loss), Net
                                                                                
                                                                                
                                                                                Production
      TaxWithholding
                                                                                
                                                                                
                                                                                RestatedBalanceStatement
      of OperationsOil
      and gas price risk management gain, net*
                                                                                
                                                                                $
                                                                                9,899
                                                                                
                                                                                
                                                                                $
                                                                                111,781
                                                                                
                                                                                
                                                                                
                                                                                -
                                                                                
                                                                                
                                                                                $
                                                                                121,680Total
      revenues
                                                                                
                                                                                
                                                                                6,195,767
                                                                                
                                                                                
                                                                                
                                                                                111,781
                                                                                
                                                                                
                                                                                
                                                                                -
                                                                                
                                                                                
                                                                                
                                                                                6,307,548Production
      and operating costs
                                                                                
                                                                                
                                                                                916,074
                                                                                
                                                                                
                                                                                
                                                                                -
                                                                                
                                                                                
                                                                                $
                                                                                (223,836
                                                                                )
                                                                                
                                                                                
                                                                                692,238Total
      costs and expenses
                                                                                
                                                                                
                                                                                4,669,978
                                                                                
                                                                                
                                                                                
                                                                                -
                                                                                
                                                                                
                                                                                
                                                                                (223,836
                                                                                )
                                                                                
                                                                                
                                                                                4,446,142Income
      from operations
                                                                                
                                                                                
                                                                                1,525,789
                                                                                
                                                                                
                                                                                
                                                                                111,781
                                                                                
                                                                                
                                                                                
                                                                                223,836
                                                                                
                                                                                
                                                                                
                                                                                1,861,406Interest
      income
                                                                                
                                                                                
                                                                                1,269
                                                                                
                                                                                
                                                                                
                                                                                -
                                                                                
                                                                                
                                                                                
                                                                                5,065
                                                                                
                                                                                
                                                                                
                                                                                6,334Net
      income
                                                                                
                                                                                
                                                                                1,536,957
                                                                                
                                                                                
                                                                                
                                                                                111,781
                                                                                
                                                                                
                                                                                
                                                                                228,901
                                                                                
                                                                                
                                                                                
                                                                                1,877,639Managing
      General Partner income
                                                                                
                                                                                
                                                                                461,087
                                                                                
                                                                                
                                                                                
                                                                                33,535
                                                                                
                                                                                
                                                                                
                                                                                68,670
                                                                                
                                                                                
                                                                                
                                                                                563,292Investor
      Partner income
                                                                                
                                                                                
                                                                                1,075,870
                                                                                
                                                                                
                                                                                
                                                                                78,246
                                                                                
                                                                                
                                                                                
                                                                                160,231
                                                                                
                                                                                
                                                                                
                                                                                1,314,347Net
      income per Investor Partner unit
                                                                                
                                                                                
                                                                                602
                                                                                
                                                                                
                                                                                
                                                                                44
                                                                                
                                                                                
                                                                                
                                                                                90
                                                                                
                                                                                
                                                                                
                                                                                736Balance
      SheetDue
      from Managing General Partner - other
                                                                                
                                                                                
                                                                                8,239
                                                                                
                                                                                
                                                                                
                                                                                (8,239
                                                                                )
                                                                                
                                                                                
                                                                                -
                                                                                
                                                                                
                                                                                
                                                                                -Due
      from Managing General Partner - derivatives, short term
                                                                                
                                                                                
                                                                                6,807
                                                                                
                                                                                
                                                                                
                                                                                83,044
                                                                                
                                                                                
                                                                                
                                                                                -
                                                                                
                                                                                
                                                                                
                                                                                89,851Total
      current assets
                                                                                
                                                                                
                                                                                6,211,694
                                                                                
                                                                                
                                                                                
                                                                                74,805
                                                                                
                                                                                
                                                                                
                                                                                -
                                                                                
                                                                                
                                                                                
                                                                                6,286,499Due
      from Managing General Partner - derivatives, long term
                                                                                
                                                                                
                                                                                -
                                                                                
                                                                                
                                                                                
                                                                                23,090
                                                                                
                                                                                
                                                                                
                                                                                -
                                                                                
                                                                                
                                                                                
                                                                                23,090Total
      assets
                                                                                
                                                                                
                                                                                45,563,857
                                                                                
                                                                                
                                                                                
                                                                                97,895
                                                                                
                                                                                
                                                                                
                                                                                -
                                                                                
                                                                                
                                                                                
                                                                                45,661,752Accounts
      payable and accrued expenses
                                                                                
                                                                                
                                                                                936,101
                                                                                
                                                                                
                                                                                
                                                                                (8,239
                                                                                )
                                                                                
                                                                                
                                                                                (228,901
                                                                                )
                                                                                
                                                                                
                                                                                698,961Due
      to Managing General Partner-derivatives, long term
                                                                                
                                                                                
                                                                                5,647
                                                                                
                                                                                
                                                                                
                                                                                (5,647
                                                                                )
                                                                                
                                                                                
                                                                                -
                                                                                
                                                                                
                                                                                
                                                                                -Total
      liabilities
                                                                                
                                                                                
                                                                                1,199,332
                                                                                
                                                                                
                                                                                
                                                                                (13,886
                                                                                )
                                                                                
                                                                                
                                                                                (228,901
                                                                                )
                                                                                
                                                                                
                                                                                956,545Partners'
      equity
                                                                                
                                                                                
                                                                                44,364,525
                                                                                
                                                                                
                                                                                
                                                                                111,781
                                                                                
                                                                                
                                                                                
                                                                                228,901
                                                                                
                                                                                
                                                                                
                                                                                44,705,207Total
      liabilities and Partners' equity
                                                                                
                                                                                $
                                                                                45,563,857
                                                                                
                                                                                
                                                                                $
                                                                                97,895
                                                                                
                                                                                
                                                                                $
                                                                                -
                                                                                
                                                                                
                                                                                $
                                                                                45,661,752
  *
                  “Oil
      and gas price risk management, net,” previously reported as other income,
      has been reclassified as a separate component of “Total
      Revenues.”
 -2-
 Index
  Although
net income for the quarter and six-months ended June 30, 2008 increased by
$340,682 due to the restatement, net cash provided by operating activities
remained unchanged for the respective periods. Adjustments to reconcile net
income to net cash provided by operating activities, due to the restatement
include an increase of $111,781 to “Unrealized gain on derivative transactions”
and a decrease of $228,901 to “Due to Managing General
Partner-other.”
 
 For
additional information concerning the Partnership’s delinquent filings with the
SEC, see Item 1A, Risk Factors
– The Managing General Partner... and Item 9, Changes in and Disagreements with
Accountants on Accounting and Financial Disclosures.
 
 Special
Note Regarding Forward Looking Statements
  This
Annual Report contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 (the “Securities Act”) and Section 21E of the
Exchange Act regarding Rockies Region Private Limited Partnership’s business,
financial condition, results of operations and prospects that are subject to
risks and uncertainties.  Words such as expects, anticipates, intends,
plans, believes, seeks, estimates and similar expressions or variations of such
words are intended to identify forward-looking statements herein, which include
statements of estimated oil and gas production and reserves, drilling plans,
future cash flows, anticipated liquidity, anticipated capital expenditures and
the Managing General Partner’s strategies, plans and
objectives.  However, these are not the exclusive means of identifying
forward-looking statements herein.  Although forward-looking
statements contained in this report reflect the Managing General Partner's good
faith judgment, such statements can only be based on facts and factors currently
known to them.  Consequently, forward-looking statements are
inherently subject to risks and uncertainties, including risks and uncertainties
incidental to the development, production and marketing of natural gas and oil,
and actual outcomes may differ materially from the results and outcomes
discussed in the forward-looking statements. Important factors that could cause
actual results to differ materially from the forward looking statements include,
but are not limited to:
 
 ·
              changes
      in production volumes, worldwide demand, and commodity prices for
      petroleum natural resources;
 ·
              risks
      incident to the operation of natural gas and oil
  wells;
 ·
              future
      production and development costs;
 ·
              the
      effect of existing and future laws, governmental regulations and the
      political and economic climate of the United
  States;
 ·
              the
      effect of natural gas and oil derivatives
  activities;
 ·
              availability
      of capital and conditions in the capital markets;
  and
 ·
              losses
      possible from pending and/or future
litigation.
 
 Further,
the Partnership urges the reader to carefully review and consider the
disclosures made in this report, including the risks and uncertainties that may
affect the Partnership's business as described herein under Item 1A, Risk Factors and its other
filings with the SEC.  Readers are cautioned not to place undue
reliance on forward-looking statements, which speak only as of the date of this
report.  The Partnership and Managing General Partner undertake no
obligation to update any forward-looking statements in order to reflect any
event or circumstance occurring after the date of this report or currently
unknown facts or conditions or the occurrence of unanticipated
events.
 
 
 Item1.
              Business
  General
 
 The
Partnership was organized as a limited partnership on December 6, 2005, under
the West Virginia Uniform Limited Partnership Act.  Upon completion of
a private placement of its securities on December 30, 2005, the Partnership was
funded and commenced its business operations. The Partnership was funded with
initial contributions of $35.7 million from 952 limited and additional general
partners (collectively, the “Investor Partners”) and a cash contribution of
$11.2 million from the Managing General Partner.  After payment of
syndication costs of $3.6 million and a one-time management fee to the Managing
General Partner of $0.5 million, the Partnership had available cash of $42.8
million to commence Partnership activities.  The Partnership owns
natural gas and oil wells located in Colorado and from the wells, it produces
and sells gas and oil.
  -3-
 Index
  Drilling
Activities
 
 The
Partnership commenced drilling activities immediately following funding on
December 30, 2005.  As of December 31, 2007, a total of 49 gross wells
had been drilled and the activity for the applicable periods is reflected in the
table below.  Wells drilled and not completed in 2005 and 2006 became
wells drilled, fractured and producing in 2007 and 2006,
respectively.  The Partnership’s 47 gross producing wells were drilled
in Colorado.
 
 2007
                  
                  
                  2006
                  
                  
                  2005Gross
                  
                  
                  Net
                  
                  
                  Gross
                  
                  
                  Net
                  
                  
                  Gross
                  
                  
                  NetDevelopment
      wells:Drilled,
      fractured and producing
                  
                  
                  1.0
                  
                  
                  
                  1.0
                  
                  
                  
                  46.0
                  
                  
                  
                  45.9
                  
                  
                  
                  -
                  
                  
                  
                  -Drilled
      and not completed
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1.0
                  
                  
                  
                  1.0
                  
                  
                  
                  2.0
                  
                  
                  
                  2.0Dry
      hole
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1.0
                  
                  
                  
                  1.0
                  
                  
                  
                  -
                  
                  
                  
                  -Exploratory
      wells:Dry
      hole
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1.0
                  
                  
                  
                  0.7
                  
                  
                  
                  -
                  
                  
                  
                  -Total
                  
                  
                  1.0
                  
                  
                  
                  1.0
                  
                  
                  
                  49.0
                  
                  
                  
                  48.6
                  
                  
                  
                  2.0
                  
                  
                  
                  2.0
 
 The 49
wells discussed above are the only wells to be drilled by the Partnership since
all of the funds raised in the Partnership offering have been
utilized.  Accordingly, the Partnership’s business plan going forward
is to produce and sell the oil and gas from the Partnership’s wells, and to make
distributions to the partners as outlined in the Partnership’s cash distribution
policy, discussed in Item 5, Market for Registrant's Common
Equity, Related
Stockholder Matters and Issuer Purchases of Equity
Securities.
 
 The
address and telephone number of the Partnership and PDC’s principal executive
offices, are 1775
Sherman Street, Suite 3000, Denver, Colorado 80203 and (303)
860-5800.
  Business
Segments
  The
Partnership operates in one segment, oil and natural gas sales.
  Plan of
Operations
 
 With
regard to the Partnership’s developmental wells drilled in Colorado, 38 wells
were drilled to the Codell formation in the Wattenberg Field (one of which was
determined to be a dry hole) and the 10 remaining wells were drilled in the
Grand Valley Field.  The Partnership drilled one exploratory well in
Wyoming which was determined to be a dry hole.
  Partnership
wells in the Wattenberg field were targeted to the Codell formation or
deeper.  The Wattenberg Field, located north and east of Denver,
Colorado, is in the Denver-Julesburg (DJ) Basin.  Wells in the area
may include as many as four productive formations.  From shallowest to
deepest, these are the Sussex, the Niobrara, the Codell and the J
Sand.  The primary producing zone for most of the Partnership’s wells
is the Codell which produces a combination of natural gas and oil.
  Partnership
wells in the Grand Valley field are targeted to the Mesa Verde formation. The
Grand Valley Field is in the Piceance Basin, located near the western border of
Colorado.  The producing interval consists of a total of 150 to 300
feet of productive sandstone divided in 10 to 15 different zones.  The
production zones are separated by layers of nonproductive shale resulting in a
total interval of 2,000 to 4,000 feet with alternating producing and
non-producing zones.  The natural gas reserves and production are
divided into these numerous smaller zones.
  -4-
 Index
  The
typical well production profile for wells in both the Wattenberg and Grand
Valley fields has an initial high production rate and relatively rapid decline,
followed by years of relatively shallow decline.   Natural gas is
the primary hydrocarbon produced; however, many wells also produce
oil.  For the natural gas, the purchase price may include revenue from
the recovery of propane and butane in the gas stream, as well as a premium for
the typical high-energy content of the natural gas.
  PDC plans
to recomplete most of the wells producing from the Codell formation in the
Wattenberg Field wells after they have been in production for five years or
more, although the exact timing may be delayed or accelerated due to changing
commodity prices.  A recompletion consists of a second fracture
treatment in the same formation originally fractured in the initial
completion.  PDC and other producers have found that the recompletions
generally increase the production rate and recoverable reserves of the
wells.  On average, the production resulting from PDC's Codell
recompletions has been above the modeled economics; however, all recompletions
have not and may not be successful.  The cost of recompleting a well
producing from the Codell formation is about one third of the cost of a new
well.  If the recompletion work is performed, PDC will charge the
Partnership for the direct costs of recompletions, and the Partnership will pay
its proportionate share of costs based on the operating costs sharing ratios of
the Partnership.  The Partnership may borrow the funds necessary to
pay for the recompletions, and payment for those borrowings will be made from
the Partnership production proceeds. Any such borrowings will be non-recourse to
the Investor Partners in the Partnership.
  Title to
Properties
  The
Partnership holds record title in its name to the working interest in each
well.  PDC provides an assignment of working interest for the well
bore, prior to the spudding of the well and effective the date of the spudding
of the well, to the Partnership in accordance with the Drilling and Operation
Agreement.  Upon completion of the drilling of all of the Partnership
wells, these assignments are recorded in the applicable
county.  Investor Partners rely on PDC to use its best judgment to
obtain appropriate title to these working interests.  Provisions of
the Limited Partnership Agreement (the “Agreement”) relieve PDC from any error
in judgment with respect to the waiver of title defects.  PDC takes
those steps it deems necessary to assure that title to the working interests is
acceptable for purposes of the Partnership.  For additional
information, see Item 2, Properties – Title to
Properties.
  Well
Operations
 
 General. As operator, PDC
represents the Partnership in all operating matters, including the drilling,
testing, completion and equipping of wells and the sale of the Partnership’s oil
and natural gas production from wells.  PDC is the operator of all of
the wells in which the Partnership owns an interest.
 
 PDC, in
some cases, provides equipment and supplies, and performs salt water disposal
services and other services for the Partnership.  PDC sold equipment
to the Partnership as needed in the drilling or completion of Partnership
wells.  All equipment and services were sold at the lesser of cost or
competitive prices in the area of operations.
 
 Gas Pipeline and
Transmission.  All of the Partnership's Colorado wells are in
the vicinity of transmission pipelines and gathering systems.  PDC
believes there are sufficient transmission pipelines and gathering systems for
the Partnership's natural gas production, subject to some seasonal
curtailment.  This seasonal curtailment typically occurs during July
and August as a result of high temperatures which reduce compressor
capacity.  The reduction in production typically amounts to less than
five percent of normal monthly production without an effect on
pricing.  The cost, timing and availability of gathering pipeline
connections and service varies from area to area, well to well, and over
time.  In selecting prospects for the Partnership, PDC included in its
evaluation the anticipated cost, timing and expected reliability of gathering
connections and capacity. When a significant amount of development work is being
done in an area, production can temporarily exceed the available markets and
pipeline capacity to move natural gas to more distant markets.  This
can lead to lower natural gas prices relative to other areas as the producers
compete for the available markets by reducing prices.  It can also
lead to curtailments of production and periods when wells are shut-in due to
lack of market.  The Partnership experienced shut in wells in October
2007.
  -5-
 Index
  
 Sale of
Production.  The Partnership sells the oil and natural gas
produced from its wells on a competitive basis at the best available terms and
prices.  PDC does not make any commitment of future production that
does not primarily benefit the Partnership.  Generally, purchase
contracts for the sale of oil are cancelable on 30 days notice, whereas purchase
contracts for the sale of natural gas may range from spot market sales of short
duration to contracts with a term of a number of years and that may require the
dedication of the natural gas from a well for a period ranging up to the life of
the well.
 
 The
Partnership sells gas at negotiated prices based upon a number of factors,
including the quality of the gas, well pressure, estimated reserves, prevailing
supply conditions and any applicable price regulations promulgated by the
Federal Energy Regulatory Commission, or FERC.  The Partnership sells
oil produced by it to local oil purchasers at spot prices. The produced oil is
stored in tanks at or near the location of the Partnership’s wells for routine
pickup by oil transport trucks.
 
 Price Hedging.Price volatility is a very
significant and destabilizing factor in the oil and natural gas production
industry.  The Partnership utilizes commodity based derivative
instruments to manage a portion of the exposure to price volatility stemming
from oil and natural gas sales.  These instruments consist of Colorado
Interstate Gas Index, or CIG, based contracts for Colorado natural gas
production and New York Mercantile Exchange, or NYMEX, based contracts for
Colorado oil production.  The contracts provide price protection for
committed and anticipated oil and natural gas purchases and sales, generally
forecasted to occur within the next one- to two-year period.  The
Partnership's policies prohibit the use of oil and natural gas futures, swaps or
options for speculative purposes and permit utilization of derivatives only if
there is an underlying physical position.
 
 The
Partnership is subject to price fluctuations for natural gas sold in the spot
market and under market index contracts.  PDC, as Managing General
Partner, continues to evaluate the potential for reducing these risks by
entering into derivative transactions.  In addition, the Managing
General Partner may close out any portion of derivatives that may exist from
time to time which may result in a realized gain or loss on that derivative
transaction.  The Partnership manages price risk on only a portion of
its anticipated production, so the remaining portion of its production is
subject to the full fluctuation of market pricing.
 
 The
Partnership uses financial derivatives to establish "collars" or fixed price
“swaps” on the possible range of the prices realized for the sale of natural gas
and oil.  These are carried on the balance sheet at fair value with
changes in fair values recognized currently in the statement of operations under
the caption "Oil and gas price risk management gain (loss),
net."  PDC, as Managing General Partner of the Partnership, enters
into derivative transactions on behalf of the Partnership in the same manner in
which it enters into transactions for itself.  For “swap” instruments,
PDC as Managing General Partner, receives a fixed price for the hedged commodity
and pays a floating market price to the counterparty. The fixed-price payment
and the floating-price payment are netted, resulting in a net amount due to or
from the counterparty. “Collars” contain a fixed floor price (put) and ceiling
price (call). If the market price exceeds the ceiling strike price or falls
below the fixed floor price, PDC, as Managing General Partner, receives the
fixed floor price and pays the market price. If the market price is between the
ceiling and floor price, no payments are due either party.  See Item
1A, Risk Factors - The
Partnership’s Derivative Activities, Etc.
 
 The
Partnership participates in all hedging transactions entered into by the
Managing General Partner in a given area after the Partnership is
formed.  The transactions are on a production month basis; therefore
the Partnership may participate in a hedge for a future period before it has
production from that area.  As the Partnership continued to drill and
put wells into production, its share of the derivative positions
increased.  The Partnership believes that in this rapidly changing
price environment, derivative positions are desirable to obtain more predictable
results and to protect against possible severe price declines during this
crucial state of flush production from the Partnership wells.  This
allocation methodology is considered reasonable by management of the Managing
General Partner.
 
 Drilling and Operating
Agreement.  The Partnership has entered into a Drilling and
Operating Agreement with PDC.  The Drilling and Operating Agreement
provides that the operator conducts and directs drilling operations, including
well recompletions, and has full control of all operations on the Partnership's
wells.  The operator has no liability to the Partnership for losses
sustained or liabilities incurred, except as may result from the operator's
negligence or misconduct.  Under the terms of the drilling and
operating agreement, PDC may subcontract responsibilities as operator for
Partnership wells.  PDC retains responsibility for work performed by
subcontractors.
  -6-
 Index
  To the
extent the Partnership has less than a 100% working interest in a well, the
Partnership paid only its proportionate share of total lease, development, and
operating costs, and received its proportionate share of production subject only
to royalties and overriding royalties. The Partnership is responsible only for
its obligations and is liable only for its proportionate working interest share
of the costs of developing and operating the wells.
 
 The
operator provides all necessary labor, vehicles, supervision, management,
accounting, and overhead services for normal production operations, and deducts
from Partnership revenues a monthly charge for these services. The charge for
these operations and field supervision fees (referred to as “well tending fees”)
for each producing well are based on competitive industry rates, which vary
based upon the area of operation.  The well tending fees and
administration fees may be adjusted annually to an amount equal to the rates
initially established by the Drilling and Operating Agreement multiplied by the
then current average of the Oil and Gas Extraction Index and the Professional
and Technical Services Index, as published by the United States Department of
Labor, Bureau of Labor Statistics, provided that the charge may not exceed the
rate which would be charged by the comparable operators in the area of
operations.  This average is commonly referred to as the Accounting
Procedure Wage Index Adjustment which is published annually by the Council of
Petroleum Accountants Societies, or COPAS.
 
 The
Partnership has the right to take in kind and separately dispose of its share of
all oil and natural gas produced from its wells.  The Partnership
designated PDC as its agent to market its production and authorized the operator
to enter into and bind the Partnership in those agreements as it deems in the
best interest of the Partnership for the sale of its oil and/or natural
gas.  If pipelines owned by PDC are used in the delivery of natural
gas to market, PDC charges a gathering fee not to exceed that which would be
charged by a non-affiliated third party for a similar service.
  The
Drilling and Operating Agreement continues in force as long as any well or wells
produce, or are capable of production, and for an additional period of 180 days
from cessation of all production, or until PDC is replaced as Managing General
Partner as provided for in the agreement.
  Production Phase of
Operations
   When
Partnership wells are "complete" (i.e., drilled, fractured or stimulated, and
all surface production equipment and pipeline facilities necessary to produce
the well are installed), production operations commence on each
well.
  The
Partnership sells the produced natural gas to commercial end users, interstate
or intrastate pipelines or local utilities, primarily under market sensitive
contracts in which the price of natural gas sold varies as a result of market
forces.  Some leases, and thus the natural gas derived from wells
drilled on those leases, may be dedicated to particular markets at the time the
Partnership acquired those leases, or subsequent to, as part of the natural gas
marketing arrangements.
  PDC, on
behalf of the Partnership, may enter into fixed price contracts, or utilize
derivatives, including collars, swaps or options, in order to offset some or all
of the price variability for particular periods of time, generally for less than
two years.  The use of derivatives may entail fees, including the time
value of money for margin requirements, which are charged to the
Partnership.
  Seasonal
factors, such as effects of weather on prices received and costs incurred, may
impact the Partnership's results.  In addition, both sales volumes and
prices tend to be affected by demand factors with a significant seasonal
component.
  -7-
 Index
  Revenues, Expenses and
Distributions
 
 The
Partnership's share of production revenue from a given well is burdened by
and/or subject to royalties and overriding royalties, monthly operating charges,
taxes and other operating costs.
  The above
items of expenditure involve amounts payable solely out of and expenses incurred
solely by reason of production operations.  Although the Partnership
is permitted to borrow funds for its operations, it is PDC's practice to deduct
operating expenses from the production revenue for the corresponding period and
to defer the collection of operating expenses to future periods when revenues
are insufficient to render full payment.
  Interests of
Partiesin
Production Revenues
  PDC, the
Investor Partners, and unaffiliated third parties (including landowners) share
revenues from production of natural gas and oil from wells in which the
Partnership has an interest.  The following chart illustrates the
interest of gross revenues derived from the wells.  For the purpose of
this chart, "gross revenue" is defined as the "wellhead gas and oil revenue"
paid by the purchasers.  Landowner and other royalties payable to
unaffiliated third parties may vary, generally between 12.5% to 25% or more;
however, the average of the royalty interests for all prospects or wells of the
Partnership may not exceed 25%.
  Illustration
      of Partnership Revenue SharingEntity
      or Interest Owners
                                    
                                    Partnership
      Interests
                                    
                                    
                                    Gross
      Revenue Interests (Partnership Revenues and Third Party
      Royalties)If
      121⁄2% Royalty:
                                    
                                    
                                    If
      25% Royalty:PDC,
      the Managing
                                    
                                    30%
                                    
                                    
                                    26.25%
                                    
                                    
                                    22.50%General
      PartnerInvestor
      Partners
                                    
                                    70%
                                    
                                    
                                    61.25%
                                    
                                    
                                    52.50%Landowners
      and Over-riding Royalty Owners
                                    
                                    N/A
                                    
                                    
                                    12.50%
                                    
                                    
                                    25.00%Totals
                                    
                                    100%
                                    
                                    
                                    100.00%
                                    
                                    
                                    100.00%
  -8-
 Index
  Production, Sales, Prices
and Lifting Costs
 
 The
following table sets forth information regarding the Partnership’s production
volumes, oil and natural gas sales, average sales price received and average
lifting cost incurred for the periods indicated.
 Year
      Ended
                    
                    
                    Year
      EndedDecember 31,
      2007
                    
                    
                    December 31,
      2006ProductionOil
      (Bbls)
                    
                    
                    76,039
                    
                    
                    
                    134,759Natural
      gas (Mcf)
                    
                    
                    1,212,711
                    
                    
                    
                    1,576,142Natural
      gas equivalent (Mcfe)
                    
                    
                    1,668,945
                    
                    
                    
                    2,384,696Oil
      and Gas SalesOil
      sales
                    
                    $
                    4,345,751
                    
                    
                    $
                    8,776,696Gas
      sales
                    
                    
                    6,005,222
                    
                    
                    
                    8,005,277Total
      oil and gas sales
                    
                    $
                    10,350,973
                    
                    
                    $
                    16,781,973Realized
      Gain (Loss) on Derivatives, netOil
      derivatives - realized (loss) gain
                    
                    $
                    (24,151
                    )
                    
                    $
                    (9,794
                    )Natural
      gas derivatives - realized gain (loss)
                    
                    
                    529,222
                    
                    
                    
                    99,279Total
      realized gain (loss) on derivatives, net
                    
                    $
                    505,071
                    
                    
                    $
                    89,485Average
      Sales PriceOil
      (per Bbl)
                    
                    $
                    57.15
                    
                    
                    $
                    65.13Natural
      gas (per Mcf)
                    
                    
                    4.95
                    
                    
                    
                    5.08Natural
      gas equivalent (per Mcfe)
                    
                    
                    6.20
                    
                    
                    
                    7.04Average
      Sales Price (including realized gain (loss) on
derivatives)Oil
      (per Bbl)
                    
                    
                    56.83
                    
                    
                    
                    65.06Natural
      gas (per Mcf)
                    
                    
                    5.39
                    
                    
                    
                    5.14Natural
      gas equivalent (per Mcfe)
                    
                    
                    6.50
                    
                    
                    
                    7.07Average
      Production Cost (Lifting Cost) per Mcfe
                    
                    $
                    1.29
                    
                    
                    $
                    0.90
  Production
as shown in the table is net and is determined by multiplying the gross
production volume of properties in which the Partnership has an interest by the
percentage of the leasehold or other property interest the Partnership
owns.  A ratio of energy content of natural gas and oil (six Mcf of
natural gas equals one barrel of oil) was used to obtain a conversion factor to
convert oil production into equivalent Mcf of natural gas.
  The
Partnership utilizes commodity based derivative instruments to manage a portion
of its exposure to price volatility of its natural gas and oil
sales.  Production costs represent oil and gas operating expenses
which include severance and ad valorem taxes as reflected in the Partnership’s
financial statements.  See Item 7, Production and Operating
Costs.
  Oil and Natural Gas
Reserves
 
 All of
the Partnership’s natural gas and oil reserves are located in the United
States.   Ryder Scott Company, L.P., an independent engineer
prepared the reserve reports for 2007 and 2006  The independent
engineers' estimates are made using available geological and reservoir data as
well as production performance data.  The estimates are prepared with
respect to reserve categorization, using the definitions for proved reserves set
forth in Regulation S-X, Rule 4-10(a) and subsequent SEC staff interpretations
and guidance.  When preparing the Partnership’s reserve estimates, the
indendent engineers did not independently verify the accuracy and completeness
of information and data furnished by the Partnership with respect to ownership
interests, oil and natural gas production, well test data, historical costs of
operations and developments, product prices, or any agreements relating to
current and future operations of properties and sales of
production.  The Partnership’s independent reserve estimates are
reviewed and approved by the Managing General Partner’s internal engineering
staff and management.
  -9-
 Index
  The
tables below set forth information as of December 31, 2007, regarding the
Partnership’s estimated proved reserves.  Reserves cannot be measured
exactly, because reserve estimates involve subjective judgment.  The
estimates must be reviewed periodically and adjusted to reflect additional
information gained from reservoir performance, new geological and geophysical
data and economic changes.  Neither the present value of estimated
future net cash flows nor the standardized measure is intended to represent the
current market value of the estimated oil and natural gas reserves the
Partnership owns.
 
 Year
      Ended December 31, 2007Oil
      (Bbl)
                              
                              
                              Gas
      (Mcf)
                              
                              
                              Total (Mcfe)Proved
      developed
                              
                              
                              363,814
                              
                              
                              
                              8,125,215
                              
                              
                              
                              10,308,099Proved
      undeveloped
                              
                              
                              398,001
                              
                              
                              
                              1,666,090
                              
                              
                              
                              4,054,096Total
      Proved
                              
                              
                              761,815
                              
                              
                              
                              9,791,305
                              
                              
                              
                              14,362,195Proved
      Developed
                              
                              
                              Proved
      Undeveloped
                              
                              
                              Total
      ProvedEstimated
      future net cash flows
                              
                              $
                              57,280,669
                              
                              
                              $
                              33,650,827
                              
                              
                              $
                              90,931,496Standardized
      measure
                              
                              
                              33,335,434
                              
                              
                              
                              12,570,930
                              
                              
                              
                              45,906,496
 
 Estimated
future net cash flow represents the estimated future gross revenue to be
generated from the production of proved reserves, net of estimated production
costs and future development costs, using prices and costs in effect at December
31, 2007.  The prices used in the Partnership’s reserve reports yield
weighted average wellhead prices of $80.20 per barrel of oil and $6.89 per Mcf
of natural gas.  These prices should not be interpreted as a
prediction of future prices, nor do they reflect the value of the Partnership’s
commodity hedges in place at December 31, 2007.  The amounts shown do
not give effect to non-property related expenses, such as direct costs - general
and administrative expenses, or to depreciation, depletion and
amortization.
  The
standardized measure of discounted future net cash flows is calculated in
accordance with Statement of Financial Accounting Standards (“SFAS”) No. 69,
which requires the future cash flows to be discounted.  The discount
rate used was 10%.  Additional information on this measure is
presented in Supplemental Oil and Gas Information - Unaudited, Standardized Measure of Discounted
Future Net Cash Flows and Changes Therein Relating to Proved Oil and Gas
Reserves, included in this report.
 
 Insurance
 
 PDC, in
its capacity as operator, carries well pollution, public liability and worker’s
compensation insurance for its own benefit as well as the benefit of the
Partnership, but that insurance may not be sufficient to cover all
liabilities.  Each unit held by the general partners, excluding the
Managing General Partner, represents an open-ended security for unforeseen
events such as blowouts, lost circulation, and stuck drill pipe, which may
result in unanticipated additional liability materially in excess of the per
unit subscription amount.
  PDC has
obtained various insurance policies, as described below, and intends to maintain
these policies subject to PDC's analysis of their premium costs, coverage and
other factors.  PDC may, in its sole discretion, increase or decrease
the policy limits and types of insurance from time to time as deemed appropriate
under the circumstances, which may vary materially.  PDC is the
beneficiary under each policy and pays the premiums for each policy, except with
respect to the insurance coverage referred to in items 2 and 5 below in which
case the Managing General Partner and the Partnership are co-insured and
co-beneficiaries.  Additionally, PDC as operator of the Partnership's
wells requires all of PDC's subcontractors to carry liability insurance coverage
with respect to their activities.  In the event of a loss, the
insurance policies of the particular subcontractor at risk would be drawn upon
before the insurance of the Managing General Partner or that of the
Partnership.  PDC has obtained and expects to maintain the following
insurance.
  -10-
 Index
  1.
              Worker's
      compensation insurance in full compliance with the laws for the states in
      which the operator has employees;
  2.
              Operator's
      bodily injury liability and property damage liability insurance, each with
      a limit of $1 million;
  3.
              Employer's
      liability insurance with a limit of not less than $1
    million;
  4.
              Automobile
      public liability insurance with a limit of not less than $1 million per
      occurrence, covering all automobile equipment;
  and
  5.
              Operator's
      umbrella liability insurance with a limit of $50 million for each well
      location and in the aggregate.
  PDC’s
management, as Managing General Partner, believes that adequate insurance,
including insurance by PDC’s subcontractors, has been provided to the
Partnership with coverage sufficient to protect the Investor Partners against
the foreseeable risks of drilling. PDC has maintained liability insurance,
including umbrella liability insurance, of at least two times the Partnership’s
capitalization, up to a maximum of $50 million , but in no event less than $10
million during drilling operations.
  Competition and
Markets
  Competition
is high among persons and companies involved in the exploration for and
production of oil and natural gas.  The Partnership competes with
entities having financial resources and staffs substantially larger than those
available to the Partnership.  There are thousands of oil and natural
gas companies in the United States.  The national supply of natural
gas is widely diversified.  As a result of this competition and FERC
and Congressional deregulation of natural gas and oil prices, prices are
generally determined by competitive forces.
  The
marketing of any oil and natural gas produced by the Partnership is affected by
a number of factors which are beyond the Partnership's control and the exact
effect of which cannot be accurately predicted.  These factors include
the volume and prices of crude oil imports, the availability and cost of
adequate pipeline and other transportation facilities, the marketing of
competitive fuels, such as coal and nuclear energy, and other matters affecting
the availability of a ready market, such as fluctuating supply and
demand.  Among other factors, the supply and demand balance of crude
oil and natural gas in world markets has caused significant variations in the
prices of these products over recent years.
 
 FERC
Order No. 636, issued in 1992, restructured the natural gas industry by
requiring natural gas pipelines to separate their storage, sales and
transportation functions and establishing an industry-wide structure for
"open-access" transportation service.  FERC Order No. 637, issued in
February 2000, further enhanced competitive initiatives, by removing price caps
on short-term capacity release transactions.
 
 FERC
Order No. 637 also enacted other regulatory policies that increase the
flexibility of interstate natural gas transportation, maximize shippers' supply
alternatives, and encourage domestic gas production in order to meet projected
increases in gas demand.  These increases in demand come from a number
of sources, including as boiler fuel to meet increased electric power generation
needs and as an industrial fuel that is environmentally preferable to
alternatives such as nuclear power and coal.  This trend has been
evident over the past year, particularly in the western U.S., where natural gas
is the preferred fuel for environmental reasons, and electric power demand has
directly affected demand for natural gas.
  The
combined impact of FERC Order No. 636 and No. 637 has been to increase the
competition among natural gas suppliers from different regions.
  In 1995,
the North American Free Trade Agreement, or NAFTA, eliminated trade and
investment barriers in the United States, Canada, and Mexico, increasing foreign
competition for gas production.  Legislation that Congress may
consider with respect to oil and natural gas may increase or decrease the demand
for the Partnership's production in the future, depending on whether the
legislation is directed toward decreasing demand or increasing
supply.
  -11-
 Index
  Members
of the Organization of Petroleum Exporting Countries, or OPEC, establish prices
and production quotas for petroleum products from time to time, with the intent
of reducing the current global oversupply and maintaining or increasing price
levels.  PDC is unable to predict what effect, if any, future OPEC
actions will have on the quantity of, or prices received for, oil and natural
gas produced and sold from the Partnership's wells.
  Various
parts of the fields the Partnership’s wells are crossed by pipelines belonging
to Colorado Interstate Gas, Encana, DCP Midstream LP (“DCP”, formerly Duke
Energy), Williams Production, RMT (“Williams”) and others.  These
companies have all traditionally purchased substantial portions of their supply
from Colorado producers.  Transportation on these systems requires
that delivered natural gas meet quality standards and that a tariff be paid for
quantities transported.
  Sales of
natural gas from the Partnership's wells to DCP and Williams are made on the
spot market via open access transportation arrangements through Colorado
Interstate Gas, Williams or other pipelines.  As a result of FERC
regulations that require interstate gas pipelines to separate their merchant
activities from their transportation activities and require them to release
available capacity on both a short and a long-term basis, local distribution
companies must take an increasingly active role in acquiring their own natural
gas supplies.  Consequently, pipelines and local distribution
companies are buying natural gas directly from natural gas producers and
marketers, and retail unbundling efforts are causing many end-users to buy their
own reserves.  Activity by state regulatory commissions to review
local distribution company procurement practices more carefully and to unbundle
retail sales from transportation has caused natural gas purchasers to minimize
their risks in acquiring and attaching natural gas supply and has added to
competition in the natural gas marketplace.
 
 Natural Gas and Oil
Pricing
 
 PDC sells
the natural gas and oil from Partnership wells in Colorado subject to market
sensitive contracts, the price of which increases or decreases with market
forces beyond control of the Partnership.  Currently, PDC sells
Partnership gas in the Piceance Basin primarily to Williams, which has an
extensive gathering and transportation system in the field.  In the
Wattenberg Field, the gas is sold primarily to DCP, which gathers and processes
the gas and liquefiable hydrocarbons produced.  Natural gas produced
in Colorado is subject to changes in market prices on a national level, as well
as changes in the market within the Rocky Mountain Region.  Sales may
be affected by capacity interruptions on pipelines transporting natural gas out
of the region.
 
 Currently,
PDC sells 100% of the crude oil from Partnership wells to Teppco Crude Oil, LP
(“Teppco”).  Generally, the oil is picked up at the well site and
trucked to either refineries or oil pipeline interconnects for redelivery to
refineries. Oil prices fluctuate not only with the general market for oil as may
be indicated by changes in the NYMEX, but also due to changes in the supply and
demand at the various refineries. Additionally, the cost of trucking or
transporting the oil to market affects the price the Partnership ultimately
receives for the oil.
 
 Governmental
Regulation
  While the
prices of oil and natural gas are set by the market, other aspects of the
Partnership's business and the oil and natural gas industry in general are
heavily regulated.  The availability of a ready market for oil and
natural gas production depends on several factors beyond the Partnership's
control.  These factors include regulation of production, federal and
state regulations governing environmental quality and pollution control, the
amount of oil and natural gas available for sale, the availability of adequate
pipeline and other transportation and processing facilities and the marketing of
competitive fuels.  State and federal regulations generally are
intended to protect consumers from unfair treatment and oppressive control, to
reduce the risk to the public and workers from the drilling, completion,
production and transportation of oil and natural gas, to prevent waste of oil
and natural gas, to protect rights of owners in a common reservoir and to
control contamination of the environment.  Pipelines are subject to
the jurisdiction of various federal, state and local agencies.  PDC
management, as Managing General Partner, believes that the Partnership is in
compliance with such statutes, rules, regulations and governmental orders,
although there can be no assurance that this is or will remain the
case.  The following summary discussion of the regulation of the
United States oil and natural gas industry is not intended to constitute a
complete discussion of the various statutes, rules, regulations and
environmental orders to which the Partnership's operations may be
subject.
  -12-
 Index
  Environmental
Regulation
 
 The
Partnership’s operations are subject to numerous laws and regulations governing
the discharge of materials into the environment or otherwise relating to
environmental protection.  Public interest in the protection of the
environment has increased dramatically in recent years.  The trend of
more expansive and tougher environmental legislation and regulations could
continue.  To the extent laws are enacted or other governmental action
is taken that restricts drilling or imposes environmental protection
requirements that result in increased costs and reduced access to the natural
gas industry in general, our business and prospects could be adversely
affected.
 
 The
Partnership generates wastes that may be subject to the Federal Resource
Conservation and Recovery Act, or RCRA, and comparable state
statutes.  The U.S. Environmental Protection Agency, or EPA, and
various state agencies have limited the approved methods of disposal for certain
hazardous and non-hazardous wastes.  Furthermore, certain wastes
generated by our operations that are currently exempt from treatment as
"hazardous wastes" may in the future be designated as "hazardous wastes," and
therefore be subject to more rigorous and costly operating and disposal
requirements.
 
 Proposed
Regulation
  Various
legislative proposals and proceedings that might affect the petroleum and
natural gas industries occur frequently in Congress, FERC, state commissions,
state legislatures, and the courts.  These proposals involve, among
other things, imposition of direct or indirect price limitations on natural gas
production, expansion of drilling opportunities in areas that would compete with
Partnership production, imposition of land use controls, landowners' "rights"
legislation, alternative fuel use requirements and/or tax incentives and other
measures.  The petroleum and natural gas industries historically has
been very heavily regulated; therefore, there is no assurance that the less
stringent regulatory approach recently pursued by FERC and Congress will
continue.  The Partnership cannot determine to what extent its future
operations and earnings will be affected by new legislation, new regulations, or
changes in existing regulation, at federal, state or local levels.
 
