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    Separation
Agreement

     

    This
Separation Agreement (the "Agreement") is made and entered into this 19th day of
May, 2009 by and between Petroleum Development Corporation, a Nevada Corporation
(the "Company") and Eric R. Stearns (the "Employee") (collectively, the
"Parties").

     

    WHEREAS,
the Parties acknowledge that Employee currently serves in the capacity of
Executive Vice President with the primary responsibility for acquisitions and
divestitures and that the Company desires to change the role of the Employee and
assign him different duties;

     

    WHEREAS,
the Parties acknowledge that the Employee does not wish to give up his current
responsibility relating to acquisitions and divestitures and the Parties further
acknowledge that the shift in duties would be a material diminution in the
Employee's authority, duties and responsibilities;

     

    WHEREAS,
Employee desires to terminate his employment with the Company pursuant to the
"Good Reason" provisions of his Employment Agreement dated December 31, 2008
between the Parties, and has given written notice of his intention to terminate
his employment with the Company unless he continues to have responsibility for
acquisitions and divestitures for the Company (Exhibit A);

     

    WHEREAS,
the Company has advised the Employee that it does not intend to reconsider the
actions taken with respect to Employee;

     

    WHEREAS,
the Parties desire to enter into a definitive agreement to set forth the terms
of Employee's separation from the Company;

     

    NOW
THEREFORE, in consideration of the premises and mutual covenants and obligations
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged and accepted, the parties hereto,
intending to be legally bound, agree as follows:

     

    1.   Termination Date.
Employee resigns his employment and his position as Executive Vice President of
the Company (and also resigns his Subsidiary positions with respect to Unioil,
Riley Natural Gas, WWWV LLC and any other position, title or office affiliated
with the Company) effective as of June 18, 2009 (the "Termination Date"). The
Parties acknowledge that his resignation is due to "Good Reason" as defined
under his Employment Agreement.

     

    2.   Nondisparagement.
Employee agrees not to make negative comments or otherwise disparage the Company
or its officers, directors, employees, shareholders or agents, in any manner
likely to be harmful to them or their business, business reputation or personal
reputation. The Company agrees that the members of the Board and officers of the
Company as of the date hereof will not, while employed by the Company or serving
as a director of the Company, as the case may be, make negative comments about
the Employee or otherwise disparage the Employee in any manner that is likely to
be harmful to the Employee's business or personal reputation. The foregoing
shall not be violated by truthful statements in response to legal process or
required governmental testimony or filings, and the foregoing limitation on the
Company's directors and officers will not be violated by statements that they in
good faith believe are necessary or

    


    DM3\994327.4


    
      
         


      

      
        
        

        
          

        

      

      
         


      

    


    appropriate
to make in connection with performing their duties for or on behalf of the
Company. Either Party will be entitled to exercise the remedies provided for in
Section 6.e. of the Employment Agreement.

    


    3.    References. The Chief
Executive Officer of the Company shall provide employment references when
requested by Employee and all such references shall characterize Employee's
separation as voluntary.

    


    4.           Compensation and
Benefits.

    (a)           The
Company shall pay to Employee the following amounts:

    


    
      	
               
      

            	
              (1)

            	
              Separation
      Compensation. Within thirty (30) days after the Termination Date or
      seven (7) days after the Revocation Date (as defined in Section 11 below)
      without revocation, whichever is greater, the Company shall pay to the
      Employee a lump sum amount of $2,001,000, such amount is acknowledged by
      the Parties as being in full satisfaction of the amount due to Employee
      pursuant to Section 7(1) of his Employment Agreement; providing for three
      times the sum of: (a) the Employee's highest Base Salary during the
      previous two years of employment immediately preceding the Termination
      Date, plus (b) the highest Bonus paid to the Employee during the same two
      year period.

            


    

     

    
      	
               
      

            	
              (2)

            	
              Accrued and Unpaid
      Compensation. Employee will be entitled to receive any compensation
      earned but not yet paid in 2009 prior to the Termination Date paid in
      accordance with the Company's normal payroll
  practices.

