ex10_2.htm


    
      
        

      

    

    
 

     

    Form
      of Drilling and Operating
      Agreement

     

    


    This
      Agreement is entered into by and
      between Rockies Region 2006 Limited Partnership, hereinafter designated and
      referred to as the "Partnership," and Petroleum Development Corporation,
      hereinafter referred to and designated as "PDC."

    


    Whereas,
      the parties to this Agreement
      desire to enter into an agreement to explore and develop certain Prospects
      for
      the production of oil and gas as hereinafter provided,

    


    It
      is agreed as follows:

    


    ARTICLE
      I

    DEFINITIONS

    


    As
      used in this Agreement, the
      following words and terms shall be defined as follows:

    


    A.           The
      term "oil and gas" shall mean oil, natural gas, casing head gas, gas condensate,
      and all other liquid or gaseous hydrocarbons and other marketable substances
      produced therewith, unless an intent to limit the inclusiveness of this term
      is
      specifically stated.

    


    B.           The
      term "Prospect" shall be deemed to consist of the drilling or spacing unit
      on
      which the well will be drilled by the Partnership which is the minimum area
      permitted by state law or local practice on which one well may be
      drilled.

    


    C.           "Royalty"
      shall mean a fractional undivided interest in the production of oil and gas
      wells, or the proceeds therefrom to be received free and clear of all costs
      of
      development, operations or maintenance.

    


    D.           "Overriding
      royalty" shall mean an interest in the oil and gas produced under a specified
      oil and gas lease or leases, or the proceeds from the sale thereof, carved
      out
      of the working interest, to be received free and clear of all costs of
      development, operation, or maintenance.

    


    E.           "Proportionate
      Working Interest" shall mean an interest in a well or Prospect of less than
      100%
      which bears that same percentage of costs of development and production as
      it
      receives in production revenues after deducting for royalty and overriding
      royalties.

    


    F.           "Non-operators"
      shall mean all parties holding a proportionate working interest in a Prospect,
      including the Additional General Partners and the Limited Partners, but
      excluding PDC if it is also serving as Operator.

    


    


    
      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

    

    


    ARTICLE
      II

    EXHIBITS

    


    The
      following exhibits are incorporated
      in and made a part of this Agreement:

    


    A.           Exhibit
      "A," Prospects.

    


    1.           Identification
      of each Prospect to be drilled.

    


    2.           Target
      formation.

    


    3.           The
      Partnership fractional interest therein.

    


    B.           Exhibit
      "B," Insurance.

    


    C.           Exhibit
      "C," Additional Prospects.

    


    1.           Identification
      of additional Prospects added or substituted after the original date of this
      Agreement, and if substituted, identification of the Prospect which is
      replaced.

    


    2.           Target
      formation.

    


    3.           The
      Partnership fractional interest therein.

    


    4.           Approval
      by the Partnership and PDC.

    


    ARTICLE
      III

    OPERATOR

    


    A.           Designation
      and Responsibilities of Operator:

    


    PDC
      shall be the Operator of the
      Prospects, and shall conduct and direct and have full control of all operations
      on the Prospects as permitted and required by, and within the limits of this
      Agreement.  It shall conduct all such operations in a good workmanlike
      manner, but it shall have no liability as Operator to the Partnership for losses
      sustained or liabilities incurred, except such as may result from negligence
      or
      misconduct.  The Managing General Partner may subcontract with another
      operator or operators to perform some of all of the duties of the operator,
      on
      Terms and conditions substantially the same as those discussed
      herein.  The Managing General Partner will supervise operations by
      other non-affiliated drilling contractors and subcontractors.