 Operating
Hazards
 
 The
Partnership's production operations include a variety of operating risks,
including the risk of fire, explosions, blowouts, cratering, pipe failure,
casing collapse, abnormally pressured formations, and environmental hazards such
as natural gas leaks, ruptures and discharges of toxic gas.  The
occurrence of any of these could result in substantial losses to us due to
injury and loss of life, severe damage to and destruction of property, natural
resources and equipment, pollution and other environmental damage, clean-up
responsibilities, regulatory investigation and penalties and suspension of
operations.  Pipeline, gathering and transportation operations are
subject to the many hazards inherent in the natural gas industry. These hazards
include damage to wells, pipelines and other related equipment, damage to
property caused by hurricanes, floods, fires and other acts of God, inadvertent
damage from construction equipment, leakage of natural gas and other
hydrocarbons, fires and explosions and other hazards that could also result in
personal injury and loss of life, pollution and suspension of
operations.
 
 Any
significant problems related to Partnership wells could adversely affect our
ability to conduct operations. In accordance with customary industry practice,
the Partnership maintains insurance against some, but not all, potential risks;
however, there can be no assurance that such insurance will be adequate to cover
any losses or exposure for liability. The occurrence of a significant event not
fully insured against could materially adversely affect Partnership operations
and financial condition. We cannot predict whether insurance will continue to be
available at premium levels that justify its purchase or whether insurance will
be available at all.  Furthermore, the Partnership is not insured
against economic losses resulting from damage or destruction to third party
property, such as the Rockies Express pipeline; such an event could result in
significantly lower regional prices or the Partnership’s inability to deliver
natural gas.
  -13-
 Index
  Available
Information
 
 The
Partnership is subject to the reporting and information requirements of the
Securities Exchange Act of 1934, as amended, and is as a result obligated to
file periodic reports, proxy statements and other information with the
SEC.  The SEC maintains a website that contains the annual, quarterly,
and current reports, proxy and information statements, and other information
regarding the Partnership, that the Partnership electronically files with the
SEC.  The address of that site is http://www.sec.gov.  The
Central Index Key, or CIK, for the Partnership is 0001350567.  You can
read and copy any materials the Partnership files with the SEC at the SEC’s
Public Reference Room at 100 F Street, N.E., Room 1850, Washington,
D.C.  20549.  You may obtain information on the operation of
the Public Reference Room by calling the SEC at 1-800-SEC-0330.
 
 
 Item1A.
              Risk
      Factors
  In the
course of its normal business, the Partnership is subject to a number of risks
that could adversely impact its business, operating results, financial
condition, and cash distributions.  The following is a discussion of
the material risks involved in an investment in the Partnership.
  Risks Pertaining to Natural
Gas and Oil Investments
  Recent disruptions in the
global financial markets and the likely related economic downturn may further
decrease the demand for oil and gas and the prices of oil and
gas.  During the third quarter of 2008 and to date, prices for
oil and gas decreased significantly.  The well-publicized global
financial market disruptions and the related economic downturn may additionally
decrease demand for oil and gas and therefore lower oil and gas
prices.  If there is such an additional reduction in demand, the
production of gas in particular may be in oversupply.  We operate in a
highly competitive industry, and certain competitors may have lower operating
costs in such an environment.  Furthermore, as a result of these
disruptions in the financial markets, it is possible that in future years the
Partnership would not be able to borrow sufficient funds to recomplete most of
the wells producing from the Codell formation in the Wattenberg Field wells
after they have been in production for five years or more, although the exact
timing may be delayed or accelerated due to changing commodity
prices.  For more information regarding the Wattenberg Field
recompletion plan, see Item 1 Business, Plan of
Operation.
 
 The oil and natural gas
business is speculative and may be unprofitable and result in the total loss of
investment.  The oil and natural gas business is inherently
speculative and involves a high degree of risk and the possibility of a total
loss of investment.  The Partnership's business activities may result
in unprofitable well operations, not only from non-productive wells, but also
from wells that do not produce oil or natural gas in sufficient quantities or
quality to return a profit on the amounts expended.  The prices of oil
and natural gas play a major role in the profitability of the
Partnership.  Partnership wells may not produce sufficient natural gas
and oil for investors to receive a profit or even to recover their initial
investment.  Only three of the prior Partnerships sponsored by PDC
have, to date, generated cash distributions in excess of investor subscriptions
without giving effect to tax savings.
 
 The Partnership may retain
Partnership revenues or borrow funds if needed for Partnership operations to
fully develop the Partnership's wells; if full development of the Partnership's
wells proves commercially unsuccessful, an individual investor partner might
anticipate a reduction in cash distributions.  The Partnership
utilized substantially all of the capital raised in the offering for the
drilling and completion of wells.   If the Partnership requires
additional capital in the future, it will have to either retain Partnership
revenues or borrow the funds necessary for these purposes.  Retaining
Partnership revenues and/or the repayment of borrowed funds will result in a
reduction of cash distributions to the investors.  Additionally, in
the future, PDC plans to rework or recomplete Partnership wells; however, PDC
has not held money from the initial investment for that future
work.  Future development of the Partnership's wells may prove
commercially unsuccessful and the further-developed Partnership wells may not
generate sufficient funds from production to increase distributions to Investor
Partners to cover revenues retained or to repay financial obligations of the
Partnership for borrowed funds plus interest.  If future development
of the Partnership's wells is not commercially successful, whether using funds
retained from production revenues or borrowed funds, these operations could
result in a reduction of cash distributions to the Investor Partners of the
Partnership.
  -14-
 Index
  
 Increases in prices of oil
and natural gas have increased the cost of drilling and development and may
affect the performance and profitability of the Partnership in both the short
and long term.  In the current high price environment, most oil
and natural gas companies have increased their expenditures for drilling new
wells.  This has resulted in increased demand and higher cost for
oilfield services and well equipment.  Because of these higher costs,
the Partnership is subject to a higher risk for decreased profitability during
both future rising or falling, oil and natural gas price changes.
 
 Reductions in prices of oil
and natural gas reduce the profitability of the Partnership's production
operations and could result in reduced cash distributions to Investor
Partners.  Global economic conditions, political conditions,
and energy conservation have created unstable prices.  Revenues of the
Partnership are directly related to natural gas and oil prices.  The
prices for domestic natural gas and oil production have varied substantially
over time and by location and are likely to remain extremely
unstable.  Revenue from the sale of oil and natural gas increases when
prices for these commodities increase and declines when prices
decrease.  These price changes can occur rapidly and are not
predictable nor within the control of the Partnership.  A decline in
natural gas and/or oil prices would result in lower revenues for the Partnership
and a reduction of cash distributions to the Investor Partners of the
Partnership.  Further, reductions in prices of oil and natural gas may
result in shut-ins thereby resulting in lower production, revenues and cash
distributions.
 
 The high level of drilling
activity could result in an oversupply of gas on a regional or national level,
resulting in much lower commodity prices, reduced profitability of the
Partnership and reduced cash distributions to Investor
Partners.  Recently, the natural gas market has been
characterized by excess demand compared to the supplies available, leading in
general to higher prices for natural gas.  The high level of drilling,
combined with a reduction in demand resulting from higher prices, could result
in an oversupply of natural gas.  In the Rocky Mountain region, rapid
growth of production and increasing supplies may result in lower prices and
production curtailment due to limitations on available pipeline facilities or
markets not developed to utilize or transport the new supplies.  In
both cases, the result would likely result in lower Partnership natural gas
sales prices, reduced profitability for the Partnership and reduced cash
distributions to the Investor Partners.  Such a condition existed in
the Rocky Mountain region during the third and fourth quarter of
2007.  In early 2008 additional pipeline capacity became available
with the expansion of Rockies Express Pipeline.
  Sufficient insurance
coverage may not be available for the Partnership, thereby increasing the risk
of loss for the General Partners.  It is possible that some or
all of the insurance coverage which the Partnership has available may become
unavailable or prohibitively expensive.  In that case, PDC might elect
to change the insurance coverage.  The general partners could be
exposed to additional financial risk due to the reduced insurance coverage and
due to the fact that they would continue to be individually liable for
obligations and liabilities of the Partnership that arose prior to conversion to
limited partners, which occurred on December 22, 2006.  Investor
Partners could be subject to greater risk of loss of their investment because
less insurance would be available to protect the Partnership from casualty
losses.  Moreover, should the Partnership's cost of insurance become
more expensive, or should the Partnership suffer a significant uninsured
casualty loss, the amount of cash distributions to the investors will be
reduced.
  Through their involvement in
the Partnership and other non-partnership activities, the Managing General
Partner and its affiliates have interests which conflict with those of the
Investor Partners; actions taken by the Managing General Partner in furtherance
of its own interests could result in the Partnership being less profitable and a
reduction in cash distributions to the Investor
Partners.  PDC's continued active participation in oil and
natural gas activities for its own account and on behalf of other partnerships
organized or to be organized by PDC and the manner in which Partnership revenues
are allocated create conflicts of interest with the Partnership.  PDC
has interests which inherently conflict with the interests of the Investor
Partners.  The following is an itemization of the material conflicts
of interest of PDC as Managing General Partner of the Partnership and of PDC’s
affiliates:
 
 ·
              PDC
      might sponsor additional drilling programs in the future that could
      conflict with the interests of the Partnership.  PDC and
      affiliates have the right to organize and manage oil and natural gas
      drilling programs in the future similar to the Partnership and to conduct
      production operations now and in the future on its own behalf or for other
      individual investor partners.  This situation could lead to a
      conflict between the position of PDC as Managing General Partner of the
      Partnership and the position of PDC or its affiliates as managing general
      partner or sponsor of additional
programs.
  -15-
 Index
  ·
              PDC
      has a fiduciary duty as Managing General Partner to the
      Partnership.  PDC acts as managing general partner currently for
      33 limited partnerships, including this Partnership, and is accountable to
      all of the partnerships as a fiduciary.  PDC therefore has a
      duty to exercise good faith and deal fairly with the investor partners of
      each partnership.  PDC’s actions taken on behalf of one or more
      of these partnerships could be disadvantageous to the Partnership and
      could fall short of the full exercise of its fiduciary duty to the
      Partnership.
 
 ·
              There
      are and will continue to be transactions between PDC, its affiliates and
      the Partnership.  PDC, as operator of the Partnership, has and
      will continue to provide drilling, completion and operation services to
      the Partnership’s wells.  Although the prices that PDC has
      charged, and will charge, to the Partnership for the supplies and services
      provided by PDC and affiliates to the Partnership will be competitive with
      the prices charged by unaffiliated persons for the same supplies and
      service, PDC will benefit financially from this
    relationship.
 
 In
operating the Partnership, the Managing General Partner and its affiliates could
take actions which benefit themselves and which do not benefit the
Partnership.  These actions could result in the Partnership being less
profitable.  In that event, Investor Partners could anticipate a
reduction of cash distributions.
  The Partnership and other
partnerships sponsored by PDC, Managing General Partner, may compete with each
other for prospects, equipment, contractors, and personnel; as a result, the
Partnership may find it more difficult to operate effectively and
profitably.  During 2007, PDC operated and managed other
partnerships formed for substantially the same purposes as those of the
Partnership.  PDC will operate and manage these partnerships in 2009
and for the foreseeable future.  Therefore, a number of partnerships
with unexpended capital funds, including those partnerships formed before and
after the Partnership, may exist at the same time.  The Partnership
may compete for equipment, contractors, and PDC personnel (when the Partnership
is also in need of equipment, contractors and PDC personnel), which may make it
more difficult and more costly to obtain equipment and services for the
Partnership.  In that event, it is possible that the Partnership would
be less profitable.  Additionally, because PDC must divide its
attention in the management of its own corporate interests as well as the
affairs of the 33 limited partnerships PDC has organized in previous programs,
the Partnership will not receive PDC's full attention and efforts at all
times.
  The Partnership's derivative
activities could result in reduced revenue and cash flows compared to the level
the Partnership might experience if no derivative instruments were in
place.The Managing
General Partner uses derivative instruments for a portion of the Partnership’s
natural gas and oil production to achieve a more predictable cash flow and to
reduce exposure to adverse fluctuations in the prices of natural gas and
oil.  These arrangements expose the Partnership to the risk of
financial loss in some circumstances, including when purchases or sales are
different than expected, the counter-party to the derivative contract defaults
on its contract obligations, or when there is a change in the expected
differential between the underlying price in the derivative agreement and actual
prices that we receive.  In addition, derivative arrangements may
limit the benefit from changes in the prices for natural gas and
oil.  Since the Partnership’s derivatives do not currently qualify for
use of hedge accounting, changes in the fair value of derivatives are recorded
in the Partnership’s income statements.  Accordingly, the
Partnership’s net income is subject to greater volatility than would be reported
if its derivative instruments qualified for hedge accounting.  The
market prices for oil and natural gas, however, have continued to increase since
such derivatives were entered into by the Partnership; if such market pricing
continues, it could result in significant non-cash charges each quarter, which
could have a material negative affect on our net income.
 
 Fluctuating market
conditions and government regulations may cause a decline in the profitability
of the Partnership and a reduction of cash distributions to the Investor
Partners.  The sale of any natural gas and oil produced by the
Partnership will be affected by fluctuating market conditions and governmental
regulations, including environmental standards, set by state and federal
agencies.  From time-to-time, a surplus of natural gas or oil may
occur in areas of the United States.  The effect of a surplus may be
to reduce the price the Partnership receives for its natural gas or oil
production, or to reduce the amount of natural gas or oil that the Partnership
may produce and sell.  As a result, the Partnership may not be
profitable.  Lower prices and/or lower production and sales will
result in lower revenues for the Partnership and a reduction in cash
distributions to the Investor Partners of the Partnership.
 -16-
 Index
  The Partnership is subject
to complex federal, state, local and other laws and regulations that could
adversely affect the cost, manner or feasibility of doing
business.  The Partnership’s operations are regulated
extensively at the federal, state and local levels.  Environmental and
other governmental laws and regulations have increased the costs to plan,
design, drill, install, operate and abandon oil and natural gas
wells.  Under these laws and regulations, the Partnership could also
be liable for personal injuries, property damage and other
damages.  Failure to comply with these laws and regulations may result
in the suspension or termination of the Partnership’s operations and subject the
Partnership to administrative, civil and criminal penalties. Moreover, public
interest in environmental protection has increased in recent years, and
environmental organizations have opposed, with some success, certain drilling
projects.  Compliance with these regulations and possible liability
resulting from these laws and regulations could result in a decline in
profitability of the Partnership and a reduction in cash distributions to the
Investor Partners of the Partnership.
 
 The
Partnership’s activities are subject to the regulations regarding conservation
practices and protection of correlative rights.  These regulations
affect our operations and limit the quantity of natural gas and/or oil we may
produce and sell.  A major risk inherent in our drilling plans is the
need to obtain drilling permits from state and local
authorities.  Because the Partnership plans to recomplete various of
its Wattenberg Wells in approximately five years, for which permits will be
required, delays in obtaining regulatory approvals or drilling permits or the
failure to obtain a drilling permit for a well or the receipt of a permit with
unreasonable conditions or costs could have a material adverse effect on our
ability to develop our properties.  Additionally, the natural gas and
oil regulatory environment could change in ways that might substantially
increase the financial and managerial costs of compliance with these laws and
regulations and, consequently, adversely affect our ability to pay distributions
to our Investor Partners.  We further reference sections Government Regulation and
Proposed Regulation in
Item 1, Business, for a
detailed discussion of the laws and regulations that affect the Partnership’s
activities.
  Environmental hazards
involved in drilling gas and oil wells may result in substantial liabilities for
the Partnership, a decline in profitability of the Partnership and a reduction
in cash distributions to the Investor Partners.  There are
numerous natural hazards involved in the drilling and operation of wells,
including unexpected or unusual formations, pressures, blowouts involving
possible damages to property and third parties, surface damages, personal injury
or loss of life, damage to and loss of equipment, reservoir damage and loss of
reserves.  Uninsured liabilities would reduce the funds available to
the Partnership, may result in the loss of Partnership properties and may create
liability for additional general partners.  The Partnership may become
subject to liability for pollution, abuses of the environment and other similar
damages, and it is possible that insurance coverage may be insufficient to
protect the Partnership against all potential losses.  In that event,
Partnership assets would be used to pay personal injury and property damage
claims and the costs of controlling blowouts or replacing destroyed equipment
rather than for drilling activities.  These payments would cause an
otherwise profitable partnership to be less profitable or unprofitable and would
result in a reduction of cash distributions to the Investor Partners of the
Partnership.
   Delay in Partnership natural
gas or oil production could reduce the Partnership’s profitability and cash
distributions to the Investor Partners.  The Partnership’s inability
to complete wells in a timely fashion may also result in production
delays.  In addition, marketing demands that tend to be
seasonal may reduce or delay production from wells.  Wells drilled for
the Partnership may have access to only one potential market.  Local
conditions including but not limited to closing businesses, conservation,
shifting population, pipeline maximum operating pressure constraints, and
development of local oversupply or deliverability problems could halt or reduce
sales from Partnership wells.  Any of these delays in the production
and sale of the Partnership's natural gas and oil could reduce the Partnership's
profitability, and in that event, the cash distributions to the Investor
Partners of the Partnership would decline.
  A significant variance from
the Partnership’s estimated reserves and future net revenues could adversely
affect the Partnership’s cash flows, results of operations, and the availability
of capital resources.  The accuracy of proved reserves and
future net revenues estimates from such reserves, is a function of the quality
of available geological, geophysical, engineering and economic data and is
subject to various assumptions, including assumptions required by the SEC
relating to oil and gas prices, drilling and operating expenses, and other
matters. Although the estimated proved reserves represent reserves the
Partnership reasonably believes it is certain to recover, actual future
production, oil and gas prices, revenues, taxes, development expenditures,
operating expenses and quantities of recoverable oil and gas reserves will most
likely vary from the assumptions and estimates used to determine proved
reserves. Any significant variance could materially affect the estimated
quantities and value of the Partnership’s oil and gas reserves, which in turn
could adversely affect cash flows, results of operations and the availability of
capital resources. In addition, estimates of proved reserves may be adjusted to
reflect production history, results of exploration and development, prevailing
oil and gas prices and other factors, many of which are beyond the Partnership’s
control. Downward adjustments to the estimated proved reserves could require a
write down of the carrying value of the Partnership’s oil and gas properties,
which would reduce earnings and partners’ equity.
  -17-
 Index
  The standardized measure of
estimated proved reserves, in accordance with SFAS 69,Disclosures
About Oil and Gas Producing Activities,which assumes a 10%
discount factor, will not necessarily equal the current fair market value of the
estimated oil and gas reserves. In accordance with the reserve reporting
requirements of the SEC, the estimated discounted future net cash flows from
proved reserves are generally based on prices and costs as of the date of the
estimate. Actual future prices and costs may be materially higher or lower than
those as of the date of the estimate. The timing of both the production and the
expenses with respect to the development and production of oil and gas
properties will affect the timing of future net cash flows from estimated proved
reserves and their related present value estimate.
 
 Seasonal weather conditions
may adversely affect the Partnership’s ability to conduct production activities
in some of the areas of operation.  Oil and natural gas
operations in the Rocky Mountains are adversely affected by seasonal weather
conditions. In certain areas, drilling and other oil and natural gas activities
are restricted or prevented by weather conditions for up to 6 months out of the
year. This limits operations in those areas and can intensify competition during
those months for oil field equipment, services, supplies and qualified
personnel, which may lead to periodic shortages. These constraints and the
resulting shortages or high costs could delay operations and materially increase
operating and capital costs and therefore adversely affect profitability, and
could result in a reduction of cash distributions to the investors.
 
 Two Colorado lawsuits
against PDC, the Managing General Partner of the Partnership, for underpayment
of royalties, could financially harm PDC and the Partnership.  A
judgment by the Federal Court against PDC could result in lower oil and gas
sales revenues for the Partnership, reduced profitability and reduced cash
distributions to the investor partners.  On May 29, 2007, a
complaint was filed against PDC in Weld County, Colorado.  The
complaint represents a class action against PDC seeking compensation for alleged
underpayment of royalties on leases in Colorado, resulting from the alleged
miscalculation of costs to produce marketable gas.  The case was moved
to Federal Court in June 2007.  A second similar Colorado class action
suit was filed against PDC on December 3, 2007.  On January 28, 2008,
the Court granted a motion to consolidate the two cases, and on February 29,
2008, the Court approved a 90 day stay in the proceedings while the parties
pursued mediation of the matter.  Based on the mediation held on May
28, 2008, and subsequent negotiations, $74,412 was accrued by the Partnership
for this litigation for the year ended December 31, 2007, which represents the
expected settlement related to all periods prior to 2008.  Although
the Partnership was not named as a party in the suit, the lawsuit states that it
relates to all wells operated by the Managing General Partner, which includes a
majority of the Partnership’s 38 wells in the Wattenberg field subject to the
settlement.  On October 10, 2008, the court issued preliminary
approval of the settlement agreement. The portion of the proposed settlement
related to the Partnership’s wells for all periods through December 31, 2007 is
$74,412.  During the third quarter of 2008, an additional amount of
$21,824 plus legal costs of $3,067 were recorded to fully accrue for the
settlement through September 30, 2008.  In November 2008, the Managing
General Partner paid into an escrow account, on behalf of the Partnership,
amounts due under the settlement.  These amounts will be deducted from
future Partnership distributions. Notice of the settlement was mailed to members
of the class action suit in the fourth quarter of 2008 and the final settlement
was approved by the court at a hearing on April 7, 2009.
 
 Special Risks of an
Investment in the Partnership
  The partnership units are
not registered and there is no public market for the units.  As a
result an individual investor partner may not be able to sell his or her
units.  There is and will be no public market for the units nor
will a public market develop for the units.  Investor Partners may not
be able to sell their Partnership interests or may be able to sell them only for
less than fair market value.  The offer and sale of units have not
been, and will not in the future be, registered under the Securities Act or
under any state securities laws.  Each purchaser of units has been
required to represent that such investor has purchased the units for his or her
own account for investment purposes and not with a view to resale or
distribution.  No transfer of a unit may be made unless the transferee
is an "accredited investor" and such transfer is registered under the Securities
Act and applicable state securities laws, or an exemption there from is
available.  The Partnership may require that the transferor provide an
opinion of legal counsel stating that the transfer complies with all applicable
securities laws.  A sale or transfer of units by an individual
investor partner requires PDC’s, as Managing General Partner, prior written
consent.  For these and other reasons, an individual investor partner
must anticipate that he or she will have to hold his or her Partnership
interests indefinitely and will not be able to liquidate his or her investment
in the Partnership.  Consequently, an individual investor partner must
be able to bear the economic risk of investing in the Partnership for an
indefinite period of time.
  -18-
 Index
  Dry hole or non-commercially
viable drilling prospect costs associated with the Partnership's drilling could
result in reduced distributions to the Investor Partners.  To
date, the Partnership has drilled a total of 49 wells.  Of these
wells, two have been determined to be commercially unproductive and therefore
declared to be dry holes.  As dry holes result in no production of oil
and natural gas, the occurrence of dry holes causes the revenues and
distributions to be less than if the wells drilled had been commercially
productive.  From inception through December 31, 2007, the Partnership
recorded $2.1 million in exploratory dry hole costs.
  Quarterly,
the Partnership assesses impairment of capitalized costs of proved oil and
natural gas properties by comparing net capitalized costs to estimated
undiscounted future net cash flows on a field-by-field basis using estimated
production based upon prices at which management reasonably estimates such
production to be sold.  Unlike dry holes, impaired properties may
still produce oil and natural gas which can be sold, however the impaired
properties may not generate enough production for the Partnership to recoup the
amounts invested in the properties.
  The general partners,
including the Managing General Partner, are individually liable for Partnership
obligations and liabilities that arose prior to conversion to limited partners
that may exceed the amount of their subscriptions, Partnership assets, and the
assets of the Managing General Partner.  Under West Virginia
law, the state in which the Partnership was organized, general partners of a
limited partnership have unlimited liability with respect to the
Partnership.  Therefore, the additional general partners of the
Partnership were liable individually and as a group for all obligations and
liabilities of creditors and claimants, whether arising out of contract or tort,
in the conduct of the Partnership's operations until such time as the additional
general partners converted to limited partners.  Upon completion of
the drilling phase of the Partnership's wells, all additional general partners
units were converted into units of limited partner interests and thereafter
became limited partners of the Partnership. Irrespective of conversion, the
additional general partners will remain fully liable for obligations and
liabilities that arose prior to conversion.  Investors as additional
general partners may be liable for amounts in excess of their subscriptions, the
assets of the Partnership, including insurance coverage, and the assets of the
Managing General Partner.
 
 The Managing General Partner
may not have sufficient funds to repurchase limited partnership
units.  As a result of PDC, the Managing General Partner, being
a general partner in several partnerships as well as an actively operating
corporation, the Partnership’s net worth is at risk of reduction if PDC suffers
a significant financial loss.  Because the Investor Partners may
request the Managing General Partner to repurchase the units in the Partnership,
subject to certain conditions and restrictions, a significant adverse financial
reversal for PDC could result in the Managing General Partner’s inability to pay
for Partnership obligations or the repurchase of investor units.  As a
result, an individual investor partner may not be able to liquidate his or her
investment in the Partnership.
 
 A significant financial loss
by the Managing General Partner could result in PDC's inability to indemnify
additional general partners for personal losses suffered because of Partnership
liabilities.  As a result of PDC's commitments as managing
general partner of several partnerships and because of the unlimited liability
of a general partner to third parties, PDC's net worth is at risk of reduction
if PDC suffers a significant financial loss.  The partnership
agreement provides that PDC as the Managing General Partner will indemnify all
additional general partners for the amounts of their obligations and losses
which exceed insurance proceeds and the Partnership's assets.  Because
PDC is primarily responsible for the conduct of the Partnership's affairs, as
well as the affairs of other partnerships for which PDC serves as managing
general partner, a significant adverse financial reversal for PDC could result
in PDC's inability to pay for Partnership liabilities and
obligations.  The additional general partners of the Partnership might
be personally liable for payments of the Partnership's liabilities and
obligations.  Therefore, the Managing General Partner's financial
incapacity could increase the risk of personal liability as an additional
general partner because PDC would be unable to indemnify the additional general
partners for any personal losses they suffered arising from Partnership
operations.
  -19-
 Index
 
 A substantial part of our
gas and oil production is located in the Rocky Mountain Region, making it
vulnerable to risks associated with operating in a single major geographic
area.  The Partnership’s operations are focused in the Rocky
Mountain Region and our producing properties are geographically concentrated in
that area.  Because our operations are not geographically diversified,
the success of our operations and our profitability may be disproportionately
exposed to the effect of any regional events, including fluctuations in prices
of natural gas and oil produced from the wells in the region, natural disasters,
restrictive governmental regulations, transportation capacity constraints,
curtailment of production or interruption of transportation, and any resulting
delays or interruptions of production from existing or planned new
wells.  During the second half of 2007, gas prices in the Rocky
Mountain Region fell disproportionately when compared to other markets, due in
part to continuing constraints in transporting gas from producing properties in
the region.  Because of the concentration of our operations in the
Rocky Mountain Region, such price decreases could have a material adverse effect
on our revenue, profitability and cash flow.
 
 Information technology
financial systems implementation problems could disrupt the Management General
Partner’s internal business operations and adversely affect Partnership business
financial results or its ability to report Partnership financial
results.  The Partnership’s Managing General Partner is
currently in the process of implementing a new financial software system to
enhance operating efficiencies and provide more effective management of
corporate and partnership business operations.  Implementations of
financial systems and related software carry such risks as cost overruns,
project delays and business interruptions, which could increase the
Partnership’s expense, have an adverse effect on the Partnership’s business, and
its ability to report in an accurate and timely manner, the Partnership’s
financial position, results of operations and cash flows.
 
 The Managing General
Partner, with respect to its own corporate interests, the Partnership and
various other limited partnerships sponsored by the Managing General Partner,
have been delinquent in filing periodic reports with the
SEC.  Consequently, Investor Partners are unable to review the
delinquent partnerships' financial statements as a source of information for
evaluating their investment in the Partnership.  PDC, as an
actively operating corporation, and various limited partnerships which PDC has
sponsored and for which PDC serves as the Managing General Partner are subject
to reporting requirements of the Exchange Act and are obligated to file annual
and quarterly reports with the SEC in accordance with the rules of the
SEC.  In the course of preparing corporate financial statements for
the quarter ended June 30, 2005, PDC identified accounting errors in its prior
period financial statements.  As a result, on October 17, 2005, PDC’s
Board of Directors, Audit Committee and management concluded that PDC's
previously issued financial statements could not be relied upon and would be
restated.  PDC, as Managing General Partner, made similar
determinations regarding the financial statements of various limited
partnerships which are subject to the Exchange Act reporting
obligations.
  Since
October 2005, PDC has become compliant with its corporate Exchange Act filing
and reporting obligations.  Additionally, Rockies Region 2007 Limited
Partnership and Rockies Region 2006 Limited Partnership have completed all
required SEC filings through December 31, 2008; Rockies Region Private Limited
Partnership (with this filing), PDC 2005-A Limited Partnership and PDC 2005-B
Limited Partnership have filed financial statements through December 31, 2007,
however, these latter three partnerships are still delinquent with respect to
their 2008 filing requirement  These three partnerships are currently
in the process of preparing their 2008 10-K filings which will include unaudited
quarterly condensed financial statements for 2008.  PDC 2004-A Limited
Partnership has filed financial statements through December 31, 2005 but is
delinquent on all quarterly and annual filing requirements from March 31, 2006
through December 31, 2008.  All remaining limited partnerships
sponsored by PDC which are subject to the Exchange Act have been, and continue
to be, delinquent in filing their respective periodic reports in accordance with
the requirements of the Exchange Act.  Until these partnerships file
their delinquent periodic reports, investors will be unable to review the
financial statements of the various limited partnerships as an additional source
of information they can use in their evaluation of their investment in the
Partnership.  Currently the Managing General Partner has in place a
compliance effort addressing the delinquent reports of the various limited
partnerships.  However, due to the amount of effort, time and
financial resources required to bring the limited partnerships into compliance
with Exchange Act periodic reporting requirements, the Partnership and the
various limited partnerships may be unable to bring their delinquent reports
current and may be unable in the future to file their required periodic reports
with the Securities and Exchange Commission in a timely manner.
 -20-
 Index
  "Material weaknesses"
identified in the Managing General Partner’s internal control over financial
reporting and resulting ineffective disclosure controls and procedures could
have a material adverse effect on the reliability of Partnership financial
statements, its ability to file Partnership public reports on time and provide
for accurate and timely Investor Partner distributions.
  Management
of the Managing General Partner assessed the effectiveness of the Partnership’s
internal control over financial reporting as of December 31, 2006 and 2007 and
pursuant to this assessment, identified three material weaknesses in the
Partnership’s internal control over financial reporting. The existence of any
material weakness means there is a deficiency, or a combination of deficiencies,
in internal control over financial reporting, such that there is a reasonable
possibility that a material misstatement of the Partnership’s annual or interim
financial statements will not be prevented or detected on a timely basis.
The three material weaknesses relate to the Partnership’s failure to
maintain effective controls over some key financial statement spreadsheets that
support all significant balance sheet and income statement accounts, the failure
to ensure proper accounting for derivative activities and the failure to
maintain sufficient documentation to adequately assess the operating
effectiveness of internal control over reporting for the transactions that are
directly related to and processed by the Partnership. For a more detailed
discussion of the Partnership’s material weaknesses, see Item 9A(T), Controls and Procedures,of
this report. As a result of these material weaknesses, management of the
Managing General Partner concluded that the Partnership’s disclosure controls
and procedures were not effective as of December 31, 2006 and
2007.
 Failure
by the Partnership in maintaining effective internal control over financial
reporting and/or effective disclosure controls and procedures could prevent the
Partnership from being able to prevent fraud and/or provide reliable financial
statements and other public reports or make timely and accurate Investor Partner
distributions. Such circumstances could harm the Partnership’s business and
operating results, cause Investor Partners to lose confidence in the accuracy
and completeness of the Partnership’s financial statements and reports, and have
a material adverse effect on the Partnership’s ability to fully develop and
utilize partnership assets. These failures may also adversely affect the
Partnership’s ability to file our periodic reports with the SEC on
time.
 
 
 Item1B.
              Unresolved
      Staff Comments
 
 None
 
 
 Item2.
              Properties
 
 The
Partnership’s properties (the “Properties”) consist of working interests in gas
wells and the ownership in leasehold acreage in the spacing units for the 49
wells drilled by the Partnership.  The acreage associated with the
spacing units is designated by state rules and regulations in conjunction with
local practice.  See the section titled Item 1, Business Drilling Activities
and Plan of Operations
for additional information on the Partnership’s properties.
  -21-
 Index
  The
Partnership commenced drilling activities immediately following funding on
December 30, 2005.  As of December 31, 2007, a total of 49 gross wells
had been drilled and the status as of that date is reflected in the table
below.
 
 2007
                  
                  
                  2006
                  
                  
                  2005Gross
                  
                  
                  Net
                  
                  
                  Gross
                  
                  
                  Net
                  
                  
                  Gross
                  
                  
                  NetDevelopment
      wells:Drilled,
      fractured and producing
                  
                  
                  47.0
                  
                  
                  
                  46.9
                  
                  
                  
                  46.0
                  
                  
                  
                  45.9
                  
                  
                  
                  -
                  
                  
                  
                  -Drilled
      and not completed
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  1.0
                  
                  
                  
                  1.0
                  
                  
                  
                  2.0
                  
                  
                  
                  2.0Dry
      hole
                  
                  
                  1.0
                  
                  
                  
                  1.0
                  
                  
                  
                  1.0
                  
                  
                  
                  1.0
                  
                  
                  
                  -
                  
                  
                  
                  -Exploratory
      wells:Dry
      hole
                  
                  
                  1.0
                  
                  
                  
                  0.7
                  
                  
                  
                  1.0
                  
                  
                  
                  0.7
                  
                  
                  
                  -
                  
                  
                  
                  -Total
                  
                  
                  49.0
                  
                  
                  
                  48.6
                  
                  
                  
                  49.0
                  
                  
                  
                  48.6
                  
                  
                  
                  2.0
                  
                  
                  
                  2.0
 
 The 49
wells in the table above are the only wells to be drilled by the Partnership
since all of the funds raised in the Partnership offering have been
utilized.
 
 Productive
wells consist of producing wells and wells capable of producing oil and natural
gas in commercial quantities.  Gross wells refer to the number of
wells in which the Partnership has an interest.  Net wells refer to
gross wells multiplied by the percentage working interest owned by the
Partnership.
 
 The
Partnership drilled 48 wells in Colorado and one in Wyoming.  Of the
wells in Colorado, 47 are development wells which are currently producing and
one is a dry hole.  In Wyoming, the one exploratory well that was
drilled was determined to be a dry hole.  The details of these
prospect areas are further outlined below.
  Colorado.  Wattenberg
Field, located north and east of Denver, Colorado, is in the Denver-Julesburg
(DJ) Basin.  The typical well production profile has an initial high
production rate and relatively rapid decline, followed by years of relatively
shallow decline.  Natural gas is the primary hydrocarbon produced;
however, many wells will also produce oil.  The purchase price for the
natural gas may include revenue from the recovery of propane and butane in the
gas stream, as well as a premium for the typical high-energy content of the
natural gas.  Wells in the area may include as many as four productive
formations.  From shallowest to deepest, these are the Sussex, the
Niobrara, the Codell and the J Sand.  The primary producing zone in
most wells is the Codell sand which produces a combination of natural gas and
oil.
  The Grand
Valley Field is in the Piceance Basin, located near the western border of
Colorado.  Wells in the Piceance Basin generally produce natural gas
along with small quantities of oil and water.  The producing interval
consists of a total of 150 to 300 feet of productive sandstone divided in 10 to
15 different zones.  The production zones are separated by layers of
nonproductive shale resulting in a total interval of 2,000 to 4,000 feet with
alternating producing and non-producing zones.  The natural gas
reserves and production are divided into these numerous smaller
zones.
 
 Wyoming.  The
Partnership drilled one exploratory well in Wyoming.  The well was
fractured in multiple zones but was determined to be a dry
hole.
  -22-
 Index
  Production
 
 Production
commenced during the first quarter of 2006, peaked at 906,546 Mcfe during the
quarter ended September 30, 2006 and has decreased as anticipated each quarter
since then.  A complete disclosure of quarterly production volumes,
prices and sales is presented in Item 7, Management’s Discussion and Analysis
of Financial Condition and Results of Operations in this
report.
 
 Oil and Natural Gas
Reserves
 
 All of
the Partnership’s gas and oil reserves are located in the United
States.  The Partnership utilized the services of an independent
petroleum engineer, Ryder Scott Company, L.P., for its 2006 and 2007 reserve
report.  The independent engineer’s estimates are made using available
geological and reservoir data as well as production performance data. The
estimates are prepared with respect to reserve categorization, using the
definitions for proved reserves set forth in SEC Regulation S-X, Rule 4-10(a)
and subsequent SEC staff interpretations and guidance. When preparing the
Partnership's reserve estimates, the independent engineer did not independently
verify the accuracy and completeness of information and data furnished by the
Managing General Partner with respect to ownership interests, oil and gas
production, well test data, historical costs of operations and developments,
product prices, or any agreements relating to current and future operations of
properties and sales of production.  The Partnership's independent
reserve estimates are reviewed and approved by the Managing General Partner's
internal engineering staff and management.  See Supplemental Oil and
Gas Information – Unaudited, NetProved Oil and Gas Reservesor additional information regarding the Partnership’s
reserves.
 
 Title to
Properties
 
 The
Partnership holds record title in its name to the working interest in each
well.  PDC provides an assignment of working interest for the well
bore prior to the spudding of the well and effective the date of the spudding of
the well, to the Partnership in accordance with the Drilling and Operation
Agreement.  Upon completion of the drilling of all of the Partnership
wells, these assignments are recorded in the applicable
county.  Investor Partners rely on PDC to use its best judgment to
obtain appropriate title to these working interests.  Provisions of
the Agreement relieve PDC from any error in judgment with respect to the waiver
of title defects.  PDC takes those steps it deems necessary to assure
that title to the working interests is acceptable for purposes of the
Partnership.
  The
Partnership's leases are direct interests in producing acreage.  The
Partnership believes it holds good and defensible title to its developed
properties, in accordance with standards generally accepted in the oil and
natural gas industry. As is customary in the industry, a perfunctory title
examination is conducted at the time the undeveloped properties are
acquired.  Prior to the commencement of drilling operations, a title
examination is conducted and curative work is performed with respect to
discovered defects which are deemed to be significant. Title examinations have
been performed with respect to substantially all of the Partnership's producing
properties.
 
 The
Partnership’s properties are subject to royalty, overriding royalty and other
outstanding interests customary to the industry.  The properties may
also be subject to additional burdens, liens or encumbrances customary to the
industry.  We do not believe that any of these burdens will materially
interfere with the use of the properties.
 
 
 Item3.
              Legal
      Proceedings
 
 The
Registrant is not currently subject to any material pending legal
proceedings.
  See Note
8, Commitments and
Contingencies to the accompanying financial statements for additional
information related to litigation.
 
 
 Item4.
              Submission
      of Matters to a Vote of Security
Holders
 
 None
  -23-
 Index
  PART
II
 
 Item5.
              Market
      for Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities
 
 At
February 28, 2009, the Partnership had 962 Investor Partners holding 1,787 units
and one Managing General Partner. Investor Partners' interests are transferable;
however, no assignee of units in the Partnership can become a substituted
partner without the written consent of the transferor and the Managing General
Partner. As of February 28, 2009, the Managing General Partner has not
repurchased any Partnership interests from Investor Partners.
 
 Market.  There is
no public market for the Partnership units nor will a public market develop for
these units in the future.  Investor Partners may not be able to sell
their Partnership interests or may be able to sell them only for less than fair
market value.  The offer and sale of the Investor Partners' interests
("units") have not been registered under the Securities Act or under any state
securities laws.  Each purchaser of units was required to represent
that such individual investor partner was purchasing the units for his or her
own account for investment and not with a view to parallel
distribution.  No transfer of a unit may be made unless the transferee
is an "accredited investor" and such transfer is registered under the Securities
Act and applicable state securities laws, or an exemption therefrom is
available.  The Partnership may require that the transferor provide an
opinion of legal counsel stating that the transfer complies with all applicable
securities laws.  A sale or transfer of units by an individual
investor partner requires PDC’s, as Managing General Partner, prior written
consent.  For these and other reasons, an individual investor partner
must anticipate that he or she will have to hold his or her partnership
interests indefinitely and will not be able to liquidate his or her investment
in the Partnership.  Consequently, an individual investor partner must
be able to bear the economic risk of investing in the Partnership for an
indefinite period of time.
 
 Cash Distribution
Policy.  PDC plans to make distributions of Partnership cash on
a monthly basis, but no less often than quarterly, if funds are available for
distribution.  PDC will make cash distributions of 70% to the Investor
Partners, adjusted for any units purchased by the Managing General Partner, and
30% to the Managing General Partner throughout the term of the
Partnership.
 