            


    

     

    
      	
               
      

            	
              (3)

            	
              Expense
      Reimbursement. Company shall pay to the Employee any unpaid expense
      reimbursement for periods on or prior to the Termination Date upon
      presentation by the Employee of an accounting of such expenses in
      accordance with normal Company practices. Employee agrees to submit all
      unpaid expense reimbursements to the Company by July 18, 2009. In no event
      shall such expense reimbursements be made later than July 31, 2009. The
      Parties acknowledge that Employee will not be entitled to any expense
      reimbursements (including, but not limited to, reimbursements for costs of
      premiums on Employee's one million dollar life insurance policy and
      reimbursements for the cost of the Employee's current disability policy)
      for any expenses incurred on or after the Termination
  Date.

            


    

     

    
      	
               
      

            	
              (4)

            	
              Stock Options and
      Restricted Stock. The Parties acknowledge that as of the date of
      this Agreement the unvested Company stock options have an exercise price
      that is greater than the current fair market value of the stock and that
      such stock options are likely to have an exercise price greater than the
      fair market value of the stock when they vest on the Termination Date.
      Company acknowledges that fourteen thousand five hundred (14,500) shares
      of restricted stock listed on Exhibit B shall become fully
      vested.

            


    

     


    
      
         


      

      
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              (5)

            	
              Performance
      Shares. Employee acknowledges that he is not entitled to any shares
      or other compensation related to the performance shares under the
      Company's 2007, 2008, and 2009 Long-Term Incentive
    Programs.

            


    

     

    
      	
               
      

            	
              (6)

            	
              Retirement
      Payment. Company shall pay Employee the Retirement Payment earned
      under Section 4.c. of the Employment Agreement. The Retirement Payment
      shall be paid in ten (10) annual installments on the first business day of
      January each year, beginning January 2, 2010. The annual retirement
      payment shall be $37,500, which amount is acknowledged by the Parties as
      being equal to $7,500 times the number of completed years of service under
      his Employment Agreement and the predecessor employment agreement (i.e.,
      five years).

            


    

     

    
      	
               
      

            	
              (7)

            	
              COBRA Coverage.
      Company shall continue coverage of the Employee and any dependents covered
      at the time of termination under the Company's group health plans at the
      Company's cost for a period equal to the lesser of (i) 18 months or (ii)
      such period as the Employee is eligible to participate in another
      employer's health plan.

            


    

     

    
      	
               
      

            	
              (8)

            	
              Tax
      Withholding. Company will be entitled to withhold from the benefits
      and payments described in this Agreement, all income and employment taxes
      as directed by Employee, as long as such request meets the minimum
      required to be withheld under applicable law. For all vested stock awards,
      the Company will withhold the designated income and employment tax amount
      in shares of Company Stock.

            


    

    


    (b)           Code Section 409A
Compliance. Company represents that it believes this Agreement is
compliant with Internal Revenue Code Section 409A ("Code Section
409A").

    


    5.           Qualified Retirement
Plan. As of the date hereof, Employee had a vested account balance in the
Company's qualified retirement plan. Employee shall be entitled to such vested
account balance under the Company's qualified retirement plan upon processing
the appropriate distribution forms following his separation. Such vested account
balance shall include Employee's share of the 2008 Company contribution and
Employee's 401(k) deferrals through his Termination Date, all as adjusted for
earnings to the date of distribution.

     

    6.           Confidential Material and
Employee Obligations. Employee acknowledges the validity of the
confidentiality, non-solicitation and non-compete provisions found in Section 6
of his Employment Agreement and the remedies called for therein. Employee agrees
to abide by the terms of Section 6 of his Employment Agreement, provided that
if, during the period specified in Section 6 d. of his Employment Agreement
Employee notifies the Company in writing of either an employment or business
opportunity he intends to pursue, the Company has five (5) days from receipt to
object. If the Company fails to object within the five (5) day period, Employee
is free to pursue the employment or business opportunity, provided further that
any objection by the Company shall not be unreasonable.

