** **

** **

**PETROLEUMDEVELOPMENT CORPORATION**

103 East Main Street

Bridgeport, WestVirginia  26330

**NOTICEOF ANNUAL MEETING OF SHAREHOLDERS**

** **

**June10, 2005**

** **

To the Shareholders of

PETROLEUM DEVELOPMENT CORPORATION:

               Notice is hereby given that the AnnualMeeting of Shareholders of Petroleum Development Corporation (the"Company") will be held at the Benedum Civic Center, Main Street,Bridgeport, West Virginia 26330, on June 10, 2005 at 10:00 A.M., local time,for the following purposes, all as more fully described in the accompanyingProxy Statement:

               (1)To elect two directors to serve three year terms or until their successorsshall be elected and shall qualify.

               (2)To ratify the selection of Independent Registered Public Accounting Firm forthe Company for the fiscal year ending December 31, 2005.

               (3)To approve the 2005 Non-Employee Director Restricted Stock Plan.

               (4)Such other business as may properly come before the meeting or any adjournmentsthereof.

               The Board of Directors has fixed the closeof business on May 6, 2005 as the record date for the determination of Shareholdersentitled to notice of and to vote at the Annual Meeting.  The presence inperson or by proxy of the holders of a majority of the outstanding shares ofthe Company's Common Stock entitled to vote is required to constitute a quorum.

               EACH SHAREHOLDER IS CORDIALLY INVITED TOBE PRESENT AND TO VOTE AT THIS MEETING IN PERSON.  SHAREHOLDERS WHO DO NOTEXPECT TO ATTEND ARE REQUESTED TO SIGN AND DATE THE ACCOMPANYING PROXY CARD ANDRETURN IT PROMPTLY IN THE ENCLOSED POSTPAID ENVELOPE.

                                                                                                ByOrder of the Board of Directors,

                                                                                                       StevenR. Williams

                                                                                                      *Chairman*

Bridgeport, West Virginia

May 11, 2005

# 

GENERAL INFORMATION.. 4

**Who May Vote**.. 4

**How to Vote**.. 4

**How Proxies Work**. 4

**Revoking a Proxy**. 4

**Quorum**... 4

**Votes Needed**.. 4

**Attending in Person**.. 5

**Conduct of the Meeting**.. 5

**Contact Information**.. 5

PROPOSAL #1 - ELECTION OFDIRECTORS.. 5

**Vote Required**.. 6

**Nominees for a ThreeYear Term Expiring in 2008**. 6

**Continuing Directorswith Terms Expiring in 2006**. 6

**Continuing Directorswith Terms Expiring in 2007**. 7

BOARD COMMITTEES.. 7

**Nominating andGovernance Committee**.. 7

**Audit Committee**.. 7

**Compensation Committee**.. 8

**Qualified LegalCompliance Committee**.. 8

**Executive Committee**.. 8

CORPORATE GOVERNANCE.. 8

**Board of Directors**. 8

**Corporate GovernanceGuidelines**. 8

**Director Independence**.. 9

**Term of Office**.. 9

**Board Meetings andAttendance**.. 9

**Executive Sessions**. 9

**Compensation CommitteeInterlocks and Insider Participation**.. 9

**Indemnification ofDirectors and Officers**. 9

**Director Compensation**.. 10

**Annual MeetingAttendance**.. 10

**DirectorQualifications and Selection**.. 10

**ShareholderRecommendations**. 11

**ShareholderNominations**. 11

**Communications withDirectors**. 11

**Written communications**. 12

**Electroniccommunications**. 12

**Code of BusinessConduct and Ethics**. 12

**Additional Information**.. 12

EXECUTIVE COMPENSATION.. 12

**Report of theCompensation Committee**.. 12

**Role of theCompensation Committee**. 12

**CompensationPhilosophy**. 12

**Selection of PeerGroup**.. 13

**Elements of ExecutiveCompensation**.. 13

**Base Salaries**. 13

**Annual PerformanceBonuses**. 13

**Long-Term IncentiveProgram**... 14

**Executive EmploymentAgreements**. 14

**Summary CompensationTable**.. 15

**Stock Options**. 16

**Aggregated Option Exercisesin Last Fiscal Year and Fiscal Year-End Option Values**. 17

**Employment and OtherAgreements and Arrangements**. 17

**Stock Option Plans**. 18

**Key-Man Life Insurance**.. 18

**Employee 401(k) andProfit Sharing Plan**.. 18

**ShareholderPerformance Graph**.. 19

SECURITY OWNERSHIP OFCERTAIN BENEFICIAL OWNERS AND MANAGEMENT. 20

**Section 16(a)Beneficial Ownership Reporting Compliance**.. 21

PROPOSAL #2- RATIFICATIONOF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM    21

**Vote Required**.. 21

**Report of the AuditCommittee**.. 21

**KPMG Fees**. 22

**Audit Fees**. 22

**Audit Related Fees**. 22

**Tax Fees**. 23

**All Other Fees**. 23

**Pre-Approval Policiesand Procedures**. 23

PROPOSAL #3- APPROVAL OFTHE 2005 NON-EMPLOYEE DIRECTOR RESTRICTED STOCK PLAN.. 23

**Vote Required**.. 23

**Summary Description ofthe NDRSP**.. 23

**Administration**.. 24

**Eligibility**. 24

**Stock Available forIssuance through the NDRSP**.. 24

**Description of Awardsunder the Plan**.. 24

**Nontransferability**. 26

**Amendment andTermination of the NDRSP**.. 26

**Tax Treatment of theNDRSP**.. 26

OTHER BUSINESS.. 26

**Advance NoticeProcedures**. 27

**General** 27

**Shareholder Proposalsfor 2006 Annual Meeting**.. 27

Exhibit A - CORPORATEGOVERNANCE GUIDELINES.. 1

Exhibit B - PETROLEUMDEVELOPMENT CORPORATION 2005 NON-EMPLOYEE DIRECTOR RESTRICTED STOCK PLAN.. 1

#  

# GENERAL INFORMATION

## **Who May Vote******

Shareholders of Petroleum Development Corporation(PDC or the Company), as recorded in our stock register on May 6, 2005, mayvote at the meeting. The outstanding voting securities of the Company as ofMarch 31, 2005 consisted of 16,589,824 shares of $.01 par value common stock.

## **How to Vote******

You may vote in person at the meeting or by proxy.We recommend you vote by proxy even if you plan to attend the meeting. You canalways change your vote at the meeting. 

## **How Proxies Work******

##  

Our Board of Directors is asking for your proxy.Giving us your proxy means you authorize us to vote your shares at the meetingin the manner you direct. You may vote for all, some, or none of our directorcandidates. You may also vote for or against the other proposals, or abstainfrom voting. 

If your shares are held in your name, you can voteby completing, signing and dating your proxy card and returning it in theenclosed envelope.

If you give us your signed proxy but do not specifyhow to vote, we will vote your shares in favor of our director candidates; infavor of the ratification of the appointment of Independent Registered PublicAccounting Firm; and in favor of the 2005 Non-Employee Director RestrictedStock Plan. 

If you hold shares through someone else, such as astockbroker, you will receive material from that firm asking how you want tovote. Check the voting form used by that firm to see what voting options youhave available.