 PDC
cannot presently predict amounts of cash distributions, if any, from the
Partnership.  However, PDC expressly conditions any distribution upon
its having sufficient cash available for distribution.  Sufficient
cash available for distribution is defined to generally mean cash generated by
the Partnership in excess of the amount the Managing General Partner determines
is necessary or appropriate to provide for the conduct of the Partnership's
business, to comply with applicable law, to comply with any debt instruments or
other agreements or to provide for future distributions to unit
holders.  In this regard, PDC reviews the accounts of the Partnership
at least quarterly for the purpose of determining the sufficiency of
distributable cash available for distribution.  Amounts will be paid
to Investor Partners only after payment of fees and expenses to the Managing
General Partner and its affiliates and only if there is sufficient cash
available.  The ability of the Partnership to make or sustain cash
distributions depends upon numerous factors.  PDC can give no
assurance that any level of cash distributions to the Investor Partners of the
Partnership will be attained, that cash distributions will equal or approximate
cash distributions made to investor partners of prior drilling programs
sponsored by PDC, or that any level of cash distributions can be
maintained.  The Partnership made cash distributions of $10.4 million
and $10.2 million for the years ended December 31, 2007 and 2006,
respectively.  No cash distributions were made for the period ended
December 31, 2005.
  In
general, the volume of production from producing properties declines with the
passage of time.  The cash flow generated by the Partnership's
activities and the amounts available for distribution to the Partnership's
Investor Partners will, therefore, decline in the absence of significant
increases in the prices that the Partnership receives for its oil and natural
gas production, or significant increases in the production of oil and natural
gas from the successful additional development of these prospects.  If
the Partnership decides to develop its wells further, the funds necessary for
that development would come from the Partnership's revenues and/or from borrowed
funds.  As a result, there may be a decrease in the funds available
for distribution, and the distributions to the Investor Partners may
decrease.
  -24-
 Index
  In
general, PDC divides cash distributions 70% to the Investor Partners and 30% to
PDC throughout the term of the Partnership.  Cash is distributed to
the Investor Partners and PDC as a return on capital, in the same proportion as
their interest in the net income of the Partnership.  However, no
individual investor partner will receive distributions to the extent the
distributions would create or increase a deficit in that investor partner's
capital account.
  PDC, as
Managing General Partner, intends to develop the Partnership's interests in its
prospects only with the proceeds of subscriptions and PDC's capital
contributions.  However, these funds may not be sufficient to fund all
future well costs, and it may be necessary for the Partnership to retain
Partnership revenues for the payment of these costs, or for PDC to advance the
necessary funds to the Partnership or for the Partnership to borrow necessary
funds.  It is likely that the Partnership's Wattenberg Field, Colorado
wells will benefit from recompletion services, generally in five years or longer
following initial drilling of those wells.  Recompletion is the
process of going into an existing zone which is already producing for a
“refrac,” or refracture operation to go into a new zone at a different depth,
all with the objective of increasing the production of oil or natural
gas.  If PDC retains Partnership revenues for the payment of these
recompletion or “refrac” costs, the amount of Partnership funds available for
distribution to the Investor Partners of the Partnership will decrease
correspondingly.  Development work will not include the drilling of
any new wells beyond the initial wells that have been drilled.  PDC
may retain payment for the recompletion or “refrac” work from Partnership
proceeds, by preparing an Authority for Expenditure, or AFE, estimate for the
Partnership in either of the two methods:
 
 ·
              PDC
      will complete the development work and will bill the Partnership for the
      work performed and will be reimbursed from future production;
      or
  ·
              The
      Partnership will retain revenues from operations until it has accumulated
      or borrowed sufficient funds to pay for the development work, at which
      time PDC will commence the work, and PDC will be reimbursed as the work
      progresses from retained revenues.
  Should
the Partnership’s revenues be retained for the payment of recompletion or
“refrac” costs, the determination of which option to use will be at PDC's
discretion, based on the amount of the anticipated expenditure and the urgency
of the necessary work.
  The
Agreement also permits the Partnership to borrow funds on behalf of the
Partnership for Partnership activities. The Partnership may borrow needed funds,
or receive advances, from the Managing General Partner or affiliates of the
Managing General Partner or from unaffiliated persons.  On loans or
advances made available to the Partnership by the Managing General Partner or
affiliates of the Managing General Partner, the Managing General Partner or
affiliate may not receive interest in excess of its interest costs, nor may the
Managing General Partner or affiliate receive interest in excess of the amounts
which would be charged the Partnership (without reference to the Managing
General Partner's financial abilities or guarantees) by unrelated banks on
comparable loans for the same purpose.  The Managing General Partner
anticipates that borrowed funds will be utilized to finance Codell recompletion
activities (see Item 1, Business).  As the
Partnership will have to pay interest on borrowed funds, the amount of
Partnership funds available for distribution to the partners of the Partnership
will be reduced accordingly.
  Individual
investor partners who are independent producers are entitled to claim a
percentage depletion deduction against their oil and natural gas
income.  The percentage depletion rate for oil and gas properties is
generally 15% of the gross income generated by the property.
 
 
 Item6.
              Selected
      Financial Data
 
 Not
applicable
 -25-
 Index
  Item7.
              Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
 
 Overview
 
 The
Partnership was funded on December 6, 2005 with initial contributions of $35.7
million from the Investor Partners and a cash contribution of $11.2 million from
the Managing General Partner.  After payment of syndication costs of
$3.6 million and a one-time management fee to PDC of $0.5 million, the
Partnership had available cash of $42.8 million to commence Partnership oil and
natural gas well drilling activities.
 
 The
Partnership began exploration and development activities immediately after
funding.  The full amount of the funding was paid to PDC to begin the
drilling of oil and natural gas wells, on behalf of the Partnership under the
Drilling and Operating Agreement.  The payment to PDC was made as an
advance of exploration and development costs for oil and natural gas
properties.  On December 30, 2005, PDC commenced drilling on behalf of
the Partnership.  As of December 31, 2007, a total of 49 wells have
been drilled, predominantly in Colorado.  Of the 49 wells drilled, 47
are producing and two, one an exploratory well and the other developmental, are
dry holes.  These 49 wells are the only wells the Partnership will
drill because all of the capital contributions have been
utilized.  The completed wells produce primarily natural gas, with
some associated crude oil.  Sales of produced natural gas and oil
commenced during the first quarter of 2006 as wells were connected to
pipelines.  Production and sales increased through the third quarter
of 2006 as additional wells were completed and connected to
pipelines.  As expected for wells in this area, the Partnership has
recognized a steady decline in quarterly production and net
sales.  The Partnership’s wells will produce until they are depleted
or until they are uneconomical to produce; however, it is the plan of the
Partnership and the Managing General Partner to recomplete the Codell formation
in certain wells in the Wattenberg Field after five or more years of production
because these wells will have experienced a significant decline in production in
that time period.  However, the exact timing of recompletion may be
delayed or accelerated due to changing commodity prices.  Codell
recompletions typically increase production rates and recoverable
reserves.  Although PDC has experienced significant production
increases following prior Codell recompletions, not all such recompletions have
been successful.
 -26-
 Index
  Results of
Operations
 
 The
following table presents significant operational information of the Partnership
for years ended December 31, 2007 and 2006 and the period from December 6, (date
of inception) to December 31, 2005.
 
 Period
      December 6, 2005 (date of inception)Year
      Ended
                    
                    
                    Year
      Ended
                    
                    
                    throughDecember
      31, 2007
                    
                    
                    December
      31, 2006
                    
                    
                    December
      31, 2005Number
      of producing wells (end of period)
                    
                    
                    47
                    
                    
                    
                    46
                    
                    
                    
                    -Production:Oil
      (Bbl)
                    
                    
                    76,039
                    
                    
                    
                    134,759
                    
                    
                    
                    -Natural
      gas (Mcf)
                    
                    
                    1,212,711
                    
                    
                    
                    1,576,142
                    
                    
                    
                    -Natural
      gas equivalents (Mcfe)
                    
                    
                    1,668,945
                    
                    
                    
                    2,384,696
                    
                    
                    
                    -Average
      selling price*:Oil
      (per Bbl)
                    
                    $
                    57.15
                    
                    
                    $
                    65.13
                    
                    
                    $
                    -Natural
      gas (per Mcf)
                    
                    
                    4.95
                    
                    
                    
                    5.08
                    
                    
                    
                    -Natural
      gas equivalents (per Mcfe)
                    
                    
                    6.20
                    
                    
                    
                    7.04
                    
                    
                    
                    -Average
      selling price (including realized gains and losses on
      derivatives):Oil
      (per Bbl)
                    
                    
                    56.83
                    
                    
                    
                    65.06
                    
                    
                    
                    -Natural
      gas (per Mcf)
                    
                    
                    5.39
                    
                    
                    
                    5.14
                    
                    
                    
                    -Natural
      gas equivalents (per Mcfe)
                    
                    
                    6.50
                    
                    
                    
                    7.07
                    
                    
                    
                    -Average
      cost per Mcfe:Production
      and operating costs
                    
                    
                    1.29
                    
                    
                    
                    0.90
                    
                    
                    
                    -Depreciation,
      depletion and amortization
                    
                    
                    2.58
                    
                    
                    
                    2.46
                    
                    
                    
                    -Revenues:Oil
      sales
                    
                    
                    4,345,751
                    
                    
                    
                    8,776,696
                    
                    
                    
                    -Natural
      gas sales
                    
                    
                    6,005,222
                    
                    
                    
                    8,005,277
                    
                    
                    
                    -Oil
      and gas sales
                    
                    
                    10,350,973
                    
                    
                    
                    16,781,973
                    
                    
                    
                    -Oil
      and gas price risk management gain (loss), net
                    
                    
                    (899,196
                    )
                    
                    
                    1,113,565
                    
                    
                    
                    -Total
      revenues
                    
                    
                    9,451,777
                    
                    
                    
                    17,895,538
                    
                    
                    
                    -Operating
      costs and expenses:Production
      and operating costs
                    
                    
                    2,144,778
                    
                    
                    
                    2,152,842
                    
                    
                    
                    -Management
      fee
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    536,033Direct
      costs - general and administrative
                    
                    
                    101,279
                    
                    
                    
                    245,875
                    
                    
                    
                    20,027Depreciation,
      depletion and amortization
                    
                    
                    4,310,845
                    
                    
                    
                    5,877,662
                    
                    
                    
                    -Exploratory
      dry hole costs
                    
                    
                    77,911
                    
                    
                    
                    2,057,369
                    
                    
                    
                    -Accretion
      of asset retirement obligations
                    
                    
                    16,620
                    
                    
                    
                    11,727
                    
                    
                    
                    -Total
      operating costs and expenses
                    
                    
                    6,651,433
                    
                    
                    
                    10,345,475
                    
                    
                    
                    556,060Income
      (loss) from operations
                    
                    
                    2,800,344
                    
                    
                    
                    7,550,063
                    
                    
                    
                    (556,060
                    )Interest
      income
                    
                    
                    101,818
                    
                    
                    
                    29,119
                    
                    
                    
                    -Net
      income (loss)
                    
                    $
                    2,902,162
                    
                    
                    $
                    7,579,182
                    
                    
                    $
                    (556,060
                    )Cash
      distributions
                    
                    $
                    10,440,213
                    
                    
                    $
                    10,156,347
                    
                    
                    $
                    -
 
 *Prices
exclude realized and unrealized ”Oil and gas price risk management gain (loss),
net” effects.
 
 Definitions
used throughout Management’s Discussion and Analysis of Financial Condition and
Results of Operations.
 
 ·
              Bbl
      – One barrel or 42 U.S. gallons liquid
volume
 ·
              MBbl
      – One thousand barrels
 ·
              Mcf
      – One thousand cubic feet
 ·
              MMcf
      – One million cubic feet
 ·
              Mcfe
      – One thousand cubic feet of gas equivalents, based on a ratio of 6 Mcf
      for each barrel of oil, which reflects the relative energy
      content.
  -27-
 Index
  No
revenue was generated by the Partnership in 2005 because no wells were in
production.  In accordance with the Partnership Agreement, a one-time
management fee equal to 1 1⁄2% of investors’ subscriptions was charged to the
Partnership in the amount of $0.5 million by the Managing General
Partner.  This fee was paid by the Partnership to the Managing General
Partner upon funding the Partnership and represents the majority of the loss for
the period ended December 31, 2005.  The Partnership paid syndication
costs of $3.6 million.
 
 Oil and Natural Gas
Sales
 
 The table
below shows sales and production information for each quarter for the years
ended December 31, 2007 and 2006.  There were no sales or production
during the period from December 6, 2005 (date of inception) to December 31,
2005.  Oil and natural gas sales exclude the impact of commodity-based
derivatives, which are reflected in the line “Oil and gas price risk management
gain (loss), net” in the statements of operations.
 
 2007
                            
                            
                            2006Total
                            
                            Sales
                            
                            
                            Mcfe's
                            
                            
                            per
      Mcfe
                            
                            
                            Sales
                            
                            
                            Mcfe's
                            
                            
                            per
      McfeJan-Mar
                            
                            $
                            3,178,054
                            
                            
                            
                            515,082
                            
                            
                            $
                            6.17
                            
                            
                            $
                            420,087
                            
                            
                            
                            45,234
                            
                            
                            $
                            9.29Apr-Jun
                            
                            
                            2,670,716
                            
                            
                            
                            444,207
                            
                            
                            
                            6.01
                            
                            
                            
                            5,775,680
                            
                            
                            
                            632,747
                            
                            
                            
                            9.13Jul-Sep
                            
                            
                            2,357,891
                            
                            
                            
                            411,543
                            
                            
                            
                            5.73
                            
                            
                            
                            5,761,615
                            
                            
                            
                            951,715
                            
                            
                            
                            6.05Oct-Dec
                            
                            
                            2,144,313
                            
                            
                            
                            298,113
                            
                            
                            
                            7.19
                            
                            
                            
                            4,824,591
                            
                            
                            
                            755,000
                            
                            
                            
                            6.39Total
                            
                            $
                            10,350,973
                            
                            
                            
                            1,668,945
                            
                            
                            $
                            6.20
                            
                            
                            $
                            16,781,973
                            
                            
                            
                            2,384,696
                            
                            
                            $
                            7.04Change
      (year-over-year)
                            
                            
                            -38
                            %
                            
                            
                            -30
                            %
                            
                            
                            -12
                            %2007
                            
                            
                            2006Oil
                            
                            Sales
                            
                            
                            Bbl
                            
                            
                            per
      Bbl
                            
                            
                            Sales
                            
                            
                            Bbl
                            
                            
                            per
      BblJan-Mar
                            
                            $
                            1,151,867
                            
                            
                            
                            25,593
                            
                            
                            $
                            45.01
                            
                            
                            $
                            327,980
                            
                            
                            
                            5,402
                            
                            
                            $
                            60.71Apr-Jun
                            
                            
                            1,012,717
                            
                            
                            
                            18,661
                            
                            
                            
                            54.27
                            
                            
                            
                            3,637,473
                            
                            
                            
                            48,185
                            
                            
                            
                            75.49Jul-Sep
                            
                            
                            1,092,615
                            
                            
                            
                            16,913
                            
                            
                            
                            64.60
                            
                            
                            
                            2,460,361
                            
                            
                            
                            41,551
                            
                            
                            
                            59.21Oct-Dec
                            
                            
                            1,088,552
                            
                            
                            
                            14,872
                            
                            
                            
                            73.19
                            
                            
                            
                            2,350,882
                            
                            
                            
                            39,621
                            
                            
                            
                            59.33Total
                            
                            $
                            4,345,751
                            
                            
                            
                            76,039
                            
                            
                            $
                            57.15
                            
                            
                            $
                            8,776,696
                            
                            
                            
                            134,759
                            
                            
                            $
                            65.13Change
      (year-over-year)
                            
                            
                            -50
                            %
                            
                            
                            -44
                            %
                            
                            
                            -12
                            %2007
                            
                            
                            2006Natural
      Gas
                            
                            Sales
                            
                            
                            Mcf
                            
                            
                            per
      Mcf
                            
                            
                            Sales
                            
                            
                            Mcf
                            
                            
                            per
      McfJan-Mar
                            
                            $
                            2,026,187
                            
                            
                            
                            361,524
                            
                            
                            $
                            5.60
                            
                            
                            $
                            92,107
                            
                            
                            
                            12,822
                            
                            
                            $
                            7.18Apr-Jun
                            
                            
                            1,657,999
                            
                            
                            
                            332,241
                            
                            
                            
                            4.99
                            
                            
                            
                            2,138,207
                            
                            
                            
                            343,637
                            
                            
                            
                            6.22Jul-Sep
                            
                            
                            1,265,276
                            
                            
                            
                            310,065
                            
                            
                            
                            4.08
                            
                            
                            
                            3,301,254
                            
                            
                            
                            702,409
                            
                            
                            
                            4.70Oct-Dec
                            
                            
                            1,055,760
                            
                            
                            
                            208,881
                            
                            
                            
                            5.05
                            
                            
                            
                            2,473,709
                            
                            
                            
                            517,274
                            
                            
                            
                            4.78Total
                            
                            $
                            6,005,222
                            
                            
                            
                            1,212,711
                            
                            
                            $
                            4.95
                            
                            
                            $
                            8,005,277
                            
                            
                            
                            1,576,142
                            
                            
                            $
                            5.08Change
      (year-over-year)
                            
                            
                            -25
                            %
                            
                            
                            -23
                            %
                            
                            
                            -3
                            %
 
 The 38%
decrease in total sales in 2007 as compared to 2006 was due to decreased total
production volumes of 30% along with a decrease in average sales price of
12%.
 
 Decreased
volumes and decreased commodity prices contributed $5.0 million and $1.4
million, respectively, to the total $6.4 million decrease in oil and natural gas
sales in 2007 as compared to 2006.  This change in production volumes
is consistent with the historically declining production curves for wells
drilled in the Wattenberg and Piceance fields.  The decline in natural
gas revenues of 25% was less than the decline of oil revenues of 50% due to a
historically steeper decline in oil production early in the production cycle as
compared to natural gas and a much larger decline in oil prices (12.2%) than
natural gas prices (2.5%).  The Partnership expects to experience
continued declines in oil and natural gas production volumes until the
Wattenberg wells are recompleted.
  -28-
 Index
  Oil and Natural Gas
Pricing
 
 Financial
results depend upon many factors, particularly the prices of oil and natural gas
and our ability to market our production effectively.  Natural gas and
oil prices have been among the most volatile of all commodity prices. These
price variations have a material impact on Partnership financial
results.  Natural gas and oil prices also vary by region and
locality, especially in the Rocky Mountain Region, depending upon the
distance to markets, and the supply and demand relationships in that region or
locality.  The combination of increased drilling activity and the lack
of substantial local market demand can lead to local market oversupply
situations, which have the effect of depressing prices.  Such a
situation existed in the Rocky Mountain Region during 2007, with production
exceeding the local market demand and pipeline transportation capacity to
non-local markets.  The result, beginning in the second quarter of
2007 and continuing into the fourth quarter of 2007, was a decrease in the price
of CIG - index natural gas pricing compared to the NYMEX price and other
markets.  This decline in the CIG price hit a low of $0.70 per Mcf in
October 2007.  In response to low prices, the Partnership temporarily
shut in eight wells in October 2007, resulting in  decreased
production and revenue for the Partnership.  Production on these wells
resumed between November 1 and November 5, 2007, when natural gas prices rose to
a high of $5.07 per Mcf on the CIG - index.  As of December 31, 2007,
no wells were shut in.  During 2008, oil and natural gas prices
have experienced extreme volatility, with oil prices fluctuating on NYMEX as
high as $145.29 on July 3, 2008 and as low as $33.87 on December 19, 2008
and natural gas prices fluctuating on CIG between a high of $10.255 on July 2,
2008 and a low of $1.000 on September 3, 2008.
  During
2009, oil and natural gas prices have continued to fluctuate on NYMEX with oil
prices as high as $53.80 on March 23, 2009 and as low as $33.98 on February
12, 2009 and natural gas prices on CIG as high as $4,585 on January 7, 2009 and
as low as $2.255 on March 1, 2009.
 
 Oil and Gas Price Risk
Management Gain (Loss), Net
 
 The
Managing General Partner uses oil and natural gas commodity derivative
instruments to manage price risk for its corporate interests as well as
sponsored drilling partnerships, including the Partnership.  As
production volumes change, the mix of derivative instruments used on behalf of
the Partnership and the other sponsored drilling partnerships will
change.  Realized and unrealized gains and losses resulting from
derivative positions are reported on the statement of operations as “Oil and gas
price risk management gain (loss), net.”  The net gains/losses are
comprised of the change in fair value of derivative positions related to the
Partnership’s production and underlying derivative contracts entered into by the
Managing General Partner on behalf of the Partnership.  In periods of
rising prices, the Partnership will generally record losses on its derivative
positions as fair values exceed contract prices determining the Partnership’s
oil and natural gas sales.  Conversely, in periods of decreasing
prices, the Partnership will generally recognize gains on its derivative
positions.  Since December 31, 2007, through the filing of this
report, we continue to experience extreme volatility in oil and gas prices
resulting in extreme fluctuation in realized and unrealized derivative
positions.  The following table presents the realized and unrealized
gains and losses recorded for each of the quarterly and annual periods
identified:
 
 Quarter
      endedMarch 31,
      2007
                                          
                                          
                                          Quarter
      endedJune 30,
      2007
                                          
                                          
                                          Quarter
      endedSeptember 30,
      2007
                                          
                                          
                                          Quarter
      endedDecember 31,
      2007
                                          
                                          
                                          Year
      ended
                                              2007TotalRealized
      gains (losses)Oil
                                          
                                          $
                                          (9,851
                                          )
                                          
                                          
                                          (8,483
                                          )
                                          
                                          $
                                          (2,868
                                          )
                                          
                                          $
                                          (2,949
                                          )
                                          
                                          $
                                          (24,151
                                          )Natural
      gas
                                          
                                          
                                          (7,808
                                          )
                                          
                                          
                                          134,214
                                          
                                          
                                          
                                          264,811
                                          
                                          
                                          
                                          138,005
                                          
                                          
                                          
                                          529,222Realized
      gain (loss)
                                          
                                          
                                          (17,659
                                          )
                                          
                                          
                                          125,731
                                          
                                          
                                          
                                          261,943
                                          
                                          
                                          
                                          135,056
                                          
                                          
                                          
                                          505,071Unrealized
      gain (loss)
                                          
                                          
                                          (630,131
                                          )
                                          
                                          
                                          195,419
                                          
                                          
                                          
                                          (40,829
                                          )
                                          
                                          
                                          (928,726
                                          )
                                          
                                          
                                          (1,404,267
                                          )Oil
      and gas price risk management gain (loss), net
                                          
                                          $
                                          (647,790
                                          )
                                          
                                          $
                                          321,150
                                          
                                          
                                          $
                                          221,114
                                          
                                          
                                          $
                                          (793,670
                                          )
                                          
                                          $
                                          (899,196
                                          )Quarter
      endedMarch 31,
      2006
                                          
                                          
                                          Quarter
      endedJune 30,
      2006
                                          
                                          
                                          Quarter
      endedSeptember 30,
      2006
                                          
                                          
                                          Quarter
      endedDecember 31,
      2006
                                          
                                          
                                          Year
      ended2006TotalRealized
      gains (losses)
                                          
                                          
                                          
                                          
                                          
                                          (As
      restated)Oil
                                          
                                          $
                                          -
                                          
                                          
                                          $
                                          -
                                          
                                          
                                          $
                                          -
                                          
                                          
                                          $
                                          (9,794
                                          )
                                          
                                          $
                                          (9,794
                                          )Natural
      gas
                                          
                                          
                                          3,717
                                          
                                          
                                          
                                          5,022
                                          
                                          
                                          
                                          30,004
                                          
                                          
                                          
                                          60,536
                                          
                                          
                                          
                                          92,174Realized
      gain
                                          
                                          
                                          3,717
                                          
                                          
                                          
                                          5,022
                                          
                                          
                                          
                                          30,004
                                          
                                          
                                          
                                          50,742
                                          
                                          
                                          
                                          82,380Unrealized
      gain (loss)
                                          
                                          
                                          (1,953
                                          )
                                          
                                          
                                          114,894
                                          
                                          
                                          
                                          911,645
                                          
                                          
                                          
                                          (506
                                          )
                                          
                                          
                                          1,031,185Oil
      and gas price risk management gain (loss), net
                                          
                                          $
                                          1,764
                                          
                                          
                                          $
                                          119,916
                                          
                                          
                                          $
                                          941,649
                                          
                                          
                                          $
                                          50,236
                                          
                                          
                                          $
                                          1,113,565
 -29-
 Index
  During
the year ended December 31, 2005, the Partnership had no oil and gas price risk
management gain (loss), net.
 
 In 2007,
the Partnership recorded realized gains of $0.5 million and unrealized losses of
$1.4 million, resulting in a net $0.9 million loss for the year.  In
2006, the Partnership incurred realized and unrealized gains of $0.1 million and
$1.0 million, respectively, resulting in a $1.1 million net gain for the
year.  The large unrealized gains for the quarter ended September 30,
2006 is primarily the result of falling natural gas prices.  The
majority of the unrealized losses recognized for the quarters ended December 31,
2006, March 31, 2007 and December 31, 2007, are due to increasing natural gas
prices.  The significant decline in the CIG market during the Fall of
2007 resulted in the realized gain in 2007.  When forward prices for
oil and natural gas prices increase as they did in these quarterly periods, the
Partnership’s derivative portfolio, which includes floors, ceilings and swaps,
tends to decrease in value, resulting in unrealized loss
positions.  Due to the continued volatility of commodity prices, large
quarter to quarter fluctuations in “Oil and gas price risk management (gain)
loss, net”, take place.
 
 The
Managing General Partner uses oil and natural gas commodity derivative
instruments to manage price risk for itself as well as the
Partnership.  The Managing General Partner sets these instruments for
itself, the Partnership and other sponsored partnerships jointly by area of
operation.  As volumes produced change, the mix between PDC, the
Partnership and other sponsored partnerships will change.
 
 Production and Operating
Costs
 
 Production
and Operating Costs include production taxes and transportation costs which
generally vary with sales and production, well operating costs charged on a per
well basis and other direct costs incurred in the production
process.
 
 2007
                                  
                                  
                                  2006Prod
      Costs
                                  
                                  
                                  Mcfe's
                                  
                                  
                                  per
      Mcfe
                                  
                                  
                                  Prod
      Costs
                                  
                                  
                                  Mcfe's
                                  
                                  
                                  per
      McfeJan-Mar
                                  
                                  $
                                  620,601
                                  
                                  
                                  
                                  515,082
                                  
                                  
                                  $
                                  1.20
                                  
                                  
                                  $
                                  69,656
                                  
                                  
                                  
                                  45,234
                                  
                                  
                                  $
                                  1.54Apr-Jun
                                  
                                  
                                  507,452
                                  
                                  
                                  
                                  444,207
                                  
                                  
                                  
                                  1.14
                                  
                                  
                                  
                                  622,582
                                  *
                                  
                                  
                                  632,747
                                  
                                  
                                  
                                  0.98Jul-Sep
                                  
                                  
                                  535,932
                                  
                                  
                                  
                                  411,543
                                  
                                  
                                  
                                  1.30
                                  
                                  
                                  
                                  725,253
                                  
                                  
                                  
                                  951,715
                                  
                                  
                                  
                                  0.76Oct-Dec
                                  
                                  
                                  480,793
                                  
                                  
                                  
                                  298,113
                                  
                                  
                                  
                                  1.61
                                  
                                  
                                  
                                  735,351
                                  
                                  
                                  
                                  755,000
                                  
                                  
                                  
                                  0.97Total
                                  
                                  $
                                  2,144,778
                                  
                                  
                                  
                                  1,668,945
                                  
                                  
                                  $
                                  1.29
                                  
                                  
                                  $
                                  2,152,842
                                  
                                  
                                  
                                  2,384,696
                                  
                                  
                                  $
                                  0.90
 
 *As
Restated
 
 As
production declines as per the historical decline curve, fixed costs increase as
a percentage of total costs.  This results in production costs per
unit to rise.  As production continues to decline, production costs
per unit can be expected to increase.
 
 Generally,
production and operating costs vary either with total oil and natural gas sales
or production volumes. Property
and severance taxes are estimates by the Managing General Partner based on rates
determined using historical information. These amounts are subject to revision
based on actual amounts determined during future filings by the Managing General
Partner with the taxing authorities.  Property and severance
taxes vary directly with total oil and natural gas
sales.  Transportation costs vary directly with production
volumes.  Fixed monthly well operating costs increase on a per unit
basis as production decreases per the historical decline
curve.  General oil field services and all other costs vary and can
fluctuate based on services required.  These costs include water
hauling and disposal, equipment repairs and maintenance, snow removal and
service rig workovers.  In addition, general oil field service costs
have experienced significant inflationary increases.
 
 The
annual increase on a per Mcfe basis is primarily due to a 30% decrease in
production.
 
 Direct Costs – General and
Administrative
 
 Direct
costs – general and administrative consist primarily of professional fees for
financial statement audits, income tax return preparation and legal
matters.  Such costs were relatively low in the year of inception and
increased in 2006 as a result of the filing and subsequent amendment of the
Partnership’s Registration Statement on Form 10, which includes unaudited
interim condensed financial statements for the three months ended March 31, 2006
and the filing of a Quarterly Report on Form 10-Q for the period ended June 30,
2006.  As a direct result of delays encountered by the Managing
General Partner in connection with the filing of its financial statements in
2006 and 2007, the Partnership incurred virtually no audit fees in 2007 and it
did not file quarterly reports with the SEC.
  -30-
 Index
  Depreciation, Depletion and
Amortization
 
 The
Partnership recorded depreciation, depletion and amortization ("DD&A")
expense in 2006 and 2007 presented in the table below.  There was no
DD&A recorded in 2005 because there were no wells drilled, completed and
connected-to-line in production at December 31, 2005.
 
 2007
                                  
                                  
                                  2006DD&A
                                  
                                  
                                  Mcfe's
                                  
                                  
                                  per
      Mcfe
                                  
                                  
                                  DD&A
                                  
                                  
                                  Mcfe's
                                  
                                  
                                  per
      McfeJan-Mar
                                  
                                  $
                                  1,302,364
                                  
                                  
                                  
                                  515,082
                                  
                                  
                                  $
                                  2.53
                                  
                                  
                                  $
                                  124,896
                                  
                                  
                                  
                                  45,234
                                  
                                  
                                  $
                                  2.76Apr-Jun
                                  
                                  
                                  1,104,753
                                  
                                  
                                  
                                  444,207
                                  
                                  
                                  
                                  2.49
                                  
                                  
                                  
                                  1,622,116
                                  
                                  
                                  
                                  632,747
                                  
                                  
                                  
                                  2.56Jul-Sep
                                  
                                  
                                  1,027,301
                                  
                                  
                                  
                                  411,543
                                  
                                  
                                  
                                  2.50
                                  
                                  
                                  
                                  2,241,180
                                  
                                  
                                  
                                  951,715
                                  
                                  
                                  
                                  2.35Oct-Dec
                                  
                                  
                                  876,427
                                  
                                  
                                  
                                  298,113
                                  
                                  
                                  
                                  2.94
                                  
                                  
                                  
                                  1,889,470
                                  
                                  
                                  
                                  755,000
                                  
                                  
                                  
                                  2.50Total
                                  
                                  $
                                  4,310,845
                                  
                                  
                                  
                                  1,668,945
                                  
                                  
                                  $
                                  2.58
                                  
                                  
                                  $
                                  5,877,662
                                  
                                  
                                  
                                  2,384,696
                                  
                                  
                                  $
                                  2.46
 
 During
the first three quarters of 2006, the DD&A per Mcfe fluctuated due in part,
to new wells being turned in line throughout the period and also due to the
changing mix of wells in Wattenberg field and Grand Valley field which have
significantly different DD&A rates.  In the fourth quarter of 2006
and 2007, the rate increased due to the availability of the reserve information
from the annual reserve reports. Although both production and overall year-end
reserves are declining year-to-year, upward revisions to oil reserves and
downward revisions to natural gas reserves in the annual reserve report,
resulted in reserves declining less relative to production in the
quarter.
 
 In the
fourth quarter of 2007, the Partnership recorded a downward revision to its
previous estimate of proved reserves of approximately 1666.7 MMcf of gas and an
upward revision of 344.6 MBblof oil. The revision was primarily due to a
decrease of 2326.1 MMcf of gas and an increase of 341.9 MBbl of oil due to asset
performance and an increase of 659.4 MMcf of gas and 2.7 MBbl of oil due to
commodity price changes.
 
 Exploratory Dry Hole
Costs
 
 The
exploratory dry hole costs of $0.1 million and $2.1 million incurred during the
years ended December 31, 2007 and 2006, respectively, resulted from one
exploratory well in Wyoming which was drilled during the first quarter of 2006
and determined to be a dry hole.
 
 Interest
Income
 
 Interest
income increased from 2006 to 2007 due to the higher level of undistributed
revenues held by the Managing General Partner for the year ended December 31,
2006.
 
 Liquidity and Capital
Resources
 
 As the
Partnership has completed its drilling activities as of December 31, 2007, the
Partnership’s operations are expected to be conducted with available funds and
revenues generated from oil and natural gas production activities, with the
possible exception of recompletions and “refracs.”  As such, the
Partnership’s liquidity may be impacted by fluctuating oil and natural gas
prices, as noted in Item 1A, Risk
Factors.  Changes in market prices for oil and natural gas
directly affect the level of cash flow from operations.  While a
decline in oil and natural gas prices would affect the amount of cash flow that
would be generated from operations, the Partnership had oil and natural gas
derivatives in place, as of December 31, 2007, covering a portion of the
expected oil and natural gas production in 2008, thereby providing price
certainty for a portion of its 2008 cash flow.  Additional derivative
positions were entered into during 2008 for natural gas production through March
2011 and oil production through December 2010.  The current
derivatives positions will change based on changes in oil and natural gas
futures markets, the view of underlying oil and natural gas supply and demand
trends and changes in volumes produced.  Oil and natural gas
derivatives as of December 31, 2007, are detailed in Note 4, Derivative Financial Instrumentsto the accompanying financial statements.
  -31-
 Index
  Working
Capital
 
 The
following table sets forth the working capital position of the Partnership
excluding the unrealized losses on derivatives contracts expiring in less than
12 months from the end of each respective period.  This adjusted
amount generally represents the receivables from oil and natural gas sales for
the preceding three months, offset by corresponding production taxes payable and
accrued expenses for the same period.
 
 2007Quarter
      ended
                          
                          
                          Quarter
      ended
                          
                          
                          Quarter
      ended
                          
                          
                          Quarter
      endedMarch 31,
                          
                          
                          June 30,
                          
                          
                          September 30,
                          
                          
                          December 31,Working
      capital per financial statement
                          
                          $
                          3,267,336
                          
                          
                          $
                          3,172,421
                          
                          
                          $
                          3,056,088
                          
                          
                          $
                          1,952,875Due
      (to) from Managing General Partner - derivatives
                          
                          
                          (393,949
                          )
                          
                          
                          (506,410
                          )
                          
                          
                          (519,895
                          )
                          
                          
                          380,187Working
      capital excluding derivatives
                          
                          $
                          2,873,387
                          
                          
                          $
                          2,666,011
                          
                          
                          $
                          2,536,193
                          
                          
                          $
                          2,333,0622006Quarter
      ended
                          
                          
                          Quarter
      ended
                          
                          
                          Quarter
      ended
                          
                          
                          Quarter
      endedMarch 31,
                          
                          
                          June 30,
                          
                          
                          September 30,
                          
                          
                          December
      31,As
      RestatedWorking
      capital per financial statement
                          
                          $
                          332,600
                          
                          
                          $
                          5,587,538
                          
                          
                          $
                          7,937,430
                          
                          
                          $
                          5,247,929Due
      (to) from Managing General Partner - derivatives
                          
                          
                          1,021
                          
                          
                          
                          (89,851
                          )
                          
                          
                          (729,947
                          )
                          
                          
                          (922,443
                          )Working
      capital excluding derivatives
                          
                          $
                          333,621
                          
                          
                          $
                          5,497,687
                          
                          
                          $
                          7,207,483
                          
                          
                          $
                          4,325,486
 
 
 Financing
and Investing Cash Flows
 
 The
Partnership was funded in December 2005 with initial contributions of $35.7
million from investor partners and a cash contribution of $11.2 million from
PDC, the Managing General Partner.  After payment of syndication cost
of $3.6 million and a one-time management fee to the Managing General Partner of
$0.5 million, the Partnership had available cash of $42.8 million to commence
Partnership activities.  During the period December 6 to December 31,
2005, $42.8 million was paid to the Managing General Partner for capital
expenditures for oil and gas properties.  There were no additional
investing activities in 2006 or 2007.
 
 The
Partnership initiated monthly cash distributions to investors in July 2006 and
has distributed $20.6 million of its operating cash flows through December 31,
2007.  The following table sets forth the quarterly cash distributions
to the Managing General Partner and Investor Partners for the respective
periods.
 
 ManagingGeneral
      PartnerDistributions
                            
                            
                            InvestorPartnersDistributions
                            
                            
                            TotalDistributions2007Jan-Mar
                            
                            $
                            1,178,783
                            
                            
                            $
                            2,750,498
                            
                            
                            $
                            3,929,281Apr-Jun
                            
                            
                            690,693
                            
                            
                            
                            1,670,495
                            
                            
                            
                            2,361,188Jul-Sep
                            
                            
                            623,868
                            
                            
                            
                            1,532,367
                            
                            
                            
                            2,156,235Oct-Dec
                            
                            
                            586,281
                            
                            
                            
                            1,407,228
                            
                            
                            
                            1,993,509$
                            3,079,625
                            
                            
                            $
                            7,360,588
                            
                            
                            $
                            10,440,2132006Jan-Mar
                            
                            $
                            -
                            
                            
                            $
                            -
                            
                            
                            $
                            -Apr-Jun
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -Jul-Sep
                            
                            
                            970,800
                            
                            
                            
                            2,265,202
                            
                            
                            
                            3,236,002Oct-Dec
                            
                            
                            2,076,103
                            
                            
                            
                            4,844,242
                            
                            
                            
                            6,920,345$
                            3,046,903
                            
                            
                            $
                            7,109,444
                            
                            
                            $
                            10,156,347
 -32-
 Index
  The
quarterly distribution represents available cash flow generated by operations
from the previous quarter.
 
 Operating
Cash Flows
 
 Net cash
provided by operating activities was $10.5 million in 2007 compared to $10.2
million in 2006, an increase of $0.3 million.  The increase in cash
provided by operating activities was due primarily to the
following:
 
 ·
              Decrease
      in oil and gas sale revenues of 38.3%, partially offset by
      a $0.4 million increase in realized oil and gas price risk management
      gain (loss), net and accompanied by a decrease in production and
      operating cost of 0.4% as well as a decrease in direct cost – general and
      administrative of 58.8%.
 
 ·
              Due
      from (to) Managing General Partner decreased due to the Partnership’s
      share of reimbursement cost paid by the Managing General
      Partner.
 
 Net cash
provided by operating activities was $10.2 million in 2006 compared to $0.5
million net cash used by operations in 2005, an increase of $10.7
million.  The increase in cash provided by operating activities was
due primarily to the following:
 
 ·
              First
      year oil and gas sale receipts of $12.0 million partially offset by a
      first year production and operating cost of $2.2 million and a decrease in
      management fee of $0.5 million as well as an increase in direct cost –
      general and administrative of $0.2
million.
 
 ·
              Due
      from (to) Managing General Partner increased due to the Partnership’s
      share of reimbursement cost paid by the Managing General
      Partner.
 
 The
following table presents the operating cash flows for the following
periods:
 
 2007Quarter
      ended
                            
                            
                            Quarter
      ended
                            
                            
                            Quarter
      ended
                            
                            
                            Quarter
      endedMarch 31,
                            
                            
                            June 30,
                            
                            
                            September 30,
                            
                            
                            December 31,Cash
      flows from operating activities
                            
                            $
                            3,942,414
                            
                            
                            $
                            2,379,838
                            
                            
                            $
                            2,168,109
                            
                            
                            $
                            1,993,1232006Quarter
      ended
                            
                            
                            Quarter
      ended
                            
                            
                            Quarter
      ended
                            
                            
                            Quarter
      endedMarch 31,
                            
                            
                            June 30,
                            
                            
                            September 30,
                            
                            
                            December 31,Cash
      flows from operating activities
                            
                            $
                            -
                            
                            
                            $
                            881
                            
                            
                            $
                            3,235,203
                            
                            
                            $
                            6,940,5912005Period
      December 6to
      December 31,Cash
      flows from operating activities
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            $
                            (536,033
                            )
 
 Information
related to the oil and gas reserves of the Partnership’s wells is discussed in
detail in Supplemental Oil & Gas Information – Unaudited, Net Proved Oil and Gas
Reserves.
 
 No bank
borrowings are anticipated until such time as recompletions of the Codell
formation in the Wattenberg Field wells are undertaken by the Partnership, which
is expected to occur in 2011 or later.
 