    


    B.           Resignation
      or Removal of Operator and Selection of Successor:

    


    
      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

    

    


    


    1.           Resignation
      or Removal of Operator:  PDC may resign as Operator at any time by
      giving written notice thereof to the Partnership.  If PDC terminates
      its legal existence, no longer owns an interest in the Prospects, has filed
      a
      petition under the Federal bankruptcy laws or any state insolvency law or a
      receiver, fiscal agent, or similar officer has been appointed by a court for
      the
      business or property of PDC, or is otherwise no longer capable of serving as
      Operator, PDC shall be deemed to have resigned without any action by the
      Partnership, except the selection of a successor.  PDC may be removed
      by the affirmative vote of Non-Operators owning a majority working interest
      in
      each Prospect after excluding the voting interest of Operator.  Such
      resignation or removal shall not become effective until 7:00 o'clock A.M.,
      Eastern time, on the first day of calendar month following the expiration of
      ninety (90) days after the giving of notice of resignation of PDC or action
      by
      the Non-Operators to remove PDC as Operator, unless a successor Operator has
      been selected and assumes the duties of PDC at an earlier date.  PDC,
      after effective date of resignation or removal, shall be bound by the terms
      hereof as a Non-Operator.  A change of a corporate name or structure
      of PDC or transfer of PDC's interest to any single subsidiary, parent or
      successor corporation shall not be the basis for removal of PDC as
      Operator.

    


    2.           Selection
      of Successor Operator:  Upon the resignation or removal of PDC, a
      successor Operator shall be selected by the parties.  The successor
      Operator shall be selected by the affirmative vote of parties owning a majority
      working interest in each Prospect; provided, however, if an Operator which
      has
      been removed fails to vote or votes only to succeed itself, the successor
      Operator shall be selected by the affirmative vote of parties owning a majority
      interest after excluding the voting interest of the Operator that was
      removed.

    


    C.           Employees:

    


    The
      number of employees used by PDC in
      conducting operations hereunder, their selection, and the hours of labor and
      the
      compensation for services performed shall be determined by PDC.

    


    ARTICLE
      IV

    DRILLING
      PROSPECTS

    


    A.           Prospects:

    


    Exhibit
      "A" lists Prospects initially
      to be acquired by the Partnership, and its proportionate working interest in
      each Prospect.  Most wells to be drilled by the Partnerships will be
      offsets to, or located nearby, producing wells.  The Partnership will
      be assigned single well drilling or spacing units or portions thereof for
      prospects located on PDC's Puckett or Chevron acreage in Garfield County,
      Colorado or on acreage in PDC's Nesson or Bakken Project acreage in North Dakota
      or on development prospects located in the Greater Wattenberg Field
      Area.  If an exploratory well is drilled on PDC's acreage in the above
      areas, and the well proves up reserves on the immediately adjacent spacing
      or
      drilling units, if PDC owns an interest in the adjacent units, PDC will assign
      the Partnership an interest equivalent to that owned in the exploratory well,
      proportionately reduced if PDC owns less than a 100% interest in the adjacent
      spacing units.

    


    
      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

    

    


    


    B.           Cost:

    


    The
      Partnership shall reimburse PDC for
      its proportionate share of the lesser of:

    


    1.           The
      fair market value of the Prospect, or

    


    
      	
               

            	
              2.

            	
              The
                "Cost" of acquisition of the Prospect including: (a) the price paid
                by PDC
                for such property; (b) title examination, abstracting, brokers
                commissions, filing fees, recording costs, transfer taxes, and other
                charges incurred in connection with the acquisition of the property;
                (c)
                bonuses, rentals and ad valorem taxes paid by PDC with respect to
                the
                Prospect to the date of its transfer to the Partnership, interest
                on funds
                used to acquire or maintain such property, and such portion of PDC's
                expenses for geological, drafting, accounting, legal and other like
                services allocated to the Prospect in accordance with generally accepted
                accounting principles, not including for expenses incurred in the
                prior
                drilling of wells, and provided such expenses shall have been incurred
                not
                more than 36 months prior to the purchase by the
                program.

            


    

    


    C.           Substitution:

    


    As
      drilling progresses other, more
      desirable Prospects may become may become less desirable as a result of
      additional information not available as of the date of this
      Agreement.  For any undrilled Prospect, the Partnership may request
      that PDC substitute another Prospect, in which case the entire acquisition
      cost
      paid for the Prospect or a substitute thereof will be applied against the cost
      of the substituted Prospect, and against other costs of this contract if and
      to
      the extent the cost of the substitute Prospect is less than the cost of the
      original Prospect it replaces.  An amendment to this Agreement in the
      form of Exhibit "C" shall be used for the addition or substitution of a
      Prospect.