##  

## **Revoking a Proxy******

You may revoke your proxy before it is voted by: 

•      Submitting a new signedproxy with a later date; 

•      Notifying PDC'sSecretary in writing before the meeting that you wish to revoke your proxy; or 

•      Appearing at themeeting, notifying the Inspectors of the Election that you wish to revoke your proxy,and voting in person at the meeting.

Ifyou hold your shares through someone else, such as a stockbroker, you will needto follow the directions they give you to revoke a proxy or otherwise vote atthe meeting.

## **Quorum******

In order to carry on the business of the meeting,we must have a quorum. This means at least a majority of the outstanding shareseligible to vote must be represented at the meeting, either by proxy or inperson. Treasury shares, which are shares owned by PDC itself, are not votedand do not count for this purpose. 

##  

## **Votes Needed******

The director candidates who receive the most voteswill be elected to fill the available seats on the Board. Approval of the otherproposals requires the favorable vote of a majority of the votes cast. Onlyvotes for or against a proposal count. Abstentions and broker non-votes countfor quorum purposes but not for voting purposes. Broker non-votes occur when abroker returns a proxy but does not have authority to vote on a particularproposal. 

## **Attending in Person******

Only shareholders or their proxy holders and PDC'sguests may attend the annual meeting. For safety and security reasons, nocameras, audio or video recording equipment, large bags, briefcases or packageswill be permitted in the meeting. In addition, each shareholder and guest maybe asked to present valid, government-issued picture identification, such as adriver's license, before being admitted to the meeting. 

If your shares are held in the name of your broker,bank, or other nominee, you must bring to the meeting an account statement orletter from the nominee indicating that you beneficially owned the shares on May6, 2005, the record date for voting. Shareholders who do not present proxies atthe meeting will be admitted upon verification of ownership at the admissionscounter. 

## **Conduct of the Meeting******

The Chairman has broad authority to conduct theannual meeting in an orderly and timely manner. This authority includesestablishing rules for shareholders who wish to address the meeting. Copies ofthese rules will be available at the meeting. The Chairman may also exercisebroad discretion in recognizing shareholders who wish to speak and indetermining the extent of discussion on each item of business. In light of theneed to conclude the meeting within a reasonable period of time, we cannotassure that every shareholder who wishes to speak on an item of business willbe able to do so. The Chairman may also rely on applicable law regardingdisruptions or disorderly conduct to ensure that the meeting is conducted in amanner that is fair to all shareholders. 

## **Contact Information******

If you have questions or need more informationabout the annual meeting, write to: 

Corporate Secretary

Petroleum Development Corporation

P.O. Box 26

Bridgeport, WV 26330 

or call us at (304) 842-3597. 

For information about shares registered in yourname call PDC at 1-800-624-3821. We also invite you to visit PDC's internetsite at www.PETD.com. Internet site materials are not part of this proxysolicitation. 

** **

# PROPOSAL #1 - ELECTION OF DIRECTORS 

As of the date ofthis proxy statement, PDC's Board of Directors had 7 members divided into threeclasses. Directors are elected for three-year terms. The terms for members ofeach class end in successive years. Directors elected to fill vacancies holdoffice for a term expiring at the annual meeting when the term for their classexpires. 

The Board ofDirectors has nominated two directors, David C. Parke and Jeffrey C. Swoveland,whose terms expire in 2005 to stand for election to the board for a three-yearterm expiring in 2008. Mr. Swoveland has served on the Board since 1991 andcurrently serves as the Chairman of the Compensation Committee.  Mr. Parke hasserved on the Board since 2003.  

The proxy committee will vote your proxy for theelection of the two nominees unless you withhold authority to vote for any oneor more of them. If any director is unable to stand for election, the board mayreduce its size or choose a substitute. Proxies cannot be voted for a greaternumber of persons than the number of nominees named.

## **Vote Required**

The two nomineesreceiving the most votes will be elected to the Board.

**THE BOARD OF DIRECTORS RECOMMENDS A VOTE"FOR" PROPOSAL #1**

## **Nominees for a Three Year Term Expiring in 2008**

| **Name and Principal**

**Occupation Past Five Years**

**and Other Directorships**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | ** **

** **

**Age** | **Year First**

**Elected**

**Director** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------|-------------------------------------------|
| DAVID C. PARKE was elected Director by the Board of  Directors in November 2003.  Mr. Parke joined Mufson/Howe/Hunter &  Company LLC, Philadelphia, Pennsylvania, an investment banking firm, as a  founder and Director in October, 2003. From 1992-2003, Mr. Parke was director  of the corporate finance department 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. | 38                              | 2003                                      |
| JEFFREY C. SWOVELAND has served as Chief Financial  Officer of Body Media located in Pittsburgh, Pennsylvania, which develops  body monitoring technologies, since September, 2000. Prior thereto, Mr.  Swoveland was Vice President-Finance and Treasurer of Equitable Resources,  Inc. since 1994.                                                                                                                                                                                                                                                                                                                                     | 50                              | 1991                                      |

## ** **

## **ContinuingDirectors with Terms Expiring in 2006**

| DONALD B. NESTOR is a Certified Public Accountant  and a Partner in the CPA firm of Toothman Rice, P.L.L.C. and is in charge of  the firm's Buckhannon, West Virginia office. Mr. Nestor has served in that  capacity since 1975. | 56 | 2000 |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----|------|
| KIMBERLY LUFF WAKIM**is an attorney and Certified Public Accountant, and  is a partner in the law firm of Thorp Reed & Armstrong, LLP, Pittsburgh,  Pennsylvania. Ms. Wakim joined Thorp Reed & Armstrong LLP in 1990.    | 47 | 2003 |
| STEVEN R. WILLIAMS was elected Chairman and Chief  Executive Officer of PDC in January 2004. Mr. Williams served as President of  PDC from 1983 until December 2004.                                                              | 54 | 1983 |

## ** **

## ** **

## **Continuing Directors with Terms Expiring in 2007**

| VINCENT F. D'ANNUNZIO has served as president of  Beverage Distributors, Inc. located in Clarksburg, West Virginia since 1985.                                                                                                                                                                                                                                                                                                                                                 | 53 | 1989 |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----|------|
| THOMAS E. RILEY was appointed as President of PDC in  December 2004. Prior to that Mr. Riley served PDC as Executive Vice President  of Production, Natural Gas Marketing and Business Development since November  2003, and as Vice President Gas Marketing and Acquisitions of PDC since joining  the Company in April 1996. Prior to joining PDC, Mr. Riley was president of  Riley Natural Gas Company, a natural gas marketing company which PDC acquired  in April 1996. | 52 | 2004 |

# BOARD COMMITTEES

The Company has five standing committees of theBoard of Directors: the Nominating and Governance Committee, the AuditCommittee, the Compensation Committee, the Qualified Legal Compliance Committeeand the Executive Committee. Each Committee Charter referred to below is postedon the Company's website at www.petd.com under "CorporateGovernance."