 Contractual Obligations and
Contingent Commitments
 
 The table
below sets forth the Partnership's contractual obligations and contingent
commitments as of December 31, 2007 and 2006.  There were no similar
obligations and commitments at December 31, 2005.
  -33-
 Index
  Payments
      due by periodContractual
      Obligations and
                        
                        
                        
                        
                        Less
      thanContingent
      Commitments
                        
                        Total
                        
                        
                        1
      year
                        
                        
                        1-3
      years
                        
                        
                        3-5
      yearsYear Ended December 31,
2007Derivatives
                        
                        $
                        380,187
                        
                        
                        $
                        380,187
                        
                        
                        $
                        -
                        
                        
                        $
                        -Asset
      Retirement Obligations
                        
                        
                        355,379
                        
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        355,379$
                        735,566
                        
                        
                        $
                        380,187
                        
                        
                        $
                        -
                        
                        
                        $
                        355,379Year Ended December 31,
2006Asset
      Retirement Obligations
                        
                        $
                        332,434
                        
                        
                        $
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        332,434$
                        332,434
                        
                        
                        $
                        -
                        
                        
                        $
                        -
                        
                        
                        $
                        332,434
 
 Critical Accounting Policies
and Estimates
 
 The
Managing General Partner has identified the following accounting policies as
critical to the understanding of the results of the operations of the
Partnership.  This is not a comprehensive list of all of the
Partnership’s accounting policies.  In many cases, the accounting
treatment of a particular transaction is specifically dictated by accounting
principles generally accepted in the United States, with no need for
management's judgment in their application.  There are also areas in
which management's judgment in selecting any available alternative would not
produce a materially different result. However, certain accounting policies are
important to the portrayal of the Partnership's financial condition and results
of operations and require management's most subjective or complex judgments, and
as a result, are subject to an inherent degree of uncertainty.  In
applying those policies, management uses its judgment to determine the
appropriate assumptions to be used in the determination of certain
estimates.  Those estimates are based on historical experience,
observance of trends in the industry, and information available from other
outside sources, as appropriate.  For a more detailed discussion on
the application of these and other accounting policies, see Note 2, Summary of Significant Accounting
Policies in the accompanying financial statements.  The
Partnership's critical accounting policies and estimates are as
follows:
 
 Oil
and Gas Properties
 
 The
Partnership accounts for its oil and natural gas properties under the successful
efforts method of accounting.  Costs of proved developed producing
properties, successful exploratory wells and development dry hole costs are
depreciated or depleted by the unit-of-production method based on estimated
proved developed oil and natural gas reserves.  Property acquisition
costs are depreciated or depleted on the unit-of-production method based on
estimated proved oil and natural gas reserves.
 
 Our
estimates of proved reserves are based on quantities of oil and gas that
engineering and geological analysis demonstrates, with reasonable certainty, to
be recoverable from established reservoirs in the future under current operating
and economic conditions. Annually, we engage independent petroleum engineers to
prepare a reserve and economic evaluation of all our properties on a
well-by-well basis as of December 31.
 
 Proved
reserves are the estimated quantities of oil and natural gas that geologic and
engineering data demonstrate with reasonable certainty to be recoverable in
future years from known reservoirs under existing economic and operating
conditions. Estimates of proved reserves may change, either positively or
negatively, as additional information becomes available and as contractual,
economic and political conditions change. The Partnership’s net proved reserve
estimates have been adjusted as necessary to reflect all contractual agreements,
royalty obligations and interests owned by others at the time of the
estimate.
 
 Proved
developed reserves are the quantities of oil and natural gas expected to be
recovered through existing wells with existing equipment and operating methods.
Proved undeveloped reserves are those reserves expected to be recovered from new
wells on undrilled acreage or from existing wells where a relatively major
expenditure is required for completion.  In some cases, proved
undeveloped reserves may require substantial new investments in additional wells
and related facilities.
  -34-
 Index
  The
process of estimating and evaluating oil and gas reserves is complex, requiring
significant decisions in the evaluation of available geological, geophysical,
engineering and economic data. The data for a given property may also change
substantially over time as a result of numerous factors, including additional
development activity, evolving production history and a continual reassessment
of the viability of production under changing economic conditions. As a result,
revisions in existing reserve estimates occur from time to time. Although every
reasonable effort is made to ensure that reserve estimates reported represent
our most accurate assessments possible, the subjective decisions and variances
in available data for various properties increase the likelihood of significant
changes in these estimates. Because estimates of reserves significantly affect
DD&A expense, a change in estimated reserves could have a material effect on
the Partnership’s financial statements.
 
 Exploratory
well drilling costs are initially capitalized but charged to expense if the well
is determined to be economically nonproductive.  The status of each
in-progress well is reviewed quarterly to determine the proper accounting
treatment under the successful efforts method of
accounting.  Cumulative costs on in-progress exploratory wells
(“Suspended Well Costs”) remain capitalized until their productive status
becomes known.  If an in-progress exploratory well is found to be
unsuccessful (referred to as a dry hole) prior to the issuance of financial
statements, the costs are expensed to exploratory dry hole costs.  If
a final determination about the productive status of a well cannot be made prior
to issuance of the financial statements, the well is classified as “Suspended
Well Costs” until there is sufficient time to conduct additional completion or
testing operations to evaluate the pertinent geological and engineering data
obtained.  When a final determination of a well’s productive status is
made, the well is removed from the suspended well status and the proper
accounting treatment is recorded.  The determination of an exploratory
well's ability to produce is made within one year from the completion of
drilling activities.  At December 31, 2007, 2006 and 2005, the
Partnership had no in-progress exploratory wells requiring “Suspended Well
Costs” classification.
 
 In
accordance with Statement of Financial Accounting Standards, SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets, the Partnership reviews its proved oil and
gas properties for impairment whenever events and circumstances indicate that a
decline in recoverability of their carrying value may have
occurred.  The Partnership estimates the expected undiscounted future
net cash flows of its oil and gas properties on a field-by-field basis and
compares such undiscounted future net cash flows to the carrying amount of the
oil and gas properties to determine if the carrying amount is
recoverable.  Estimated production is based upon prices at which
management reasonably estimates such products will be sold.  These
estimates of future product prices may differ from current market prices of oil
and natural gas.  Any downward revisions in estimates to Partnership
reserve quantities, expectations of falling commodity prices or rising operating
costs could result in a reduction in undiscounted future net cash flows and an
impairment of our oil and gas properties.  If net capitalized costs
exceed undiscounted future net cash flows, impairment is measured by the amount
by which the net capitalized costs exceed their fair value.  Although
cash flow estimates used by the Partnership are based on the relevant
information available at the time the estimates are made, estimates of future
cash flows are, by nature, highly uncertain and may vary significantly from
actual results.
 Revenue
Recognition
 
 Sales of
natural gas are recognized when natural gas has been delivered to a custody
transfer point, persuasive evidence of a sales arrangement exists, the rights
and responsibility of ownership pass to the purchaser, collection of revenue
from the sale is reasonably assured, and the sales price is fixed or
determinable.  Natural gas is sold by the Managing General Partner
under contracts with terms ranging from one month up to the life of the
well.  Virtually all of the Managing General Partner’s contracts’
pricing provisions are tied to a market index with certain adjustments based on,
among other factors, whether a well delivers to a gathering or transmission
line, quality of gas and prevailing supply and demand conditions, so that the
price of the natural gas fluctuates to remain competitive with other available
natural gas supplies.  As a result, the Partnership’s revenues from
the sale of natural gas will suffer if market prices decline and benefit if they
increase.  The Managing General Partner may from time to time enter
into derivative agreements, usually with a term of two years or less which may
either “swap” or “collar” a price range in order to reduce the impact of market
price fluctuations. The Partnership believes that the pricing provisions of its
natural gas contracts are customary in the industry.
 
 The
Partnership currently uses the “Net-Back” method of accounting for
transportation arrangements of natural gas sales.  The Partnership
sells natural gas at the wellhead, collects a price, and recognizes revenues
based on the wellhead sales price since transportation costs downstream of the
wellhead are incurred by the Partnership’s customers and reflected in the
wellhead price.
  -35-
 Index
  Sales of
oil are recognized when persuasive evidence of a sales arrangement exists, the
oil is verified as produced and is delivered from storage tanks at well
locations to a purchaser, collection of revenue from the sale is reasonably
assured, and the sales price is determinable.  The Partnership does
not refine any of its oil production.  The Partnership’s crude oil
production is sold to purchasers at or near the Partnership’s wells under
short-term purchase contracts at prices and in accordance with arrangements that
are customary in the oil industry.
 
 Accounting
for Derivatives Contracts at Fair Value
 
 The
Partnership currently does not qualify for hedge accounting treatment for its
derivatives.  Derivatives are reported on the accompanying balance
sheets at fair value on a gross asset and liability basis.  Changes in
fair value of derivatives are recorded in oil and gas price risk management gain
(loss), net, in the accompanying statements of operations.  The
measurement of fair value is based on actively quoted market prices, if
available.  Otherwise, validation of a contract's fair value is
performed internally and, while the Partnership uses common industry practices
to develop its valuation techniques, changes in its pricing methodologies or the
underlying assumptions could result in significantly different fair
values.  If pricing information from external sources is not
available, measurement involves the use of judgment and
estimates.  These estimates are based on valuation methodologies the
Partnership considers appropriate.  For individual contracts, the use
of different assumptions could have a material effect on the contract's
estimated fair value.
 
 Asset
Retirement Obligations
 
 The
Partnership applies the provisions of SFAS 143, Accounting for Asset Retirement
Obligations and Financial Accounting Standards Board, or FASB,
Interpretation No. 47, Accounting for Conditional Asset
Retirement Obligations, and accounts for asset retirement obligations by
recording the fair value of its plugging and abandonment obligations when
incurred, which is at the time the well is completely drilled.  Upon
initial recognition of an asset retirement obligation, the Partnership increases
the carrying amount of the long-lived asset by the same amount as the
liability.  Over time, the asset retirement obligations are accreted,
over the estimate life of the related asset, for the change in their present
value.  The initial capitalized costs are depleted over the useful
lives of the related assets, through charges to DD&A expense.  If
the fair value of the estimated asset retirement obligation changes, an
adjustment is recorded to both the asset retirement obligation and the asset
retirement cost. Revisions in estimated liabilities can result from revisions of
estimated inflation rates, escalating retirement costs and changes in the
estimated timing of settling asset retirement obligations.  See Note
7, Asset Retirement
Obligations to the accompanying financial statements, for a
reconciliation of asset retirement obligation activity.
 
 Recent Accounting
Standards
 
 See Note
2, Summary of Significant
Accounting Policies to the accompanying financial statements, included in
this report for recently issued and implemented accounting
standards.
 
 
 Item7A.
              Quantitative
      and Qualitative Disclosures about Market
Risk
 
 Market-Sensitive Instruments
and Risk Management
 
 The
Partnership's primary market risk exposure is commodity price risk and related
credit exposure.  Management of the Managing General Partner has
established risk management processes to monitor and manage this market
risk.
  -36-
 Index
  Commodity
Price Risk
 
 The
Partnership is exposed to the effect of market fluctuations in the prices of oil
and natural gas as they relate to our oil and natural gas sales and marketing
activities.  Price risk represents the potential risk of loss from
adverse changes in the market price of oil and natural gas commodities. The
Managing General Partner utilizes established policies and procedures to manage
the risks associated with these market fluctuations using commodity
derivatives.  The Partnership's policy prohibits the use of oil and
natural gas derivative instruments for speculative purposes.
 
 Derivative
arrangements are entered into by the Managing General Partner on behalf of the
Partnership.  None of the Partnership’s derivative instruments are
designated as hedging instruments in accordance with the provisions of SFAS No.
133, Accounting for Derivative
Instruments and Certain Hedging Activities.  Accordingly, all
gains and losses, realized and unrealized, are recognized in the statement of
operations in the period of change.  See Note 2, Summary of Significant Accounting
Policies and Note 4, Derivative Financial
Instruments to the accompanying financial statements for additional
disclosure regarding the Partnership’s derivative instruments including, but not
limited to, a summary of the open derivative positions as of December 31,
2007.  Changes in the fair value of the Partnership’s share of
derivatives are recorded in the statement of operations under oil and gas price
risk management.
 
 Measurement
and validation of a contract’s fair value using common industry practices is
performed by the Managing General Partner based on actively quoted market
prices, if available.  Otherwise, the Managing General Partner seeks
indicative price information from external sources including broker quotes and
industry publications.  Changes in the Partnership’s pricing
methodologies or the underlying assumptions could result in different fair
values.
 
 Risk
Management Strategies
 
 The
results of the Partnership’s operations and operating cash flows are affected by
changes in market prices for oil and natural gas. To mitigate a portion of the
exposure to adverse market changes, the Managing General Partner has entered
into various derivative instruments.  As of December 31, 2007, the
Partnership's oil and gas derivative instruments were comprised of fixed-price
“swaps” and “collars”.  These instruments generally consist of
CIG-based contracts for Colorado gas production and NYMEX-based contracts for
Colorado oil production.  In addition to the fixed-price swaps and
collar derivative instruments which remain in effect at February 28, 2009,
the Managing General Partner previously utilized “floor” contracts to protect
against natural gas and oil price declines in subsequent
periods.  Through October 31, 2007, the Partnership’s natural gas
derivative instruments were comprised of natural gas floors and collars while
its oil derivative instruments were comprised of oil “floors.”
  ·
              For
      swap instruments, PDC, as Managing General Partner, receives a fixed price
      for the hedged commodity and pays a floating market price to the
      counterparty. The fixed-price payment and the floating-price payment are
      netted, resulting in a net amount due to or from the
      counterparty.
 ·
              Collars
      contain a fixed floor price (put) and ceiling price (call). If the market
      price exceeds the ceiling strike price or falls below the fixed floor
      strike price, PDC, as Managing General Partner, receives the fixed floor
      price and pays the market price. If the market price is between the
      ceiling and the floor strike price, no payments are due from either
      party.
 ·
              Floors
      contained a floor price (put) whereby PDC, as Managing General Partner,
      received from the counterparty, the floor price if the commodity market
      price fell below the floor strike price, but received no payment when the
      commodity market price exceeded the floor
price.
  The
Managing General Partner purchases floor and ceiling “collars” to protect
against price declines in future periods while retaining much of the benefits of
price increases.  While these derivatives are structured to reduce the
Partnership's exposure to changes in price associated with the derivative
commodity, they also limit the benefit the Partnership might otherwise have
received from price changes in the physical market. The Partnership believes its
derivative instruments continue to be effective in achieving the risk management
objectives for which they were intended.
  -37-
 Index
  The
following table presents monthly average CIG and NYMEX closing prices for gas
and oil in 2007 and 2006, as well as average sales prices the Partnership
realized for the respective commodity.
 
 Year
      Ended
                    
                    
                    Year
      EndedAverage
      index closing price
                    
                    December 31,
      2007
                    
                    
                    December 31,
      2006Natural
      Gas (per Mcf) - CIG
                    
                    $
                    3.97
                    
                    
                    $
                    5.63Oil
      (per Bbl) - NYMEX
                    
                    
                    69.79
                    
                    
                    
                    64.73Average
      sales priceNatural
      gas
                    
                    
                    4.95
                    
                    
                    
                    5.08Oil
                    
                    $
                    57.15
                    
                    
                    $
                    65.13
 
 
 As of
December 31, 2007, the fair value of the Partnership’s derivative instruments
was a net liability of $0.4 million compared to a net asset of $1 million as of
December 31, 2006.  Based on a sensitivity analysis as of December 31,
2007, it was estimated that a 10% increase in oil and gas prices over the entire
period for which we have derivatives currently in place would result in an
increase in unrealized losses of $0.5 million and a 10% decrease in oil and gas
prices would result in a decrease in unrealized losses of $0.5
million.
 
 The
following table sets forth the Partnership's portion of derivative positions in
effect as of February 28, 2009.
 
 Floors
                                                    
                                                    
                                                    Ceilings
                                                    
                                                    
                                                    Swaps
      (Fixed Prices)Commodity/
                                                      Index/
                                                      Area
                                                    
                                                    Month
      Set
                                                    
                                                    Month
                                                    
                                                    Net
                                                      Monthly
      Quantity
                                                      (Gas
      -MMbtu
                                                      Oil
      -Bbls)
                                                    
                                                    
                                                    Price
                                                    
                                                    
                                                    Net
                                                      Monthly
      Quantity
                                                      (Gas
      -MMbtu
                                                      Oil
      -Bbls)
                                                    
                                                    
                                                    Price
                                                    
                                                    
                                                    Net
                                                      Monthly
      Quantity
                                                      (Gas-MMbtu
                                                      Oil
      -Bbls)
                                                    
                                                    
                                                    PriceNatural
      Gas - (CIG)Piceance
      BasinApr-08
                                                    
                                                    Mar
      09
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    18,843
                                                    
                                                    
                                                    $
                                                    7.76Jul-08
                                                    
                                                    Mar
      09
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    11,240
                                                    
                                                    
                                                    
                                                    8.52Feb-08
                                                    
                                                    Mar
      09
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    11,240
                                                    
                                                    
                                                    
                                                    8.18Jan-08
                                                    
                                                    Apr
      09 - Oct 09
                                                    
                                                    
                                                    20,265
                                                    
                                                    
                                                    $
                                                    5.75
                                                    
                                                    
                                                    
                                                    20,265
                                                    
                                                    
                                                    $
                                                    8.75
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -Mar-08
                                                    
                                                    Apr
      09 - Oct 09
                                                    
                                                    
                                                    19,910
                                                    
                                                    
                                                    
                                                    5.75
                                                    
                                                    
                                                    
                                                    19,910
                                                    
                                                    
                                                    
                                                    9.05
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -Jul-08
                                                    
                                                    Nov
      09 - Mar 10
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    15,127
                                                    
                                                    
                                                    
                                                    9.20Jul-08
                                                    
                                                    Nov
      09 - Mar 10
                                                    
                                                    
                                                    21,514
                                                    
                                                    
                                                    
                                                    7.50
                                                    
                                                    
                                                    
                                                    21,514
                                                    
                                                    
                                                    
                                                    11.40
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -Nov
      - 08
                                                    
                                                    Nov 10
      - Mar 11
                                                    
                                                    
                                                    13,901
                                                    
                                                    
                                                    
                                                    4.75
                                                    
                                                    
                                                    
                                                    13,901
                                                    
                                                    
                                                    
                                                    9.45Wattenberg
      FieldApr-08
                                                    
                                                    Mar
      09
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    4,290
                                                    
                                                    
                                                    
                                                    7.76Jul-08
                                                    
                                                    Mar
      09
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    2,535
                                                    
                                                    
                                                    
                                                    8.52Feb-08
                                                    
                                                    Mar
      09
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    2,535
                                                    
                                                    
                                                    
                                                    8.18Jan-08
                                                    
                                                    Apr
      09 - Oct 09
                                                    
                                                    
                                                    4,458
                                                    
                                                    
                                                    
                                                    5.75
                                                    
                                                    
                                                    
                                                    4,458
                                                    
                                                    
                                                    
                                                    8.75
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -Mar-08
                                                    
                                                    Apr
      09 - Oct 09
                                                    
                                                    
                                                    4,052
                                                    
                                                    
                                                    
                                                    5.75
                                                    
                                                    
                                                    
                                                    4,052
                                                    
                                                    
                                                    
                                                    9.05
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -Jul-08
                                                    
                                                    Nov
      09 - Mar 10
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    3,145
                                                    
                                                    
                                                    
                                                    9.20Jul-08
                                                    
                                                    Nov
      09 - Mar 10
                                                    
                                                    
                                                    4,530
                                                    
                                                    
                                                    
                                                    7.50
                                                    
                                                    
                                                    
                                                    4,530
                                                    
                                                    
                                                    
                                                    11.40
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -Nov-08
                                                    
                                                    Nov
      10 - Mar 11
                                                    
                                                    
                                                    3,546
                                                    
                                                    
                                                    $
                                                    4.75
                                                    
                                                    
                                                    
                                                    3,546
                                                    
                                                    
                                                    $
                                                    9.45Oil
      - NYMEXWattenberg
      FieldJan-08
                                                    
                                                    Mar 09
      - Dec 09
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    887
                                                    
                                                    
                                                    
                                                    84.90Jan-08
                                                    
                                                    Mar 09
      - Dec 09
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    887
                                                    
                                                    
                                                    
                                                    85.40May-08
                                                    
                                                    Mar 09 -
      Dec 09
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    355
                                                    
                                                    
                                                    
                                                    117.35May-08
                                                    
                                                    Jan
      10 - Dec 10
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    884
                                                    
                                                    
                                                    
                                                    92.74May-08
                                                    
                                                    Jan
      10 - Dec 10
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    -
                                                    
                                                    
                                                    
                                                    884
                                                    
                                                    
                                                    $
                                                    93.17
 
 
 The gross
volumes in the above table reflect the total volumes of derivatives for the
Partnership by area of operation.
  In
December 2008, PDC, the Managing General Partner, entered into a CIG basis
protection swap covering approximately 80% of PDC’s and the Partnership’s
natural gas production in the Piceance and Wattenberg fields which was not
previously covered by derivative contracts. Basis protection swaps are
arrangements that guarantee a price differential for natural gas from a
specified delivery point. For the CIG basis protection swap, which has a
negative differential to NYMEX, PDC, as Managing General Partner, receives a
payment from the counterparty if the price differential is greater than the
stated terms of the contract and pays the counterparty if the price differential
is less than the stated terms of contract. This CIG basis protection swap runs
from April 2010 through December 2013 at $1.88/Mmbtu. The Partnership’s portion
of this position is an average monthly quantity of approximately 33,500 Mmbtu in
the Piceance Basin field and 6,900 Mmbtu in the Wattenberg field for the period
April 2010–October 2010; 16,800 Mmbtu in the Piceance Basin field and 2,900
Mmbtu in the Wattenberg field for the period November 2010-March 2011; and
26,300 Mmbtu in the Piceance Basin field and 5,200 Mmbtu in the Wattenberg field
for the period April 2011-December 2013.
  -38-
 Index
  The
following table sets forth the Partnership’s portion of derivative positions in
effect as of December 31, 2007.  In addition to the fixed-price
“swaps” and “collar” derivative, the Managing General Partner previously
utilized “floor” contracts to protect against natural gas and oil price declines
in subsequent periods.
 
 Floors
                                    
                                    
                                    Ceilings
                                    
                                    
                                    Swaps
      (Fixed Prices)Commodity/
                                      Index/
                                      Area
                                    
                                    Month
      Set
                                    
                                    Month
                                    
                                    Net
                                      Monthly
      Quantity
                                      (Gas
      -MMbtu
                                      Oil
      -Bbls)
                                    
                                    
                                    Price
                                    
                                    
                                    Net
                                      Monthly
      Quantity
                                      (Gas
      -MMbtu
                                      Oil
      -Bbls)
                                    
                                    
                                    Price
                                    
                                    
                                    Net
                                      Monthly
      Quantity
                                      (Gas-MMbtu
                                      Oil
      -Bbls)
                                    
                                    
                                    PriceNatural
      Gas - (CIG)Piceance
      BasinDec-06
                                    
                                    Jan
      08 - Mar 08
                                    
                                    
                                    12,965
                                    
                                    
                                    $
                                    5.25
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -Jan-07
                                    
                                    Jan
      08 - Mar 08
                                    
                                    
                                    12,965
                                    
                                    
                                    
                                    5.25
                                    
                                    
                                    
                                    12,965
                                    
                                    
                                    $
                                    9.80
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -May-07
                                    
                                    Apr
      08 - Oct 08
                                    
                                    
                                    25,588
                                    
                                    
                                    
                                    5.50
                                    
                                    
                                    
                                    25,588
                                    
                                    
                                    
                                    10.35
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -Wattenberg
      FieldJan-07
                                    
                                    Jan
      08 - Mar 08
                                    
                                    
                                    7,185
                                    
                                    
                                    
                                    5.25
                                    
                                    
                                    
                                    7,185
                                    
                                    
                                    
                                    9.80
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -May-07
                                    
                                    Apr
      08 - Oct 08
                                    
                                    
                                    17,243
                                    
                                    
                                    $
                                    5.50
                                    
                                    
                                    
                                    17,243
                                    
                                    
                                    $
                                    10.35
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -Oil
      - NYMEXWattenberg
      FieldOct-07
                                    
                                    Jan
      08 - Dec 08
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    4,335
                                    
                                    
                                    $
                                    84.20
 
 The
following table sets forth the Partnership's portion of derivative positions in
effect as of December 31, 2006.  The gross volumes in the table
reflect the total volumes of derivatives for the Partnership by area of
operation.
 
 Floors
                                              
                                              
                                              CeilingsMonth
      Set
                                              
                                              Month
                                              
                                              Net
                                                Monthly
      Quantity
                                                (Gas
      -MMbtu
                                                Oil
      -Bbls)
                                              
                                              
                                              Price
                                              
                                              
                                              Net
                                                Monthly
      Quantity
                                                (Gas
      -MMbtu
                                                Oil
      -Bbls)
                                              
                                              
                                              PriceNatural
      Gas - (CIG)Piceance
      BasinJul-05
                                              
                                              Jan
      07 - Mar 07
                                              
                                              
                                              19,030
                                              
                                              
                                              $
                                              6.00
                                              
                                              
                                              
                                              9,515
                                              
                                              
                                              $
                                              8.40Feb-06
                                              
                                              Jan
      07 - Mar 07
                                              
                                              
                                              40,779
                                              
                                              
                                              
                                              6.50
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -Feb-06
                                              
                                              Apr
      07 - Oct 07
                                              
                                              
                                              29,905
                                              
                                              
                                              
                                              5.50
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -Sep-06
                                              
                                              Jan
      07 - Mar 07
                                              
                                              
                                              72,043
                                              
                                              
                                              
                                              4.00
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -Sep-06
                                              
                                              Apr
      07 - Oct 07
                                              
                                              
                                              101,948
                                              
                                              
                                              
                                              4.50
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -Dec-06
                                              
                                              Nov
      07 - Mar 08
                                              
                                              
                                              51,654
                                              
                                              
                                              
                                              5.25
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -Oil
      - NYMEXWattenberg
      FieldSep-06
                                              
                                              Jan
      07 - Oct 07
                                              
                                              
                                              4,820
                                              
                                              
                                              $
                                              50.00
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
 -39-
 Index
  Credit
Risk
 
 By using
derivative financial instruments to manage exposures to changes in commodity
prices, the Partnership exposes itself to credit risk.  Credit risk is
the failure of the counterparty to perform under the terms of the derivative
contract.  When the fair value of a derivative contract is positive,
the counterparty owes the Managing General Partner, which in turn owes the
Partnership, thus creating repayment risk.
 
 To reduce
credit exposure, the Managing General Partner seeks to enter into netting
agreements with counterparties that permit the offset of receivables and
payables with such counterparties.  The Managing General Partner
attempts to further reduce credit risk by diversifying our counterparty exposure
and entering into transactions with high-quality
counterparties.  Where exposed to credit risk, the Managing General
Partner analyzes the counterparties’ financial condition prior to entering into
an agreement, establishes credit limits and monitors the appropriateness of
those limits on an ongoing basis.  The Managing General Partner has
experienced no counterparty defaults during the years ended December 31, 2007,
2006 and 2005, respectively.
 
 Disclosure
of Limitations
 
 As the
information above incorporates only those exposures which existed as of or prior
to December 31, 2008, it does not consider those exposures or positions which
could arise after that date.  As a result, the Partnership's ultimate
realized gain or loss with respect to commodity price fluctuations depends on
the future exposures that arise during the period, the Partnership's hedging
strategies at the time and commodity prices at the time.
 
 
 Item8.
              Financial
      Statements and Supplementary Data
 
 The
financial statements are attached to this Form 10-K beginning at page
F-1.
 
 Supplemental
financial information required by this Item can be found in Item 7, Management’s Discussion and Analysis of Financial
Condition and Results of Operations of this report.
 
 
 Item9.
              Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure
 
 Previous
Independent Registered Public Accounting Firm
 
 As
previously reported on Form 8-K filed with the SEC on January 4, 2008, on
December 28, 2007, Petroleum Development Corporation, the Managing General
Partner of Rockies Region Private Limited Partnership (the "Registrant"),
recommended, and the Audit Committee of the Board of Directors of Petroleum
Development Corporation ratified, the dismissal of KPMG as the Registrant's
independent registered public accounting firm.  The Registrant does
not have its own audit committee and, therefore, relies upon and utilitizes the
services of the Managing General Partner’s audit committee.
 
 The audit
report of KPMG on the Registrant's financial statements as of December 31, 2005
and for the period from December 6, 2005 (date of inception) to December 31,
2005, did not contain an adverse opinion or a disclaimer of opinion, and was not
qualified or modified as to uncertainty, audit scope, or accounting
principles.  Prior to this filing, the Registrant had not filed
audited financial statements since its December 31, 2005, Form 10/A Amendment
No. 2.
  -40-
 Index
  In
connection with the audit of the period ended December 31, 2005, and the
subsequent period through December 28, 2007, there were no: (1)
disagreements with KPMG on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreement(s), if not resolved to their satisfaction, would have caused them
to make reference in connection with their report to the subject matter of the
disagreement(s), or (2) reportable events, except that:
 
 1.
              The
      following material weaknesses in internal control over financial reporting
      were identified related to the period ended December 31, 2005, and the
      subsequent period through December 28, 2007, as
  follows:
  ·
              The
      Registrant did not have effective policies and procedures, or personnel
      with sufficient technical expertise to properly account for derivative
      transactions in accordance with generally accepted accounting principles.
      Specifically, the Registrant's policies and procedures relating to
      derivatives transactions were not designed effectively such that each of
      the requirements for hedge accounting were evaluated appropriately with
      respect to the Registrant's commodity based
  derivatives.
  
 ·
              The
      Registrant did not have effective policies and procedures, or personnel
      with sufficient technical expertise to ensure compliance with appropriate
      accounting principles for its oil and gas properties. Specifically, the
      Registrant's policies and procedures were not designed effectively to
      ensure that the calculation of depreciation and depletion and the
      determination of impairments were performed in accordance with the
      applicable authoritative accounting guidance.
 
 ·
              The
      Registrant did not have effective policies and procedures, or personnel
      with sufficient technical expertise to ensure that its accounting for
      asset retirement obligations complied with generally accepted accounting
      principles. Specifically, the Registrant's policies and procedures
      regarding the estimate of the fair value of the asset retirement
      obligations were not designed effectively to ensure that it was estimated
      in accordance with SFAS No. 143, Asset Retirement
    Obligations.
 
 ·
              The
      Registrant did not have effective policies and procedures to ensure the
      timely reconciliation, review and adjustment of significant balance sheet
      and income statement accounts, which resulted in the identification of
      material misstatements in certain significant balance sheet and income
      statement accounts during the Registrant's closing process.
 
 2.
              In
      connection with KPMG's audit of the Managing General Partner's 2006
      financial statements, the Managing General Partner identified that the
      Managing General Partner had over-withheld production taxes from revenue
      distributions made to its 75 drilling partnerships' limited partners,
      including the limited partners of the Registrant. See Explanatory Note on
      Page 1 for discussion concerning the over-withholding of production taxes
      by PDC.
 
 KPMG has
been authorized to respond fully to the inquiries of the successor independent
registered public accounting firm concerning the subject matter of the
foregoing.
 
 The
Registrant provided KPMG with a copy of the foregoing statements and requested
that KPMG furnish the Registrant with a letter addressed to the SEC stating
whether KPMG agrees with the foregoing statements, and, if not, stating the
respects in which KPMG does not agree.  A letter from KPMG is attached
as Exhibit 16 to the Form 8-K filed with the SEC on January 4,
2008.
  -41-
 Index
  New
Independent Registered Public Accounting Firm
 
 As
previously reported on Form 8-K filed with the SEC on January 4, 2008, on
December 28, 2007, the Audit Committee of the Managing General Partner and its
Board of Directors ratified the engagement of PricewaterhouseCoopers LLP ("PwC")
as the Registrant's new independent registered public accounting
firm.
 
 During
the period ended December 31, 2005 and through December 28, 2007,  the
Registrant had not consulted with PwC regarding either (i) the application of
accounting principles to a specified transaction, either completed or proposed;
or the type of audit opinion that might be rendered on the Registrant's
financial statements, and neither a written report was provided to the
Registrant nor oral advice was provided that PwC concluded was an important
factor considered by the Registrant in reaching a decision as to the accounting,
auditing or financial reporting issue; or (ii) any matter that was either the
subject of a disagreement, as that term is defined in Item 304(a)(1)(iv) of SEC
Regulation S-K, or a reportable event required to be reported under Item
304(a)(1)(v) of Regulation S-K.
 
 
 Item9A(T).
              Controls
      and Procedures
 
 The
Partnership has no direct management or officers.  The management,
officers and other employees that provide services on behalf of the Partnership
are employed by the Managing General Partner.
 
 (a)
              Evaluation of
      Disclosure Controls and
Procedures
 
 As of
December 31, 2007, PDC, as Managing General Partner on behalf of the
Partnership, carried out an evaluation, under the supervision and with the
participation of the Managing General Partner's management, including its Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of the Partnership's disclosure controls and
procedures.  Disclosure controls and procedures are defined in
Exchange Act Rules 13a-15(e) and 15d-15(e) as the controls and procedures of an
issuer that are designed to ensure that information required to be disclosed by
the issuer in the reports it files or submits under the Exchange Act is
recorded, processed, summarized and reported, within the time periods specified
in the SEC’s rules and forms, and that such information is accumulated and
communicated to the issuer’s management, including its principal executive and
principal financial officers, or persons performing similar functions, as
appropriate to allow timely decisions regarding required
disclosure.  Based upon that evaluation, the Managing General
Partner’s Chief Executive Officer and Chief Financial Officer concluded that the
Partnership’s disclosure controls and procedures were not effective as of
December 31, 2007 due to the existence of the material weaknesses described
below in Management’s Report
on Internal Control Over Financial Reportingincluded in this Item
9A(T).
 
 (b)       Management’s Report on
Internal Control Over Financial Reporting
 
 Management
of PDC, the Managing General Partner of the Partnership, is responsible for
establishing and maintaining adequate internal control over financial
reporting.  Internal control over financial reporting is defined in
Exchange Act Rules 13a-15(f) and 15d-15(f) as a process designed by, or under
the supervision of, the issuer’s principal executive and principal financial
officers, or persons performing similar functions, and effected by the issuer’s
board of directors, management and other personnel, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with accounting
principles generally accepted in the United States of America and includes those
policies and procedures that:
 
 ·
              Pertain
      to the maintenance of records that in reasonable detail accurately and
      fairly reflect the transactions and dispositions of the assets of the
      issuer;
 
 ·
              Provide
      reasonable assurance that transactions are recorded as necessary to permit
      preparation of financial statements in accordance with accounting
      principles generally accepted in the United States of America and that
      receipts and expenditures of the issuer are being made only in accordance
      with authorizations of management and directors of the issuer;
      and
  -42-
 Index
  ·
              Provide
      reasonable assurance regarding prevention or timely detection of
      unauthorized acquisition, use or disposition of the issuer’s assets that
      could have a material effect on the financial statements of the
      issuer.
 
 Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements.  Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with policies or procedures may deteriorate.
 
 Management
of the Managing General Partner has assessed the effectiveness of the
Partnership’s internal control over financial reporting as of December 31, 2007,
based upon the criteria established in “Internal Control - Integrated Framework”
issued by the Committee of  Sponsoring Organizations of the Treadway
Commission.  Based on this evaluation, management of the Managing
General Partner concluded that the Partnership did not maintain effective
internal control over financial reporting as of December 31, 2007 due to the
material weaknesses discussed below.  A material weakness is a
deficiency, or a combination of deficiencies, in internal control over financial
reporting, such that there is a reasonable possibility that a material
misstatement of the registrant’s annual or interim financial statements will not
be prevented or detected on a timely basis.  Management of PDC, the
Managing General Partner, identified the following material weaknesses related
to the effectiveness of the Partnership’s internal control over financial
reporting as of December 31, 2007:
 
 ·
              The
      support for the Partnership’s general ledger depends in part on the
      effectiveness of controls of the Managing General Partner’s
      spreadsheets.  The overall ineffectiveness of the Managing
      General Partner's spreadsheet controls could have a material effect on the
      Partnership’s financial statements.  The Partnership did not
      maintain effective controls to ensure the completeness, accuracy, and
      validity of key financial statement spreadsheets generated by the Managing
      General Partner.  These spreadsheets are utilized by the
      Partnership to support significant balance sheet and income statement
      accounts. This
      material weakness has not been
  remediated.
 
 ·
              The
      support for the Partnership’s derivative calculations depends in part on
      the effectiveness of controls of the Managing General Partner’s
      process.  The overall ineffectiveness of the Managing General
      Partner's derivative controls could have a material effect on the
      Partnership’s financial statements.  The Partnership did not
      maintain effective controls to ensure that the Managing General Partner
      had policies and procedures, or personnel with sufficient technical
      expertise to record derivative activities in accordance with generally
      accepted accounting principles. This
      material weakness has not been
  remediated.
 
 ·
              For
      the transactions that are directly related to and processed by the
      Partnership, the Partnership failed to maintain sufficient documentation
      to adequately assess the operating effectiveness of internal control over
      reporting.  More specifically, the Partnership’s financial close
      and reporting narrative failed to adequately describe the process,
      identify key controls and assess segregation of duties. This
      material weakness has not been
  remediated.
  In
addition, the Partnership identified the following material weakness related to
the effectiveness of the Partnership’s internal control over financial reporting
as of December 31, 2006:
 
 ·
                The
      Partnership did not have effective policies and procedures, or personnel
      with sufficient technical expertise to ensure compliance with appropriate
      accounting principles for its oil and gas properties. Specifically, the
      Registrant’s policies and procedures were not designed effectively to
      ensure that the calculation of depreciation and depletion and the
      determination of impairments were performed in accordance with the
      applicable authoritative accounting guidance. This material weakness was
      remediated as of December 31, 2007.
 
 ·
                The
      Partnership did not have effective policies and procedures to ensure the
      timely reconciliation, review and adjustment of significant balance sheet
      and income statement accounts, which resulted in the identification of
      material misstatements in certain significant balance sheet and income
      statement accounts during the Registrant’s closing process. This material
      weakness was remediated as of December 31,
2007.
  This
Annual Report does not include an attestation report of the Partnership’s
independent registered public accounting firm regarding internal control over
financial reporting.  The report of the Managing General Partner was
not subject to attestation by the Partnership’s independent registered public
accounting firm pursuant to temporary rules of the SEC that permit the
Partnership to provide only the Managing General Partner’s report in this Annual
Report.
  -43-
 Index
  (c)
              Changes in Internal
      Control Over Financial
Reporting
 
 There
were no changes in internal control over financial reporting in the second
quarter of 2008. During the first and third quarters of 2008, the Managing
General Partner made the following changes in the Partnership's internal control
over financial reporting that has materially affected, or is reasonably likely
to materially affect, the Partnership's internal controls over financial
reporting:
 
 ·
              During
      the first quarter of 2008, the Managing General Partner implemented the
      general ledger, accounts receivable, cash receipts, revenue, financial
      reporting, and joint interest billing modules as part of a new broader
      financial system.  The Managing General Partner had planned to
      implement a Partnership distribution module in 2008, however, the Managing
      General Partner currently does not expect this module to be in place until
      2009.  The new financial system will enhance operating
      efficiencies and provide more effective management of Partnership business
      operations and processes.  The Managing General Partner believes
      the phased-in implementation approach it is taking reduces the risks
      associated with the new financial system implementation. The Managing
      General Partner has taken the necessary steps to monitor and maintain
      appropriate internal controls during this period of
      change.  These steps include documenting all new business
      process changes related to the new financial system; testing all new
      business processes on the new financial  system; and conducting
      training related to the new business processes and to the new financial
      system software.  The Managing General Partner expects the
      implementation of the new financial system will strengthen the overall
      systems of internal controls due to enhanced automation and integration of
      related processes.  The Managing General Partner continues to
      modify the design and documentation of internal control processes and
      procedures related to the new financial system to supplement and
      complement existing internal controls over financial
      reporting.  The system changes were developed to integrate
      systems and consolidate information, and were not undertaken in response
      to any actual or perceived deficiencies in the Partnership's internal
      control over financial reporting.  Testing of the controls
      related to these new systems is ongoing and is included in the scope of
      the Managing General Partner's assessment of the Partnership's internal
      control over financial reporting for
2008.
 
 ·
              During
      the third quarter of 2008, the Managing General Partner improved controls
      over certain key financial statement spreadsheets that support all
      significant balance sheet and income statement
      accounts.  Specifically, the Managing General Partner enhanced
      the spreadsheet policy to provide additional clarification and guidance
      with regard to risk assessment and enforced controls over:  1)
      the security and integrity of the data used in the various spreadsheets,
      2) access to the spreadsheets, 3) changes to spreadsheet functionality and
      the related approval process and documentation and 4) increased
      management’s review of the
spreadsheets.
 
 ·
              During
      the third quarter of 2008, in addition to accredited derivative training
      attended by key personnel, the Managing General Partner created and
      documented a desktop procedure to:  1) ensure the completeness
      and accuracy of the Managing General Partner’s derivative activities and
      2) supplement key controls previously existing in the
      process.  Further, the desktop procedure provides for a more
      robust review of the Managing General Partner’s derivative
      process.  This procedure continued to be enhanced throughout the
      fourth quarter of 2008.
 
 Remediation
of Material Weaknesses in Internal Control
 
 PDC, the
Managing General Partner, with oversight from the Audit Committee of its Board
of Directors, has been addressing the material weaknesses disclosed in its 2007
Annual Report on Form 10-K and Item 4 of its subsequently filed Quarterly
Reports on Form 10-Q.  The Managing General Partner believes, through
the implementation of the above changes in internal controls over financial
reporting, that it will be able to remediate these known material weaknesses as
of December 31, 2008.  However, these control weaknesses will not be
considered remediated until the changes in internal controls over financial
reporting are operating effectively for a sufficient period of time and PDC has
concluded, through testing, that these controls are operating
effectively.
  -44-
 Index
  Until
PDC, the Managing General Partner, has concluded that it has remediated these
known material weaknesses in internal control over financial reporting, the
Managing General Partner will perform additional analysis and procedures in
order to ensure that its condensed consolidated financial statements contained
in its subsequent SEC filings are prepared in accordance with generally accepted
accounting principles in the United States.
 
 The
Managing General Partner continues to evaluate the ongoing effectiveness and
sustainability of these changes in internal control over financial reporting,
and, as a result of the ongoing evaluation, may identify additional changes to
improve internal control over financial reporting.  Further
information regarding the material weaknesses of the Managing General Partner
referenced above may be found in the Managing General Partner, PDC’s Annual
Report on 10-K for the year ended December 31, 2007 under Item 8 Financial
Statements and Supplementary Data Management’s Report on Internal
Control Over Financial Reporting and Item 9A, Controls and Procedures,
contained therein.
 