    


    D.           Title
      Examination and Opinion:

    


    Title
      examination shall be made by
      outside attorneys on the drillsite of any proposed well prior to commencement of
      drilling operations.  The opinion will include ownership of the
      working interest, mineral, royalty, overriding royalty, and production payments
      under the applicable leases.  A copy of the opinion will be furnished
      to the Partnership.

    


    PDC
      shall take such steps as are
      necessary in its best judgment to render title to the leases assigned to the
      Partnership acceptable for the purposes of the Partnership.  No
      operation shall be commenced on leases acquired by the Partnership unless the
      Partnership Manager is satisfied that necessary title requirements have been
      satisfied by PDC and that the undertaking of such operation would be in the
      interest of the Partnership.  PDC shall be free, however, to use their
      own best

    


    
      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

    

    


    judgment
      in waiving title requirements and shall not be liable to the Partnership, or
      Participants for any mistakes of judgment; nor shall PDC be deemed to be making
      any warranties or representations, express or implied, as to the validity or
      merchantability of the title to any lease assigned to the Partnership or the
      extent of the interest covered thereby.

    


    ARTICLE
      V

    INTEREST
      IN COSTS AND PRODUCTION

    


    A.           Royalties
      and Overriding Royalties:

    


    The
      Partnership interest in production
      from drilling Prospects will be subject to the payment to non-affiliated parties
      of royalties and overriding royalties, provided the weighted average of all
      royalties for all Partnership Prospects drilled shall not exceed 25% gross
      revenues.  No such royalty or overriding royalty will be paid to PDC
      or its affiliates.

    


    B.           Proportionate
      Working Interest:

    


    The
      Partnership may acquire 100% of the
      working interest in a Prospect or a proportionate interest of less than
      100%.  If the Partnership acquires a proportionate interest, the
      respective obligations and benefits acquired by the Partnership will be
      proportionately the same as the working interest acquired.  PDC and
      its affiliates may not retain any overrides or other burdens on the interest
      conveyed to the Partnership.  The Partnership will pay a proportionate
      share of the total of lease, development, and operating costs, and will be
      entitled to receive a proportionate share of production subject only to
      royalties and overriding royalties discussed in Article V, § A.

    


    C.           Joint
      Venture Activities:

    


    PDC
      may retain an interest or convey
      interests in undrilled Prospects to other Joint Venturers, retaining for its
      own
      account a profit or promotional interest on the interest
      conveyed.  PDC shall require any party acquiring such an interest to
      acquire a proportionate working interest and to assume and bear alone all
      obligation associated with such an interest, and to bear alone and hold the
      Partnership and other Joint Venturers harmless from all costs, claims, and
      burdens associated with the interest acquired.  At the discretion of
      the Managing General Partner, the Partnership may enter into joint ventures
      which allow a functional allocation of tangible, intangible and lease costs,
      where each joint venturer is responsible for its overhead costs, provided the
      Partnership's interest in the revenues and income of such a joint venture is
      proportional to its contribution to the total cost of such venture.

    


    D.           Adjustments:

    


    Payment
      of any bill shall not prejudice
      the right of the Partnership to protest or question the correctness
      thereof:  provided, however, all bills and statements rendered to the
      Partnership by

    


    
      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

    

    


    PDC
      during any calendar year shall conclusively be presumed to be true and correct
      after a twenty-four (24) month period unless the Partnership takes written
      exception thereto and makes claim on PDC for adjustment.  No
      adjustment favorable to PDC shall be made unless it is made within the same
      prescribed period.  The provisions of this paragraph shall not prevent
      adjustments resulting from a physical inventory of controllable
      material.

    


    E.           Audits:

    


    The
      Partnership, upon notice in writing
      to PDC and all other Non-Operators, shall have the right to audit PDC's accounts
      and records relating to the Partnership wells for any calendar year within
      the
      twenty-four (24) month period following the end of the calendar year to be
      audited; provided, however the making of an audit shall not extend the time
      for
      the taking of written exception to and the adjustments of
      account.  Where there are two or more Non-Operators, the Non-Operators
      shall make every reasonable effort to conduct a joint audit in a manner which
      will result in a minimum of inconvenience to PDC.  PDC shall bear no
      portion of the Non-Operators audit cost incurred under this paragraph unless
      agreed to by PDC.  The audits shall not be conducted more than once
      each year without prior approval of PDC, except upon the resignation or removal
      of PDC as operator, and shall be made at the expense of those Non-Operators
      requesting such audit.