## ** **

## **Nominating and Governance Committee**

This Committee is comprised of Directors D'Annunzio(Chair), Wakim and Parke all of whom our Board has determined are independentof the Company under Rule 4200(a)(15) of the NASDAQ's listing standards. TheNominating and Governance Committee met four times in 2004. The purpose andfunctions performed by the Committee are to (1) assist the Board by identifyingindividuals qualified to become Board members and to recommend to the Board thedirector nominees for the next annual meeting of Shareholders or any vacancies;(2) recommend to the Board Corporate Governance Guidelines applicable to theCompany; (3) lead the Board in its annual review of the Board's performance and(4) recommend to the Board director nominees for each committee. The Board hasadopted a Charter for the Nominating and Governance Committee. The Charter hasbeen posted on the Company's website. 

##  

## **Audit Committee******

The Audit Committee is comprised of DirectorsNestor (Chair), Swoveland and Wakim all of whom our Board has determinedqualify as Audit Committee Financial Experts and are independent of the Companyunder Rule 4200(a)(15) of the NASDAQ listing standards. The Audit Committee meteight times in 2004.

The purpose of the Audit Committee is to (1) assistthe Board in monitoring the integrity of the financial reporting process,systems of internal controls and financial statements and reports of theCompany, and the compliance by the Company with legal and regulatoryrequirements; and (2) be directly responsible for the appointment, compensationand oversight of the Independent Registered Public Accounting Firm employed bythe Company for the purpose of preparing or issuing an audit report or relatedwork.

The functions performed by the Audit Committeeinclude the selection of the Company's Independent Registered Public AccountingFirm, determining the compensation of the Independent Registered PublicAccounting Firm, and overseeing their work; reviewing the scope of the audit tobe conducted by the Independent Registered Public Accounting Firm and reviewingwith the Company's Independent Registered Public Accounting Firm the results ofaudits performed by them; approving audit and non-audit services to be providedto the Company by the Independent Registered Public Accounting Firm; andoverseeing and reviewing the Company's monthly and quarterly unauditedfinancial statements. These reviews include the adequacy of cash flow and thestatus of credit arrangements of the Company. In performing itsresponsibilities, the Audit Committee monitors the integrity of the Company'sfinancial reporting process and systems of internal controls regarding finance,accounting and legal compliance; monitors the independence of the IndependentRegistered Public Accounting Firm; and provides an avenue of communicationsamong the Independent Registered Public Accounting Firm, management and theBoard of Directors. The Board of Directors has adopted a Charter of the AuditCommittee which is posted on the Company's website. The Board of Directorscontinues to assess the adequacy of the Charter and will revise it asnecessary.

## **Compensation Committee**

The Compensation Committee is comprised ofDirectors Swoveland (Chair), Nestor and Parke all of whom our Board hasdetermined are independent of the Company under Rule 4200(a)(15) of theNASDAQ's listing standards. The Compensation Committee met eight times in 2004.The Board has adopted a Compensation Committee Charter which is posted on theCompany's website.

The purpose and functions of this committee are to(1) oversee the development of a compensation strategy for the Company subjectto approval by the Board, (2) oversee the administration of the Company'scompensation programs, (3) evaluate the performance of and set compensation forthe Chief Executive Officer, (4) review and approve the elements of compensationfor other executive officers of the Company, (5) negotiate the terms ofemployment agreements with executive officers of the Company, (6) review thecompensation of the Company's Directors and recommend changes in compensationlevels to the Board of Directors, (7) recommend equity-based incentive programsnecessary to implement the Company's compensation strategy, and (8) administerall equity-based incentive programs of the Company. 

##  

## **Qualified Legal Compliance Committee**

The Qualified Legal Compliance Committee (QLCC)consists of Directors Wakim (Chair), D'Annunzio and Nestor. The purpose of theCommittee is to assist the Board in receiving, considering, investigating, andresponding to reports submitted under Section 307 of the Sarbanes-Oxley Act of2002 ("SOX") alleging credible evidence of a material violation offederal or state securities laws, a material breach of a fiduciary duty arisingunder federal or state laws, or a similar violation of federal or state laws bythe Company or any of its officers, directors, employees or agents (each suchreport, a "Section 307 Report").  The Board has adopted a charter forthe QLCC which is posted on the Company's website.

##  

## **Executive Committee**

The Executive Committee is comprised of DirectorsWilliams (Chair), D'Annunzio, Swoveland and Riley. The purpose and function ofthis committee is to exercise the powers and duties of the Board between Boardmeetings and while the Board is not in session, and to implement the policydecisions of the Board. The Board has adopted an Executive Committee Charterwhich is posted on the Company's website.

# CORPORATE GOVERNANCE

## **Board of Directors******

The Board of Directors and its committees perform anumber of functions for PDC and its shareholders, including: 

•      Overseeing themanagement of the Company on your behalf; 

•      Reviewing PDC'slong-term strategic plans; 

•      Exercising directdecision-making authority in key areas, such as approving capital budgets;

•      Selecting the CEO andevaluating the CEO's performance; and 

•      Reviewing developmentand succession plans for PDC's top executives. 

##  

## **Corporate Governance Guidelines******

TheBoard has adopted Corporate Governance Guidelines that govern the structure andfunctioning of the Board and set out the Board's policies on a number of governanceissues. A current copy of our Corporate Governance Guidelines is included as ExhibitA to this proxy statement. The Guidelines are posted on the CorporateGovernance section, listed under Investor Information, of our internet site atwww.PETD.com. They are also available to any shareholder on request to theSecretary at the address given under "Contact Information" above. 

## **Director Independence******

Subject to someexceptions and transition provisions, the NASDAQ standards generally providethat a director will not be independent if (1) the director is, or at any timeduring the past three years was, employed by PDC; (2) the director is a familymember of an individual who is, or at any time during the past three years was,an executive officer of PDC; (3) the director or a member of the director'simmediate family has received payments of more than $60,000 during the currentor any of the past three fiscal years from PDC other than for service as adirector; (4) the director or a member of the director's immediate family is acurrent partner of KPMG LLP, our Independent Registered Public Accounting Firm,or during the past three years was a partner or employee of KPMG LLP; (5) thedirector or a member of the director's immediate family is employed as anexecutive officer of another entity where at any time during the past threeyears any of PDC's executive officers serves on the compensation committee ofthe other entity; or (6) the director or a member of the director's immediatefamily is a partner in, or a controlling person of, or an executive officer ofany organization to which PDC made, or from which PDC received, payments forproperty or services in the current or any of the three past fiscal years thatexceed 5% of the recipient's consolidated gross revenues for that year, or$200,000, whichever is more.

The Board has reviewed business and charitablerelationships between PDC and each non-employee director to determinecompliance with the NASDAQ standards described above and to evaluate whetherthere are any other facts or circumstances that might impair a director'sindependence. Based on that review, our Board has determined that all ournon-employee directors are independent. 

## **Term of Office******

PDC directors serve three year terms on the Board. Theterms are staggered so that approximately one-third of the board stands forelection each year.

## **Board Meetings and Attendance******

The Board met eight times in 2004. Each of PDC'sdirectors attended more than 75% percent of the aggregate Board and committeemeetings during 2004. 

## ** **

## **Executive Sessions******

PDC's non-employee directors held five executivesessions in 2004. Normally Ms. Wakim, the Lead Director, presides at executivesessions but the non-employee directors may, in the event of her absence, selectanother presiding director for a particular session. 