 Because of the material weaknesses
identified by the Managing General Partner, it has retained external consultants
for the purpose of performing additional substantive tests and analytical review
procedures on behalf of the Partnership so as to ensure that the Partnership
financial statements for the years ended December 31, 2007 and 2006 and for the
period from December 6, 2005 (date of inception) to December 31, 2005, are
fairly presented, in all material respects, in accordance with generally
accepted accounting principles.
 
 In
addition to the remedial measures already taken by the Partnership personnel and
the Managing General Partner, the Partnership plans to initiate a plan to make
similar changes to internal control over financial reporting to improve controls
over certain key financial statement spreadsheets that support all significant
balance sheet and income statement accounts.  The Partnership will
also create and document a procedural framework to ensure the completeness and
accuracy of the Partnership’s derivative activities.  This plan is
expected to be complete by December 31, 2008 with implementation planned for the
first half of 2009.  At present, the Partnership has not quantified
the cost of this initiative, however the majority of this cost is expected to be
paid by the Managing General Partner.
 
 
 Item9B.
              Other
      Information
 
 None
 
 
 PART
III
 
 Item10.
              Directors,
      Executive Officers and Corporate
Governance
 
 The
Partnership has no directors or executive officers.  The Partnership
is managed by PDC, the Managing General Partner.
 
 PDC, a
publicly-owned Nevada corporation, was organized in 1955.  The common
stock of PDC is traded on the Nasdaq Global Select Market under the symbol
"PETD."  Since 1969, PDC has been engaged in the business of exploring
for, developing and producing oil and gas primarily in West Virginia, Tennessee,
Pennsylvania, Ohio, Michigan and the Rocky Mountains.  As of December
31, 2007, PDC had approximately 260 employees.  PDC will make
available to Investor Partners, upon request, audited financial statements of
PDC for the most recent fiscal year and unaudited financial statements for
interim periods.  PDC's Internet address is www.petd.com.  PDC
posts on its Internet Web site its periodic and current reports and other
information, including its audited financial statements, that it files with the
SEC, as well as various charters and other corporate governance
information.
  -45-
 Index
  As the
Managing General Partner, PDC actively manages and conducts the business of the
Partnership.  PDC has the full and complete power to do any and all
things necessary and incident to the management and conduct of the Partnership's
business.  PDC is responsible for maintaining Partnership bank
accounts, collecting Partnership revenues, making distributions to the partners,
delivering reports to the partners, and supervising the drilling, completion,
and operation of the Partnership's natural gas and oil wells.  The
executive officers of PDC are full-time employees of PDC.  As such,
they devote the entirety of their daily time to the business and operations of
PDC.  One of the major business segments of PDC includes the operation
of the business of PDC's sponsored limited partnerships, including the
Partnership.  An element of their job responsibilities requires that
they devote such time and attention to the business and affairs of the
Partnership as is reasonably required.  This time commitment varies
for each individual and varies over the life of the Partnership.
 
 In
addition to managing the affairs of the Partnership, the management and
technical staff of PDC also manage the corporate affairs of PDC, the affairs of
33 limited partnerships and other joint ventures formed over the
years.  PDC owns an interest in all of the 33 limited partnerships for
which it acts as Managing General Partner.  Because PDC must divide
its attention and efforts among many unrelated parties, the Partnership does not
receive its full attention or efforts at all times, however, PDC believes that
it devotes sufficient time, attention and expertise to the Partnership to
appropriately manage the affairs of the Partnership.
 
 Although
the Partnership has no Code of Ethics, PDC has a Code of Ethics that applies to
its senior executive officers.  The Code of Ethics is posted on PDC’s
website at www.petd.com.
 
 Experience and Capabilities
as Driller/Operator
 
 PDC is
contracted to serve as operator for the Partnership wells.  Since
1969, PDC has drilled over 3,100 wells in Colorado, West Virginia, Tennessee,
Ohio, Michigan, North Dakota, Utah, Wyoming, and Pennsylvania.  PDC
currently operates approximately 4,300 wells.
  PDC
employs geologists who develop prospects for drilling by PDC and who help
oversee the drilling process.  In addition, PDC has an engineering
staff that is responsible for well completions, pipelines, and production
operations.  PDC retains drilling subcontractors, completion
subcontractors, and a variety of other subcontractors in the performance of the
work of drilling contract wells.  In addition to technical management,
PDC may provide services, at competitive rates, from PDC-owned service rigs, a
water truck, steel tanks used temporarily on the well location during the
drilling and completion of a well, roustabouts, and other assorted small
equipment and services.  A roustabout is an oil and natural gas field
employee who provides skilled general labor for assembling well components and
other similar tasks.  PDC may lay short gathering lines, or may
subcontract all or part of the work where it is more cost effective for the
Partnership.  PDC employs full-time well tenders and supervisors to
operate its wells.  In addition, the engineering staff evaluates
reserves of all wells at least annually and reviews well performance against
expectations.  All services provided by PDC are provided at rates less
than or equal to prevailing rates for similar services provided by unaffiliated
persons in the area.
  -46-
 Index
  Petroleum Development
Corporation
 
 The
executive officers and directors of PDC, their principal occupations for the
past five years and additional information is set forth below:
 
 Name
                        
                        Age
                        
                        Positions
      and
                          Offices Held
                        
                        Director
                          Since
                        
                        Directorship
                          Term ExpiresRichard
      W McCullough
                        
                        56
                        
                        Chairman,
      Chief Executive Officer, President and Director
                        
                        2007
                        
                        2010Gysle
      R. Shellum
                        
                        56
                        
                        Chief
      Financial Officer
                        
                        -
                        
                        -Eric
      R. Stearns
                        
                        50
                        
                        Executive
      Vice President
                        
                        -
                        
                        -Darwin
      L. Stump
                        
                        54
                        
                        Chief
      Accounting Officer
                        
                        -
                        
                        -Daniel
      W. Amidon
                        
                        47
                        
                        General
      Counsel and Secretary
                        
                        -
                        
                        -Barton
      R. Brookman, Jr.
                        
                        46
                        
                        Senior
      Vice President Exploration and Production
                        
                        -
                        
                        -Steven
      R. Williams
                        
                        58
                        
                        Director
                        
                        1983
                        
                        2009Vincent
      F. D'Annunzio
                        
                        56
                        
                        Director
                        
                        1989
                        
                        2010Jeffrey
      C. Swoveland
                        
                        53
                        
                        Director
                        
                        1991
                        
                        2011Kimberly
      Luff Wakim
                        
                        50
                        
                        Director
                        
                        2003
                        
                        2009David
      C. Parke
                        
                        41
                        
                        Director
                        
                        2003
                        
                        2011Anthony
      J. Crisafio
                        
                        55
                        
                        Director
                        
                        2006
                        
                        2009Joseph
      E. Casabona
                        
                        64
                        
                        Director
                        
                        2007
                        
                        2011Larry
      F. Mazza
                        
                        47
                        
                        Director
                        
                        2007
                        
                        2010
 
 Richard
W. McCullough was elected Chairman in November 2008.  Mr.
McCullough was appointed Chief Executive Officer in June 2008, and has served as
President since March 2008. Mr. McCullough was appointed Chief Financial Officer
in November 2006 and also served as PDC’s Treasurer from November 2006 until
October 2007.  Prior to joining PDC, Mr. McCullough served as an
energy consultant from July 2005 to November 2006.  From January 2004
to July 2005, Mr. McCullough served as president and chief executive officer of
Gasource, LLC, Dallas, Texas, a marketer of long-term, natural gas
supplies.  From 2001 through 2003, Mr. McCullough served as an
investment banker with J.P. Morgan Securities, Atlanta, Georgia, and served in
the public finance utility group supporting bankers nationally in all gas
matters.  Additionally, Mr. McCullough has held senior positions with
Progress Energy, Deloitte and Touche, and the Municipal Gas Authority of
Georgia.  Mr. McCullough, a CPA, was a practicing certified public
accountant for eight years.
 
 Gysle R.
Shellum, was appointed Chief Financial Officer in November
2008.  Prior to joining PDC, Mr. Shellum served as Vice President,
Finance and Special Projects of CrossTex Energy, LP, an energy company with
upstream and downstream assets from 2004-2008.  From 2002-2004, Mr.
Shellum served as a Director of Value Capital, LLC.  Additionally, he
served as Chief Financial and Operating Officer at Financial Trade Solutions,
Partner and Chief Financial Officer at Duer Wagner & Co., and as American
International Petroleum Corporation’s Chief Financial Officer.  Mr.
Shellum began his career as a practicing CPA in Arthur Anderson’s energy
group.
  -47-
 Index
  Darwin
L. Stumpwas appointed Chief
Accounting Officer in November 2006.  Mr. Stump has been an officer of
PDC since April 1995 and held the position of Chief Financial Officer and
Treasurer from November 2003 until November 2006.  Previously, Mr.
Stump served as Corporate Controller from 1980 until November
2003.  Mr. Stump, a CPA, was a senior accountant with Main Hurdman,
Certified Public Accountants prior to joining PDC.
 
 Eric R.
Stearns was appointed Executive Vice President in March
2008.  Prior to his current position, Mr. Stearns served as Executive
Vice President Exploration and Production from December 2004 until March 2008,
Executive Vice President Exploration and Development from November 2003 until
December 2004, and Vice President Exploration and Development from April 1995
until November 2003.  Mr. Stearns joined PDC as a geologist in 1985
after working at Hywell, Incorporated and for Petroleum
Consultants.
 
 Daniel
W. Amidonwas appointed General
Counsel and Secretary in July 2007.  Prior to his current position,
Mr. Amidon was employed by Wheeling-Pittsburgh Steel Corporation beginning in
July 2004; he served in several positions including General Counsel and
Secretary.  Prior to his employment with Wheeling-Pittsburgh Steel,
Mr. Amidon worked for J&L Specialty Steel Inc. from 1992 through July 2004
in positions of increasing responsibility, including General Counsel and
Secretary.  Mr. Amidon practiced with the Pittsburgh law firm of
Buchanan Ingersoll PC from 1986 through 1992.
 
 Barton
R. Brookman, Jr. was appointed Senior Vice President Exploration and
Production in March 2008.  Previously Mr. Brookman served as Vice
President Exploration and Production since joining PDC in July
2005.  Prior to joining PDC, Mr. Brookman worked for Patina Oil and
Gas and its predecessor Snyder Oil for 17 years in a series of positions of
increasing responsibility ending his service as Vice President of Operations of
Patina.
 
 Steven
R. Williams was elected and served as Chairman from January 2004 until
his retirement in November 2008.  Mr. Williams served as Chief
Executive Officer from January 2004 to June 2008 and President from March 1983
until December 2004.
 
 Vincent
F. D'Annunzio has served as president of Beverage Distributors, Inc.,
located in Clarksburg, West Virginia since 1985.  Mr. D’Annuzio has
served as a Director since 1989.
 
 Jeffrey
C. Swoveland is the Chief Operating Officer of Coventina Healthcare
Enterprises, a medical device company specializing in therapeutic warming and
multi-modal treatment systems used in the treatment, rehabilitation and
management of pain since May 2007.  Previously, Mr. Swoveland served
as Chief Financial Officer of Body Media, Inc., a life-science company
specializing in the design and development of wearable body monitoring products
and services, from September 2000 to May 2007.  Prior thereto, Mr.
Swoveland held various positions, including Vice-President of Finance, Treasurer
and interim Chief Financial Officer with Equitable Resources, Inc., a
diversified gas company from 1997 to September 2000.  Mr. Swoveland
serves as a member of the board of directors of Linn Energy, LLC, a public,
independent gas and oil company.  Mr. Swoveland has served as a
Director since 1991.
 
 Kimberly
Luff Wakim, an Attorney and a Certified Public Accountant, is a Partner
with the Pittsburgh, Pennsylvania law firm, Thorp, Reed & Armstrong LLP,
where she serves as a member of the Executive Committee.  Ms. Wakim
has practiced law with Thorp, Reed & Armstrong LLP since
1990.  Ms. Wakim has served as a Director since 2003.
 
 David C.
Parke is a Managing Director in the investment banking group of Boenning
& Scattergood, Inc., West Conshohocken, PA, a full-service investment
banking firm.  Prior to joining Boenning & Scattergood in November
2006, he was a Director with Mufson Howe Hunter & Company LLC, Philadelphia,
Pennsylvania, an investment banking firm, from October 2003 to November
2006.  From 1992 through 2003, Mr. Parke was Director of Corporate Finance
of Investec, Inc. and its predecessor Pennsylvania Merchant Group Ltd.,
investment banking companies.  Prior to joining Pennsylvania Merchant
Group, Mr. Parke served in the corporate finance departments of Wheat First
Butcher & Singer, now part of Wachovia Securities, and Legg Mason, Inc., now
part of Stifel Nicolaus.  Mr. Parke serves as a member of the board of
directors of Zunicom Inc., a public company providing business communication
services to the hospitality industry.  Mr. Parke has served as a
Director since 2003.
  -48-
 Index
  Anthony
J. Crisafiowas elected to the
Board in October 2006.  Mr. Crisafio, a Certified Public Accountant,
serves as an independent business consultant, providing financial and
operational advice to businesses and has done so since
1995.  Additionally, Mr. Crisafio has served as the Chief Operating
Officer of Cinema World, Inc. from 1989 until 1993 and was a partner with Ernst
& Young from 1986 until 1989.
  Joseph
E. Casabona Mr. Casabona has been a Director since 2007. Mr. Casabona
served as Executive Vice President and member of the Board of Directors of
Denver based Energy Corporation of America, a natural gas exploration and
development company, from 1985 to his retirement in May 2007. Mr. Casabona’s
responsibilities included strategic planning as well as executive oversight of
the drilling operations in the continental United States and internationally. In
2008, Mr. Casabona assumed the title of Chief Executive Officer of Paramax
Resources Ltd, a junior public Canadian oil & gas company (PMXRF) engaged in
the business of acquiring and exploration of oil and gas prospects, primarily in
Canada and Idaho. Mr. Casabona serves on the Audit Committee and the Planning
and Finance Committee.
  Larry F.
Mazzawas
elected to the Board in October 2007 by the Board of Directors.  Mr.
Mazza has served as Chief Executive Officer of MVB Bank Harrison, Inc., in
Bridgeport, West Virginia since March 2005.  Prior to the formation of
MVB Bank Harrison, Mr. Mazza served as Senior Vice President Retail Banking
Manager for BB&T in West Virginia, where he was employed from June 1986 to
March 2005.
 
 The Audit
Committee of the Board of Directors is comprised of Directors Swoveland,
Crisafio, Parke, Wakim and Casabona.  The Board has determined that
the Audit Committee is comprised entirely of independent directors as defined by
the NASDAQ rule 4200(a) (15).  Anthony J. Crisafio chairs the Audit
Committee.  All audit committee members, with the exception of Mr.
Parke, qualify as audit committee financial experts and are independent of
management.
 
 
 Item11.
              Executive
      Compensation
 
 The
Partnership does not have any employees or executives of its
own.  None of PDC's officers or directors receives any direct
remuneration, compensation or reimbursement from the
Partnership.  These persons receive compensation solely from
PDC.  The management fee and other amounts paid to the Managing
General Partner by the Partnership are not used to directly compensate or
reimburse PDC’s officers or directors.  The management fee paid to PDC
in 2005 was $0.5 million.  No management fee was paid to PDC in 2007
or 2006.  See Item 13, Certain Relationships and Related
Transactions, and Director Independence for a discussion of compensation
paid by the Partnership to the Managing General Partner.
  Compensation Committee
Interlocks and Insider Participation
 
 There are
no Compensation Committee interlocks.
   Item12.
              Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
 
 As
of February 28, 2009, the Partnership had 1,787 units
outstanding.  No director or officer of PDC owns any
units.  As of February 28, 2009, PDC has purchased no Partnership
interests from Investor Partners.  PDC owns a 30% partnership interest
in the Partnership.
  -49-
 Index
  Item13.
              Certain
      Relationships and Related Transactions, and Director
      Independence
 
 Compensation to the Managing
General Partner and Affiliates
 
 The
Managing General Partner transacts all of the Partnerships business on behalf of
the Partnership.  See Note 3, Transactions with Managing General
Partner and Affiliates to the accompanying financial statements, for
information regarding compensation to and transactions with the Managing General
Partner and affiliates.
 
 Related Party Transaction
Policies and Approval
 
 The
Limited Partnership Agreement and the Drilling and Operating Agreement with
Petroleum Development Corporation govern related party transactions, including
those described above.  We have no written policies or procedures for the
review, approval or ratification of transactions with related persons outside
the agreements.
 
 Other Agreements and
Arrangements
 
 Executive
officers of the Managing General Partner are eligible to invest in a
Board-approved executive drilling program, as approved by the Board of
Directors.
 
 These
executive officers may profit from their participation in the executive drilling
program because they invest in wells at cost and do not have to pay drilling
compensation, management fees or broker commissions and therefore obtain an
interest in the wells at a reduced price than that which is generally charged to
the investing partners in a Partnership. Investor partners participating in
drilling through a partnership are generally charged a profit or markup above
the cost of the wells; management fees and commissions at rates which are
generally similar to those for this Partnership outlined in Note 3, Transactions with Managing General
Partner and Affiliates to the accompanying financial
statements.
 
 Through
the executive drilling program, certain executive officers have invested in the
wells owned by the Partnership.  Ownership by each executive in
Partnership wells varies depending on when the well was drilled and the amount
of funds invested in the program.  The aggregate ownership percentage
is .15% of each well in the Partnership.  The Board believes that
having the executive officers invest in wells with the company and other
investor partners helps to create a commonality of interests much like share
ownership creates a commonality of interests between the shareholders and
executive officers.
 
 Director
Independence
 
 The
Partnership has no directors.  The Partnership is managed by the
Managing General Partner.  See Item 10, Directors, Executive Officers and
Corporate Governancee.
 
 
 Item14.
              Principal
      Accountant Fees and Services
 
 There
were billings from the Partnership’s independent registered public accounting
firm, KPMG, of $0.1 million for audit fees for the period ended December 31,
2005 and the quarters ended March 31, 2006 and June 30, 2006.  Audit
fees include amounts billed for professional services rendered by KPMG for the
audit of the Partnership’s financial statements in its Form 10 and Form 10/A,
including reviews of the condensed unaudited financial statements included in
the Partnership’s Form 10/A for the quarter ended March 31, 2006 and the
quarterly report on Form 10-Q for the quarter ended June 30,
2006.  For the years ended December 31, 2007 and 2006, there were
audit billings from the Partnership’s Independent Registered Public Accounting
Firm, PwC, of approximately $0.1 million per year.  For the year
ended December 31, 2007, there were tax billings from the Partnership’s
Independent Registered Public Accounting Firm, PwC, of $19,968.
  -50-
 Index
  Audit Committee Pre-Approval
Policies and Procedures
 
 The
Sarbanes-Oxley Act of 2002 requires that all services provided to the
Partnership by its independent registered public accounting firm be subject to
pre-approval by the Audit Committee or authorized members of the
Committee.  The Partnership has no Audit Committee.  The
Audit Committee of PDC, as Managing General Partner, has adopted policies and
procedures for pre-approval of all audit services and non-audit services to be
provided by the Partnership's independent registered public accounting
firm.  Services necessary to conduct the annual audit must be
pre-approved by the Audit Committee annually at a meeting. Permissible non-audit
services to be performed by the independent registered public accounting firm
may also be approved on an annual basis by the Audit Committee if they are of a
recurring nature.  Permissible non-audit services to be conducted by
the independent registered public accounting firm, which are not eligible for
annual pre-approval, must be pre-approved individually by the full Audit
Committee or by an authorized Audit Committee member.  Actual fees
incurred for all services performed by the independent registered public
accounting firm will be reported to the Audit Committee after the services are
fully performed.  The duties of the Committee are described in the
Audit Committee Charter, which is available at the Managing General Partner
PDC’s website under Corporate
Governance.
 
 
 Item15.
              Exhibits,
      Financial Statement Schedules
 
 (a)
              The
      index to Financial Statements is located on page
  F-1.
 
 (b)
              Exhibits.
 
 Exhibit No.
                                                
                                                Description3.1
                                                
                                                Limited
      Partnership Agreement (incorporated by reference to Exhibit No. 3 of
      Amendment No. 1 to Form 10-12G/A, SEC File number
    000-51959).3.2
                                                
                                                Certificate
      of limited partnership which reflects the organization of the Partnership
      under West Virginia law, filed herewith.10.1
                                                
                                                Form
      of assignment of leases to the Partnership, filed
  herewith.10.2
                                                
                                                Drilling
      and operating agreement between PDC as Managing General Partner of the
      Partnership, filed herewith.10.3
                                                
                                                Audited
      Consolidated Financial
      Statements for the year ended December 31, 2007 of Petroleum
      Development Corporation and its subsidiaries, as Managing General Partner
      of the Partnership (incorporated by reference to PDC’s Annual Report on
      Form 10-K, SEC file No. 000-07246, filed on March 20,
    2008).10.4
                                                
                                                Gas
      Purchase and Processing Agreement between Duke Energy Field Services,
      Inc.; United States Exploration, Inc.; and Petroleum Development
      Corporation, dated October 28, 1999 (incorporated by reference to Exhibit
      10.3 of Rockies Region 2007 Limited Partnership’s Form 10/A Amendment No.
      3 registration statement filed by PDC as Managing General Partner, on
      March 31, 2009).10.5
                                                
                                                Gas
      Purchase and Processing Agreement between Natural Gas Associates, a
      Colorado partnership, and Aceite Energy Corporation, Walker Exploratory
      Program 1982-A Limited and Creek Cattle Company, dated October 14, 1983
      (incorporated by reference to Exhibit 10.4 of Rockies Region 2007 Limited
      Partnership’s Form 10/A Amendment No. 3 registration statement filed by
      PDC as Managing General Partner, on March 31, 2009).10.6
                                                
                                                Gas
      Purchase and Processing Agreement between Natural Gas Associates, a
      Colorado partnership, and SHF Partnership, a Colorado general partnership,
      Trailblazer Oil and Gas, Inc. Alfa Resources, Inc., Pulsar Oil and Gas,
      Inc., Overthrust Oil Royalty Corporation, Corvette Petroleum Ltd., Robert
      Lanari, an individual, and Toby A Martinez, an individual, dated September
      21, 1983 (incorporated by reference to Exhibit 10.5 of Rockies Region 2007
      Limited Partnership’s Form 10/A  Amendment No. 3 registration
      statement filed by PDC as Managing General Partner, on March 31,
      2009).
  -51-
 Index
 10.7
                    
                    Domestic
      Crude Oil Purchase Agreement with ConocoPhillips Company, dated January 1,
      1993, as amended by agreements with Teppco Crude Oil, LLC dated August 2,
      2007; September 24, 2007; October 17, 2007; January 7, 2008; January 15,
      2008; and April 17, 2008 (incorporated by reference to Exhibit 10.6 of
      Rockies Region 2007 Limited Partnership’s Form 10/A Amendment No. 3
      registration statement filed by PDC as Managing General Partner, on March
      31, 2009).10.8
                    
                    Gas
      Purchase Agreement between Williams Production RMT Company, Riley Natural
      Gas Company and Petroleum Development Corporation, dated as of June 1,
      2006 (incorporated by reference to Exhibit 10.7 of Rockies Region 2007
      Limited Partnership’s Form 10/A Amendment No. 3 registration statement
      filed by PDC as Managing General Partner, on March 31,
    2009).23.1
                    
                    Consent
      of Ryder Scott Company, L.P., Petroleum Consultants, filed
      herewith.31.1
                    
                    Rule
      13a-14(a)/15d-14(c) Certification of Chief Executive Officer of Petroleum
      Development Corporation, the Managing General Partner of the
      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
      Partnership.32.1
                    
                    Title
      18 U.S.C. Section 1350 (Section 906 of Sarbanes-Oxley Act of 2002)
      Certification by Chief Executive Officer of Petroleum Development
      Corporation the Managing General Partner of the
    Partnership.32.2
                    
                    Title
      18 U.S.C. Section 1350 (Section 906 of Sarbanes-Oxley Act of 2002)
      Certification by Chief Financial Officer of Petroleum Development
      Corporation the Managing General Partner of the
    Partnership.
 -52-
 Index
  SIGNATURES
  Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
 
 Rockies
Region Private Limited Partnership
 By its
Managing General Partner
 Petroleum
Development Corporation
 
 By/s/ Richard W.
McCullough
 Richard
W. McCullough
 Chairman,
Chief Executive Officer and President
 April 8,
2009
 
 Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated:
 
 Signature
                                                Title
                                                Date/s/ Richard W. McCullough
                                                Chairman,
      Chief Executive Officer, and President
                                                April
      8, 2009Richard W.
      McCullough
                                                Petroleum
      Development Corporation,Managing
      General Partner of the Registrant(Principal
      executive officer)/s/ Gysle R. Shellum
                                                Chief
      Financial Officer
                                                April
      8, 2009Gysle R.
      Shellum
                                                Petroleum
      Development Corporation,Managing
      General Partner of the Registrant(Principal
      financial officer)/s/ Darwin L. Stump
                                                Chief
      Accounting Officer
                                                April
      8, 2009Darwin L.
      Stump
                                                Petroleum
      Development Corporation,Managing
      General Partner of the Registrant(Principal
      accounting officer)/s/ Steven R. Williams
                                                Director
                                                April
      8, 2009Steven R.
      Williams
                                                Petroleum
      Development Corporation,Managing
      General Partner of the Registrant/s/ Anthony J. Crisafio
                                                Director
                                                April
      8, 2009Anthony J.
      Crisafio
                                                Petroleum
      Development Corporation,Managing
      General Partner of the Registrant/s/ Jeffrey C. Swoveland
                                                Director
                                                April
      8, 2009Jeffrey C.
      Swoveland
                                                Petroleum
      Development Corporation,Managing
      General Partner of the Registrant/s/ Joseph E. Casabona
                                                Director
                                                April
      8, 2009Joseph E.
      Casabona
                                                Petroleum
      Development Corporation,Managing
      General Partner of the Registrant
  -53-
 Index
  ROCKIESREGION PRIVATE LIMITED PARTNERSHIP
 
 Index to Financial
Statements
 
 Report
      of Independent Registered Public Accounting Firms
                  
                  F-2,
      F-2aBalance
      Sheets – December 31, 2007, 2006 and 2005
                  
                  F-3Statements
      of Operations – For the Years Ended December 31, 2007 and 2006 and the
      Period from December 6, 2005 (date of inception) to December 31,
      2005
                  
                  F-4Statements
      of Partners' Equity –For the Years Ended December 31, 2007 and 2006 and
      the Period from December 6, 2005 (date of inception) to December 31,
      2005
                  
                  F-5Statements of Cash Flows – For
      the Years Ended December 31, 2007 and 2006 and the Period from December 6,
      2005 (date of inception) to December 31, 2005
                  
                  F-6Notes
      to Financial Statements
                  
                  F-7Supplemental
      Oil and Gas Information - Unaudited
                  
                  F-24Unaudited
      Condensed Quarterly Financial StatementsBalance
      Sheets – 2007
                  
                  F-28Balance
      Sheets – 2006*
                  
                  F-29Statements
      of Operations - 2007
                  
                  F-30Statements
      of Operations – 2006*
                  
                  F-31Statements
      of Cash Flows - 2007
                  
                  F-32Statements
      of Cash Flows – 2006*
                  
                  F-33Notes
      to Unaudited Condensed Quarterly Financial Statements
                  
                  F-34
 
 
 *As
restated for the three and six months ended June 30, 2006
 Index
  Report of
Independent Registered Public Accounting Firm
  To the
Partners of the Rockies Region Private Limited Partnership,
  In our
opinion, the accompanying balance sheets and the related statements of
operations, partners' equity and cash flows present fairly, in all material
respects, the financial position of Rockies Region Private Limited Partnership
(the "Partnership") at December 31, 2007 and 2006, and the results of its
operations and its cash flows for each of the two years in the period ended
December 31, 2007 in conformity with accounting principles generally
accepted in the United States of America. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
  As
discussed in Note 3 to the financial statements, the Partnership has significant
related party transactions with Petroleum Development Corporation and its
subsidiaries.
  /s/
PricewaterhouseCoopers LLP
 Pittsburgh,
Pennsylvania
 April
8, 2009
  F-2
  Report
of Independent Registered Public Accounting Firm
 
 
 To the
Partners
  Rockies
Region Private Limited Partnership:
 
  We have
audited the accompanying balance sheet of Rockies Region Private Limited
Partnership as of December 31, 2005 and the related statements of operations,
partners' equity and cash flows for the period from December 6, 2005 (date of
inception) to December 31, 2005. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
  We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
  In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Rockies Region Private Limited
Partnership as of December 31, 2005, and the results of its operations and its
cash flows for the period from December 6, 2005 (date of inception) to December
31, 2005, in conformity with U.S. generally accepted accounting
principles.
 
 
 /s/ KPMG
LLP
 Pittsburgh,
Pennsylvania
 April
27, 2006
  F-2a
 Index
  ROCKIES
REGION PRIVATE LIMITED PARTNERSHIP
 
 
 Balance
      SheetsDecember
      31, 2007, 2006 and 2005Assets
                                              
                                              2007
                                              
                                              
                                              2006
                                              
                                              
                                              2005Current
      assets:Cash
      and cash equivalents
                                              
                                              $
                                              63,599
                                              
                                              
                                              $
                                              20,328
                                              
                                              
                                              $
                                              -Accounts
      receivable
                                              
                                              
                                              2,144,313
                                              
                                              
                                              
                                              4,814,402
                                              
                                              
                                              
                                              -Due
      from Managing General Partner-derivatives
                                              
                                              
                                              -
                                              
                                              
                                              
                                              922,443
                                              
                                              
                                              
                                              -Due
      from Managing General Partner-other
                                              
                                              
                                              236,307
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -Total
      current assets
                                              
                                              
                                              2,444,219
                                              
                                              
                                              
                                              5,757,173
                                              
                                              
                                              
                                              -Oil
      and gas properties, successful efforts method
                                              
                                              
                                              40,785,791
                                              
                                              
                                              
                                              37,182,325
                                              
                                              
                                              
                                              -Wells
      in progress
                                              
                                              
                                              -
                                              
                                              
                                              
                                              1,969,943
                                              
                                              
                                              
                                              315,408Drilling
      advances to Managing General Partner
                                              
                                              
                                              253,556
                                              
                                              
                                              
                                              1,958,665
                                              
                                              
                                              
                                              42,532,187Oil
      and gas properties, at cost
                                              
                                              
                                              41,039,347
                                              
                                              
                                              
                                              41,110,933
                                              
                                              
                                              
                                              42,847,595Less
      accumulated depreciation, depletion and amortization
                                              
                                              
                                              (10,188,507
                                              )
                                              
                                              
                                              (5,877,662
                                              )
                                              
                                              
                                              -Oil
      and gas properties, net
                                              
                                              
                                              30,850,840
                                              
                                              
                                              
                                              35,233,271
                                              
                                              
                                              
                                              42,847,595Due
      from Managing General Partner-derivatives
                                              
                                              
                                              -
                                              
                                              
                                              
                                              101,637
                                              
                                              
                                              
                                              -Due
      from Managing General Partner-other
                                              
                                              
                                              264,016
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -Total
      assets
                                              
                                              $
                                              33,559,075
                                              
                                              
                                              $
                                              41,092,081
                                              
                                              
                                              $
                                              42,847,595Liabilities and Partners'
      equityCurrent
      liabilities:Accounts
      payable
                                              
                                              $
                                              111,157
                                              
                                              
                                              $
                                              369,402
                                              
                                              
                                              $
                                              -Due
      to Managing General Partner-derivatives
                                              
                                              
                                              380,187
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -Due
      to Managing General Partner-other
                                              
                                              
                                              -
                                              
                                              
                                              
                                              139,842
                                              
                                              
                                              
                                              20,027Total
      current liabilities
                                              
                                              
                                              491,344
                                              
                                              
                                              
                                              509,244
                                              
                                              
                                              
                                              20,027Asset
      retirement obligations
                                              
                                              
                                              355,379
                                              
                                              
                                              
                                              332,434
                                              
                                              
                                              
                                              -Total
      liabilities
                                              
                                              
                                              846,723
                                              
                                              
                                              
                                              841,678
                                              
                                              
                                              
                                              20,027Commitments
      and contingenciesPartners'
      equity:Managing
      General Partner
                                              
                                              
                                              8,243,538
                                              
                                              
                                              
                                              10,452,514
                                              
                                              
                                              
                                              11,225,662Investor
      Partners - 1,787 units issued and outstanding
                                              
                                              
                                              24,468,814
                                              
                                              
                                              
                                              29,797,889
                                              
                                              
                                              
                                              31,601,906Total
      Partners' equity
                                              
                                              
                                              32,712,352
                                              
                                              
                                              
                                              40,250,403
                                              
                                              
                                              
                                              42,827,568Total
      liabilities and Partners' equity
                                              
                                              $
                                              33,559,075
                                              
                                              
                                              $
                                              41,092,081
                                              
                                              
                                              $
                                              42,847,595
 
 
 See
accompanying notes to financial statements.
  F-3
 Index
  ROCKIES
REGION PRIVATE LIMITED PARTNERSHIP
 
 
 Statements
      of OperationsFor
      the Years Ended December 31, 2007 and 2006 andPeriod
      from December 6, 2005 (date of inception) to December 31,
    2005Period
      December 6, 2005(date
      of inception)to
      December 31,2007
                        
                        
                        2006
                        
                        
                        2005Revenues:Oil
      and gas sales
                        
                        $
                        10,350,973
                        
                        
                        $
                        16,781,973
                        
                        
                        $
                        -Oil
      and gas price risk management (loss) gain,  net
                        
                        
                        (899,196
                        )
                        
                        
                        1,113,565
                        
                        
                        
                        -Total
      revenues
                        
                        
                        9,451,777
                        
                        
                        
                        17,895,538
                        
                        
                        
                        -Operating
      costs and expenses:Production
      and operating costs
                        
                        
                        2,144,778
                        
                        
                        
                        2,152,842
                        
                        
                        
                        -Management
      fee
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        536,033Direct
      costs - general and administrative
                        
                        
                        101,279
                        
                        
                        
                        245,875
                        
                        
                        
                        20,027Depreciation,
      depletion and amortization
                        
                        
                        4,310,845
                        
                        
                        
                        5,877,662
                        
                        
                        
                        -Exploratory
      dry hole costs
                        
                        
                        77,911
                        
                        
                        
                        2,057,369
                        
                        
                        
                        -Accretion
      of asset retirement obligations
                        
                        
                        16,620
                        
                        
                        
                        11,727
                        
                        
                        
                        -Total
      operating costs and expenses
                        
                        
                        6,651,433
                        
                        
                        
                        10,345,475
                        
                        
                        
                        556,060Income
      (loss) from operations
                        
                        
                        2,800,344
                        
                        
                        
                        7,550,063
                        
                        
                        
                        (556,060
                        )Interest
      income
                        
                        
                        101,818
                        
                        
                        
                        29,119
                        
                        
                        
                        -Net
      income (loss)
                        
                        $
                        2,902,162
                        
                        
                        $
                        7,579,182
                        
                        
                        $
                        (556,060
                        )Net
      income (loss) allocated to partners
                        
                        $
                        2,902,162
                        
                        
                        $
                        7,579,182
                        
                        
                        $
                        (556,060
                        )Less
      Managing General Partner interest in net income (loss)
                        
                        
                        870,649
                        
                        
                        
                        2,273,755
                        
                        
                        
                        (6,008
                        )Net
      income (loss) allocated to Investor Partners
                        
                        $
                        2,031,513
                        
                        
                        $
                        5,305,427
                        
                        
                        $
                        (550,052
                        )Net
      income (loss) per Investor Partner unit
                        
                        $
                        1,137
                        
                        
                        $
                        2,969
                        
                        
                        $
                        (308
                        )Investor
      Partner units outstanding
                        
                        
                        1,787
                        
                        
                        
                        1,787
                        
                        
                        
                        1,787
 
 See
accompanying notes to financial statements.
  F-4
 Index
  ROCKIES
REGION PRIVATE LIMITED PARTNERSHIP
 
 
 Statements
      of Partners' EquityFor
      the Years Ended December 31, 2007 and 2006 andPeriod
      from December 6, 2005 (date of inception) to December 31,
    2005ManagingInvestor
                  
                  
                  GeneralPartners
                  
                  
                  Partner
                  
                  
                  TotalDecember
      6, 2005 (date of inception)
                  
                  $
                  35,735,509
                  
                  
                  $
                  11,231,670
                  
                  
                  $
                  46,967,179Syndication
      costs
                  
                  
                  (3,583,551
                  )
                  
                  
                  -
                  
                  
                  
                  (3,583,551
                  )Net
      loss
                  
                  
                  (550,052
                  )
                  
                  
                  (6,008
                  )
                  
                  
                  (556,060
                  )Balance,
      December 31, 2005
                  
                  
                  31,601,906
                  
                  
                  
                  11,225,662
                  
                  
                  
                  42,827,568Distributions
      to Partners
                  
                  
                  (7,109,444
                  )
                  
                  
                  (3,046,903
                  )
                  
                  
                  (10,156,347
                  )Net
      income
                  
                  
                  5,305,427
                  
                  
                  
                  2,273,755
                  
                  
                  
                  7,579,182Balance,
      December 31, 2006
                  
                  
                  29,797,889
                  
                  
                  
                  10,452,514
                  
                  
                  
                  40,250,403Distributions
      to Partners
                  
                  
                  (7,360,588
                  )
                  
                  
                  (3,079,625
                  )
                  
                  
                  (10,440,213
                  )Net
      income
                  
                  
                  2,031,513
                  
                  
                  
                  870,649
                  
                  
                  
                  2,902,162Balance,
      December 31, 2007
                  
                  $
                  24,468,814
                  
                  
                  $
                  8,243,538
                  
                  
                  $
                  32,712,352
 
 
 See
accompanying notes to financial statements.
  F-5
 Index
  Statements
      of Cash FlowsFor
      the Years Ended December 31, 2007 and 2006 andPeriod
      from December 6, 2005 (date of inception) to December 31,
    2005Period
      December 6, 2005(date
      of inception)to
      December 31,2007
                        
                        
                        2006
                        
                        
                        2005Cash
      flows from operating activities:Net
      income (loss)
                        
                        $
                        2,902,162
                        
                        
                        $
                        7,579,182
                        
                        
                        $
                        (556,060
                        )Adjustments
      to reconcile net income (loss) to net cash provided by (used in) operating
      activities:Depreciation,
      depletion and amortization
                        
                        
                        4,310,845
                        
                        
                        
                        5,877,662
                        
                        
                        
                        -Accretion
      of asset retirement obligations
                        
                        
                        16,620
                        
                        
                        
                        11,727
                        
                        
                        
                        -Unrealized
      (gain) loss on derivative transactions
                        
                        
                        1,404,267
                        
                        
                        
                        (1,024,080
                        )
                        
                        
                        -Exploratory
      dry hole costs
                        
                        
                        77,911
                        
                        
                        
                        2,057,369
                        
                        
                        
                        -Changes
      in operating assets and liabilities:Decrease
      (increase) in accounts receivable
                        
                        
                        2,670,089
                        
                        
                        
                        (4,814,402
                        )
                        
                        
                        -(Decrease)
      increase in accounts payable
                        
                        
                        (258,245
                        )
                        
                        
                        369,402
                        
                        
                        
                        -(Decrease)
      increase in due from/to Managing General Partner
                        
                        
                        (640,165
                        )
                        
                        
                        119,815
                        
                        
                        
                        20,027Net
      cash provided by (used in) operating activities
                        
                        
                        10,483,484
                        
                        
                        
                        10,176,675
                        
                        
                        
                        (536,033
                        )Cash
      flows from investing activities:Capital
      expenditures for oil and gas properties
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (42,847,595
                        )Net
      cash used in investing activities
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (42,847,595
                        )Cash
      flows from financing activities:Investor
      Partners' contributions
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        35,735,509Managing
      General Partner contribution
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        11,231,670Syndication
      costs paid
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (3,583,551
                        )Distributions
      to Partners
                        
                        
                        (10,440,213
                        )
                        
                        
                        (10,156,347
                        )
                        
                        
                        -Net
      cash (used in) provided by financing activities
                        
                        
                        (10,440,213
                        )
                        
                        
                        (10,156,347
                        )
                        
                        
                        43,383,628Net
      increase in cash and cash equivalents
                        
                        
                        43,271
                        
                        
                        
                        20,328
                        
                        
                        
                        -Cash
      and cash equivalents, beginning of period
                        
                        
                        20,328
                        
                        
                        
                        -
                        
                        
                        
                        -Cash
      and cash equivalents, end of period
                        
                        $
                        63,599
                        
                        
                        $
                        20,328
                        
                        
                        $
                        -Supplemental
      disclosure of non-cash activity:Asset
      retirement obligation, with corresponding increase to oil and gas
      properties
                        
                        $
                        6,325
                        
                        
                        $
                        320,707
                        
                        
                        $
                        -
 
 
 See
accompanying notes to financial statements.
  F-6
 Index
  ROCKIES
REGION PRIVATE LIMITED PARTNERSHIP
 
 Notes to
Financial Statements
 
 Note
1 - Organization
 
 The
Rockies Region Private Limited Partnership (the “Partnership” or the
“Registrant”) was organized as a limited partnership on December 6, 2005, in
accordance with the laws of the State of West Virginia for the purpose of
engaging in the exploration and development of oil and natural gas properties
and commenced business operations as of the date of organization.
 