    


    PDC
      shall reply in writing to an audit
      report within 75 days after receipt of such report.

    


    ARTICLE
      VI

    DRILLING
      AND DEVELOPMENT

    


    A.           Agreement
      To Drill and Complete:

    


    PDC
      shall commence drilling of a well
      or wells on each Prospect within 180 days of the date of the initial formation
      of the Partnership, but in no case later than March 30, 2007 and shall continue
      drilling thereafter with due diligence to the Target formation unless a
      condition which renders further drilling impractical is encountered at a lesser
      depth, or unless the Partnership agrees to complete or abandon the well at
      a
      lesser depth.

    


    PDC
      shall make reasonable tests of all
      formations encountered during drilling which give indication of containing
      economic quantities of oil and/or gas.  If such tests indicate the
      presence of economic quantities of oil and/or gas, PDC shall complete the well
      and install such surface and well equipment, gathering pipelines, heaters,
      separators, etc., as are necessary and normal in the area in which the Prospect
      is located.  If it is determined that the well is not likely to
      produce oil and/or gas in commercial quantities PDC shall plug and abandon
      the
      well in accordance with applicable regulations.

    


    B.           Cost
      of Drilling and Completion:

    


    The
      Partnership shall bear its
      proportionate share of the cost of drilling and completing or drilling and
      abandoning each Partnership well, where the Managing General Partner serves
      as
      operator as follows:

    


    
      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

    

    


    


    


    
      	
               

            	
              1.

            	
              The
                Cost of the Prospect, as defined;

            


    

    


    
      	
               

            	
              2.

            	
              The
                intangible costs of drilling and completing the well, including the
                Managing General Partner's compensation for acting as operator, equal
                to
                12.6% of the total direct well cost if the investor partners' interest
                in
                the well is 63%, and proportionally reduced if the tangible costs
                exceed
                37% of the direct well costs on average for the Partnership's wells,
                so
                that the Managing General Partner's contribution to and interest
                in the
                Partnership is increased above 37%;
                and

            


    

    


    
      	
               

            	
              3.

            	
              The
                tangible Costs of drilling and completing the Partnership wells and
                of
                gathering pipelines necessary to connect the well to the nearest
                appropriate sales point or delivery
                point.

            


    

    


    If
      the Partnership acquires less than
      100% of a Prospect, its Drilling and Completion Costs of that Prospect will
      proportionately decrease.

    


    Intangible
      drilling costs will include
      a monthly drilling well fixed overhead based on the most recently published
      Ernst & Young fixed rate overhead survey.  The rate will be
      determined by state and well depth.

    


    In
      addition, the Managing General
      Partner may also provide direct services in the drilling and completion of
      the
      wells, including land and legal services, roustabout and construction services,
      supervision of drilling and completion operations, engineering and geological
      services, and other services.  Such services will be provided at the
      Managing General Partner's cost determined in accordance with generally accepted
      accounting principles and subject to written agreements.

    


    If
      the foregoing rates for direct
      services exceed competitive rates available from other non-affiliated persons
      in
      the area engaged in the business of rendering or providing comparable services
      or equipment, the foregoing rates will adjust to an amount equal to that
      competitive rate.

    


    C.           Completion
      By Less Than All Parties:

    


    If
      not all Participants in a well wish
      to participate in a completion attempt, the parties desiring to do so may pay
      all costs of the completion attempt including the cost of necessary well
      equipment and a gathering pipeline, and such parties shall receive all income
      and pay all operating costs from the well until they have received an amount
      equal to 300% of the completion and connection costs, after which time the
      non-consenting parties shall have the right to receive their original interest
      in further revenues and expenses.

    


    
      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

    

    


    


    D.           Prepayment:

    


    The
      Partnership agrees to pay PDC the
      full cost of all planned Prospects prior to December 31, 2006 in order to assure
      the Partnership of the rates quoted in Article VI, § B, to
      arrange for
      the drilling equipment for the wells through subcontractors and to provide
      PDC
      with working capital for the drilling of the wells.