## **Compensation Committee Interlocks and Insider Participation**

## ** **

The members of the Compensation Committee areSwoveland (Chair), Nestor and Parke. There are no relationships that wouldcause a Compensation Committee interlock as defined under applicable SECregulations.

## ** **

## **Indemnification of Directors and Officers**

The Company's By-Laws provide that the Companyshall indemnify any director, officer, employee, or other agent of the Companywho is or was a party, or is threatened to be made a party, to any proceeding(other than an action by or in the right of the Company to procure a judgmentin its favor) by reason of the fact that such person is or was an agent of theCompany, against expenses, judgments, fines, settlements, and other amountsactually and reasonably incurred in connection with such proceeding, if thatperson acted in good faith and in a manner that person reasonably believed tobe in the best interest of the Company, and in the case of a criminalproceeding, had no reasonable cause to believe the conduct of that person wasunlawful. 

The Company has entered into separateindemnification agreements with each of its directors and officers whereby theCompany has agreed to indemnify the director or officer against all expenses,including attorneys' fees, and other amounts reasonably incurred by the officeror director in connection with any threatened, pending or completed civil,criminal, administrative or investigative action or proceeding to which suchperson is party by reason of the fact that he is or was a director or officer,as the case may be, of the Company, if the person acted in good faith and in amanner reasonably believed to be in or not opposed to the best interests of theCompany, and, with respect to any criminal action or proceeding, the person hadno reasonable cause to believe such conduct to be unlawful. The agreementsprovide for the advancement of expenses and that the Company has the right topurchase and maintain insurance on behalf of the director or officer againstany liability or liabilities asserted against him, whether or not the Companywould have the power to indemnify the person against such liability under anyprovision of the agreement. The Company has agreed to indemnify such personagainst expenses actually and reasonably incurred in connection with any actionin which the person has been successful on the merits or otherwise.Indemnification must also be provided by the Company (unless ordered otherwise bya court) only as authorized in the specific case upon a determination that theindemnification of the person is appropriate because he has met the applicablestandard of conduct described in the agreement made by (i) the Board ofDirectors, by a majority vote of a quorum consisting of directors who are notparties to such action or proceeding, (ii) by independent legal counsel in awritten opinion or (iii) the Shareholders of the Company.

##  

## **Director Compensation**

Each non-employee director of the Company was paidan annual fee of $20,000 in 2004, $30,000 in 2003 and $20,000 in 2002. In 2003and 2004 employee directors received no additional compensation for theirservice on the Board. In 2002 each employee director received an annual fee of$10,000. Non-employee directors will be paid an annual fee of $40,000 in 2005and will receive restricted stock with a market value as determined by theBoard. For 2005 the Board has determined to award each non-employee directorrestricted stock with a market value of $40,000 on the date of the AnnualMeeting. These grants of restricted stock are subject to approval by theshareholders of the 2005 Non-Employee Director Restricted Stock Plan.  Eachnon-employee committee chairperson will receive an additional retainer of $2,500per year ($5,000 for the Audit Committee). Directors who do not chair acommittee will receive no additional compensation for serving on thatcommittee.

##  

## **Annual Meeting Attendance******

As specified in our Corporate Governance Guidelines,Directors are strongly encouraged to attend the annual meeting of shareholders.All directors attended last year's meeting. 

## ** **

## **Director Qualifications and Selection******

The Board has adopted Director NominationProcedures that prescribe the process the Nominating and Governance Committee willuse to select the Company's nominees for election to the Board.  The Nominatingand Governance Committee evaluates candidates, whether or not recommended by Shareholders,based on the candidates' level and diversity of experience and knowledge(including generally and with specific application to the industry in which theCompany operates and issues relevant to the Company), skills, education,reputation and integrity, professional stature and other factors that may berelevant depending on the particular candidate and the need, size andcomposition of the Board at a particular time, including the need to have abroad mixture of skills, experience and perspectives on the Board. Accordingly,one or more of these factors may be given more weight in a particular case at aparticular time, no single factor would be viewed as determinative, and theCommittee has not specified any minimum qualifications that the Committeebelieves must be met by any particular nominee.  The Company's Director NominationProcedures are posted on our website at www.petd.com under "CorporateGovernance" and are available free of charge on request to the Secretaryat the address given under "Contact Information" on page 5. 

The Committee identifies director candidatesprimarily through recommendations made by the non-employee directors. Theserecommendations are developed based on the directors' own knowledge andexperience in a variety of fields, and research conducted by PDC staff at theCommittee's direction. The Committee also considers recommendations made by theemployee directors, shareholders, and others, including search firms. Allrecommendations, regardless of the source, are evaluated on the same basisagainst the criteria contained in the Guidelines. The Committee has theauthority to engage consultants to help identify or evaluate potential directornominees but has not done so recently. 

## ** **

## **Shareholder Recommendations**

The Company's Nominating and Governance Committeewill consider director candidates recommended by Shareholders of the Company.Any Shareholder who wishes to recommend a prospective Board nominee for theCommittee to consider should notify the Nominating and Governance Committee oftheir recommendation by writing to the committee at the Company's headquarters,or by sending the information via email to board@petd.com. All recommendationswill be received by the Nominating and Governance Committee. 

A submissionrecommending a candidate should include: 

•      Sufficientbiographical information to allow the Committee to evaluate the candidate inlight of the Guidelines;

•      An indication as towhether the proposed candidate will meet the requirements for independenceunder the NASDAQ guidelines;

•      Informationconcerning any relationships between the candidate and the shareholderrecommending the candidate; and 

•      Material indicatingthe willingness of the candidate to serve if nominated and elected. 

## **Shareholder Nominations**

Shareholders whowish to may nominate candidates for election to the Board.  The Company'sBy-Laws require Shareholders who wish to submit nominations of persons forelection to the Board of Directors at the annual meeting of Shareholders tofollow certain procedures. The Shareholder must give written notice to theCorporate Secretary at 103 East Main Street, Bridgeport, West Virginia 26330 ormay email notice to board@petd.com, not later than 80 days nor earlier than 90days prior to the first anniversary of the preceding year's annual meeting. TheShareholder must be a Shareholder of record at the time the notice is given.The written notice must set forth (a) as to each nominee all informationrelating to that person that is required to be disclosed in solicitations ofproxies for election of directors in an election contest, or is otherwiserequired, in each case pursuant to Regulation 14A under the Securities ExchangeAct of 1934 (including such person's written consent to being named in theproxy statement as a nominee and to serving as a director if elected); (b) asto the Shareholder giving the notice and the beneficial owner, if any, on whosebehalf the nomination is made (1) the name and address of the Shareholder, asthey appear on the Company's books, and of such beneficial owner and (2) theclass and number of shares of the Company's securities that are beneficiallyowned by such Shareholder and the beneficial owner; and (c) any materialinterest of such Shareholder and such beneficial owner in such nomination.

* *

## **Communications with Directors******

The Board has approved procedures for shareholdersand other interested persons to send communications to individual directors orthe non-employee directors as a group. Shareholders may communicate with theBoard or any member of the Board or its committees regarding any matter bywriting to or emailing the Board.