     


    
      
         


      

      
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    7.           Return of Property.
On or before the Termination Date, Employee will return to the Company all of
the Company's property in his possession. The Company's property includes,
without limitation, privileged information, reports, files, memoranda,
correspondence, door and file keys, identification cards, credit cards, computer
access codes, computer programs, software and hardware, customer and client
lists or information and other property or material which he prepared or helped
to prepare or to which he had access including any reproductions
thereof.

     

    8.           Cooperation with
Investigations. Employee agrees to cooperate fully with the Company and
its attorneys in connection with any investigation or litigation relating to any
Company matter in which Employee was involved, provided advice or has knowledge
and will be reimbursed for Employee's reasonable expenses incurred. The Company
will consult with Employee and make reasonable efforts to schedule any of
Employee's time required under this Section 8 so as not to materially disrupt
Employee's business and personal affairs, and the Company will reimburse
Employee for reasonable direct expenses incurred by him in so complying. The
Company agrees to promptly notify Employee, unless precluded by law, in the
event the Company has knowledge that Employee is named or will be involved in
any legal or regulatory proceeding, and the Company will designate an individual
at the Company who will serve as Employee's point of contact in the
matter.

    


    9.           Other.

    


    
      	
               
      

            	
              (a)

            	
              This
      Agreement shall be construed and enforced pursuant to the laws of the
      State of Pennsylvania without giving effect to its conflict of laws. If
      any provision hereof is declared to be unenforceable by a court of law,
      such provision shall be fully severable, and this Agreement shall be
      construed and enforced as if such unenforceable provision had never
      comprised a part hereof, the remaining provisions hereof shall remain in
      full force and effect, and the court construing the Agreement shall add as
      a part hereof a provision as similar in terms and effect to such
      unenforceable provision as may be enforceable, in lieu of the
      unenforceable provision.

            


    

     

    
      	
               
      

            	
              (b)

            	
              This
      Agreement sets forth the entire agreement between the parties hereto, and
      fully supersedes any and all prior oral or written agreements between the
      parties pertaining to the subject matter
hereof.

            


    

     

    
      	
               
      

            	
              (c)

            	
              All
      notices, requests, demands or other communications under the Agreement
      will be in writing and shall be deemed to have been duly given when
      delivered in person or deposited in the United States mail, postage
      prepaid, by registered or certified mail, return receipt requested, to the
      party to whom such notice is being given as
  follows:

            


    

     

     

    
      	 As to Eric: R.
      Stearns: 	 	  Eric R.
      Stearns
	 	 	 753
      Brightridge Drive
	 	 	 Bridgeport,
      West Virginia 26330
	 	 	 
	 	 	 
	 As
      to the Company:	 	 General
      Counsel
	 	 	 Petroleum
      Development Corporation
	 	 	 1775 Sherman
      Street, Suite 3000
	 	 	 Denver, CO
      80203


    

     

      

      
        
           


        

        
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    10.           Waiver and Release.
In consideration of the Company's obligations as set forth above, Employee
hereby releases, acquits and forever discharges Company and each of its
subsidiaries and affiliates and each of their respective officers, employees,
directors, successors and assigns from any and all claims, actions or causes of
action in any way related to the Employment Agreement or his employment with the
Company or the termination thereof, whether arising from tort, statute or
contract, including but not limited to, claims of defamation, claims arising
under the Employee Retirement Income Security Act of 1974, as amended, the Age
Discrimination in Employment Act of 1967, as amended by the Older Workers
Benefit Protection Act of 1990, Title VII of the Civil Rights Act of 1964, as
amended, the Americans with Disabilities Act, the Family and Medical Leave Act,
the discrimination and wage payment laws of West Virginia and any other federal,
state or local statutes or ordinances of the United States, it being Employee's
intention and the intention of the Company to make this release as broad and as
general as the law permits. Employee understands that this Agreement does not
waive any rights or claims that may arise after his execution of it and does not
apply to claims arising under the terms of this Agreement.