    


    E.           Refunds:

    


    In
      no event shall PDC be obligated to
      refund any moneys paid to it by the Partnership under this
      Agreement.  If any amounts paid under Article VI, § D exceed
      costs
      due under Article VI, § B, such
      excess
      shall be credited to the Partnership and shall be expended for additional
      drilling.

    


    ARTICLE
      VII

    PRODUCTION
      AND SUBSEQUENT OPERATIONS

    


    A.           Commencement
      of Production:

    


    For
      purposes of this Agreement,
      production will commence:

    


    
      	
               

            	
              1.

            	
              In
                the case of gas wells, when gas is first delivered from the well
                through a
                pipeline or other delivery system to a
                purchaser;

            


    

    


    
      	
               

            	
              2.

            	
              In
                the case of oil wells, when the well has produced 100 barrels;
                or

            


    

    


    
      	
               

            	
              3.

            	
              In
                the case of combination wells, when either of criteria have been
                satisfied.

            


    

    


    A
      well will be deemed to be "in
      production" in any month thereafter in which oil or gas are produced in
      commercial quantities.

    


    B.           Production
      Operations:

    


    PDC
      shall provide all necessary labor,
      vehicles, supervision, management, accounting, and overhead services for normal
      production operations, and lease accounting, and shall be entitled to deduct
      from Partnership revenues a monthly well-tending fee of $400 per Wattenberg
      Field well, $700 per Piceance Basin, $950 for Red Desert Basin or Williston
      Basin well and a monthly operating  charge of $100 per
      well.  If the Partnership has producing wells in areas different from
      those above, the operator will charge a monthly Partnership Administration
      fee
      of $100 per well plus a competitive industry rate for operations and field
      supervision.  Nonroutine operations will be billed to the Partnership
      at their proportionate cost.  Any nonroutine operation with an
      estimated cost exceeding $10,000 will be authorized for expenditure ("AFE"
      or
      "AFE'd") and submitted to the Non-Operators for approval.  Approval of
      a majority of the working interest owners will be required to authorize such
      operations.  If the Partnership authorized such operations, PDC shall
      have the right to deduct payment for the cost from Partnership
      revenues.

    


    
      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

    

    


    


    


    C.           Abandonment
      of Wells That Have Produced:

    


    Any
      well which has been completed as a
      producer shall not be plugged and abandoned without the consent of all
      Non-Operators.  If all parties consent to such abandonment, the well
      shall be plugged and abandoned in accordance with applicable regulations and
      at
      the cost, risk of expense of all owners.  If, within (30) days after
      receipt of the notice of the proposed abandonment of any well, all parties
      do
      not agree to the abandonment of such well, those wishing to continue its
      operations from the interval(s) of the formation(s) then open to production
      shall tender to each of the other parties its proportionate share of the value
      of the well's salvageable material and equipment, less the estimated cost of
      salvaging and assign the non-abandoning parties, without warranty, express
      or
      implied, as to title or as to quantity, or fitness for use of the equipment
      and
      material, all of its interest in the well and related equipment, together with
      its interest in leasehold estate as to, but only as to, the interval or
      intervals of the formation or formations then open to production.

    


    D.           Marketing
      of Production:

    


    The
      Partnership shall have the right to
      take in kind and separately dispose of its share of all oil and gas produced
      from the Prospects, excluding its proportionate share of production required
      for
      lease operations and production unavoidably lost.  Initially the
      Partnership designates PDC as its agent to market such production and authorizes
      PDC to enter into and bind the Partnership in such agreements as it deems in
      the
      best interest of the Partnership for the sale of such oil and/or
      gas.  The Partnership may rescind the designation of PDC as its agent
      with regard to all subsequent marketing agreements by written notice at any
      time, but agrees to be bound by such agreements as may then be in effect during
      their terms.  The Partnership shall bear its proportionate share of
      all marketing costs, if any.  If PDC provides marketing services, its
      charge shall be no greater than those charges made by unaffiliated
      marketers.  If pipelines which have been built by PDC are used in the
      delivery of natural gas to market, PDC may charge a gathering fee not to exceed
      that which would be charged by a nonaffiliated third party for a similar
      service.