### ***Written communications*********

Written correspondence should be addressed to adirector or directors in care of the Secretary at the address given under"Contact Information" on page 5. All correspondence will be forwardedto the intended recipient. All mail sent to the Board without specifiedaddressees will be received and reviewed by an independent director andforwarded to the appropriate Board member or committee.

###  

### ***Electronic communications*********

You may alsosend email to the non-employee directors atBoard@petd.com, with the Director's name inthe reference line. These communications will be forwarded directly to adesignated non-employee director's electronic mailbox. Any electronic mailaddressed to the Board of Directors of the Company without a designatedrecipient will also be reviewed by the designated independent director.

More information about our procedures for handlingcommunications to non-employee directors is posted on our internet site atwww.petd.com under "Corporate Governance." 

##  

## **Code of Business Conduct and Ethics**

The Board maintains a Code of Business Conduct andEthics (the "Code") that serves both as the code of ethics for the principalexecutive officer, principal financial officer, and principal accountingofficer under SEC rules, and the code of business conduct and ethics fordirectors, officers, and employees under NASDAQ listing standards. The Codeincludes guidelines relating to the ethical handling of actual or potentialconflicts of interest, compliance with laws, accurate financial reporting, andprocedures for promoting compliance with, and reporting violations of, the Code.The Code applies to all directors, officers, and employees. 

The Code is posted on our internet site and isavailable free of charge on request to the Secretary at the address given under"Contact Information" on page 5. The Nominating and GovernanceCommittee reviews the Code annually and makes recommendations for any necessarychanges to the Board. Any amendment of the Code will be promptly posted on ourinternet site.

##  

## **Additional Information******

The Corporate Governance section of our internetsite contains additional information, including our Certificate ofIncorporation and By-Laws; written charters for each Board committee; and Boardpolicy statements.

# EXECUTIVE COMPENSATION

## **Report of the Compensation Committee**

### ** **

### ***Role of the Compensation Committee*********

The Compensation Committee of the Board ofDirectors consists of three independent directors who are not employees of theCompany. Our Committee reviews the Company's executive compensation program andpolicies each year and determines the compensation of the executive officers.We also administer the Company's 401(k) Plan, all Employee Stock Option Plans,and the Company's Profit Sharing Plan.

###  

### ***Compensation Philosophy***

The Company's overall policy regarding compensationof the Company's executive officers is to provide competitive salary levels andcompensation incentives that (i) attract and retain individuals of outstandingability in these key positions, (ii) recognize individual performance and theperformance of the Company relative to the performance of other companies ofcomparable size, complexity and quality, and (iii) support both the short-termand long-term goals of the Company. We believe this approach closely links thecompensation of the Company's executives to accomplishments of Company goalsthat coincide with Shareholder objectives.

In setting compensation we consider the anticipatedtax treatment of the Company's executive compensation program. Section 162(m)of the Internal Revenue Code of 1986, as amended (the "Code"),generally limits the corporate tax deduction for compensation paid to executiveofficers named in the Summary Compensation Table to $1 million, unless certainconditions are met. The Company's policy is to qualify a portion of its executivecompensation for deduction under Section 162(m) of the Code..

###  

### ***Selection of Peer Group***

* *

During 2004 we retained Towers Perrin, a compensationconsulting group, to help us select a new peer group of companies to help usdetermine competitive levels of compensation for our executives.  In selectingthe group we considered the industry and activities of the Company, the extentand complexity of the operations managed by the Company including itspartnership drilling operations, differences in compensation such as deferredcompensation and retirement programs, and other factors.  The final peer groupconsists of 13 companies of comparable size (median revenue of $220 million) asof the beginning of 2004 with comparable lines of business. The companiesselected for the peer group were Berry Petroleum Company, Cabot Oil & GasCorporation, Cimarex Energy Co., Clayton Williams Energy Inc., EncoreAcquisition Company, KCS Energy Incorporated, Magnum Hunter Resources, Inc., Penn Virginia Corporation,Quicksilver Resources Inc., Range Resources Corporation, St. Mary Land &Exploration Company, Unit Corporation, and Whiting Petroleum Corporation.  Weused the compensation and performance data for this group of companies to helpus establish competitive levels of compensation for the four executive officersof the Company.

We used comparative data from the peer group todevelop a total compensation package that is competitive with the market forexecutives holding comparable positions. We used proxy information from ourpeer group as summarized by Towers Perrin to help us establish a competitivelevel of total compensation for the overall executive management group.  Wedistributed cash and long-term incentive compensation among the executiveofficers in a fashion that recognizes the important contributions each memberof the group makes to the Company. A similar process using information from adifferent independent consultant was used in 2003 to establish the Company'sexecutive compensation at a level comparable to companies in an industry peergroup. The Committee used that information to develop new employment contractsfor executives that were effective beginning in 2004 as described in the"Employment and Other Agreements and Arrangements" below. Wedetermined the 2004 long-term incentive compensation and adjusted the basesalaries and bonus compensation for 2005 based in large part on competitive informationfrom the Towers Perrin Report.

For 2003 the compensation of the CEO was determined bythe terms of his previous employment agreement and the performance of theCompany. 

### ** **

### ***Elements of Executive Compensation***

*** ***The compensation program includesthree elements that, taken together, constitute a flexible and balanced methodof establishing total compensation for the Company's executive officers. Theseelements are (i) base salary, (ii) annual bonus plan awards, and (iii)long-term incentive awards, which consist of stock based grants from Shareholder-approvedplans.

### ** **

### ***Base Salaries***

The base salaries of the Messrs. Williams, Riley,Stearns and Stump were determined by their employment agreements. As CEO, Mr.Williams received a salary of $300,000 in 2004. Mr. Williams's salary was fixedby the terms of his employment agreement. The median salary of the CEOs in thepeer group was $360,000.

###  

### ***Annual Performance Bonuses***

The purpose of the annual bonus plan is to providemotivation toward and reward the accomplishment of corporate annual objectivesand to provide a competitive compensation package that will attract, reward andretain individuals of the highest quality. As a pay-for-performance plan, cashbonus awards are paid based upon the achievement of corporate performanceobjectives.  For 2004 the majority of the bonus compensation was based on anafter tax net income target of $21.6 million which the company exceeded.  Thebalance of the bonus was based on our assessment of the performance of the executives.

Each of the executive officers, Messrs. Williams,Riley, Stearns and Stump earned the maximum annual performance bonus inaccordance with the terms of their employment agreements based on the Company'sperformance. During 2004, the CEO, Mr. Williams, earned a bonus of $300,000.The median for the peer group was $248,000.  Messrs. Riley, Stearns and Stumpearned an annual performance bonus based upon the Company's performance asestablished by their contracts.  

###  

### ***Long-Term Incentive Program***

The long-term incentive program is used to focusmanagement attention on Company performance over a period of time longer thanone year in recognition of the long-term horizons for return on investments andstrategic decisions in the energy industry. The program is designed to motivatemanagement to assist the Company in achieving a high level of long-termperformance and serves to link this portion of executive compensation tolong-term Shareholder value. Pursuant to the long-term incentive program, theCompensation Committee may award stock based compensation to executive officerson an annual basis. In December of 2004 we awarded each of the executiveofficers restricted stock and stock options.  These awards vest in equalamounts over a four year period on the anniversary of the date of grant.  Mr.Williams was granted 8,130 restricted shares and options to purchase 5,870shares of common stock at the market price on the date of grant ($37.15 pershare).  Based on a Black-Scholes analysis the fair market value of the optionswas $16.75.  The total market value of the long-term grant made to Mr. Williamswas $400,000, compared to $499,000 for the median of the peer group.