 Purchasers
of partnership units subscribed to and fully paid for 41.5 units of limited
partner interests and 1,745.28 units of additional general partner interests at
$20,000 per unit.  As of February 28, 2009, there are 962 Investor
Partners.  Petroleum Development Corporation has been designated the
Managing General Partner of the Partnership and has a 30% ownership in the
Partnership. Generally, throughout the term of the Partnership, revenues, costs,
and cash distributions are allocated 70% to the limited and additional general
partners (collectively, the “Investor Partners”), which are shared pro rata
based upon the amount of their investment in the Partnership, and 30% to the
Managing General Partner.  As of February 28, 2009, the Managing
General Partner has repurchased no units of Partnership interests from Investor
Partners.
 
 Upon
completion of the drilling phase of the Partnership's wells, all additional
general partners units were converted into units of limited partner interests
and thereafter became limited partners of the Partnership.
 
 In
accordance with the terms of the Limited Partnership Agreement (the
“Agreement”), the Managing General Partner manages all activities of the
Partnership and acts as the intermediary for substantially all Partnership
transactions.
 
 Executive Drilling
Program
 
 Executive
officers of the Managing General Partner are eligible to invest in a
Board-approved executive drilling program, as approved by the Board of
Directors.  These executive officers may profit from their
participation in the executive drilling program because they invest in wells at
cost and do not have to pay drilling compensation, management fees or broker
commissions and therefore obtain an interest in the wells at a reduced price
than that which is generally charged to the investing partners in a
Partnership.  Investor partners participating in drilling through a
partnership are generally charged a profit or markup above the cost of the
wells; management fees and commissions at rates which are generally similar to
those for this Partnership outlined above.
 
 Through
the executive drilling program, certain executive officers have invested in the
wells owned by the Partnership.  Ownership by each executive in
Partnership wells varies depending on when the well was drilled and the amount
of funds invested in the program.  The aggregate ownership percentage
is .15% of each well in the Partnership.  The Board believes that
having the executive officers invest in wells with the company and other
investor partners helps to create a commonality of interests much like share
ownership creates a commonality of interests between the shareholders and
executive officers.
 
 Note
2 - Summary of
Significant Accounting Policies
 
 Basis of
Presentation
 
 The
financial statements include only those assets, liabilities and results of
operations of the partners which relate to the business of the
Partnership.  The statements do not include any assets, liabilities,
revenues or expenses attributable to any of the partners' other
activities.
 
 Cash and Cash
Equivalents
 
 The
Partnership considers all highly liquid investments with original maturities of
three months or less to be cash equivalents.  The Partnership
maintains substantially all of its cash and cash equivalents in a bank account
at one financial institution.  The balance in the Partnership’s
account is temporarily insured by the Federal Deposit Insurance Corporation, or
FDIC, in an amount up to $250,000 through December 31, 2009, after such date the
FDIC limit will revert to $100,000 unless the temporary limit is extended or
made permanent.  At times, the Partnership’s account balance may
exceed FDIC limits.  The Partnership has not experienced losses in any
such accounts and limits its exposure to credit loss by placing its cash and
cash equivalents with high-quality financial institutions.
  F-7
 Index
  ROCKIES
REGION PRIVATE LIMITED PARTNERSHIP
 
 Notes to
Financial Statements
 
 Allowance for Doubtful
Accounts
 
 As of
December 31, 2007, 2006 and 2005, the Partnership did not record an allowance
for doubtful accounts.  The Partnership sells substantially all of its
oil and natural gas to customers who purchase oil and natural gas from other
partnerships managed by the Partnership’s Managing General
Partner.  Historically, none of the other partnerships managed by the
Partnership’s Managing General Partner have experienced significant losses on
accounts receivable.  The Managing General Partner periodically
reviews accounts receivable for credit risks resulting from changes in the
financial condition of its customers.  The Partnership did not incur
any losses on accounts receivable for the year ended December 31, 2007 and 2006
or the period from December 6, 2005 (date of inception) to December 31,
2005.
 
 Oil and Gas
Properties
 
 The
Partnership accounts for its oil and natural gas properties (the “Properties”)
under the successful efforts method of accounting. Costs of proved developed
producing properties, successful exploratory wells and development dry hole
costs are depreciated or depleted by the unit-of-production method based on
estimated proved developed oil and natural gas reserves.  Property
acquisition costs are depreciated or depleted on the unit-of-production method
based on estimated proved oil and natural gas reserves.  The
Partnership obtains new reserve reports from independent petroleum engineers
annually as of December 31 of each year.  See Supplemental Oil and Gas
Information – Unaudited, Net
Proved Oil and Gas Reservesfor additional information regarding the
Partnership’s reserve reporting.  In accordance with the Agreement,
all capital contributed to the Partnership after deducting syndication costs and
a one-time management fee is to be used solely for the drilling of oil and
natural gas wells.  Accordingly, all such funds were advanced to the
Managing General Partnership as of December 31, 2005.  Amounts that
have not yet been used by the Managing General Partner for drilling activities
are reported under the caption “Drilling advances to Managing General
Partner.”  The Partnership does not maintain an inventory of undrilled
leases.
 
 Partnership
estimates of proved reserves are based on quantities of oil and gas that
engineering and geological analysis demonstrates, with reasonable certainty, to
be recoverable from established reservoirs in the future under current operating
and economic conditions.  Independent petroleum engineers prepare the
annual reserve and economic evaluation of all properties on a well-by-well
basis.  Additionally, the Partnership adjusts oil and gas reserves for
major well rework or abandonment during the year as needed. The process of
estimating and evaluating oil and gas reserves is complex, requiring significant
decisions in the evaluation of available geological, geophysical, engineering
and economic data. The data for a given property may also change substantially
over time as a result of numerous factors, including additional development
activity, evolving production history and a continual reassessment of the
viability of production under changing economic conditions. As a result,
revisions in existing reserve estimates occur from time to time. Although every
reasonable effort is made to ensure that reserve estimates reported represent
our most accurate assessments possible, the subjective decisions and variances
in available data for various properties increase the likelihood of significant
changes in these estimates. Because estimates of reserves significantly affect
our Depletion, Depreciation and Amortization (“DD&A”) expense, a change in
our estimated reserves could have an effect on our net income.
 
 Exploratory
well drilling costs are initially capitalized but charged to expense if the well
is determined to be nonproductive.  The status of each in-progress
well is reviewed quarterly to determine the proper accounting treatment under
the successful efforts method of accounting. Cumulative costs on in-progress
wells (“Suspended Well Costs”) remain capitalized until their productive status
becomes known. If an in-progress exploratory well is found to be unsuccessful
(referred to as a dry hole) prior to the issuance of financial statements, the
costs incurred as of the balance sheet date are expensed to exploratory dry hole
costs. If a final determination about the productive status of a well is unable
to be made prior to issuance of the financial statements, the well is classified
as “Suspended Well Costs” until there is sufficient time to conduct additional
completion or testing operations to evaluate the pertinent geological and
engineering data obtained. When a final determination of a well’s productive
status is made, the well is removed from the suspended well status and the
proper accounting treatment is recorded. The determination of an exploratory
well's ability to produce is made within one year from the completion of
drilling activities.  At December 31, 2007, 2006 and 2005, the
Partnership had no in-progress exploratory wells requiring “Suspended Well Cost”
classification.
  F-8
 Index
  ROCKIES
REGION PRIVATE LIMITED PARTNERSHIP
 
 Notes to
Financial Statements
 
  In
accordance with Statement of Financial Accounting Standards, or SFAS No. 144,
Accounting for the Impairment
or Disposal of Long-Lived Assets,the Partnership reviews its proved oil
and gas properties for impairment whenever events and circumstances indicate
that a decline in recoverability of their carrying value may have
occurred.  The Partnership estimates the expected undiscounted future
net cash flows of its oil and gas properties on a field-by-field basis and
compares such undiscounted future net cash flows to the carrying amount of the
oil and gas properties to determine if the carrying amount is
recoverable.  Estimated production is based upon prices at which
management reasonably estimates such products will be sold.  These
estimates of future product prices may differ from market prices of oil and
natural gas.  Any downward revisions to the Partnership’s estimates of
future production or product prices could result in an impairment of the
Partnership’s oil and natural gas properties in subsequent periods  If
net capitalized costs exceed undiscounted future net cash flows, impairment is
measured by the amount by which the net capitalized costs exceed their fair
value.  The Partnership has incurred no impairment losses from date of
inception through December 31, 2007, on its proved oil and natural gas
properties.
 Revenue
      Recognition
 
 Sales of
natural gas are recognized when natural gas has been delivered to a custody
transfer point, persuasive evidence of a sales arrangement exists, the rights
and responsibility of ownership pass to the purchaser upon delivery, collection
of revenue from the sale is reasonably assured, and the sales price is fixed or
determinable.  Natural gas is sold by the Managing General Partner
under contracts with terms ranging from one month up to the life of the
well.  Virtually all of the Managing General Partner’s contracts
pricing provisions are tied to a market index with certain adjustments based on,
among other factors, whether a well delivers to a gathering or transmission
line, quality of natural gas and prevailing supply and demand conditions, so
that the price of the natural gas fluctuates to remain competitive with other
available gas supplies.
 
 The
Partnership currently uses the “Net-Back” method of accounting for
transportation arrangements of natural gas sales.  The Partnership
sells natural gas at the wellhead, collects a price, and recognizes revenues
based on the wellhead sales price since transportation costs downstream of the
wellhead are incurred by the Partnership’s customers and reflected in the
wellhead price.
 
 Sales of
oil are recognized when persuasive evidence of a sales arrangement exists, the
oil is verified as produced and is delivered from storage tanks at well
locations to a purchaser, collection of revenue from the sale is reasonably
assured and the sales price is determinable.  The Partnership is
currently able to sell all the oil that it can produce under existing sales
contracts with petroleum refiners and marketers.  The Partnership does
not refine any of its oil production.  The Partnership’s crude oil
production is sold to purchasers at or near the Partnership’s wells under
short-term purchase contracts at prices and in accordance with arrangements that
are customary in the oil industry.
 
 The
Partnership sold natural gas and oil to three customers, DCP Midstream LP
(“DCP”), Teppco Crude Oil, LP (“Teppco”) and Williams Production RMT
(“Williams”), which accounted for 14%, 52% and 34%, respectively, of the
Partnership’s total natural gas and oil sales for the year ended December 31,
2006.  These same three customers accounted for 16%, 42% and 42%,
respectively, of the Partnership’s total natural gas and oil sales for the year
ended December 31, 2007.
 
 Asset Retirement
Obligations
 
 The
Partnership applies the provisions of SFAS No. 143, Accounting for Asset Retirement
Obligations and Financial Accounting Standards Board, or FASB,
Interpretation No. 47, Accounting for Conditional Asset
Retirement Obligations, and accounts for asset retirement obligations by
recording the fair value of its plugging and abandonment obligations when
incurred, which is at the time the well is completely drilled.  Upon
initial recognition of an asset retirement obligation, the Partnership increases
the carrying amount of the long-lived asset by the same amount as the
liability.  Over time, the asset retirement obligations are accreted,
over the estimated life of the related asset, for the change in their present
value.  The initial capitalized costs are depleted over the useful
lives of the related assets, through charges to DD&A expense.  If
the fair value of the estimated asset retirement obligation changes, an
adjustment is recorded to both the asset retirement obligation and the asset
retirement cost. Revisions in estimated liabilities can result from revisions of
estimated inflation rates, escalating retirement costs and changes in the
estimated timing of settling asset retirement obligations.  See Note
7, Asset Retirement
Obligations for a reconciliation of asset retirement obligation
activity.
  F-9
 Index
  ROCKIES
REGION PRIVATE LIMITED PARTNERSHIP
 
 Notes to
Financial Statements
 
 Derivative Financial
Instruments
 
 PDC, as
Managing General Partner of the Partnership, enters into derivative transactions
including “collars” and fixed price “swaps.”  PDC, as Managing General
Partner of the Partnership, enters into transactions on behalf of the
Partnership in the same manner in which it enters into transactions for
itself.  The Partnership participates in all derivative transactions
entered into by the Managing General Partner in a given area after the
partnership was formed. The transactions are on a production month basis;
therefore the Partnership may participate in a derivative for a future period
before it has current production from that area.  As the Partnership
continues to drill and put wells into production, its share of the derivative
positions will increase in future periods.  The Partnership believes
that in this rapidly changing price environment, derivative positions are
desirable to obtain more predictable results and to protect against possible
severe price declines during this crucial stage of flush production from the
Partnership wells.  This allocation methodology is considered
reasonable by management of the Managing General Partner.
 
 The
Partnership accounts for derivative financial instruments in accordance with
SFAS Statement No. 133, Accounting for Derivative
Instruments and Certain Hedging Activities as amended.  During
the years 2007, 2006 and 2005, respectively, none of the Managing General
Partner’s derivative instruments qualified for hedge accounting treatment under
SFAS No. 133.  Accordingly, the Partnership recognizes all derivative
instruments as either an asset or liability on the balance sheet at fair value
and the change in the fair value is recorded in oil and gas price risk
management gain (loss), net, on the Partnership’s statements of
operations.  Because derivative arrangements are entered into by the
Managing General Partner on behalf of the Partnership, the fair value of open
derivative positions is reported on the balance sheet as either “Due from
Managing General Partner – derivatives” in the case of a net holding gain or
“Due to Managing General Partner – derivatives” in the case of a net holding
loss.  Realized gains or losses that have not yet been distributed to
the Partnership are included in the balance sheet item “Due from/to Managing
General Partner-other.”  Undistributed realized gains amounted to $0.2
million as of December 31, 2007 and $50,742 as of December 31,
2006.
 
 Measurement
and validation of a contract’s fair value using common industry practices is
performed by the Managing General Partner based on actively quoted market
prices, if available. Otherwise, the Managing General Partner seeks indicative
price information from external sources including broker quotes and industry
publications. Changes in the Partnership’s pricing methodologies or the
underlying assumptions could result in different fair values.
 
 By using
derivative financial instruments to manage exposures to changes in commodity
prices, the Partnership exposes itself to credit risk. Credit risk is the
failure of the counterparty to perform under the terms of the derivative
contract. When the fair value of a derivative contract is positive, the
counterparty owes the Managing General Partner, which in turn owes the
Partnership thus creating repayment risk.
 
 To reduce
credit exposure, the Managing General Partner seeks to enter into netting
agreements with counterparties that permit the offset of receivables and
payables with such counterparties. The Managing General Partner attempts to
further reduce credit risk by diversifying our counterparty exposure and
entering into transactions with high-quality counterparties. Where exposed to
credit risk, the Managing General Partner analyzes the counterparties’ financial
condition prior to entering into an agreement, establishes credit limits and
monitors the appropriateness of those limits on an ongoing basis. The Managing
General Partner has experienced no counterparty defaults during the years ended
December 31, 2007, 2006 and 2005, respectively.
  F-10
 Index
  ROCKIES
REGION PRIVATE LIMITED PARTNERSHIP
 
 Notes to
Financial Statements
 
 Income
Taxes
 
 Since the
taxable income or loss of the Partnership is reported in the separate tax
returns of the individual investor partners, no provision has been made for
income taxes by the Partnership.
 
 Production Tax
      Liability
 
 Production
tax liability represents estimated taxes, primarily severance and property, to
be paid to the states and counties in which the Partnership produces oil and
natural gas. The Partnership’s share of these taxes is expensed to production
and operating costs.
 
 Use of
      Estimates
 
 The
Partnership has made a number of estimates and assumptions relating to the
reporting of assets and liabilities and revenues and expenses and the disclosure
of contingent assets and liabilities to prepare these Partnership financial
statements in conformity with accounting principles generally accepted in the
United States of America. Actual results could differ from those estimates.
Estimates which are particularly significant to the financial statements include
estimates of oil and natural gas reserves, future cash flows from oil and
natural gas properties which are used in assessing impairment of long-lived
assets, estimated property and severance taxes, asset retirement
obligations, and valuation of derivative instruments.
 
 Recently Issued Accounting
Standards
 
 In
September 2006, the FASB issued SFAS No. 157, Fair Value Measurements,
which replaces several existing pronouncements, defines fair value, establishes
a framework for measuring fair value, and expands disclosures about fair value
measurements.  SFAS No. 157, which the Partnership will adopt on
January 1, 2008, applies broadly to financial and nonfinancial assets and
liabilities that are measured at fair value under other authoritative accounting
pronouncements, but does not expand the application of fair value accounting to
any new circumstances.  In February 2008, the FASB issued FASB Staff
Position, or FSP, FAS No. 157-2, Effective Date of FASB Statement No.
157, which delays the effective date of SFAS No. 157 by one year (to
January 1, 2009) for nonfinancial assets and liabilities, except those that are
recognized or disclosed at fair value in the financial statements on a recurring
basis (at least annually).  The Partnership does not expect that the
adoption of SFAS 157 will have a material effect on the Partnership financial
statements with respect to derivative financial instruments and is currently
evaluating the potential effect of applying SFAS No. 157 and FSP No. FAS 157-2,
which the Partnership will adopt January 1, 2008, to the Partnership’s asset
retirement obligation valuation.  In October 2008, the FASB issued FSP
No. FAS 157-3, Determining the
Fair Value of a Financial Asset in a Market That Is Not Active, which
applies to financial assets within the scope of accounting pronouncements that
require or permit fair value measurements in accordance with SFAS No.
157.  The FSP clarifies the application of SFAS No. 157 in a market
that is not active and defines additional key criteria in determining the fair
value of a financial asset when the market for that financial asset is not
active.  FSP FAS 157-3 was effective upon issuance and did not have a
material impact on the Partnership’s financial statements.
 
 In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities.  SFAS No. 159 permits
entities to choose to measure, at fair value, many financial instruments and
certain other items that are not currently required to be measured at fair
value.  The objective is to improve financial reporting by providing
entities with the opportunity to mitigate volatility in reported earnings caused
by measuring related assets and liabilities differently without having to apply
complex hedge accounting provisions.  SFAS No. 159 establishes
presentation and disclosure requirements designed to facilitate comparisons
between entities that choose different measurement attributes for similar types
of assets and liabilities.  The statement will be effective as of the
beginning of an entity's first fiscal year beginning after November 15,
2007.  The Partnership has not and does not intend to measure
additional financial assets and liabilities at fair value.
  F-11
 Index
  ROCKIES
REGION PRIVATE LIMITED PARTNERSHIP
 
 Notes to
Financial Statements
 
 In April
2007, the FASB issued FSP FASB Interpretation, or FIN, No. 39-1, Amendment of FASB Interpretation No.
39, or ("FIN No. 39-1"), to amend certain portions of Interpretation
39.  FIN No. 39-1 replaces the terms "conditional contracts" and
"exchange contracts" in Interpretation 39 with the term "derivative instruments"
as defined in Statement 133.  FIN No. 39-1 also amends Interpretation
39 to allow for the offsetting of fair value amounts for the right to reclaim
cash collateral or receivable, or the obligation to return cash collateral or
payable, arising from the same master netting arrangement as the derivative
instruments.  FIN No. 39-1 applies to fiscal years beginning after
November 15, 2007, with early adoption permitted.  The Partnership
does not expect that the adoption of FSP FIN 39-1 will have any impact on the
financial statements.
 
 In
December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations (“SFAS
No. 141R”).  SFAS No. 141R requires an acquirer to recognize the
assets acquired, the liabilities assumed and any noncontrolling interest in the
acquiree at their acquisition-date fair values.  SFAS No. 141R also
requires disclosure of the information necessary for investors and other users
to evaluate and understand the nature and financial effect of the business
combination.  Additionally, SFAS No. 141R requires that
acquisition-related costs be expensed as incurred.  The provisions of
SFAS No. 141R with become effective for acquisitions completed on or after
January 1, 2009; however, the income tax provisions of SFAS No. 141R will become
effective as of that date for all acquisitions, regardless of the acquisition
date.  SFAS No. 141R amends SFAS No. 109, Accounting for Income Taxes,
to require the acquirer to recognize changes in the amount of its deferred tax
benefits recognizable due to a business combination either in income from
continuing operations in the period of the combination or directly in
contributed capital, depending on the circumstances.  SFAS No. 141R
further amends SFAS No. 109 and FIN 48, Accounting for Uncertainty in Income
Taxes, to require, subsequent to a prescribed measurement period, changes
to acquisition-date income tax uncertainties to be reported in income from
continuing operations and changes to acquisition-date acquiree deferred tax
benefits to be reported in income from continuing operations or directly in
contributed capital, depending on the circumstances.
 
 In
December 2007, the FASB issued SFAS No. 160, Non-controlling Interests in
Consolidated Financial Statements—An Amendments of ARB No.
51.  SFAS No. 160 states that accounting and reporting for
minority interests will be recharacterized as non-controlling interests and
classified as a component of equity.  Additionally, SFAS No. 160
establishes reporting requirements that provide sufficient disclosures which
clearly identify and distinguish between the interests of the parent and the
interests of the non-controlling owners.  SFAS No. 160 is effective as
of the beginning of an entity’s first fiscal year beginning after December 15,
2008.  We are evaluating the impact that SFAS No. 160 will have, if
any, on our financial statements and related disclosures when adopted in
2009.
 
 In March
2008, the FASB issued SFAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities—An Amendment of FASB Statement No.
133, which changes the disclosure requirements for derivative instruments
and hedging activities.  Enhanced disclosures are required to provide
information about (a) how and why an entity uses derivative instruments, (b) how
derivative instruments and related hedged items are accounted for under
Statement 133 and its related interpretations and (c) how derivative instruments
and related hedged items affect an entity’s financial position, financial
performance and cash flows.  SFAS No. 161 is effective for financial
statements issued for fiscal years and interim periods beginning after November
15, 2008, with early application encouraged.  We are evaluating the
impact that SFAS No. 161 will have, if any, on our financial statements and
related disclosures when adopted in 2009.
  In
January 2009, the SEC published its final rule, Modernization of Oil and Gas
Reporting,which modifies the
SEC’s reporting and disclosure rules for oil and natural gas reserves. The most
notable changes of the final rule include the replacement of the single day
period-end pricing for valuing oil and natural gas reserves to a 12-month
average of the first day of the month price for each month within the reporting
period. The final rule also permits voluntary disclosure of probable and
possible reserves, a disclosure previously prohibited by the SEC rules. The
revised reporting and disclosure requirements are effective for the
Partnership’s Annual Report on Form 10-K for the year ended December 31, 2009.
Early adoption is not permitted. The Partnership is evaluating the impact that
adoption of this final rule will have on the Partnership’s financial statements,
related disclosure and management’s discussion and analysis.
 
 Recently Adopted Accounting
Standards
 
 In June
2006, the FASB issued Emerging Issues Task Force, or EITF, No. 06-3, How Taxes Collected from Customers
and Remitted to Governmental Authorities Should be Presented in the Income
Statement (That Is, Gross versus Net Presentation).  EITF 06-3
addresses the income statement presentation of any tax collected from customers
and remitted to a government authority and concludes that the presentation of
taxes on either a gross basis or a net basis is an accounting policy decision
that should be disclosed pursuant to Accounting Principles Board, or APB, No.
22, Disclosures of Accounting
Policies.  For taxes that are reported on a gross basis
(included in revenues and costs), EITF 06-3 requires disclosure of the amounts
of those taxes in interim and annual financial statements, if those amounts are
significant.  EITF 06-3 became effective for interim and annual
reporting periods beginning after December 15, 2006.  The adoption of
EITF 06-03, effective January 1, 2007, had no impact on the accompanying
financial statements.  The Partnership's existing accounting policy,
which was not changed upon the adoption of EITF 06-3, is to present taxes within
the scope of EITF 06-3 on a net basis.
  F-12
 Index
  ROCKIES
REGION PRIVATE LIMITED PARTNERSHIP
 
 Notes to
Financial Statements
 
 Reclassifications
 
 Certain
amounts in prior periods have been reclassified to conform with the
classifications of the years ended December 31, 2007 and 2006, with no effect on
previously reported net income or Partners’ equity.
 
 Note 3 -
Transactions with
Managing General Partner and Affiliates
 
 The
Managing General Partner transacts business on behalf of the
Partnership.  Revenues and other cash inflows received on behalf of
the Partnership are distributed to the Partners net of (after deducting)
corresponding operating costs and other cash outflows incurred on behalf of the
Partnership.  Undistributed oil and natural gas revenues are recorded
on the balance sheet under the caption “Accounts receivable.” The portion
due from third parties, amounted to $899,341 and $3,141,627 as of December 31,
2007 and 2006, respectively, with the remaining portion due from the Managing
General Partner.  The fair value of the Partnership’s portion of
unexpired derivative instruments is recorded on the balance sheet under the
caption “Due from the Managing General Partner – derivatives” in the case of net
unrealized gains or “Due to  Managing General Partner – derivatives”
in the case of net unrealized losses.  Realized
gains or losses that have not yet been distributed to the Partnership are
included in the balance sheet caption “Due from (to) Managing General
Partner-other.”  Undistributed realized gains amounted to $135,056 and
$50,742 as of December 31, 2007 and 2006, respectively.  The
Partnership recorded no realized gains (losses) for the period December 6, 2005
(date of inception) to December 31, 2005.All other unsettled
transactions between the Partnership and the Managing General Partner are
recorded net on the balance sheet under the caption “Due to or from Managing
General Partner - other.”  At
December 31, 2007, “Due from (to) Managing General Partner-other” consisted of
undistributed realized gains on derivatives of $135,056 and prepayments of
$101,251.  At December 31, 2006, “Due from (to) Managing General
partner-other” consisted of undistributed realized gains on derivatives of
$50,742, net of unsettled liabilities totaling $190,584.  At December
31, 2005, “Due from (to) Managing General Partner-other” consisted of
unsettled liabilities totaling $20,027.
 The
following table presents reimbursements and service fees paid by the Partnership
to PDC or its affiliates for years ended December 31, 2007, 2006 and the period
from December 6, 2005 (date of inception) to December 31, 2005:
 
 Period
      from December 6, 2005 toYear
      Ended
                    
                    
                    Year
      Ended
                    
                    
                    (date
      of inception)Transaction
                    
                    December 31, 2007
                    
                    
                    December 31, 2006
                    
                    
                    to December 31, 2005Capital
      contribution (1)
                    
                    $
                    -
                    
                    
                    $
                    -
                    
                    
                    $
                    11,231,670Syndication
      costs (2)
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    3,583,551Management
      fee (3)
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    536,033Drilling
      costs (4)
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    276,674Drilling
      compensation (4)
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    38,734Drilling
      advances to Managing Gereral Partner (4)
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    42,532,187Well
      charges (5)
                    
                    
                    318,688
                    
                    
                    
                    197,270
                    
                    
                    
                    -Gas
      marketing, supplies and equipment (6)
                    
                    
                    639,968
                    
                    
                    
                    365,651
                    
                    
                    
                    -Gathering,
      compression and processing fees (7)
                    
                    
                    297,115
                    
                    
                    
                    305,912
                    
                    
                    
                    -Direct
      costs - general and administrative (8)
                    
                    
                    101,279
                    
                    
                    
                    245,875
                    
                    
                    
                    20,027Distributions
      (9)
                    
                    
                    3,079,625
                    
                    
                    
                    3,046,903
                    
                    
                    
                    -
 
  1. The
Managing General Partner has contributed capital of $11.2 million to the
Partnership as of December 31, 2007 in exchange for the 30% interest in the
Partnership.
  2. The
Partnership reimbursed PDC Securities Inc., a wholly owned subsidiary of the
Managing General Partner, for dealer manager commissions, due diligence costs,
marketing and support expenses and wholesaling fees as outlined in the
Partnership Agreement.  Costs incurred by PDC relating to start-up and
organization charges, for which no reimbursement was made, were
insignificant.
 
 3. In
accordance with the Partnership Agreement, a one-time management fee equal to
11⁄2% of Investor Partners’ subscriptions was charged to the Partnership by the
Managing General Partner.  This fee was paid by the Partnership to the
Managing General Partner upon funding the Partnership.  The fee is
treated as a period cost in the year of formation and is
non-refundable.
  F-13
 Index
  ROCKIES
REGION PRIVATE LIMITED PARTNERSHIP
 
 Notes to
Financial Statements
  4. The
Partnership entered into a Drilling and Operating Agreement with the Managing
General Partner to drill and complete the Partnership's wells at cost plus the
Managing General Partner's drilling compensation of 14.0% of the total well
cost. Total well cost includes the cost of leases acquired from the Managing
General Partner and drilling costs.  The drilling compensation
percentage of 14.0% was determined prior to formation of the Partnership and
disclosed in the offering documents.  The drilling compensation
amounts were calculated using this rate in accordance with the offering
documents.  The Managing General Partner sells undeveloped prospects
(leases) to the Partnership to drill the Partnership’s wells.  Leases
are sold to the Partnership at the lower of the Managing General Partner’s cost
to purchase the lease or the leases’ fair market
value.   Drilling costs include an overhead charge to the
Managing General Partner of 11⁄2% of each well’s Authority for
Expenditure.  On December 31, 2005, the Partnership advanced all
remaining financing proceeds to the Managing General Partner to cover future
drilling costs.
   If the
Managing General Partner provides other services in the drilling and completion
of the wells, it charges those services at its cost, not to exceed competitive
rates charged in its area of operation by unaffiliated persons and these charges
are included in the total well cost when determining the Managing General
Partner's drilling compensation.
  Cost,
when used with respect to services, generally means the reasonable, necessary,
and actual expense incurred in providing the services, determined in accordance
with generally accepted accounting principles.  The cost of the well
also includes all ordinary costs of drilling, testing and completing the
well.
   The well
costs charged to the Partnership are proportionately reduced to the extent the
Partnership acquires less than 100% of the working interest in a
prospect.  The amount of compensation that the Managing General
Partner could earn as a result of these arrangements depends on the degree to
which it provides services for the wells, and the number and type of wells that
are drilled.  If the Managing General Partner supplies other goods and
services to the Partnership, it is required to supply them at cost, and they
will be included in the total well costs for determining the Managing General
Partner's and the investor partners' contributions, the division of oil and
natural gas revenues, and calculation of the Managing General Partner's drilling
compensation.
   The
following table presents the usage of the drilling advances to Managing General
Partner based on the drilling activities of the Managing General
Partner:
  Year
      Ended
                    
                    
                    Year
      EndedDecember 31, 2007
                    
                    
                    December 31, 2006Sales
      of leases
                    
                    $
                    3,119
                    
                    
                    $
                    422,414Drilling
      costs
                    
                    
                    1,492,591
                    
                    
                    
                    35,168,394Drilling
      compensation
                    
                    
                    209,399
                    
                    
                    
                    4,982,713Drilling
      advances to Managing General Partner
                    
                    $
                    (1,705,109
                    )
                    
                    $
                    (40,573,521
                    )
 
  5. Under
the Drilling and Operating Agreement, the Managing General Partner, as operator
of the wells, receives the following from the Partnership when the wells begin
producing:
  ·
              reimbursement
      at actual cost for all direct expenses incurred on behalf of the
      Partnership;
 ·
              monthly
      well operating charges for operating and maintaining the wells during
      producingoperations
      at a competitive rate; and
 ·
              monthly
      administration charge for Partnership
  activities.  F-14
 Index
  ROCKIES
REGION PRIVATE LIMITED PARTNERSHIP
 
 Notes to
Financial Statements
  During
the production phase of operations, the Managing General Partner as operator
receives a monthly fee for each producing well based upon competitive industry
rates for operations and field supervision and $100 for Partnership-related
general and administrative expenses that include accounting, engineering and
management.  The Managing General Partner as operator bills
non-routine operations and administration costs to the Partnership at its
cost.  The Managing General Partner may not benefit by
inter-positioning itself between the Partnership and the actual provider of
operator services.  In no event is any consideration received for
operator services duplicative of any consideration or reimbursement received
under the Agreement.
  The well
operating charges cover all normal and regularly recurring operating expenses
for the production, delivery, and sale of natural gas and oil, such
as:
  ·
              well
      tending, routine maintenance, and
adjustment;
 ·
              reading
      meters, recording production, pumping, maintaining appropriate books and
      records; and
 ·
              preparing
      production related reports to the Partnership and government
      agencies.
  The well
supervision fees do not include costs and expenses related to:
  ·
              the
      purchase of equipment, materials, or third-party
  services;
 ·
              the
      cost of compression and third-party gathering services, or gathering
      costs;
 ·
              brine
      disposal; and
 ·
              rebuilding
      of access roads.
  These
costs are charged at the invoice cost of the materials purchased or the
third-party services performed.
  6. The
Managing General Partner and its affiliates may enter into other transactions
with the Partnership for services, supplies and equipment during the production
phase of the Partnership, and is entitled to compensation at competitive prices
and terms as determined by reference to charges of unaffiliated companies
providing similar services, supplies and equipment.  Management
believes these transactions were on terms no less favorable than could have been
obtained from non-affiliated third parties.
  7. Under
the Agreement, the Managing General Partner is responsible for gathering,
compression, processing and transporting the gas produced by the Partnership to
interstate pipeline systems, local distribution companies, and/or end-users in
the area from the point the natural gas from the well is commingled with natural
gas from other wells.  In such a case, the Managing General Partner
uses gathering systems already owned by PDC or PDC constructs the necessary
facilities if no such line exists.  In such a case, the Partnership
pays a gathering, compression and processing fee directly to the Managing
General Partner at competitive rates.  If a third-party gathering
system is used, the Partnership pays the gathering fee charged by the
third-party gathering the gas.
  8. The
Managing General Partner is reimbursed by the Partnership for all direct costs
expended by them on the Partnership’s behalf for administrative and professional
fees, such as legal expenses, audit fees and engineering fees for reserve
reports.
  9. The
Agreement provides for the allocation of cash distributions 70% to the
Investors Partners and 30% to the Managing General Partner.  For
additional disclosure regarding the allocation of cash distributions, refer to
Note 5, Partners’ Equity and
Cash Distributions.
  Additionally,
refer to Note 4, Derivative
Financial Instruments for derivative transactions between the Partnership
and the Managing General Partner.
  F-15
 Index
  ROCKIES
REGION PRIVATE LIMITED PARTNERSHIP
 
 Notes to
Financial Statements
 
 The
Partnership holds record title in its name to the working interest in each
well.  PDC provides an assignment of working interest for the well
bore prior to the spudding the well and effective the date of the spudding of
the well, to the Partnership in accordance with the Drilling and Operation
Agreement.  Upon completion of the drilling of all of the Partnership
wells, these assignments are recorded in the applicable
county.  Investor Partners rely on PDC to use its best judgment to
obtain appropriate title to these working interests.  Provisions of
the Agreement relieve PDC from any error in judgment with respect to the waiver
of title defects.  PDC takes those steps it deems necessary to assure
that title to the leases is acceptable for purposes of the
Partnership.  For additional information, see Item 2, Properties - Title to
Properties.
 
 Note
4 - Derivative
Financial Instruments
 
 The
Partnership accounts for derivative financial instruments in accordance with
SFAS No. 133, Accountingfor Derivative Instruments and
Certain Hedging Activities, as amended.  The Partnership
recognizes all derivative instruments as either assets or liabilities on the
Partnership’s balance sheets at fair value.  Partnership derivative
instruments do not qualify for use of hedge accounting under the provisions of
SFAS No. 133.  Accordingly, changes in the derivatives' fair values
are recorded on a net basis in the Partnership’s statements of operations in oil
and natural gas price risk management gain (loss), net, for changes in
derivative instruments related to our oil and natural gas sales.
 
 The
Partnership is exposed to the effect of market fluctuations in the prices of oil
and natural gas as they relate to oil and natural gas sales.  Price
risk represents the potential risk of loss from adverse changes in the market
price of oil and natural gas commodities.  The Managing General
Partner employs established policies and procedures to manage the risks
associated with these market fluctuations using commodity
derivatives.  Partnership policy prohibits the use of oil and natural
gasderivative
instruments for speculative purposes.
 
 Risk Management
Strategies.  The Partnership’s results of operations and
operating cash flows are affected by changes in market prices for oil and
natural gas.  To mitigate a portion of the exposure to adverse market
changes, the Managing General Partner has entered into various derivative
instruments. As of December 31, 2007, our oil and natural gas derivative
instruments were comprised of “swaps” and “collars.”  These
instruments generally consist of Colorado Interstate Gas Index, or CIG, based
contracts for Colorado gas production and New York Mercantile Exchange, or
NYMEX, based contracts for Colorado oil production.  In addition to
the fixed-price swaps and collar derivative instruments which remain in effect
at February 28, 2009, the Managing General Partner previously utilized
“floor” contracts to protect against natural gas and oil price declines in
subsequent periods.  Through October 31, 2007, the Partnership’s
natural gas derivative instruments were comprised of natural gas floors and
collars while its oil derivative instruments were comprised of oil
“floors.”
  ·
              For
      swap instruments, PDC, as Managing General Partner, receives a fixed price
      for the hedged commodity and pays a floating market price to the
      counterparty.  The fixed-price payment and the floating-price
      payment are netted, resulting in a net amount due to or from the
      counterparty.
 
 ·
              Collars
      contain a fixed floor price (put) and ceiling price (call).  If
      the market price exceeds the ceiling strike price or falls below the fixed
      floor strike price, PDC, as Managing General Partner, receives the fixed
      floor price and pays the market price.  If the market price is
      between the ceiling and the floor strike price, no payments are due from
      either party.
 
 ·
              Floors
      contained a floor price (put) whereby PDC, as Managing General Partner,
      received from the counterparty, the floor price if the commodity market
      price fell below the floor strike price, but received no payment when the
      commodity market price exceeded the floor
price.
  F-16
 Index
  ROCKIES
REGION PRIVATE LIMITED PARTNERSHIP
 
 Notes to
Financial Statements
 
 The
Managing General Partner enters into derivative instruments for Partnership
production to protect against price declines in future periods.  While
these derivatives are structured to reduce exposure to changes in price
associated with the derivative commodity, they also limit the benefit the
Partnership might otherwise have received from price changes in the physical
market.  The Partnership believes the derivative instruments in
place continue to be effective in achieving the risk management objectives for
which they were intended, although at December 31, 2007, they are below
market due to the continual rise in energy prices.  Since December 31,
2007, through the filing of this report, the Partnership continues to experience
extreme volatility in oil and gas prices resulting in extreme fluctuation in
realized and unrealized derivative positions.
 
 The table
below summarizes our open derivative positions as of December 31, 2007 and 2006
as follows:
 
 Year
      Ended 2007
                      
                      
                      Year
      Ended 2006Short -Term
                      
                      
                      Long-Term
                      
                      
                      Total
                      
                      
                      Short -Term
                      
                      
                      Long-Term
                      
                      
                      TotalNatural
      gas floors
                      
                      $
                      76,615
                      
                      
                      $
                      -
                      
                      
                      $
                      76,615
                      
                      
                      $
                      894,990
                      
                      
                      $
                      101,638
                      
                      
                      $
                      996,628Natural
      gas ceilings
                      
                      
                      (4,024
                      )
                      
                      
                      -
                      
                      
                      
                      (4,024
                      )
                      
                      
                      (337
                      )
                      
                      
                      -
                      
                      
                      
                      (337
                      )Oil
      floors
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      27,789
                      
                      
                      
                      -
                      
                      
                      
                      27,789Oil
      swaps
                      
                      
                      (452,778
                      )
                      
                      
                      -
                      
                      
                      
                      (452,778
                      )
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -$
                      (380,187
                      )
                      
                      $
                      -
                      
                      
                      $
                      (380,187
                      )
                      
                      $
                      922,442
                      
                      
                      $
                      101,638
                      
                      
                      $
                      1,024,080
 
 At
December 31, 2007 and 2006, the maximum term for the derivative positions listed
above is 12 months and 15 months, respectively.  At December 31, 2005,
the Partnership had no derivative positions.
 
 The
following table identifies the changes in the fair value of commodity based
derivatives as reflected in the Statements of Operations.
 
 Year
      Ended
                        
                        
                        Year
      EndedDecember 31,
      2007
                        
                        
                        December 31,
      2006Oil and gas price
      risk management gain (loss), net Realized
      gain (loss):Oil
                        
                        $
                        (24,151
                        )
                        
                        $
                        (9,794
                        )Gas
                        
                        
                        529,222
                        
                        
                        
                        92,174Total
      realized gain
                        
                        
                        505,071
                        
                        
                        
                        82,380Unrealized
      gain (loss)
                        
                        
                        (1,404,267
                        )
                        
                        
                        1,031,185Oil
      and gas price risk management gain (loss), net
                        
                        $
                        (899,196
                        )
                        
                        $
                        1,113,565
  Pursuant
to SFAS No. 133, the Partnership’s derivatives do not qualify for designation as
cash flow hedges.  Changes in the fair value of these non-qualifying
derivatives that occur prior to their maturity (i.e. temporary fluctuations in
value) are reported currently in the Partnership’s statements of operations as
unrealized gain (loss).  Oil and natural gas price risk management
gain (loss), net includes realized and unrealized gains and losses on commodity
based derivatives related to our oil and natural gas sales.
  F-17
 Index
  ROCKIES
REGION PRIVATE LIMITED PARTNERSHIP
 
 Notes to
Financial Statements
 The
following table sets forth the Partnership's portion of derivative positions in
effect as of February 28, 2009.
 