    


    E.           Escalation
      in the Event of Rising Costs:

    


    The
      production and accounting charges
      provided in Article VII, § B, may
      be
      adjusted annually beginning January 1, 2008, to an amount equal to the rates
      from Article VII, § B, multiplied
      by
      the ratio of the then current average weekly earnings of Crude Petroleum and
      Gas
      Production workers to the average weekly earnings of Crude Petroleum and Gas
      Production workers for 2005, 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 other comparable operators in the area of
      operations.

    


    
      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

    

    


    


    ARTICLE
      VIII

    LIABILITY
      OF PARTIES

    


    A.           Liability
      of Parties:

    


    If
      the Partnership participates in a
      well with third parties, the liability of the parties shall be several, not
      joint or collective.  The Partnership shall be responsible only for
      its obligations, and shall be liable only for its proportionate share of the
      costs of developing and operating the Prospects.  It is not the
      intention of the parties to create, nor shall this Agreement be construed as
      creating, a mining or other partnership or association, or to render the parties
      liable as partners.

    


    B.           Liens
      and Payment Defaults:

    


    The
      Partnership grants to PDC a lien
      upon its oil and gas rights in the Contract Area, and a security interest in
      its
      share of oil and/or gas when extracted and its interest in all equipment, to
      secure payment of its share of expense, together with interest
      thereon.  If PDC has a security interest under the Uniform Commercial
      Code of the state, PDC shall be entitled  to exercise the rights and
      remedies of a secured party under the Code.  The bringing of a suit
      and the obtaining of judgment by PDC for the secured indebtedness shall not
      be
      deemed an election of remedies or otherwise affect the lien rights or security
      interest as security for the payment thereof.  In addition, upon
      default by the Partnership in the payment of its share of expense, PDC shall
      have the right, without prejudice to other rights or remedies, to collect from
      the purchaser the proceeds from the sale of the Partnership's share of oil
      and/or gas until the amount owed by the Partnership, plus interest, has been
      paid.  Each purchaser shall be entitled to rely upon PDC's written
      statement concerning the amount of any default.  PDC grants a like
      lien and security interest to the Partnership to secure payment of PDC's
      proportionate share of expenses.

    


    If
      any party fails or is unable to pay
      its share of expense within sixty (60) days after rendition of a statement
      therefor by PDC, PDC shall pay the unpaid amount in the proportion that the
      interest of each such party bears to the interest of all such
      parties.

    


    C.           Payments
      and Accounting:

    


    Except
      as herein otherwise specifically
      provided, PDC shall promptly pay and discharge expenses incurred in the
      development and operation of the Contract Area pursuant to this
      Agreement.  PDC shall keep an accurate record of the account
      hereunder, showing expenses incurred and charges and credits made and
      received.

    


    Regardless
      of which party has
      contributed the lease(s) and/or oil and gas interest(s) hereto on which royalty
      is due and payable, PDC shall pay or deliver or cause to be paid or delivered
      the royalty and overriding royalty payments due under the terms associated
      with
      the acquisition of each Prospect, and shall deduct such payments from the
      revenue of the Partnership.

    


    
      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

    

    


    


    D.           Taxes:

    


    Unless
      the Partnership elects to take
      production in kind, PDC shall pay or cause to be paid all production, severance,
      excise, gathering and other taxes imposed upon or with respect to the production
      or handling of such party's share of oil and/or gas produced under the terms
      of
      this Agreement, and shall be entitled to reimbursement for such taxes from
      partnership revenue.

    


    E.           Insurance:

    


    At
      all times while operations are
      conducted hereunder, PDC shall comply with the workmen's compensation laws
      of
      the state of West Virginia and in each state where the Partnership is conducting
      drilling and production operations.  PDC shall also carry or provide
      insurance as outlined in Exhibit "B," attached to and made a part
      hereof.  PDC shall require all contractors engaged in work on or for
      the Contract Area to comply with the workmen's compensation law of the state
      where the operations are being conducted and to maintain such other insurance
      as
      PDC may require.

    


    No
      additional charge will be made for
      such insurance during drilling and completion operations.  When wells
      have been placed in production PDC may bill for the cost of providing such
      insurance, allocated among wells and operations in accordance with generally
      accepted accounting principles.