###  

### ***Executive Employment Agreements***

During 2002 and 2003, the Compensation Committeecommissioned peer group compensation studies from a nationally recognizedexecutive compensation consultant, retained the services of an attorneyspecializing in executive compensation agreements, and reviewed surveyinformation to help it structure agreement terms for new compensationagreements effective in 2004 consistent with the compensation goals of theCompany.

Although the compensation consultants' report foundthat the Company has consistently performed at or above the 75thpercentile for many performance measures compared to the selected peer group,the Compensation Committee settled on the average of the group salary and bonuscompensation to use as its guidelines. Some of the key provisions of Mr.Williams' agreement effective January 1, 2004 include an initial salary levelof $300,000 per year, and a maximum bonus amount equal to the salary. Inaddition, 75% of the bonus in 2004 was based on performance goals establishedby the Compensation Committee before the beginning of the contract year, withup to 25% of the maximum bonus amount to be awarded at the end of the contractyear at the discretion of the Compensation Committee.  

The Compensation Committee also establishedemployment agreements effective January 1, 2004 with the Company's other threeexecutive officers, Thomas E. Riley, Eric R. Stearns and Darwin L. Stump. Theagreements provide for an annual salary and fixed maximum performance bonuswith performance goals similar to that of Mr. Williams' agreement.

Under the terms of the agreements, adjustments tosalary, maximum bonus amounts and other factors may be made annually by theCompensation Committee at its sole discretion.  For 2005 the committee hasincreased Mr. Williams Base Salary to $318,000 and his maximum bonus for theyear to $413,400.

Respectfully,

THE COMPENSATION COMMITTEE

Jeffrey C. Swoveland, Chair

Donald B. Nestor

David C. Parke

## **SummaryCompensation Table**

The following table sets forth in summary form thecompensation received during each of the Company's last three fiscal years bythe Chief Executive Officer and by each other executive officer of the Companywhose salary and bonus exceeded $100,000 in 2004 (the "NamedExecutives").

| ** **               |                                                                                                                                                                                                                                                                      |            |                     |
|--------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|---------------------|
|                          | Long Term Compensation                                                                                                                                                                                                                                               |            |
|                          |                      Annual  Compensation                    |            |
|                          |                                                                                                                                                                                                                                                                      |            |                     | Other | Restricted | Securities |  |
|                          |                                                                                                                                                                                                                                                                      |            |                     | Annual | Stock | underlying | All Other |
| Name and                 |                                                                                                                                                                                                                                                                      |            | Bonus               | Compen- | Awards | Options | Compen- |
| Principal Position       | Year                                                                                                                                                                                                                                                                 | Salary($)  | (1)(2)($)           | sation($)(3) | ($)(4) |    (#)(5)    | sation($)(6) |
| Steven R. Williams       | 2004                                                                                                                                                                                                                                                                 | 300,000    | 300,000             | 37,567 | 302,030 | 5,870 | 135,834 |
| Chief Executive Officer  | 2003                                                                                                                                                                                                                                                                 | 166,485    | 1,312,385           | 6,241 | - | - | 101,726 |
|  and Director       | 2002                                                                                                                                                                                                                                                                 | 160,125    |   672,582 | 22,777 | - | - | 100,167 |
|                          |                                                                                                                                                                                                                                                                      |            |                     |  |  |  |  |
| Thomas E. Riley          | 2004                                                                                                                                                                                                                                                                 | 240,000    | 140,000             | 5,624 | 200,239 | 3,890 | 100,834 |
| President                | 2003                                                                                                                                                                                                                                                                 | 153,400(7) | 121,370             | 1,565 |    -        | - |  21,726 |
| and Director             |                                                                                                                                                                                                                                                                      |            |                     |  |  |  |  |
|                          |                                                                                                                                                                                                                                                                      |            |                     |  |  |  |  |
| Eric R. Stearns          | 2004                                                                                                                                                                                                                                                                 | 220,000    | 140,000             | 9,678 | 188,796 | 3,670 |  97,834 |
| Executive Vice President | 2003                                                                                                                                                                                                                                                                 | 132,567(7) | 121,370             | 1,084 | - | - |  20,726 |
|                          |                                                                                                                                                                                                                                                                      |            |                     |  |  |  |  |
| Darwin L. Stump          | 2004                                                                                                                                                                                                                                                                 | 200,000    | 140,000             | 12,773 | 177,577 | 3,450 |  97,834 |
| Chief Financial Officer  | 2003                                                                                                                                                                                                                                                                 | 112,733(7) | 121,370             | 1,074 | - | - |  12,777 |
|  and Treasurer      |                                                                                                                                                                                                                                                                      |            |                     |  |  |  |  |
|                          |                                                                                                                                                                                                                                                                      |            |                     |  |  |  |  |

(1)       Includes bonuses earned in the reported fiscal year and paidin the following fiscal year.

(2)       In 1994, the Board of Directors approved a deferredcompensation arrangement for certain Executives. See "Employment and OtherAgreements and Arrangements."  Under the arrangements, each NamedExecutive could choose to defer any portion of his bonus compensation untilretirement or separation from the Company or termination of the plan by theCompany.  Included is deferred bonus Mr. Williams voluntarily deferred of$30,000 in 2002. In 2002, $30,000 of the deferred bonus compensation of Mr.Williams was utilized to pay the premiums of split-dollar life insurancepolicies. The Company terminated the deferred compensation plans during thefirst quarter of 2003 and distributed the amounts previously deferred. Thesplit-dollar policies have been terminated.

(3)       Amounts disclosed in this column consist of use of a companyvehicle, life insurance, disability insurance, and medical reimbursement asprovided for in the Named Executive's employment contract.  Mr. Williamsreceived a director's fee in the amount of $10,000 in 2002 which is alsoincluded.

(4)       Amounts disclosed in this column consist of the value ofrestricted stock awards based upon the closing price of our common stock on thedate of grant which was $37.15 on December 13, 2004.  During 2004 the number ofshares awarded to Messrs. Williams, Riley, Stearns and Stump amounted to 8,130,5,390, 5,080 and 4,780 shares, respectively.  These shares vest in four equalinstallments on the first, second, third and fourth anniversaries of the grantdate.

(5)       Amounts in this column represent the number of options grantedon December 13, 2004 to the named individuals. The fair value of these optionsat date of grant was $16.75 using the Black-Scholes option pricing model withan exercise price of $37.15. These options vest in four equal installments onthe first, second, third and fourth anniversaries of the grant date.