 Floors
                                              
                                              
                                              Ceilings
                                              
                                              
                                              Swaps
      (Fixed Prices)Commodity/
                                                Index/
                                                Area
                                              
                                              Month
      Set
                                              
                                              Month
                                              
                                              Net
                                                Monthly
      Quantity
                                                (Gas
      -MMbtu
                                                Oil
      -Bbls)
                                              
                                              
                                              Price
                                              
                                              
                                              Net
                                                Monthly
      Quantity
                                                (Gas
      -MMbtu
                                                Oil
      -Bbls)
                                              
                                              
                                              Price
                                              
                                              
                                              Net
                                                Monthly
      Quantity
                                                (Gas-MMbtu
                                                Oil
      -Bbls)
                                              
                                              
                                              PriceNatural
      Gas - (CIG)Piceance
      BasinApr-08
                                              
                                              Mar
      09
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              18,843
                                              
                                              
                                              $
                                              7.76Jul-08
                                              
                                              Mar
      09
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              11,240
                                              
                                              
                                              
                                              8.52Feb-08
                                              
                                              Mar
      09
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              11,240
                                              
                                              
                                              
                                              8.18Jan-08
                                              
                                              Apr
      09 - Oct 09
                                              
                                              
                                              20,265
                                              
                                              
                                              $
                                              5.75
                                              
                                              
                                              
                                              20,265
                                              
                                              
                                              $
                                              8.75
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -Mar-08
                                              
                                              Apr
      09 - Oct 09
                                              
                                              
                                              19,910
                                              
                                              
                                              
                                              5.75
                                              
                                              
                                              
                                              19,910
                                              
                                              
                                              
                                              9.05
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -Jul-08
                                              
                                              Nov
      09 - Mar 10
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              15,127
                                              
                                              
                                              
                                              9.20Jul-08
                                              
                                              Nov
      09 - Mar 10
                                              
                                              
                                              21,514
                                              
                                              
                                              
                                              7.50
                                              
                                              
                                              
                                              21,514
                                              
                                              
                                              
                                              11.40
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -Nov-08
                                              
                                              Nov
      10 - Mar 11
                                              
                                              
                                              13,901
                                              
                                              
                                              
                                              4.75
                                              
                                              
                                              
                                              13,901
                                              
                                              
                                              
                                              9.45Wattenberg
      FieldApr-08
                                              
                                              Mar
      09
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              4,290
                                              
                                              
                                              
                                              7.76Jul-08
                                              
                                              Mar
      09
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              2,535
                                              
                                              
                                              
                                              8.52Feb-08
                                              
                                              Mar
      09
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              2,535
                                              
                                              
                                              
                                              8.18Jan-08
                                              
                                              Apr
      09 - Oct 09
                                              
                                              
                                              4,458
                                              
                                              
                                              
                                              5.75
                                              
                                              
                                              
                                              4,458
                                              
                                              
                                              
                                              8.75
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -Mar-08
                                              
                                              Apr
      09 - Oct 09
                                              
                                              
                                              4,052
                                              
                                              
                                              
                                              5.75
                                              
                                              
                                              
                                              4,052
                                              
                                              
                                              
                                              9.05
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -Jul-08
                                              
                                              Nov
      09 - Mar 10
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              3,145
                                              
                                              
                                              
                                              9.20Jul-08
                                              
                                              Nov
      09 - Mar 10
                                              
                                              
                                              4,530
                                              
                                              
                                              
                                              7.50
                                              
                                              
                                              
                                              4,530
                                              
                                              
                                              
                                              11.40
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -Nov-08
                                              
                                              Nov
      10 - Mar 11
                                              
                                              
                                              3,546
                                              
                                              
                                              $
                                              4.75
                                              
                                              
                                              
                                              3,546
                                              
                                              
                                              $
                                              9.45Oil
      - NYMEXWattenberg
      FieldJan-08
                                              
                                              Mar 09
      - Dec 09
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              887
                                              
                                              
                                              
                                              84.90Jan-08
                                              
                                              Mar 09
      - Dec 09
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              887
                                              
                                              
                                              
                                              85.40May-08
                                              
                                              Mar 09
      - Dec 09
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              355
                                              
                                              
                                              
                                              117.35May-08
                                              
                                              Jan
      10 - Dec 10
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              884
                                              
                                              
                                              
                                              92.74May-08
                                              
                                              Jan
      10 - Dec 10
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              884
                                              
                                              
                                              $
                                              93.17
 
 The gross
volumes in the above table reflect the total volumes of derivatives for the
Partnership by area of operation.
  In
December 2008, PDC, the Managing General Partner, entered into a CIG basis
protection swap covering approximately 80% of PDC’s and the Partnership’s
natural gas production in the Piceance and Wattenberg fields which was not
previously covered by derivative contracts. Basis protection swaps are
arrangements that guarantee a price differential for natural gas from a
specified delivery point. For the CIG basis protection swap, which has a
negative differential to NYMEX, PDC, as Managing General Partner, receives a
payment from the counterparty if the price differential is greater than the
stated terms of the contract and pays the counterparty if the price differential
is less than the stated terms of contract. This CIG basis protection swap runs
from April 2010 through December 2013 at $1.88/Mmbtu. The Partnership’s portion
of this position is an average monthly quantity of approximately 33,500 Mmbtu in
the Piceance Basin field and 6,900 Mmbtu in the Wattenberg field for the period
April 2010–October 2010; 16,800 Mmbtu in the Piceance Basin field and 2,900
Mmbtu in the Wattenberg field for the period November 2010-March 2011; and
26,300 Mmbtu in the Piceance Basin field and 5,200 Mmbtu in the Wattenberg field
for the period April 2011-December 2013.
  F-18
 Index
  ROCKIES
REGION PRIVATE LIMITED PARTNERSHIP
 
 Notes to
Financial Statements
  The
following table sets forth the Partnership’s portion of derivative positions in
effect as of December 31, 2007.  In addition to the fixed-price
“swaps” and “collar” derivative, the Managing General Partner previously
utilized “floor” contracts to protect against natural gas and oil price declines
in subsequent periods.
  Floors
                                    
                                    
                                    Ceilings
                                    
                                    
                                    Swaps
      (Fixed Prices)Commodity/
                                      Index/
                                      Area
                                    
                                    Month
      Set
                                    
                                    Month
                                    
                                    Net
                                      Monthly
      Quantity
                                      (Gas
      -MMbtu
                                      Oil
      -Bbls)
                                    
                                    
                                    Price
                                    
                                    
                                    Net
                                      Monthly
      Quantity
                                      (Gas
      -MMbtu
                                      Oil
      -Bbls)
                                    
                                    
                                    Price
                                    
                                    
                                    Net
                                      Monthly
      Quantity
                                      (Gas-MMbtu
                                      Oil
      -Bbls)
                                    
                                    
                                    PriceNatural
      Gas - (CIG)Piceance
      BasinDec-06
                                    
                                    Jan
      08 - Mar 08
                                    
                                    
                                    12,965
                                    
                                    
                                    $
                                    5.25
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -Jan-07
                                    
                                    Jan
      08 - Mar 08
                                    
                                    
                                    12,965
                                    
                                    
                                    
                                    5.25
                                    
                                    
                                    
                                    12,965
                                    
                                    
                                    $
                                    9.80
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -May-07
                                    
                                    Apr
      08 - Oct 08
                                    
                                    
                                    25,588
                                    
                                    
                                    
                                    5.50
                                    
                                    
                                    
                                    25,588
                                    
                                    
                                    
                                    10.35
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -Wattenberg
      FieldJan-07
                                    
                                    Jan
      08 - Mar 08
                                    
                                    
                                    7,185
                                    
                                    
                                    
                                    5.25
                                    
                                    
                                    
                                    7,185
                                    
                                    
                                    
                                    9.80
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -May-07
                                    
                                    Apr
      08 - Oct 08
                                    
                                    
                                    17,243
                                    
                                    
                                    $
                                    5.50
                                    
                                    
                                    
                                    17,243
                                    
                                    
                                    $
                                    10.35
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -Oil
      - NYMEXWattenberg
      FieldOct-07
                                    
                                    Jan
      08 - Dec 08
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    4,335
                                    
                                    
                                    $
                                    84.20
 
 
 The
following table sets forth the Partnership's portion of derivative positions in
effect as of December 31, 2006.  The gross volumes in the table
reflect the total volumes of derivatives for the Partnership by area of
operation.
 
 Floors
                                      
                                      
                                      CeilingsMonth
      Set
                                      
                                      Month
                                      
                                      Net
                                        Monthly
      Quantity
                                        (Gas
      -MMbtu
                                        Oil
      -Bbls)
                                      
                                      
                                      Price
                                      
                                      
                                      Net
                                        Monthly
      Quantity
                                        (Gas
      -MMbtu
                                        Oil
      -Bbls)
                                      
                                      
                                      PriceNatural
      Gas - (CIG)Piceance
      BasinJul-05
                                      
                                      Jan
      07 - Mar 07
                                      
                                      
                                      19,030
                                      
                                      
                                      $
                                      6.00
                                      
                                      
                                      
                                      9,515
                                      
                                      
                                      $
                                      8.40Feb-06
                                      
                                      Jan
      07 - Mar 07
                                      
                                      
                                      40,779
                                      
                                      
                                      
                                      6.50
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Feb-06
                                      
                                      Apr
      07 - Oct 07
                                      
                                      
                                      29,905
                                      
                                      
                                      
                                      5.50
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Sep-06
                                      
                                      Jan
      07 - Mar 07
                                      
                                      
                                      72,043
                                      
                                      
                                      
                                      4.00
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Sep-06
                                      
                                      Apr
      07 - Oct 07
                                      
                                      
                                      101,948
                                      
                                      
                                      
                                      4.50
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Dec-06
                                      
                                      Nov
      07 - Mar 08
                                      
                                      
                                      51,654
                                      
                                      
                                      
                                      5.25
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -Oil
      - NYMEXWattenberg
      FieldSep-06
                                      
                                      Jan
      07 - Oct 07
                                      
                                      
                                      4,820
                                      
                                      
                                      $
                                      50.00
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      -
 F-19
 Index
  ROCKIES
REGION PRIVATE LIMITED PARTNERSHIP
 
 Notes to
Financial Statements
  Note
5 -  Partners’ Equity and Cash
Distributions
 
 Partners’
Equity
 
 A unit
represents the individual interest of an individual investor partner in the
Partnership.  No public market exists or will develop for the
units.  While units of the Partnership are transferable, assignability
of the units is limited, requiring the consent of the Managing General
Partner.
 
 Allocation of Partners’
Interest
 
 The table
below summarizes the participation of the Investor Partners and the Managing
General Partner in the revenues and costs of the Partnership, taking into
account the Managing General Partner's capital contribution, which was equal to
31.43% of the Investor Partners’ initial capital.
 
 ManagingInvestor
                    
                    
                    GeneralPartners
                    
                    
                    PartnerPartnership
      Revenue:Oil
      and gas sales
                    
                    
                    70
                    %
                    
                    
                    30
                    %Oil
      and gas price risk management gain (loss)
                    
                    
                    70
                    %
                    
                    
                    30
                    %Sale
      of productive properties
                    
                    
                    70
                    %
                    
                    
                    30
                    %Sale
      of equipment
                    
                    
                    70
                    %
                    
                    
                    30
                    %Sale
      of undeveloped leases
                    
                    
                    70
                    %
                    
                    
                    30
                    %Interest
      income
                    
                    
                    70
                    %
                    
                    
                    30
                    %Partnership
      Costs:Organization
      costs (a)
                    
                    
                    0
                    %
                    
                    
                    100
                    %Broker-dealer
      commissions and expenses/syndication costs (a)
                    
                    
                    100
                    %
                    
                    
                    0
                    %Cost
      of oil and gas properties:Undeveloped
      lease costs
                    
                    
                    0
                    %
                    
                    
                    100
                    %Tangible
      well costs
                    
                    
                    0
                    %
                    
                    
                    100
                    %Intangible
      drilling costs
                    
                    
                    100
                    %
                    
                    
                    0
                    %Managing
      General Partner's drilling compensation
                    
                    
                    100
                    %
                    
                    
                    0
                    %Direct
      drilling and compensation costs, excludingManaging
      General Partner’s drilling compensation
                    
                    
                    70
                    %
                    
                    
                    30
                    %Other
      costs and expenses:Management
      fee (b)
                    
                    
                    100
                    %
                    
                    
                    0
                    %Production
      and operating costs (c)
                    
                    
                    70
                    %
                    
                    
                    30
                    %Depreciation,
      depletion and amortization expense
                    
                    
                    70
                    %
                    
                    
                    30
                    %Accretion
      of asset retirement obligations
                    
                    
                    70
                    %
                    
                    
                    30
                    %Direct
      costs - general and administrative (d)
                    
                    
                    70
                    %
                    
                    
                    30
                    %
 
 (a)
              The
      Managing General Partner paid all legal, accounting, printing, and filing
      fees associated with the organization of the Partnership and the offering
      of units and is allocated 100% of these costs.  The Investor
      Partners paid all dealer manager commissions, discounts, and due diligence
      reimbursements and are allocated 100% of these
  costs.
 
 (b)
              Represents
      a one-time fee paid to the Managing General Partner on the day the
      Partnership was funded equal to 1-1/2% of total investor
      subscriptions.
 
 (c)
              Represents
      operating costs incurred after the completion of productive wells,
      including monthly per-well charges paid to the Managing General
      Partner.
 
 (d)
              The
      Managing General Partner receives monthly reimbursement from the
      Partnership for direct costs – general and administrative incurred by the
      Managing General Partner on behalf of the
  Partnership.
  F-20
 Index
  ROCKIES
REGION PRIVATE LIMITED PARTNERSHIP
 
 Notes to
Financial Statements
 The
following table presents the allocation of net income (loss) to the Investor
Partners and the Managing General Partner for each of the periods
presented.
 
 Period
      from December 6, 2005Year
      Ended
                        
                        
                        Year
      Ended
                        
                        
                        (date
      of inception) toDecember
      31, 2007
                        
                        
                        December
      31, 2006
                        
                        
                        December
      31, 2005Net
      Income (loss)
                        
                        $
                        2,902,162
                        
                        
                        $
                        7,579,182
                        
                        
                        $
                        (556,060
                        )Plus
      Management fee
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        536,033Net
      Income (loss) allocable to the partners
                        
                        $
                        2,902,162
                        
                        
                        $
                        7,579,182
                        
                        
                        $
                        (20,027
                        )Net
      Income (loss) allocable to Investor Partners:70%
      of Net Income (loss) allocable to the Partners
                        
                        $
                        2,031,513
                        
                        
                        $
                        5,305,427
                        
                        
                        $
                        (14,019
                        )100%
      of Management Fee
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        (536,033
                        )Net
      income (loss) allocable to Investor Partners
                        
                        
                        2,031,513
                        
                        
                        
                        5,305,427
                        
                        
                        
                        (550,052
                        )Net
      Income (loss) allocable to Managing General Partner30%
      of Net Income (loss) allocable to the Partners
                        
                        
                        870,649
                        
                        
                        
                        2,273,755
                        
                        
                        
                        (6,008
                        )Net
      Income (loss) allocable to Managing General Partner
                        
                        
                        870,649
                        
                        
                        
                        2,273,755
                        
                        
                        
                        (6,008
                        )Net
      Income (loss)
                        
                        $
                        2,902,162
                        
                        
                        $
                        7,579,182
                        
                        
                        $
                        (556,060
                        )
 
 Cash
Distributions
 
 The
Agreement requires the Managing General Partner to distribute cash available for
distribution not less frequently than quarterly.  The Managing General
Partner will determine and distribute, if funds are available for distribution,
cash on a monthly basis.  The Managing General Partner will make cash
distributions of 70% to the Investor Partners and 30% to the Managing General
Partner throughout the term of the Partnership.  The Partnership has
paid cash distributions each month since July 2006.  Distributions for
the years ended December 31, 2007 and 2006 were $10.4 million and $10.2 million,
respectively.  There were no cash distributions in
2005.
  F-21
 Index
  ROCKIES
REGION PRIVATE LIMITED PARTNERSHIP
 
 Notes to
Financial Statements
  Note
6  - Oil and Gas
Properties
 
 The
Partnership is engaged solely in oil and natural gas activities, all of which
are located in the continental United States.  Drilling operations
began upon funding on December 30, 2005 with payments made for all planned
drilling and completion costs for the Partnership made in 2005.  Costs
capitalized for these activities at December 31, 2007, 2006 and 2005 are as
follows:
 
 2007
                    
                    
                    2006
                    
                    
                    2005Leasehold
      costs
                    
                    $
                    459,554
                    
                    
                    $
                    453,169
                    
                    
                    $
                    -Development
      costs
                    
                    
                    40,326,237
                    
                    
                    
                    36,729,156
                    
                    
                    
                    -Oil
      and gas properties, successful efforts method
                    
                    
                    40,785,791
                    
                    
                    
                    37,182,325
                    
                    
                    
                    -Wells
      in progress
                    
                    
                    -
                    
                    
                    
                    1,969,943
                    
                    
                    
                    315,408Drilling
      advances to Managing General Partner
                    
                    
                    253,556
                    
                    
                    
                    1,958,665
                    
                    
                    
                    42,532,187Oil
      and gas properties at cost
                    
                    
                    41,039,347
                    
                    
                    
                    41,110,933
                    
                    
                    
                    42,847,595Less
      accumulated depreciation, depletion and amortization
                    
                    
                    (10,188,507
                    )
                    
                    
                    (5,877,662
                    )
                    
                    
                    -Oil
      and gas properties, net
                    
                    $
                    30,850,840
                    
                    
                    $
                    35,233,271
                    
                    
                    $
                    42,847,595
 
 Wells in
progress represents expenditures incurred for wells for which drilling and/or
completion activities have commenced but had not been
completed.  “Drilling advances
to Managing General Partner” represent
prepayments to the Managing General Partner for the development of oil and gas
properties for which drilling has not commenced.
 
 Note
7 - Asset
Retirement Obligations
 
 Changes
in the carrying amount of asset retirement obligations associated with oil and
natural gas properties are presented in the table below.  There was no
asset retirement obligation recorded in 2005 because there were no wells drilled
and completed as of December 31, 2005, the period in which the Partnership’s
business operations commenced.
 
 2007
                    
                    
                    2006Balance
      at beginning of period
                    
                    $
                    332,434
                    
                    
                    $
                    -Obligations
      assumed with development activities
                    
                    
                    6,325
                    
                    
                    
                    320,707Accretion
      expense
                    
                    
                    16,620
                    
                    
                    
                    11,727Balance
      at end of period
                    
                    $
                    355,379
                    
                    
                    $
                    332,434
 
 The
discount rate used in calculating the asset retirement obligation and related
accretion vary from 5.10% to 5.55%, depending on the quarter in which the
Partnership was required to record the retirement obligation for any specific
well.  These rates approximate the borrowing rate of the Managing
General Partner for the quarter in which the retirement obligation was
recorded.
  F-22
 Index
  ROCKIES
REGION PRIVATE LIMITED PARTNERSHIP
 
 Notes to
Financial Statements
  Note
8 - Commitments
and Contingencies
 
 On May
29, 2007, Glen Droegemueller, individually and as representative plaintiff on
behalf of all others similarly situated, filed a class action complaint against
the Partnership’s Managing General Partner in the District Court, Weld County,
Colorado alleging that the Managing General Partner underpaid royalties on gas
produced from wells operated by the Managing General Partner in the State of
Colorado (the "Droegemueller Action").  The plaintiff seeks
declaratory relief and to recover an unspecified amount of compensation for
underpayment of royalties paid by the Managing General Partner pursuant to
leases.  The Managing General Partner moved the case to Federal Court
on June 28, 2007, and on July 10, 2007, the Managing General Partner filed its
answer and affirmative defenses.
 
 A second
similar Colorado class action suit was filed against the Managing General
Partner in the U.S. District Court for the District of Colorado on December 3,
2007 by Ted Amsbaugh, et al.  On December 31, 2007, the plaintiffs in
this second action filed a motion to consolidate the case with the Droegemueller
action above.  On January 28, 2008, the Court granted the plaintiff’s
motion to consolidate the action with the Droegemueller Action.
 
 The court
approved a stay in proceedings until September 22, 2008 while the parties
pursued mediation of the matter.  Based on the mediation held on May
28, 2008, and subsequent negotiations, $74,412 was accrued by the Partnership
for this litigation for the year ended December 31, 2007, which represents the
expected settlement related to all periods prior to 2008.  Although
the Partnership was not named as a party in the suit, the lawsuit states that it
relates to all wells operated by the Managing General Partner, which includes a
majority of the Partnership’s 38 wells in the Wattenberg field subject to the
settlement.  On October 10, 2008 the court issued preliminary approval
of the settlement agreement.
 
 The
portion of the proposed settlement related to the Partnership’s wells for all
periods through December 31, 2007 is $74,412.  During the third
quarter of 2008, an additional amount of $21,824 plus legal costs of $3,067 were
recorded to fully accrue for the settlement through September 30,
2008.  In November 2008, the Managing General Partner paid into an
escrow account, on behalf of the Partnership, amounts due under the
settlement.  These amounts will be deducted from future Partnership
distributions. Notice of
the settlement was mailed to members of the class action suit in the fourth
quarter of 2008 and the final settlement was approved by the court at
a hearing on April 7, 2009.
 
 F-23
 Index
  ROCKIES
REGION PRIVATE LIMITED PARTNERSHIP
 
 Supplemental
Oil and Gas Information - Unaudited
  Costs Incurred in Oil and Gas Property
Development Activities
  Costs
incurred in oil and gas property development are presented below:
 
 2007
                    
                    
                    2006Leasehold
      costs
                    
                    $
                    6,385
                    
                    
                    $
                    453,169Development
      costs
                    
                    
                    3,597,081
                    
                    
                    
                    36,729,156Total
      costs incurred
                    
                    $
                    3,603,466
                    
                    
                    $
                    37,182,325
 
 There
were no costs incurred in Oil and Gas Property Development Activities during
2005.
  Net Proved Oil and Gas
Reserves
 
 Our
proved oil and natural gas reserves have been estimated by independent petroleum
engineers. Ryder Scott Company, L.P. prepared Partnership reserve reports
estimating proved reserves at December 31, 2007 and 2006. These reserve
estimates have been prepared in compliance with professional standards and the
reserves definitions prescribed by the SEC.
 
 Proved
reserves are the estimated quantities of oil and natural gas that geologic and
engineering data demonstrate with reasonable certainty to be recoverable in
future years from known reservoirs under existing economic and operating
conditions. Estimates of proved reserves may change, either positively or
negatively, as additional information becomes available and as contractual,
economic and political conditions change. The Partnership’s net proved reserve
estimates have been adjusted as necessary to reflect all contractual agreements,
royalty obligations and interests owned by others at the time of the
estimate.
 
 Proved
developed reserves are the quantities of oil and natural gas expected to be
recovered through existing wells with existing equipment and operating methods.
Proved undeveloped reserves are those reserves expected to be recovered from new
wells on undrilled acreage or from existing wells where a relatively major
expenditure is required for completion.  In some cases, proved
undeveloped reserves may require substantial new investments in additional wells
and related facilities.
 
 The
following Partnership reserve estimates present the estimate of the proved gas
and oil reserves and net cash flows of the Partnership’s Properties which are
United States properties.  The Managing General Partner’s management
emphasizes that reserve estimates are inherently imprecise and that estimates of
new discoveries are more imprecise than those of producing gas and oil
properties.  Accordingly, the estimates are expected to change as
future information becomes available.
  F-24
 Index
  ROCKIES
REGION PRIVATE LIMITED PARTNERSHIP
 
 Supplemental
Oil and Gas Information - Unaudited
 Below are
the net quantities of net proved reserves of the Partnership’s
Properties.
 
 Oil
      (Bbls)2007
                                            
                                            
                                            2006Proved
      reserves:Beginning
      of year, January 1
                                            
                                            
                                            493,294
                                            
                                            
                                            
                                            -Extensions,
      discoveries and improved recovery, less related costs
                                            
                                            
                                            -
                                            
                                            
                                            
                                            628,054Revisions
      of previous estimates
                                            
                                            
                                            344,560
                                            
                                            
                                            
                                            -Production
                                            
                                            
                                            (76,039
                                            )
                                            
                                            
                                            (134,760
                                            )End
      of Year, December 31
                                            
                                            
                                            761,815
                                            
                                            
                                            
                                            493,294Gas
      (McF)2007
                                            
                                            
                                            2006Proved
      reserves:Beginning
      of year, January 1
                                            
                                            
                                            12,670,718
                                            
                                            
                                            
                                            -Extensions,
      discoveries and improved recovery, less related costs
                                            
                                            
                                            -
                                            
                                            
                                            
                                            14,246,856Revisions
      of previous estimates
                                            
                                            
                                            (1,666,702
                                            )
                                            
                                            
                                            -Production
                                            
                                            
                                            (1,212,711
                                            )
                                            
                                            
                                            (1,576,138
                                            )End
      of Year, December 31
                                            
                                            
                                            9,791,305
                                            
                                            
                                            
                                            12,670,718December
      31,Proved Developed Reserves
                                            
                                            2007
                                            
                                            
                                            2006Oil
      (Bbl)
                                            
                                            
                                            363,814
                                            
                                            
                                            
                                            425,376Natural
      Gas (Mcf)
                                            
                                            
                                            8,125,215
                                            
                                            
                                            
                                            11,811,135
 
 
 ·
              Bbl
      – One barrel or 42 U.S. gallons of liquid
volume
 ·
              Mcf
      – One thousand cubic feet
 
 In the
fourth quarter of 2007, the Partnership recorded a downward revision to its
previous estimate of proved reserves of approximately 1666.7 MMcf of gas and an
upward revision of 344.6 MBbl of oil. The revision was primarily due to a
decrease of 2326.1 MMcf of gas and an increase of 341.9 MBbl of oil due to asset
performance and an increase of 659.4 MMcf of gas and 2.7 MBbl of oil due to
commodity price changes.
 
 F-25
 Index
  ROCKIES
REGION PRIVATE LIMITED PARTNERSHIP
 
 Supplemental
Oil and Gas Information - Unaudited
 
 Standardized Measure of
Discounted Future Net Cash Flows and Changes Therein Relating to Proved Oil and
Gas Reserves
 
 Summarized
in the following table is information with respect to the standardized measure
of discounted future net cash flows relating to proved oil and gas
reserves.  Future cash inflows are computed by applying year-end
prices of oil and gas relating to our proved reserves to the year-end quantities
of those reserves. Future production, development, site restoration and
abandonment costs are derived based on current costs, including production –
related taxes, primarily severance and property, assuming continuation of
existing economic conditions.  Future development costs include the
development costs related to recompletions of wells drilled in the Codell
formation, as described in Item 1, Business—Plan of
Operations.  Since Partnership taxable income is reported in
the separate tax returns of individual investor partners, no future estimated
income taxes are computed and presented herein.
 
 Year
      Ended December 31,2007
                    
                    
                    2006Future
      estimated revenues
                    
                    $
                    128,592,450
                    
                    
                    $
                    84,675,373Future
      estimated production costs
                    
                    
                    (30,513,922
                    )
                    
                    
                    (23,973,185
                    )Future
      estimated development costs
                    
                    
                    (7,147,032
                    )
                    
                    
                    (6,625,194
                    )Future
      net cash flows
                    
                    
                    90,931,496
                    
                    
                    
                    54,076,99410%
      annual discount for estimated timing of cash flows
                    
                    
                    (45,025,000
                    )
                    
                    
                    (22,323,000
                    )Standardized
      measure of discounted future estimated net cash flows
                    
                    $
                    45,906,496
                    
                    
                    $
                    31,753,994
   The
following table summarizes the principal sources of change in the standardized
measure of discounted future estimated net cash flows for the years ended
December 31, 2007 and 2006:
 
 Year
      Ended December 31,2007
                      
                      
                      2006Sales
      of oil and gas production, net of production costs
                      
                      $
                      (8,206,195
                      )
                      
                      $
                      (14,629,131
                      )Net
      changes in prices and production costs
                      
                      
                      15,028,000
                      
                      
                      
                      -Extensions,
      discoveries, and improved recovery,less
      related costs
                      
                      
                      -
                      
                      
                      
                      46,383,125Revisions
      of previous quantity estimates
                      
                      
                      7,721,000
                      
                      
                      
                      -Accretion
      of discount
                      
                      
                      2,647,000
                      
                      
                      
                      -Timing
      and other
                      
                      
                      (3,037,303
                      )
                      
                      
                      -Net
      change
                      
                      $
                      14,152,502
                      
                      
                      $
                      31,753,994
  The data
presented should not be viewed as representing the expected cash flow from, or
current value of, existing proved reserves since the computations are based on a
large number of estimates and arbitrary assumptions.  Reserve
quantities cannot be measured with precision and their estimation requires many
judgmental determinations and frequent revisions.  The required
projection of production and related expenditures over time requires further
estimates with respect to pipeline availability, rates of demand and
governmental control. Actual future prices and costs are likely to be
substantially different from the current prices and costs utilized in the
computation of reported amounts.  Any analysis or evaluation of the
reported amounts should give specific recognition to the computational methods
utilized and the limitations inherent therein.
  F-26
 Index
  ROCKIES
REGION PRIVATE LIMITED PARTNERSHIP
 
 Supplemental
Oil and Gas Information - Unaudited
 The
estimated present value of future cash flows relating to proved reserves is
extremely sensitive to prices used at any measurement period.  The
average December 31 price used for each commodity at December 31, 2007 and 2006
is presented below.
  Year
      End PriceAs
      of December 31,
                      
                      Oil
                      
                      
                      Natural
      Gas2007
                      
                      $
                      80.20
                      
                      
                      $
                      6.892006
                      
                      
                      58.28
                      
                      
                      
                      4.41
 F-27
 Index
  ROCKIES
REGION PRIVATE LIMITED PARTNERSHIP
 
 Condensed
Quarterly Balance Sheets
 (Unaudited)
   BALANCE
      SHEETS
                                              
                                              
                                              
                                              
                                              As
      ofMarch 31,
                                              
                                              
                                              June 30,
                                              
                                              
                                              September 30,
                                              
                                              
                                              December 31,Assets
                                              
                                              2007
                                              
                                              
                                              2007
                                              
                                              
                                              2007
                                              
                                              
                                              2007Current
      assets:Cash
      and cash equivalents
                                              
                                              $
                                              33,461
                                              
                                              
                                              $
                                              52,111
                                              
                                              
                                              $
                                              63,984
                                              
                                              
                                              $
                                              63,599Accounts
      receivable
                                              
                                              
                                              3,125,930
                                              
                                              
                                              
                                              2,670,716
                                              
                                              
                                              
                                              2,357,890
                                              
                                              
                                              
                                              2,144,313Due
      from Managing General Partner-derivatives
                                              
                                              
                                              393,949
                                              
                                              
                                              
                                              506,410
                                              
                                              
                                              
                                              519,895
                                              
                                              
                                              
                                              -Due
      from Managing General Partner-other
                                              
                                              
                                              -
                                              
                                              
                                              
                                              176,374
                                              
                                              
                                              
                                              315,900
                                              
                                              
                                              
                                              236,307Total
      current assets
                                              
                                              
                                              3,553,340
                                              
                                              
                                              
                                              3,405,611
                                              
                                              
                                              
                                              3,257,669
                                              
                                              
                                              
                                              2,444,219Oil
      and gas properties, successful efforts method
                                              
                                              
                                              37,382,032
                                              
                                              
                                              
                                              39,947,543
                                              
                                              
                                              
                                              40,030,883
                                              
                                              
                                              
                                              40,785,791Drilling
      advances to Managing General Partner
                                              
                                              
                                              1,022,892
                                              
                                              
                                              
                                              1,141,323
                                              
                                              
                                              
                                              1,001,500
                                              
                                              
                                              
                                              253,556Wells
      in progress
                                              
                                              
                                              2,711,435
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -Oil
      and gas properties, at cost
                                              
                                              
                                              41,116,359
                                              
                                              
                                              
                                              41,088,866
                                              
                                              
                                              
                                              41,032,383
                                              
                                              
                                              
                                              41,039,347Less
      accumulated depreciation, depletion and amortization
                                              
                                              
                                              (7,180,026
                                              )
                                              
                                              
                                              (8,284,779
                                              )
                                              
                                              
                                              (9,312,080
                                              )
                                              
                                              
                                              (10,188,507
                                              )Oil
      and gas properties, net
                                              
                                              
                                              33,936,333
                                              
                                              
                                              
                                              32,804,087
                                              
                                              
                                              
                                              31,720,303
                                              
                                              
                                              
                                              30,850,840Due
      from Managing General Partner-derivatives
                                              
                                              
                                              -
                                              
                                              
                                              
                                              82,958
                                              
                                              
                                              
                                              28,644
                                              
                                              
                                              
                                              -Due
      from Managing General Partner-other
                                              
                                              
                                              102,242
                                              
                                              
                                              
                                              188,161
                                              
                                              
                                              
                                              264,016
                                              
                                              
                                              
                                              264,016Total
      assets
                                              
                                              $
                                              37,591,915
                                              
                                              
                                              $
                                              36,480,817
                                              
                                              
                                              $
                                              35,270,632
                                              
                                              
                                              $
                                              33,559,075Liabilities and Partners'
      equityCurrent
      liabilities:Accounts
      payable
                                              
                                              $
                                              274,095
                                              
                                              
                                              $
                                              233,190
                                              
                                              
                                              $
                                              201,581
                                              
                                              
                                              $
                                              111,157Due
      to Managing General Partner-derivatives
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              380,187Due
      to Managing General Partner-other
                                              
                                              
                                              11,909
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -Total
      current liabilities
                                              
                                              
                                              286,004
                                              
                                              
                                              
                                              233,190
                                              
                                              
                                              
                                              201,581
                                              
                                              
                                              
                                              491,344Asset
      retirement obligations
                                              
                                              
                                              342,914
                                              
                                              
                                              
                                              347,069
                                              
                                              
                                              
                                              351,224
                                              
                                              
                                              
                                              355,379Total
      liabilities
                                              
                                              
                                              628,918
                                              
                                              
                                              
                                              580,259
                                              
                                              
                                              
                                              552,805
                                              
                                              
                                              
                                              846,723Partners'
      equity:Managing
      General Partner
                                              
                                              
                                              9,466,293
                                              
                                              
                                              
                                              9,165,225
                                              
                                              
                                              
                                              8,833,407
                                              
                                              
                                              
                                              8,243,538Limited
      Partners - 1,787 units issued and outstanding
                                              
                                              
                                              27,496,704
                                              
                                              
                                              
                                              26,735,333
                                              
                                              
                                              
                                              25,884,420
                                              
                                              
                                              
                                              24,468,814Total
      Partners' equity
                                              
                                              
                                              36,962,997
                                              
                                              
                                              
                                              35,900,558
                                              
                                              
                                              
                                              34,717,827
                                              
                                              
                                              
                                              32,712,352Total
      liabilities and Partners' equity
                                              
                                              $
                                              37,591,915
                                              
                                              
                                              $
                                              36,480,817
                                              
                                              
                                              $
                                              35,270,632
                                              
                                              
                                              $
                                              33,559,075
 
 
 See
accompanying notes to unaudited condensed quarterly financial
statements.
  F-28
 Index
  ROCKIES
REGION PRIVATE LIMITED PARTNERSHIP
 
 Condensed
Quarterly Balance Sheets
 (Unaudited)
   BALANCE
      SHEETS
                                          
                                          
                                          
                                          
                                          As
      ofMarch 31,
                                          
                                          
                                          June 30,
                                          
                                          
                                          September 30,
                                          
                                          
                                          December 31,Assets
                                          
                                          2006
                                          
                                          
                                          2006
                                          
                                          
                                          2006
                                          
                                          
                                          2006(As
      restated)Current
      assets:Cash
      and cash equivalents
                                          
                                          
                                          -
                                          
                                          
                                          $
                                          881
                                          
                                          
                                          $
                                          83
                                          
                                          
                                          $
                                          20,328Accounts
      receivable
                                          
                                          
                                          423,304
                                          
                                          
                                          
                                          6,195,767
                                          
                                          
                                          
                                          8,193,924
                                          
                                          
                                          
                                          4,814,402Due
      from Managing General Partner-derivatives
                                          
                                          
                                          -
                                          
                                          
                                          
                                          89,851
                                          
                                          
                                          
                                          729,947
                                          
                                          
                                          
                                          922,443Total
      current assets
                                          
                                          
                                          423,304
                                          
                                          
                                          
                                          6,286,499
                                          
                                          
                                          
                                          8,923,954
                                          
                                          
                                          
                                          5,757,173Oil
      and gas properties, successful efforts method
                                          
                                          
                                          7,741,567
                                          
                                          
                                          
                                          35,091,253
                                          
                                          
                                          
                                          36,035,119
                                          
                                          
                                          
                                          37,182,325Drilling
      advances to Managing General Partner
                                          
                                          
                                          17,394,862
                                          
                                          
                                          
                                          4,484,301
                                          
                                          
                                          
                                          3,494,426
                                          
                                          
                                          
                                          1,958,665Wells
      in progress
                                          
                                          
                                          16,641,791
                                          
                                          
                                          
                                          1,523,621
                                          
                                          
                                          
                                          1,537,199
                                          
                                          
                                          
                                          1,969,943Oil
      and gas properties, at cost
                                          
                                          
                                          41,778,220
                                          
                                          
                                          
                                          41,099,175
                                          
                                          
                                          
                                          41,066,744
                                          
                                          
                                          
                                          41,110,933Less
      accumulated depreciation, depletion and amortization
                                          
                                          
                                          (124,896
                                          )
                                          
                                          
                                          (1,747,012
                                          )
                                          
                                          
                                          (3,988,192
                                          )
                                          
                                          
                                          (5,877,662
                                          )Oil
      and gas properties, net
                                          
                                          
                                          41,653,324
                                          
                                          
                                          
                                          39,352,163
                                          
                                          
                                          
                                          37,078,552
                                          
                                          
                                          
                                          35,233,271Due
      from Managing General Partner-derivatives
                                          
                                          
                                          -
                                          
                                          
                                          
                                          23,090
                                          
                                          
                                          
                                          294,639
                                          
                                          
                                          
                                          101,637Total
      Assets
                                          
                                          $
                                          42,076,628
                                          
                                          
                                          $
                                          45,661,752
                                          
                                          
                                          $
                                          46,297,145
                                          
                                          
                                          $
                                          41,092,081Liabilities and Partners'
      EquityCurrent
      liabilities:Accounts
      payable
                                          
                                          $
                                          38,128
                                          
                                          
                                          $
                                          570,194
                                          
                                          
                                          $
                                          507,435
                                          
                                          
                                          $
                                          369,402Due
      to Managing General Partner-derivatives
                                          
                                          
                                          1,021
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -Due
      to Managing General Partner-other
                                          
                                          
                                          51,555
                                          
                                          
                                          
                                          128,767
                                          
                                          
                                          
                                          479,089
                                          
                                          
                                          
                                          139,842Total
      current liabilities
                                          
                                          
                                          90,704
                                          
                                          
                                          
                                          698,961
                                          
                                          
                                          
                                          986,524
                                          
                                          
                                          
                                          509,244Due
      to Managing General Partner-derivatives
                                          
                                          
                                          932
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -Asset
      retirement obligations
                                          
                                          
                                          184,237
                                          
                                          
                                          
                                          257,584
                                          
                                          
                                          
                                          260,708
                                          
                                          
                                          
                                          332,434Total
      liabilities
                                          
                                          
                                          275,873
                                          
                                          
                                          
                                          956,545
                                          
                                          
                                          
                                          1,247,232
                                          
                                          
                                          
                                          841,678Partners'
      equity:Managing
      General Partner
                                          
                                          
                                          10,917,618
                                          
                                          
                                          
                                          11,788,954
                                          
                                          
                                          
                                          11,892,366
                                          
                                          
                                          
                                          10,452,514Limited
      Partners - 1,787 units issued and outstanding
                                          
                                          
                                          30,883,137
                                          
                                          
                                          
                                          32,916,253
                                          
                                          
                                          
                                          33,157,547
                                          
                                          
                                          
                                          29,797,889Total
      Partners' equity
                                          
                                          
                                          41,800,755
                                          
                                          
                                          
                                          44,705,207
                                          
                                          
                                          
                                          45,049,913
                                          
                                          
                                          
                                          40,250,403Total
      Liabilities and Partners' Equity
                                          
                                          $
                                          42,076,628
                                          
                                          
                                          $
                                          45,661,752
                                          
                                          
                                          $
                                          46,297,145
                                          
                                          
                                          $
                                          41,092,081
 
 As the
Partnership was formed on December 6, 2005, there are no quarterly balance
sheets for the first three quarters of 2005.  The balance sheet as of
December 31, 2005 presented on page F-3 of these financial statements is the
same as would be presented if a balance sheet were provided for that
quarter.
 