    


    ARTICLE
      IX

    INTERNAL
      REVENUE CODE ELECTION

    


    This
      Agreement is not intended to
      create, and shall not be construed to create, a relationship of partnership
      or
      an association for profit between or among the parties
      hereto.  Notwithstanding any provision herein that the rights and
      liabilities hereunder are several and not joint or collective, or that this
      agreement and operations hereunder shall not  constitute a
      partnership, if, for federal income tax purposes, this Agreement and the
      operations hereunder are regarded as a partnership, each party hereby affected
      elects to be excluded from the application of all of the provisions of
      Subchapter "K," Chapter 1, Subtitle "A" of the Internal Revenue Code of 1986,
      as
      amended (the "Code") as permitted and authorized by Code Section 761 and the
      regulations promulgated thereunder.  PDC is authorized and directed to
      execute on behalf of the Partnership such evidence of this election as may
      be
      required by the Secretary of the Treasury of the United States or the Federal
      Internal Revenue Service, including specifically, but not by way of limitation,
      all of the returns, statements, and the data required by Regulations
      1.761.  Should there be any requirement that each party hereby
      affected to give further evidence of this election, each such party shall
      execute such documents and furnish such other evidence as may be required by
      the
      Federal Internal Revenue Service or as may be necessary to evidence this
      election.  No such party shall give any notices or take any other
      action inconsistent with the election made hereby.  If any present or
      future income tax laws of the state or states in which the Contract Area is
      located or any future income tax laws of the United States contain provisions
      similar to those in Subchapter "K,"

    


    
      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

    

    


    Chapter
      l, Subtitle "A," of the Code, under which an election similar to that provided
      by Section 761 of the Code is permitted, each party hereby affected shall make
      such election as may be permitted or required by such laws.  In making
      the foregoing election, each such party states that the income derived by such
      party from operations hereunder can be adequately determined without the
      computation of partnership taxable income.

    


    ARTICLE
      X

    CLAIMS
      AND LAWSUITS

    


    PDC
      may settle any single uninsured
      third party damage claim or suit arising from operations hereunder if the
      expenditure does not exceed One Thousand Dollars ($1,000.00) and if the payment
      is in complete settlement of such claim or suit.  If the amount
      required for settlement exceeds the above amount, the Partnership shall assume
      and take over the further handling of its interest in the claim suit, unless
      such authority is delegated to PDC.  All costs and expenses of
      handling, settling, or otherwise discharging such claim or suit shall be at
      the
      joint expenses of the parties participating in the operation from which the
      claim or suit arises.  If a claim is made against any party or if any
      party is sued on account of any matter arising from operations hereunder over
      which such individual has no control because of the rights given Operator by
      this Agreement, such party shall immediately notify all other parties, and
      the
      claim or suit shall be treated as any other claim or suit involving operations
      hereunder all claims and suits involving title to any interest subject to this
      Agreement shall be treated as a claim or suit against all parties participating
      in the Prospect so affected.

    


    ARTICLE
      XI

    FORCE
      MAJEURE

    


    If
      either party is rendered unable,
      wholly or in part, by force majeure to carry out its obligations under this
      Agreement, other than the obligation to make money payments, that party shall
      give to the other party prompt written notice of the force majeure with
      reasonably full particulars concerning its; thereupon, the obligations of the
      party giving the notice, so far as they are affected by the force majeure,
      shall
      be suspended during, but no longer than, the continuance of the force
      majeure.  The affected party shall use all reasonable diligence to
      remove the force majeure situation as quickly as practicable.

    


    The
      requirement that any force majeure
      shall be remedied with all reasonable dispatch shall not require the settlement
      of strikes, lockouts, or other labor difficulty by the party involved, contrary
      to its wishes; how all such difficulties shall be handled shall be entirely
      within the discretion of the party concerned.

    


    The
      term "force majeure," as here
      employed, shall mean act of God, strike, lockout, or other industrial
      disturbance act of the public enemy, war, blockade, public riot, lightning,
      fire, storm, flood, explosion, governmental action, governmental delay,
      restraint or inaction, unavailability of equipment or market for oil and/or
      gas,
      and any other cause, whether of the kind specifically enumerated above or
      otherwise, which is not reasonably within the control of the party claiming
      suspension.