(6)       This amount includes contributions made by the Company underthe Company's Employee Profit Sharing Plan and 401(k) plan.  In 2004, 2003 and2002 the Company contributed $300,000, $250,000 and $200,000, respectively, tothe Employee Profit Sharing Plan. Of the contributions for 2004, Messrs.Williams, Riley, Stearns and Stump were each credited $9,834. Of the contributionsfor 2003, Messrs., Williams, Riley and Stearns were each credited $9,726 andMr. Stump was credited $8,634. Of the contributions for 2002, Mr. Williams wascredited $8,167. The Company provided a matching of 401(k) contribution basedupon all employees respective contributions.  The total Company matchingcontributions were $382,700, $305,515 and $288,000 in 2004, 2003 and 2002. For2004, Messrs. Williams and Riley were each credited with matching contributionsof $16,000, Messrs. Stearns and Stump were credited with matching contributionsof $13,000. For 2003, Messrs. Williams and Riley were each credited withmatching contributions of $12,000, Messrs. Stearns and Stump were credited withmatching contributions of $11,000 and $4,143, respectively. For 2002, Mr. Williamswas credited with matching contributions of $12,000. This amount also includes retirementcompensation for the named individuals which provides for an amount per yearworked under their employment agreements for 10 years following theirtermination of service. The total amounts earned during 2004 to be paid overthe ten-year period following such individuals' termination amounted to $110,000for Mr. Williams, and $75,000 for Messrs. Riley, Stearns and Stump. For 2003and 2002 such amount was $80,000 per year for Mr. Williams. These agreements provide for retirementcompensation equal to $11,000 per year for each year worked under such contractfor 10 years following the date of the termination of service for Mr. Williamsand $7,500 per year for Messrs. Riley, Stearns and Stump.  

(7)       This amount includes compensation for Messrs. Riley, Stearnsand Stump earned during 2003 while each was an officer of the Company prior tobecoming an Executive Officer in November 2003.

## **Stock Options**

The following table contains information about stockoptions granted in 2004 to the named executive officers.

|                    | **Option  Grants in 2004**

**Individual  Grants**     |
|--------------------|--------------------------------------------------------|
| Name               | Number of

Securities 

Underlying 

Options 

Granted | Percent of 

Total Options 

Granted to 

Employees in 

Fiscal Year | Exercise 

or Base 

Price 

($/Sh)(1) | Expiration

Date | Grant 

Date 

Present 

($) Value(2) |
| Steven R. Williams | 5,870                                                  | 34.8% | 37.15 | 12/13/14 |  98,323 |
| Thomas E. Riley    | 3,890                                                  | 23.1% | 37.15 | 12/13/14 |  65,158 |
| Eric R. Stearns    | 3,670                                                  | 21.7% | 37.15 | 12/13/14 |  61,473 |
| Darwin L. Stump    | 3,450                                                  | 20.4% | 37.15 | 12/13/14 |  57,788 |

(1)  The exercise price of each option is equal tothe closing price of our common stock on the date of the grant. The optionsgranted in 2004 become exercisable in four equal installments on the first,second, third and fourth anniversaries of the grant date.

(2)  The estimated present value at grant date ofeach option granted during 2004 has been calculated to be $16.75 for optionswith an exercise price of $37.15 using the Black-Scholes option pricing model.The valuation is based upon the following assumptions.

| Dividend yield                  | 0%     |
|---------------------------------|--------|
| Expected volatility             | 39.71% |
| Risk-free interest rate         | 4.06%  |
| Expected option life (in years) | 7.0    |

The approach used in developing the assumptionsupon which the Black-Scholes valuation was calculated is consistent with therequirements of Statement of Financial Accounting Standars No. 123."Accounting for Stock-Based Compensation." The actual value of theoptions may be significantly different, the value actually realized, if any,will depend upon the excess of the market value of the common stock over theoption exercise price at the time of exercise.

## **Aggregated Option Exercises in Last Fiscal Year and FiscalYear-End Option Values**

The following table provides certain information withrespect to options exercised during 2004 by the persons named in the SummaryCompensation Table under the Company's stock option plans. The table alsorepresents information as to the number of options outstanding as of December31, 2004 with respect to options granted pursuant to the Company's employeestock compensation plans, as well as options granted during 2004 under thoseplans. 

|                    | Number 

of Shares

Exercised | Value

Realized ($)* | Number of Unexercised 

Options at Year-end | Value of Unexercised

In-The-Money Options 

at Year-End(1)($) |
|--------------------|-------------------------------|----------------------|---------------------------------------------|----------------------------------------------------------------|
|                    |                               |                      | Exercisable                                 | Unexercisable                                                  | Exercisable | Unexercisable* |
| Steven R. Williams | 178,000                       | 4,294,790            | -                                           | 5,870                                                          | - | 8,335 |
| Thomas E. Riley    | 114,000                       | 4,599,250            | -                                           | 3,890                                                          | - | 5,524 |
| Eric R. Stearns    | 114,000                       | 4,270,930            | -                                           | 3,670                                                          | - | 5,211 |
| Darwin L. Stump    | 114,000                       | 3,134,510            | -                                           | 3,450                                                          | - | 4,899 |

*Market value ofthe underlying securities at exercise or year-end, as applicable, minus theexercise price.

(1) On December31, 2004, the closing sales price of the Common Stock was $38.57 per share. 

## ** **

## **Employment and Other Agreements and Arrangements**

TheCompany entered into employment agreements with Messrs. Williams, Riley,Stearns and Stump effective January 1, 2004. The initial term of the agreementsis for two years and they are automatically extended for an additional 12months beginning on the first anniversary of the effective date and on eachsuccessive anniversary unless either party cancels. The employment agreementsprovided for a base annual salary for Mr. Williams, Mr. Riley, Mr. Stearns andMr. Stump in the amounts of $300,000, $240,000, $220,000 and $200,000,respectively for 2004. For 2005 the Compensation Committee established BaseSalaries for Mr. Williams, Mr. Riley, Mr. Stearns and Mr. Stump in the amountsof $318,000, $252,000, $231,000 and $210,000, respectively. Each employmentagreement provides for an annual performance bonus, based upon a combination ofwritten objective criteria approved by the Compensation Committee, determinedprior to the beginning of each calendar year and upon the discretion of theCompensation Committee. The maximum amounts of the entire annual performancebonus were $300,000 for Mr. Williams and $140,000 for Messrs. Riley, Stearnsand Stump in 2004. Each of the executives earned the maximum bonus in 2004. For2005 the Compensation Committee has set maximum annual performance amounts forMr. Williams, Mr. Riley, Mr. Stearns and Mr. Stump of $413,400, $201,600,$184,800 and $168,000, respectively. These agreements provide for retirementcompensation equal to $11,000 per year for each year worked under such contractfor 10 years following the date of the termination of service for Mr. Williamsand $7,500 per year for Messrs. Riley, Stearns and Stump.  

Inthe event of a change in control of the Company, each Named Executive has theright to elect to terminate his employment under his employment agreement andreceive severance compensation equal to three times the sum of 1) his highestbase salary in the previous two years of employment plus 2) highest bonus paidto the named Executive during the same two year period.

Eachemployment agreement contains a standard non-disclosure covenant. Eachemployment agreement also provides that the Named Executive is prohibitedduring the term of his employment and for a period of one year following histermination from engaging in any business that is competitive with theCompany's oil and gas drilling business.