 
 See
accompanying notes to unaudited condensed quarterly financial
statements.
  F-29
 Index
  ROCKIES
REGION PRIVATE LIMITED PARTNERSHIP
 
 Condensed
Quarterly Statements of Operations
 (Unaudited)
   Quarter
      EndedSTATEMENTS
      OF OPERATIONS
                      
                      March 31,
                      
                      
                      June 30,
                      
                      
                      September 30,
                      
                      
                      December 31,2007
                      
                      
                      2007
                      
                      
                      2007
                      
                      
                      2007Revenues:Oil
      and gas sales
                      
                      $
                      3,178,054
                      
                      
                      $
                      2,670,716
                      
                      
                      $
                      2,357,890
                      
                      
                      $
                      2,144,313Oil
      and gas price risk management gain (loss), net
                      
                      
                      (647,790
                      )
                      
                      
                      321,150
                      
                      
                      
                      221,114
                      
                      
                      
                      (793,670
                      )Total
      revenues
                      
                      
                      2,530,264
                      
                      
                      
                      2,991,866
                      
                      
                      
                      2,579,004
                      
                      
                      
                      1,350,643Operating
      costs and expenses:Production
      and operating costs
                      
                      
                      620,601
                      
                      
                      
                      507,452
                      
                      
                      
                      535,932
                      
                      
                      
                      480,793Direct
      costs - general and administrative
                      
                      
                      403
                      
                      
                      
                      75,178
                      
                      
                      
                      430
                      
                      
                      
                      25,268Depreciation,
      depletion and amortization
                      
                      
                      1,302,364
                      
                      
                      
                      1,104,753
                      
                      
                      
                      1,027,301
                      
                      
                      
                      876,427Exploratory
      dry hole costs
                      
                      
                      900
                      
                      
                      
                      27,492
                      
                      
                      
                      56,483
                      
                      
                      
                      (6,964
                      )Accretion
      of asset retirement obligations
                      
                      
                      4,155
                      
                      
                      
                      4,155
                      
                      
                      
                      4,155
                      
                      
                      
                      4,155Total
      operating costs and expenses
                      
                      
                      1,928,423
                      
                      
                      
                      1,719,030
                      
                      
                      
                      1,624,301
                      
                      
                      
                      1,379,679Income
      from operations
                      
                      
                      601,841
                      
                      
                      
                      1,272,836
                      
                      
                      
                      954,703
                      
                      
                      
                      (29,036
                      )Interest
      income
                      
                      
                      40,034
                      
                      
                      
                      25,914
                      
                      
                      
                      18,801
                      
                      
                      
                      17,069Net
      income
                      
                      $
                      641,875
                      
                      
                      $
                      1,298,750
                      
                      
                      $
                      973,504
                      
                      
                      $
                      (11,967
                      )Net
      income allocated to partners
                      
                      $
                      641,875
                      
                      
                      $
                      1,298,750
                      
                      
                      $
                      973,504
                      
                      
                      $
                      (11,967)Less
      Managing General Partner interest in net income
                      
                      
                      192,563
                      
                      
                      
                      389,625
                      
                      
                      
                      292,051
                      
                      
                      
                      (3,590
                      )Net
      income allocated to Investor Partners
                      
                      $
                      449,312
                      
                      
                      $
                      909,126
                      
                      
                      $
                      681,453
                      
                      
                      $
                      (8,377
                      )Net
      income per Investor Partner unit
                      
                      $
                      251
                      
                      
                      $
                      509
                      
                      
                      $
                      381
                      
                      
                      $
                      (5
                      )Investor
      Partner units outstanding
                      
                      
                      1,787
                      
                      
                      
                      1,787
                      
                      
                      
                      1,787
                      
                      
                      
                      1,787
 
 
 See
accompanying notes to unaudited condensed quarterly financial
statements.
  F-30
 Index
  ROCKIES
REGION PRIVATE LIMITED PARTNERSHIP
 
 Condensed
Quarterly Statements of Operations
 (Unaudited)
 
 
 Quarter
      EndedSTATEMENTS
      OF OPERATIONS
                  
                  March 31,
                  
                  
                  June 30,
                  
                  
                  September 30,
                  
                  
                  December 31,2006
                  
                  
                  2006
                  
                  
                  2006
                  
                  
                  2006(As
      restated)Revenues:Oil
      and gas sales
                  
                  $
                  420,087
                  
                  
                  $
                  5,775,680
                  
                  
                  $
                  5,761,615
                  
                  
                  $
                  4,824,591Oil
      and gas price risk management gain (loss), net
                  
                  
                  1,764
                  
                  
                  
                  119,916
                  
                  
                  
                  941,649
                  
                  
                  
                  50,236Total
      revenues
                  
                  
                  421,851
                  
                  
                  
                  5,895,596
                  
                  
                  
                  6,703,264
                  
                  
                  
                  4,874,827Operating
      costs and expenses:Production
      and operating costs
                  
                  
                  69,656
                  
                  
                  
                  622,582
                  
                  
                  
                  725,253
                  
                  
                  
                  735,351Direct
      costs - general and administrative
                  
                  
                  500
                  
                  
                  
                  388
                  
                  
                  
                  123,797
                  
                  
                  
                  121,190Depreciation,
      depletion and amortization
                  
                  
                  124,896
                  
                  
                  
                  1,622,116
                  
                  
                  
                  2,241,180
                  
                  
                  
                  1,889,470Exploratory
      dry hole costs
                  
                  
                  1,251,337
                  
                  
                  
                  749,216
                  
                  
                  
                  32,431
                  
                  
                  
                  24,385Accretion
      of asset retirement obligations
                  
                  
                  2,275
                  
                  
                  
                  3,176
                  
                  
                  
                  3,124
                  
                  
                  
                  3,152Total
      operating costs and expenses
                  
                  
                  1,448,664
                  
                  
                  
                  2,997,478
                  
                  
                  
                  3,125,785
                  
                  
                  
                  2,773,548Income
      (loss) from operations
                  
                  
                  (1,026,813
                  )
                  
                  
                  2,898,118
                  
                  
                  
                  3,577,479
                  
                  
                  
                  2,101,279Interest
      income
                  
                  
                  -
                  
                  
                  
                  6,334
                  
                  
                  
                  3,228
                  
                  
                  
                  19,557Net
      income (loss)
                  
                  $
                  (1,026,813
                  )
                  
                  $
                  2,904,452
                  
                  
                  $
                  3,580,707
                  
                  
                  $
                  2,120,836Net
      income (loss) allocated to partners
                  
                  $
                  (1,026,813
                  )
                  
                  $
                  2,904,452
                  
                  
                  $
                  3,580,707
                  
                  
                  $
                  2,120,836Less
      Managing General Partner interest in net income (loss)
                  
                  
                  (308,044
                  )
                  
                  
                  871,336
                  
                  
                  
                  1,074,212
                  
                  
                  
                  636,251Net
      income (loss) allocated to Investor Partners
                  
                  $
                  (718,769
                  )
                  
                  $
                  2,033,116
                  
                  
                  $
                  2,506,495
                  
                  
                  $
                  1,484,585Net
      income (loss) per Investor Partner unit
                  
                  $
                  (402
                  )
                  
                  
                  1,138
                  
                  
                  $
                  1,403
                  
                  
                  $
                  831Investor
      Partner units outstanding
                  
                  
                  1,787
                  
                  
                  
                  1,787
                  
                  
                  
                  1,787
                  
                  
                  
                  1,787
 
 As the
Partnership was formed on December 6, 2005, there are no quarterly statements of
operations for the first three quarters of 2005.  The statement of
operations from December 6, 2005 (date of inception) to December 31, 2005
presented on page F-4 of these financial statements is the same as would be
presented if a statement of operations were provided for that
quarter.
 
 
 See
accompanying notes to unaudited condensed quarterly financial
statements.
  F-31
 Index
  ROCKIES
REGION PRIVATE LIMITED PARTNERSHIP
 
 Condensed
Quarterly Statements of Cash Flows
 (Unaudited)
 
 Statements
      of Cash Flows
                        
                        Three
                        
                        
                        Six
                        
                        
                        NineMonths
      ended
                        
                        
                        Months
      ended
                        
                        
                        Months
      endedMarch 31,
                        
                        
                        June 30,
                        
                        
                        September 30,2007
                        
                        
                        2007
                        
                        
                        2007Cash
      flows from operating activities:Net
      income
                        
                        $
                        641,875
                        
                        
                        $
                        1,940,625
                        
                        
                        $
                        2,914,129Adjustments
      to reconcile net income to net cash provided by operating
      activities:Depreciation,
      depletion and amortization
                        
                        
                        1,302,364
                        
                        
                        
                        2,407,117
                        
                        
                        
                        3,434,418Accretion
      of asset retirement obligations
                        
                        
                        4,155
                        
                        
                        
                        8,310
                        
                        
                        
                        12,465Unrealized
      loss on derivative transactions
                        
                        
                        630,131
                        
                        
                        
                        434,712
                        
                        
                        
                        475,541Exploratory
      dry hole costs
                        
                        
                        900
                        
                        
                        
                        28,392
                        
                        
                        
                        84,875Changes
      in operating assets and liabilities:Decrease
      in accounts receivable
                        
                        
                        1,688,472
                        
                        
                        
                        2,143,686
                        
                        
                        
                        2,456,512Decrease
      in accounts payable
                        
                        
                        (95,307
                        )
                        
                        
                        (136,212
                        )
                        
                        
                        (167,822
                        )Decrease
      in due from/to Managing General Partner
                        
                        
                        (230,176
                        )
                        
                        
                        (504,378
                        )
                        
                        
                        (719,758
                        )Net
      cash provided by operating activities
                        
                        
                        3,942,414
                        
                        
                        
                        6,322,252
                        
                        
                        
                        8,490,361Cash
      flows from financing activities:Distributions
      to Partners
                        
                        
                        (3,929,281
                        )
                        
                        
                        (6,290,469
                        )
                        
                        
                        (8,446,705
                        )Net
      cash used in financing activities
                        
                        
                        (3,929,281
                        )
                        
                        
                        (6,290,469
                        )
                        
                        
                        (8,446,705
                        )Net
      increase in cash and cash equivalents
                        
                        
                        13,133
                        
                        
                        
                        31,783
                        
                        
                        
                        43,656Cash
      and cash equivalents, beginning of period
                        
                        
                        20,328
                        
                        
                        
                        20,328
                        
                        
                        
                        20,328Cash
      and cash equivalents, end of period
                        
                        $
                        33,461
                        
                        
                        $
                        52,111
                        
                        
                        $
                        63,984
  
 See
accompanying notes to unaudited condensed quarterly financial
statements.
  F-32
 Index
  ROCKIES
REGION PRIVATE LIMITED PARTNERSHIP
 
 Condensed
Quarterly Statements of Cash Flows
 (Unaudited)
 
 Statements
      of Cash Flows
                    
                    Three
                    
                    
                    Six
                    
                    
                    NineMonths
      ended
                    
                    
                    Months
      ended
                    
                    
                    Months
      endedMarch
      31,
                    
                    
                    June
      30,
                    
                    
                    September
      30,2006
                    
                    
                    2006
                    
                    
                    2006(As
      restated)Cash
      flows from operating activities:Net
      income (loss)
                    
                    $
                    (1,026,813
                    )
                    
                    $
                    1,877,639
                    
                    
                    $
                    5,458,346Adjustments
      to reconcile net income (loss) to net cash provided by operating
      activities:Depreciation,
      depletion and amortization
                    
                    
                    124,896
                    
                    
                    
                    1,747,012
                    
                    
                    
                    3,988,192Accretion
      of asset retirement obligations
                    
                    
                    2,275
                    
                    
                    
                    5,451
                    
                    
                    
                    8,575Unrealized
      gain on derivative transactions
                    
                    
                    1,953
                    
                    
                    
                    (112,941
                    )
                    
                    
                    (1,024,586
                    )Exploratory
      dry hole costs
                    
                    
                    1,251,337
                    
                    
                    
                    2,000,553
                    
                    
                    
                    2,032,984Changes
      in operating assets and liabilities:Increase
      in accounts receivable
                    
                    
                    (423,304
                    )
                    
                    
                    (6,195,767
                    )
                    
                    
                    (8,193,924
                    )Increase
      in accounts payable
                    
                    
                    69,656
                    
                    
                    
                    570,194
                    
                    
                    
                    507,435Increase
      in due from/to Managing General Partner
                    
                    
                    -
                    
                    
                    
                    108,740
                    
                    
                    
                    459,062Net
      cash provided by operating activities
                    
                    
                    -
                    
                    
                    
                    881
                    
                    
                    
                    3,236,084Cash
      flows from financing activities:Distributions
      to Partners
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (3,236,001
                    )Net
      cash used in financing activities
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    (3,236,001
                    )Net
      increase in cash and cash equivalents
                    
                    
                    -
                    
                    
                    
                    881
                    
                    
                    
                    83Cash
      and cash equivalents, beginning of period
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -Cash
      and cash equivalents, end of period
                    
                    $
                    -
                    
                    
                    $
                    881
                    
                    
                    $
                    83
 
 As the
Partnership was formed on December 6, 2005, there are no quarterly statements of
cash flows for the first three quarters of 2005.  The statement of
cash flows from December 6, 2005 (date of inception) to December 31, 2005
presented on page F-6 of these financial statements is the same as would be
presented if a statement of cash flows was provided for that
quarter.
 
 
 See
accompanying notes to unaudited condensed quarterly financial
statements.
  F-33
 Index
  ROCKIES
REGION PRIVATE LIMITED PARTNERSHIP
 
 Notes to
Unaudited Condensed Quarterly Financial Statements
 Note 1 –
Basis of
Presentation
 
 The
Rockies Region Private Limited Partnership (the “Partnership” or the
“Registrant”) was organized as a limited partnership on December 6, 2005, in
accordance with the laws of the State of West Virginia for the purpose of
engaging in the exploration and development of oil and natural gas properties
and commenced business operations as of the date of organization.
 
 The
accompanying interim financial statements have been prepared without audit in
accordance with accounting principles generally accepted in the United States of
America for interim financial information and the instructions to Form 10-Q and
Regulation S-X, Rule 8-03(a) and (b) of the Securities and Exchange Commission
(“SEC”).  Accordingly, pursuant to certain rules and regulations,
certain notes and other financial information included in accompanying audited
financial statements have been condensed or omitted.  In the
Partnership’s opinion, the accompanying interim financial statements, as
restated for the quarter ended June 30, 2006, contain all adjustments
(consisting of only normal recurring adjustments) necessary to fairly state the
Partnership's financial position and results of operations for the periods
presented.  See Note 5, Restatement below, for more
information about year 2006 unaudited condensed quarterly financial
reporting.  Results of operations for the three months ended March 31,
June 30, September 30, and December 31, 2007 and 2006 are not necessarily
indicative of the results to be expected for the full year or any other future
period.
 
 Note 2 -
Transactions with
Managing General Partner and Affiliates
 
 The
Managing General Partner transacts business on behalf of the
Partnership.  Revenues and other cash inflows received on behalf of
the Partnership are distributed to the Partners net of (after deducting)
corresponding operating costs and other cash outflows incurred on behalf of the
Partnership.  Undistributed oil and natural gas revenues are recorded
on the balance sheet under the caption “Accounts receivable.”  A portion of
the undistributed oil and natural gas revenues had not been received by the
Managing General Partner as of the end of the period.  The fair value
of the Partnership’s portion of unexpired derivative instruments is recorded on
the balance sheet under the caption “Due from the Managing General Partner –
derivatives” in the case of net unrealized gains or “Due to Managing General
Partner – derivatives” in the case of net unrealized losses.  All
other unsettled transactions between the Partnership and the Managing General
Partner are recorded net on the balance sheet under the caption “Due to or from
Managing General Partner – other.”
  F-34
 Index
  ROCKIES
REGION PRIVATE LIMITED PARTNERSHIP
 
 Notes to
Unaudited Condensed Quarterly Financial Statements
 The
following table presents reimbursements and service fees paid by the Partnership
to PDC or its affiliates during  the quarters ended March 31, June 30,
September 30 and December 31, for the years 2007 and 2006  and the
period from December 6, 2005 (date of inception) to December 31,
2005.
 
 Quarter
      EndedMarch 31, 2007
                                              
                                              
                                              June 30, 2007
                                              
                                              
                                              September 30, 2007
                                              
                                              
                                              December 31, 2007TransactionWell
      charges
                                              
                                              $
                                              77,987
                                              
                                              
                                              $
                                              78,104
                                              
                                              
                                              $
                                              77,604
                                              
                                              
                                              $
                                              84,993Gas
      marketing, supplies and equipment
                                              
                                              
                                              163,498
                                              
                                              
                                              
                                              199,601
                                              
                                              
                                              
                                              125,948
                                              
                                              
                                              
                                              150,921Gathering,
      compression and processing fees
                                              
                                              
                                              97,985
                                              
                                              
                                              
                                              77,695
                                              
                                              
                                              
                                              74,752
                                              
                                              
                                              
                                              46,683Direct
      costs- general and administrative
                                              
                                              
                                              403
                                              
                                              
                                              
                                              75,178
                                              
                                              
                                              
                                              430
                                              
                                              
                                              
                                              25,268Distributions*
                                              
                                              $
                                              1,178,783
                                              
                                              
                                              $
                                              690,693
                                              
                                              
                                              $
                                              623,868
                                              
                                              
                                              $
                                              586,281Quarter
      EndedMarch 31, 2006
                                              
                                              
                                              June 30, 2006
                                              
                                              
                                              September 30, 2006
                                              
                                              
                                              December 31, 2006TransactionWell
      charges
                                              
                                              $
                                              8,800
                                              
                                              
                                              $
                                              61,607
                                              
                                              
                                              $
                                              49,142
                                              
                                              
                                              $
                                              77,721Gas
      marketing, supplies and equipment
                                              
                                              
                                              -
                                              
                                              
                                              
                                              -
                                              
                                              
                                              
                                              134,634
                                              
                                              
                                              
                                              231,017Gathering,
      compression and processing fees
                                              
                                              
                                              207
                                              
                                              
                                              
                                              5,774
                                              
                                              
                                              
                                              156,283
                                              
                                              
                                              
                                              143,648Direct
      costs- general and administrative
                                              
                                              
                                              500
                                              
                                              
                                              
                                              388
                                              
                                              
                                              
                                              123,797
                                              
                                              
                                              
                                              121,190Distributions*
                                              
                                              $
                                              -
                                              
                                              
                                              $
                                              -
                                              
                                              
                                              $
                                              970,800
                                              
                                              
                                              $
                                              2,076,103Period
      fromDecember 6, 2005
      toDecember 31,
      2005TransactionCapital
      contribution
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              $
                                              11,231,670Syndication
      costs
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              3,583,551Management
      fee
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              536,033Drilling
      costs
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              276,674Drilling
      compensation
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              38,734Drilling
      advances to Managing General Partner
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              42,532,187Direct
      costs- general and administrative
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              
                                              $
                                              20,027
 
 *Distributions
commenced in July 2006.
  F-35
 Index
  ROCKIES
REGION PRIVATE LIMITED PARTNERSHIP
 
 Notes to
Unaudited Condensed Quarterly Financial Statements
  Note 3 -
Derivative Financial
Instruments
  The
Managing General Partner utilizes commodity-based derivative instruments,
entered into on behalf of the Partnership, to manage a portion of the
Partnership’s exposure to price risk from oil and natural gas
sales.  These instruments consisted of Colorado Interstate Gas Index,
or CIG, based contracts for Colorado natural gas production and New York
Mercantile Exchange, or NYMEX, based floors for our Colorado oil
production.  These derivative instruments have the effect of locking
in for specified periods (at predetermined prices or ranges of prices) the
prices the Managing General Partner receives for the volume of oil and natural
gas to which the derivative relates.
 
 In
addition to the fixed-price “swaps” and “collar” derivative instruments which
remain in effect at February 28, 2009, the Managing General Partner
previously utilized “floor” contracts to protect against natural gas and oil
price declines in subsequent periods.  Through October 31, 2007, the
Partnership’s natural gas derivative instruments were comprised of natural gas
“floors” and “collars” while its oil derivative instruments were comprised of
oil “floors.”
 
 “Floors”
contained a floor price (put) whereby PDC, as Managing General Partner, received
from the counterparty, the floor price if the commodity market price fell below
the floor strike price, but received no payment when the commodity market price
exceeded the floor price.  “Collars” contained a fixed floor price
(put) and ceiling price (call). If the market price exceeded the call strike
price or fell below the fixed put strike price, PDC, as Managing General
Partner, received the fixed price and paid the market price to the
counterparty.  If the market price was between the call and put strike
price, no payments were due from either party.
 
 Upon the
expiration of the NYMEX-based oil “floor” contract in October 31, 2007, PDC
entered into a NYMEX-based oil “swap” contract in which the Managing General
Partner received a fixed price for the hedged commodity and paid a floating
market price to the counterparty. The fixed-price payment and the floating-price
payment were netted, which resulted in a net amount due to or from the
counterparty.
 
 The
following table summarizes our open derivative positions:
 
 Quarter
      EndedMarch 31,
      2007
                          
                          
                          June 30,
      2007
                          
                          
                          September 30,
      2007Short-term
                          
                          
                          Long-term
                          
                          
                          Total
                          
                          
                          Short-term
                          
                          
                          Long-term
                          
                          
                          Total
                          
                          
                          Short-term
                          
                          
                          Long-term
                          
                          
                          TotalNatural
      gas floors
                          
                          $
                          578,942
                          
                          
                          $
                          -
                          
                          
                          $
                          578,942
                          
                          
                          $
                          645,120
                          
                          
                          $
                          179,781
                          
                          
                          $
                          824,901
                          
                          
                          $
                          571,147
                          
                          
                          $
                          43,877
                          
                          
                          $
                          615,024Natural
      gas ceilings
                          
                          
                          (189,430
                          )
                          
                          
                          -
                          
                          
                          
                          (189,430
                          )
                          
                          
                          (139,245
                          )
                          
                          
                          (96,823
                          )
                          
                          
                          (236,068
                          )
                          
                          
                          (51,288
                          )
                          
                          
                          (15,233
                          )
                          
                          
                          (66,521
                          )Oil
      floors
                          
                          
                          4,437
                          
                          
                          
                          -
                          
                          
                          
                          4,437
                          
                          
                          
                          535
                          
                          
                          
                          -
                          
                          
                          
                          535
                          
                          
                          
                          36
                          
                          
                          
                          -
                          
                          
                          
                          36Total
                          
                          $
                          393,949
                          
                          
                          $
                          -
                          
                          
                          $
                          393,949
                          
                          
                          $
                          506,410
                          
                          
                          $
                          82,958
                          
                          
                          $
                          589,368
                          
                          
                          $
                          519,895
                          
                          
                          $
                          28,644
                          
                          
                          $
                          548,539Quarter
      EndedMarch 31,
      2006
                          
                          
                          June 30,
      2006
                          
                          
                          September 30,
      2006Short-term
                          
                          
                          Long-term
                          
                          
                          Total
                          
                          
                          Short-term
                          
                          
                          Long-term
                          
                          
                          Total
                          
                          
                          Short-term
                          
                          
                          Long-term
                          
                          
                          TotalNatural
      gas floors
                          
                          $
                          (1,021
                          )
                          
                          $
                          (932
                          )
                          
                          $
                          (1,953
                          )
                          
                          $
                          89,851
                          *
                          
                          $
                          23,090
                          *
                          
                          $
                          112,941
                          *
                          
                          $
                          694,390
                          
                          
                          $
                          287,685
                          
                          
                          $
                          982,075Natural
      gas ceilings
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -Oil
      floors
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          35,557
                          
                          
                          
                          6,954
                          
                          
                          
                          42,511Total
                          
                          $
                          (1,021
                          )
                          
                          $
                          (932
                          )
                          
                          $
                          (1,953
                          )
                          
                          $
                          89,851
                          
                          
                          $
                          23,090
                          
                          
                          $
                          112,941
                          
                          
                          $
                          729,947
                          
                          
                          $
                          294,639
                          
                          
                          $
                          1,024,586
 
 *As
Restated
  F-36
 Index
  ROCKIES
REGION PRIVATE LIMITED PARTNERSHIP
 
 Notes to
Unaudited Condensed Quarterly Financial Statements
 The
following table identifies the changes in the fair value of commodity based
derivatives as reflected in the accompanying unaudited condensed statements of
operations:
 
 Quarter
      ended March 31, 2007
                            
                            
                            Quarter
      ended June 30, 2007
                            
                            
                            Quarter
      ended September 30, 2007
                            
                            
                            Quarter
      ended December 31, 2007Realized
      gains (losses)Oil
                            
                            $
                            (9,851
                            )
                            
                            
                            (8,483
                            )
                            
                            $
                            (2,868
                            )
                            
                            $
                            (2,949
                            )Natural
      gas
                            
                            
                            (7,808
                            )
                            
                            
                            134,214
                            
                            
                            
                            264,811
                            
                            
                            
                            138,005Realized
      gain (loss)
                            
                            
                            (17,659
                            )
                            
                            
                            125,731
                            
                            
                            
                            261,943
                            
                            
                            
                            135,056Unrealized
      gain (loss)
                            
                            
                            (630,131
                            )
                            
                            
                            195,419
                            
                            
                            
                            (40,829
                            )
                            
                            
                            (928,726
                            )Oil
      and gas price risk management gain (loss), net
                            
                            $
                            (647,790
                            )
                            
                            $
                            321,150
                            
                            
                            $
                            221,114
                            
                            
                            $
                            (793,670
                            )Quarter
      ended March 31, 2006
                            
                            
                            Quarter
      ended June 30, 2006
                            
                            
                            Quarter
      ended September 30, 2006
                            
                            
                            Quarter
      ended December 31, 2006Realized
      gains (losses)
                            
                            
                            
                            
                            
                            (As
      restated)Oil
                            
                            $
                            -
                            
                            
                            $
                            -
                            
                            
                            $
                            -
                            
                            
                            $
                            (9,794
                            )Natural
      gas
                            
                            
                            3,717
                            
                            
                            
                            5,022
                            
                            
                            
                            30,004
                            
                            
                            
                            60,536Realized
      gain
                            
                            
                            3,717
                            
                            
                            
                            5,022
                            
                            
                            
                            30,004
                            
                            
                            
                            50,742Unrealized
      gain (loss)
                            
                            
                            (1,953
                            )
                            
                            
                            114,894
                            
                            
                            
                            911,645
                            
                            
                            
                            (506
                            )Oil
      and gas price risk management gain (loss), net
                            
                            $
                            1,764
                            
                            
                            $
                            119,916
                            
                            
                            $
                            941,649
                            
                            
                            $
                            50,236
 
 
 The
Partnership had no derivative positions in 2005.
  F-37
 Index
  ROCKIES
REGION PRIVATE LIMITED PARTNERSHIP
 
 Notes to
Unaudited Condensed Quarterly Financial Statements
 Note 4 -
Capitalized Costs
Relating to Oil and Gas Activities
 
 The
Partnership is engaged solely in oil and natural gas activities, all of which
are located in the continental United States.  Drilling operations
began upon funding on December 31, 2005 with payments made for all planned
drilling and completion costs for the Partnership made in December
2005.  Costs capitalized for these activities are as
follows:
 
 Quarter
      EndedMarch 31,
      2007
                                                                  
                                                                  
                                                                  June 30,
      2007
                                                                  
                                                                  
                                                                  September 30,
      2007
                                                                  
                                                                  
                                                                  December 31,
      2007Leasehold
      costs
                                                                  
                                                                  $
                                                                  454,873
                                                                  
                                                                  
                                                                  $
                                                                  459,380
                                                                  
                                                                  
                                                                  $
                                                                  459,398
                                                                  
                                                                  
                                                                  $
                                                                  459,554Development
      costs
                                                                  
                                                                  
                                                                  36,927,159
                                                                  
                                                                  
                                                                  
                                                                  39,488,163
                                                                  
                                                                  
                                                                  
                                                                  39,571,485
                                                                  
                                                                  
                                                                  
                                                                  40,326,237Oil
      and gas properties, successful efforts method
                                                                  
                                                                  
                                                                  37,382,032
                                                                  
                                                                  
                                                                  
                                                                  39,947,543
                                                                  
                                                                  
                                                                  
                                                                  40,030,883
                                                                  
                                                                  
                                                                  
                                                                  40,785,791Drilling
      advances to Managing General Partner
                                                                  
                                                                  
                                                                  1,022,892
                                                                  
                                                                  
                                                                  
                                                                  1,141,323
                                                                  
                                                                  
                                                                  
                                                                  1,001,500
                                                                  
                                                                  
                                                                  
                                                                  253,556Wells
      in progress
                                                                  
                                                                  
                                                                  2,711,435
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -Oil
      and gas properties, at cost
                                                                  
                                                                  
                                                                  41,116,359
                                                                  
                                                                  
                                                                  
                                                                  41,088,866
                                                                  
                                                                  
                                                                  
                                                                  41,032,383
                                                                  
                                                                  
                                                                  
                                                                  41,039,347Less
      accumulated depreciation, depletion and amortization
                                                                  
                                                                  
                                                                  (7,180,026
                                                                  )
                                                                  
                                                                  
                                                                  (8,284,779
                                                                  )
                                                                  
                                                                  
                                                                  (9,312,080
                                                                  )
                                                                  
                                                                  
                                                                  (10,188,507
                                                                  )Oil
      and gas properties, net
                                                                  
                                                                  $
                                                                  33,936,333
                                                                  
                                                                  
                                                                  $
                                                                  32,804,087
                                                                  
                                                                  
                                                                  $
                                                                  31,720,303
                                                                  
                                                                  
                                                                  $
                                                                  30,850,840Quarter
      EndedMarch 31,
      2006
                                                                  
                                                                  
                                                                  June 30,
      2006
                                                                  
                                                                  
                                                                  September 30,
      2006
                                                                  
                                                                  
                                                                  December 31,
      2006(As
      restated)Leasehold
      costs
                                                                  
                                                                  $
                                                                  42,293
                                                                  
                                                                  
                                                                  $
                                                                  363,156
                                                                  
                                                                  
                                                                  $
                                                                  368,191
                                                                  
                                                                  
                                                                  $
                                                                  453,169Development
      costs
                                                                  
                                                                  
                                                                  7,699,274
                                                                  
                                                                  
                                                                  
                                                                  34,728,097
                                                                  
                                                                  
                                                                  
                                                                  35,666,928
                                                                  
                                                                  
                                                                  
                                                                  36,729,156Oil
      and gas properties, successful efforts method
                                                                  
                                                                  
                                                                  7,741,567
                                                                  
                                                                  
                                                                  
                                                                  35,091,253
                                                                  
                                                                  
                                                                  
                                                                  36,035,119
                                                                  
                                                                  
                                                                  
                                                                  37,182,325Drilling
      advances to Managing General Partner
                                                                  
                                                                  
                                                                  17,394,862
                                                                  
                                                                  
                                                                  
                                                                  4,484,301
                                                                  
                                                                  
                                                                  
                                                                  3,494,426
                                                                  
                                                                  
                                                                  
                                                                  1,958,665Wells
      in progress
                                                                  
                                                                  
                                                                  16,641,791
                                                                  
                                                                  
                                                                  
                                                                  1,523,621
                                                                  
                                                                  
                                                                  
                                                                  1,537,199
                                                                  
                                                                  
                                                                  
                                                                  1,969,943Oil
      and gas properties, at cost
                                                                  
                                                                  
                                                                  41,778,220
                                                                  
                                                                  
                                                                  
                                                                  41,099,175
                                                                  
                                                                  
                                                                  
                                                                  41,066,744
                                                                  
                                                                  
                                                                  
                                                                  41,110,933Less
      accumulated depreciation, depletion and amortization
                                                                  
                                                                  
                                                                  (124,896
                                                                  )
                                                                  
                                                                  
                                                                  (1,747,012
                                                                  )
                                                                  
                                                                  
                                                                  (3,988,192
                                                                  )
                                                                  
                                                                  
                                                                  (5,877,662
                                                                  )Oil
      and gas properties, net
                                                                  
                                                                  $
                                                                  41,653,324
                                                                  
                                                                  
                                                                  $
                                                                  39,352,163
                                                                  
                                                                  
                                                                  $
                                                                  37,078,552
                                                                  
                                                                  
                                                                  $
                                                                  35,233,271
 
 Wells in
progress represents expenditures incurred for wells on which drilling and/or
completion activities have commenced but has not been
completed.  Drilling advances to Managing General Partner represent
prepayments to the Managing General Partner for the development of oil and
natural gas properties on which drilling has not commenced.
  F-38
 Index
  ROCKIES
REGION PRIVATE LIMITED PARTNERSHIP
 
 Notes to
Unaudited Condensed Quarterly Financial Statements
 Note 5 -
Restatement
 
 In 2007,
PDC determined that it had over-withheld production taxes from distributions to
the limited partners of the Partnership during 2006, overstating production and
operating costs.  The total misstatement for the production tax
over-withholding was $213,276, including $4,719 in interest, during
the three month period ended June 30, 2006.  Management
determined that the misstatement for the production tax over-withholding
for the first quarter of 2006 of $15,625, including $346 in related
interest, was immaterial for restatement of the Partnership's unaudited
condensed financial statements for the three month period ended March
31, 2006 and thus was recorded in the second quarter of
2006.  Additionally, the Partnership determined that there was an
error in the Partnership's derivative valuation methodology. The
resultant misstatement for unrealized gains and losses due to the error in
the derivative valuation maethodology was an unrecorded gain of $111,781
during the second quarter of 2006. There was no error for the derivative
position for the three moth period ended March 31, 2006.
  F-39
 Index
  ROCKIES
REGION PRIVATE LIMITED PARTNERSHIP
 
 Notes to
Unaudited Condensed Quarterly Financial Statements
 The
following tables reflect the effects of the restatements on the Condensed
Balance Sheet as of June 30, 2006 and the Condensed Statements of Operations for
the three and six month periods ended June 30, 2006:
 
 Quarter
      ended June 30, 2006
                                                                                  
                                                                                  Amount
      asPreviously
      ReportedIncludingReclassifications
                                                                                  
                                                                                  
                                                                                  UnrealizedDerivativesGain (Loss),
      Net
                                                                                  
                                                                                  
                                                                                  Production
      TaxWithholding
                                                                                  
                                                                                  
                                                                                  RestatedBalanceStatement
      of OperationsOil
      and gas price risk management gain, net*
                                                                                  
                                                                                  $
                                                                                  8,135
                                                                                  
                                                                                  
                                                                                  $
                                                                                  111,781
                                                                                  
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  $
                                                                                  119,916Total
      revenues
                                                                                  
                                                                                  
                                                                                  5,783,815
                                                                                  
                                                                                  
                                                                                  
                                                                                  111,781
                                                                                  
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  5,895,596Production
      and operating costs
                                                                                  
                                                                                  
                                                                                  846,418
                                                                                  
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  $
                                                                                  (223,836
                                                                                  )
                                                                                  
                                                                                  
                                                                                  622,582Total
      costs and expenses
                                                                                  
                                                                                  
                                                                                  3,221,314
                                                                                  
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  (223,836
                                                                                  )
                                                                                  
                                                                                  
                                                                                  2,997,478Income
      from operations
                                                                                  
                                                                                  
                                                                                  2,562,501
                                                                                  
                                                                                  
                                                                                  
                                                                                  111,781
                                                                                  
                                                                                  
                                                                                  
                                                                                  223,836
                                                                                  
                                                                                  
                                                                                  
                                                                                  2,898,118Interest
      income
                                                                                  
                                                                                  
                                                                                  1,269
                                                                                  
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  5,065
                                                                                  
                                                                                  
                                                                                  
                                                                                  6,334Net
      income
                                                                                  
                                                                                  
                                                                                  2,563,770
                                                                                  
                                                                                  
                                                                                  
                                                                                  111,781
                                                                                  
                                                                                  
                                                                                  
                                                                                  228,901
                                                                                  
                                                                                  
                                                                                  
                                                                                  2,904,452Managing
      General Partner income
                                                                                  
                                                                                  
                                                                                  769,131
                                                                                  
                                                                                  
                                                                                  
                                                                                  33,535
                                                                                  
                                                                                  
                                                                                  
                                                                                  68,670
                                                                                  
                                                                                  
                                                                                  
                                                                                  871,336Investor
      Partner income
                                                                                  
                                                                                  
                                                                                  1,794,639
                                                                                  
                                                                                  
                                                                                  
                                                                                  78,246
                                                                                  
                                                                                  
                                                                                  
                                                                                  160,231
                                                                                  
                                                                                  
                                                                                  
                                                                                  2,033,116Net
      income per Investor Partner unit
                                                                                  
                                                                                  
                                                                                  1,004
                                                                                  
                                                                                  
                                                                                  
                                                                                  44
                                                                                  
                                                                                  
                                                                                  
                                                                                  90
                                                                                  
                                                                                  
                                                                                  
                                                                                  1,138Six
      Months ended June 30, 2006
                                                                                  
                                                                                  Amount
      asPreviously
      ReportedIncludingReclassifications
                                                                                  
                                                                                  
                                                                                  UnrealizedDerivativesGain (Loss),
      Net
                                                                                  
                                                                                  
                                                                                  Production
      TaxWithholding
                                                                                  
                                                                                  
                                                                                  RestatedBalanceStatement
      of OperationsOil
      and gas price risk management gain, net*
                                                                                  
                                                                                  $
                                                                                  9,899
                                                                                  
                                                                                  
                                                                                  $
                                                                                  111,781
                                                                                  
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  $
                                                                                  121,680Total
      revenues
                                                                                  
                                                                                  
                                                                                  6,195,767
                                                                                  
                                                                                  
                                                                                  
                                                                                  111,781
                                                                                  
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  6,307,548Production
      and operating costs
                                                                                  
                                                                                  
                                                                                  916,074
                                                                                  
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  $
                                                                                  (223,836
                                                                                  )
                                                                                  
                                                                                  
                                                                                  692,238Total
      costs and expenses
                                                                                  
                                                                                  
                                                                                  4,669,978
                                                                                  
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  (223,836
                                                                                  )
                                                                                  
                                                                                  
                                                                                  4,446,142Income
      from operations
                                                                                  
                                                                                  
                                                                                  1,525,789
                                                                                  
                                                                                  
                                                                                  
                                                                                  111,781
                                                                                  
                                                                                  
                                                                                  
                                                                                  223,836
                                                                                  
                                                                                  
                                                                                  
                                                                                  1,861,406Interest
      income
                                                                                  
                                                                                  
                                                                                  1,269
                                                                                  
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  5,065
                                                                                  
                                                                                  
                                                                                  
                                                                                  6,334Net
      income
                                                                                  
                                                                                  
                                                                                  1,536,957
                                                                                  
                                                                                  
                                                                                  
                                                                                  111,781
                                                                                  
                                                                                  
                                                                                  
                                                                                  228,901
                                                                                  
                                                                                  
                                                                                  
                                                                                  1,877,639Managing
      General Partner income
                                                                                  
                                                                                  
                                                                                  461,087
                                                                                  
                                                                                  
                                                                                  
                                                                                  33,535
                                                                                  
                                                                                  
                                                                                  
                                                                                  68,670
                                                                                  
                                                                                  
                                                                                  
                                                                                  563,292Investor
      Partner income
                                                                                  
                                                                                  
                                                                                  1,075,870
                                                                                  
                                                                                  
                                                                                  
                                                                                  78,246
                                                                                  
                                                                                  
                                                                                  
                                                                                  160,231
                                                                                  
                                                                                  
                                                                                  
                                                                                  1,314,347Net
      income per Investor Partner unit
                                                                                  
                                                                                  
                                                                                  602
                                                                                  
                                                                                  
                                                                                  
                                                                                  44
                                                                                  
                                                                                  
                                                                                  
                                                                                  90
                                                                                  
                                                                                  
                                                                                  
                                                                                  736Balance
      SheetDue
      from Managing General Partner - other
                                                                                  
                                                                                  
                                                                                  8,239
                                                                                  
                                                                                  
                                                                                  
                                                                                  (8,239
                                                                                  )
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  -Due
      from Managing General Partner - derivatives, short term
                                                                                  
                                                                                  
                                                                                  6,807
                                                                                  
                                                                                  
                                                                                  
                                                                                  83,044
                                                                                  
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  89,851Total
      current assets
                                                                                  
                                                                                  
                                                                                  6,211,694
                                                                                  
                                                                                  
                                                                                  
                                                                                  74,805
                                                                                  
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  6,286,499Due
      from Managing General Partner - derivatives, long term
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  23,090
                                                                                  
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  23,090Total
      assets
                                                                                  
                                                                                  
                                                                                  45,563,857
                                                                                  
                                                                                  
                                                                                  
                                                                                  97,895
                                                                                  
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  45,661,752Accounts
      payable and accrued expenses
                                                                                  
                                                                                  
                                                                                  936,101
                                                                                  
                                                                                  
                                                                                  
                                                                                  (8,239
                                                                                  )
                                                                                  
                                                                                  
                                                                                  (228,901
                                                                                  )
                                                                                  
                                                                                  
                                                                                  698,961Due
      to Managing General Partner-derivatives, long term
                                                                                  
                                                                                  
                                                                                  5,647
                                                                                  
                                                                                  
                                                                                  
                                                                                  (5,647
                                                                                  )
                                                                                  
                                                                                  
                                                                                  -
                                                                                  
                                                                                  
                                                                                  
                                                                                  -Total
      liabilities
                                                                                  
                                                                                  
                                                                                  1,199,332
                                                                                  
                                                                                  
                                                                                  
                                                                                  (13,886
                                                                                  )
                                                                                  
                                                                                  
                                                                                  (228,901
                                                                                  )
                                                                                  
                                                                                  
                                                                                  956,545Partners'
      equity
                                                                                  
                                                                                  
                                                                                  44,364,525
                                                                                  
                                                                                  
                                                                                  
                                                                                  111,781
                                                                                  
                                                                                  
                                                                                  
                                                                                  228,901
                                                                                  
                                                                                  
                                                                                  
                                                                                  44,705,207Total
      liabilities and Partners' equity
                                                                                  
                                                                                  $
                                                                                  45,563,857
                                                                                  
                                                                                  
                                                                                  $
                                                                                  97,895
                                                                                  
                                                                                  
                                                                                  $
                                                                                  -
                                                                                  
                                                                                  
                                                                                  $
                                                                                  45,661,752
  *
                  “Oil
      and gas price risk management gain, net,” previously reported as other
      income, has been reclassified as a separate component of “Total
      Revenues.”
 F-40
 Index
  ROCKIES
REGION PRIVATE LIMITED PARTNERSHIP
 
 Notes to
Unaudited Condensed Quarterly Financial Statements
 Although
net income for the quarter and six-months ended June 30, 2008 increased by
$340,682 due to the restatement, net cash provided by operating activities
remained unchanged for the respective periods. Adjustments to reconcile net
income to net cash provided by operating activities, due to the restatement,
include an increase of $111,781 to “Unrealized gain on derivative transactions”
and an increase of $228,901 to “Due to Managing General
Partner-other.”
  F-41