    


    
      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

    

    


    


    ARTICLE
      XII

    NOTICES

    


    All
      notices required by this Agreement
      shall be given in writing addressed to the parties as follows:

    


    1.           For
      the Partnership:

    


    
      	
               

            	
              Petroleum
                Development Corporation, Managing General Partner of Rockies Region
                2006
                Limited Partnership, P.O. Box 26 Bridgeport, WV
                26330

            


    

    


    2.           For
      PDC:

    


    Petroleum
      Development
      Corporation

    P.O.
      Box 26

    Bridgeport,
      WV 26330

    


    Each
      party shall have the right to
      change its address at any time, by giving written notice to all other
      parties.

    


    ARTICLE
      XIII

    TERM
      OF
      AGREEMENT

    


    If
      a well drilled under any provision
      of this Agreement, results in production of oil and/or gas in paying quantities,
      this Agreement shall continue in force so long as any such well or wells
      produce, or are capable of production, and for an additional period of 180
      days
      from cessation of all production; provided, however, if, prior to the expiration
      of such additional period, one or more of the parties hereto are engaged in
      drilling, reworking, deepening, plugging back, testing or attempting to complete
      a well or wells hereunder, this Agreement shall continue in force until such
      operations have been completed; and if production results therefrom, this
      Agreement shall continue in force as provided herein.

    


    It
      is agreed, however, that the
      termination of this Agreement shall not relieve any party hereto from any
      liability which has accrued or attached prior to the date of such
      termination.

    


    ARTICLE
      XIV

    COMPLIANCE
      WITH LAWS AND REGULATIONS

    


    A.           Laws,
      Regulations and Order:

    


    This
      Agreement shall be subject to the
      conservation laws of the state in which the Prospects are located, to the valid
      rules, regulations, and orders of any duly constituted regulatory body of said
      state; and to all other applicable federal, state, and local laws, ordinances,
      rules, regulations, and orders.

    


    
      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

    

    


    B.           Governing
      Law:

    


    This
      Agreement and all matters
      pertaining hereto, including, but not limited to, matters of performance,
      non-performance, breach, remedies, procedures, rights, duties and interpretation
      or construction, shall be governed and determined by the law of the state in
      which the Prospect is located.

    


    C.           Regulatory
      Agencies:

    


    Nothing
      herein contained shall grant,
      or be construed to grant, PDC the right or authority to waive or release any
      rights, privileges, or obligations which the Partnership may have federal or
      state laws or under rules, regulations or orders promulgated under such laws
      in
      reference to oil, gas and mineral operations, including the location, operation,
      or production of wells, on tracts offsetting or adjacent to the Contract
      Area.

    


    With
      respect to operations hereunder,
      the Partnership agrees to release PDC from any and all losses, damages,
      injuries, claims and causes of action arising out of, incident to or resulting
      directly or indirectly from Operator's interpretation or application of rules,
      rulings, regulations, or orders of the Department of Energy or predecessor
      or
      successor agencies to the extent such interpretation or application was made
      in
      good faith.  The Partnership further agrees to reimburse PDC for any
      amounts applicable to the Partnership's share of production that PDC may be
      required to refund, rebate or pay as a result of such an incorrect
      interpretation or application.

    


    ARTICLE
      XV

    MISCELLANEOUS

    


    This
      Agreement shall be binding upon
      and shall inure to the benefit of the parties hereto and to their respective
      heirs, devisees, legal representative, successors and assigns.

    


    This
      Agreement may be executed in any
      number of counterparts, each of which shall be considered an original for all
      purposes.

    


    IN
      WITNESS WHEREOF, this Agreement
      shall be effective as of __ day of July 2006.

    


    ________________________

    Darwin
      L. Stump,

    CFO
      and Treasurer

    Petroleum
      Development
      Corporation

    


    ________________________

    Steven
      R. Williams, CEO

    Petroleum
      Development
      Corporation

    Managing
      General Partner
      of

    Rockies
      Region 2006 Limited
      Partnership

    *     *     *     *     *

    


    
      
        
          
          

        

        
          14