    


    11.           Knowing and Voluntary
Consent. Employee agrees that the consideration to which he is entitled
as a result of this Agreement exceeds the consideration to which Employee would
otherwise have been entitled, and is sufficient to make this Agreement fully
enforceable.

     

    Employee
acknowledges that he was provided a period of at least twenty-one (21) days to
consider this Agreement and that his signature on this Agreement prior to the
expiration of the twenty one (21) days shall constitute a waiver of the
remainder of the twenty-one (21) day consideration period. Employee further
acknowledges that he has a period of seven days following the date that he signs
below to revoke this Agreement by delivering a written revocation to the Company
at the address below by the end of business on the seventh day of the revocation
period ("Revocation Date"). In the event of revocation, the Company's
obligations under this Agreement will be void.

     

    Employee
acknowledges that he has been encouraged, and has had a full opportunity, to
consult with an attorney of his choosing in reviewing this Agreement, and
Employee has had a reasonable time within which to review and consider it.
Employee acknowledges that: (a) this Agreement is written in terms and sets
forth conditions in a manner which he understands, (b) he has
carefully read and understands all of the terms and conditions of this
Agreement; (c) he agrees with the terms and conditions of this Agreement; (d)
the payment to be made to him pursuant to this Agreement is not something to
which he is entitled except as consideration for this Agreement; and (e) he
enters into this Agreement knowingly and voluntarily.

     

    12.           Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original, but all of which together will constitute but one
document.

    



    
      
         


      

      
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    IN
WITNESS WHEREOF, the Company and the Employee have duly executed this Separation
Agreement as of this 19th day of May, 2009.

    


    


    
      
        
          
            	
                    Company

                  	 	
                     Employee

                  
	
                    Petroleum
      Development Corporation

                  	 	 
      
	
                    By:
      /s/ Kimberly Luff
    Wakim

                  	 	
                    /s/ Eric R. Stearns

                  
	 
      	 	
                    Eric
      R. Stearns

                  


          

        

      

    

    


     


    
      
         


      

      
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    EXHIBIT
A

    


    RESIGNATION
LETTER

    May 19,
2009

     

    Daniel W.
Amidon

    General
Counsel &
Corporate Secretary

    Petroleum
Development Corporation

    1775
Sherman Street, Suite 3000

    Denver,
Colorado 80203

    


    Re:
Notice of Intent to Terminate Employment for Good Reason

     

    Dear
Dan,

     

    I have
been advised that Petroleum Development Corporation wishes to change my duties
and responsibilities so that I no longer would have responsibility for
acquisitions and divestitures but would be assigned to joint venture management
and development for the Marcellus acreage. Please be advised that I find this
change in duties
and responsibilities to be unacceptable and am advising you, under Section 7.f.
of my Employment Agreement, that unless I continue to have responsibility for
acquisitions and divestitures for Petroleum Development Corporation, I will
exercise the Good Reason termination provisions of my Employment Agreement based
on having a material diminution in my authority, duties, and
responsibilities.

     

    My
resignation will take effect thirty (30) days from the date hereof (June 18,
2009), unless I hear from Petroleum Development Corporation that I will retain
my responsibility for acquisitions and divestitures.

     

    


    /s/ Eric R. Stearns

     
Eric R. Steams


    
      
         


      

      
        
        

        
          

        

      

      
         


      

    


    


    EXHIBIT
B

     

    EQUITY
COMPENSATION

     

    Fourteen
Thousand Five Hundred (14,500) Shares of Restricted Stock of Petroleum
Development Corporation, as designated by the Parties in an amendment to this
Agreement.

     

    All other
time-based shares of restricted stock of Petroleum Development Corporation shall
be forfeited.