TheCompany has entered into stock redemption agreements with Messrs. Williams,Riley, Stearns and Stump. The agreements require the Company to maintain lifeinsurance policies on each of them in the amount of $1 million. At the electionof the Named Executive's estate or heirs made within one year of such person's death,the Company must utilize the proceeds from such insurance policies to purchasefrom his estate or heirs all or a portion of his shares of the Company's CommonStock owned by him, including shares subject to outstanding stock options orwarrants owned by such Named Executive at the time of his death, up to anaggregate sale price of $1 million. The purchase price for such shares ofCommon Stock will be based upon the closing market price for the Company'sCommon Stock as quoted by Nasdaq of the stock day next preceding the writtendemand upon the corporation to purchase such shares. The Company is notrequired to purchase any shares in excess of the amount provided by suchinsurance policies. 

## **Stock Option Plans**

Underthe Company's incentive stock option plans, options to purchase shares ofCommon Stock of the Company may be granted to certain officers and keyemployees of the Company, which options are intended to qualify as incentivestock options under the provisions of the Internal Revenue Code. The optionsmay be exercised six months after the date of grant. Options will expire tenyears from the date of grant if not exercised. A dissolution or liquidation ofthe Company or a merger or consolidation in which the Company is not thesurviving corporation will cause each outstanding option to terminate, providedthat each optionee, in such event, will have the right immediately prior tosaid dissolution or liquidation or merger or consolidation to exercise hisoption in whole or in part without regard to any installment vesting provisionswith respect to such options. 

Asapproved by the shareholders at the annual meeting in 2004, the Company has aLong-Term Equity Compensation Plan which allows for the awarding of Non-qualifiedstock options, Incentive Stock Options, Stock Appreciation Rights, RestrictedStock, Performance shares and Performance units. The number of shares allocatedto this plan is 750,000 shares.  During 2004, a total of 23,380 shares ofrestricted stock and 16,880 options were granted to the executives namedpreviously. As of March 31, 2005, 709,740 shares remain in the plan, for future grants.

Thefollowing table shows at December 31, 2004, the number of outstanding optionsand the weighted average exercise price of those options outstanding understock option plans approved by the shareholders. 

| Equity  Compensation Plan Information

December 31, 2004     |
|--------------------------------------------------------------|
| Plan Category                                                | Number of securities to 

be issued upon exercise 

of outstanding options, 

warrants and rights

(a) | Weighted-average 

exercise price of 

outstanding options, 

warrants and rights

(b) | Number of securities 

remaining available for 

future issuance under 

equity compensation plans (excluding  securities 

reflected  in column (a))

(c) |
| Equity compensation plans 

approved by security holders     | 76,880 | $11.64 | 709,740 |
|                                                              |  |  |  |
| Equity compensation plans not 

approved by security holders | - | - | - |
| Total                                                        | 76,880 | $11.64 | 709,740 |

## **Key-Man Life Insurance**

TheCompany maintains key-man life insurance policies on the life of Mr. Williamsin the amount of $4.0 million, and in the amount of $1.0 million for Messrs.Riley, Stearns and Stump. The Company is the beneficiary of each policy.

##  

## **Employee 401(k) and Profit Sharing Plan**

In1987, the Company established a retirement plan qualified under Section 401(k)of the Internal Revenue Code. The plan is funded by employee contributions anda company matching contribution. Administrative costs of the plan are borne bythe Company. The employees choose from eight investment programs and,therefore, the amount of an individual's plan assets depends on the amount oftheir contributions and the performance by their chosen investments.

In1992, the Company began a Profit Sharing Retirement plan to supplement the401(k) Plan. Contributions are dependent on corporate profitability and are atthe discretion of the Board of Directors of the Company. The Company filed andqualified the plan with the Internal Revenue Service.  

## ** **

## **Shareholder Performance Graph**

Thefollowing graph illustrates the cumulative total return on the Company's commonstock over a five year period ended December 31, 2004, compared to thecumulative total returns for the same period for the S&P 500 Index and apeer group index. The peer group index consists of 226 Crude Petroleum andNatural Gas Companies. The cumulative total Shareholder return computationsassume the investment of $100 in Company common stock, the S&P 500 Indexand the peer group index. The table includes the cumulative Shareholder returnassuming the reinvestment of dividends.

| **------------------------  FISCAL YEAR ENDING ---------------------** |
|------------------------------------------------------------------------|
| **Company/Index/Market**                                               | **12/31/1999** | **12/29/2000** | **12/31/2001** | **12/31/2002** | **12/31/2003** | **12/31/2004** |
| ** **                                                             | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Petroleum Dev Cp**                                                   | **100.00** | **172.14** | **161.84** | **139.02** | **621.64** | **1011.67** |
| **Crude Petroleum &**

**  Natural Gas**                      | **100.00** | **127.04** | **116.56** | **124.27** | **199.58** | ** 253.54** |
| **S&P Composite**                                                  | **100.00** | ** 90.89** | ** 80.09** | ** 62.39** | ** 80.29** | **  89.02** |

** **

** **

# SECURITY OWNERSHIPOF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain informationregarding ownership of the Company's Common Stock as of March 31, 2005 by (a)each person known by the Company to own beneficially more than 5% of theoutstanding shares of Common Stock; (b) each director of the Company; (c) eachNamed Executive; (d) all directors and executive officers as a group

|                                                                        | Beneficial Ownership (1)                 |
|-----------------------------------------------------------------------------|------------------------------------------|
| Name and  Address                                                           | Number                                   | Percent |
| Barclays  Global Investors, NA

45 Fremont  Street

San Francisco, CA 94105 | 2,197,003(2)                             | 13.2% |
|                                                                             |                                          |  |
| Fidelity  Management

82  Devonshire Street

Boston, MA 02109               | 1,536,000(3)                             | 9.3% |
|                                                                             |                                          |  |
| Steven  R. Williams

103  East Main Street

Bridgeport, WV 26330            | 402,156              | 2.5% |
|                                                                             |                                          |  |
| Thomas  E. Riley

103  E. Main Street

Bridgeport, WV 26330                 | 93,197               | * |
|                                                                             |                                          |  |
| Eric  R. Stearns

103  E. Main Street

Bridgeport, WV 26330                 | 50,000               | * |
|                                                                             |                                          |  |
| Darwin  L. Stump

103  E. Main Street

Bridgeport, WV 26330                 | 20,450               | * |
|                                                                             |                                          |  |
| Vincent F. D'Annunzio                                                       | 15,838               | * |
|                                                                             |                                          |  |
| Jeffrey C. Swoveland                                                        | 12,342               | * |
|                                                                             |                                          |  |
| Donald B. Nestor                                                            | 1,143                | * |
|                                                                             |                                          |  |
| Kimberly Luff Wakim                                                         | 1,300                | * |
|                                                                             |                                          |  |
| David C. Parke                                                              |    852     | * |
|                                                                             |                                          |  |
| All  directors and executive officers as a

group (9 persons)               | 624,658              | 3.8% |

* Less than 1%

(1) Includes shares over which the person currentlyholds or shares voting or investment power. Unless otherwise indicated in thefootnotes to this table, the persons named in this table have sole voting andinvestment power with respect to the shares beneficially owned. 

(2) According to the Schedule 13G filed by BarclayGlobal Investors, NA with the Securities and Exchange Commission on February14, 2005.

(3) According to the Schedule 13G filed by FidelityManagement with the Securities and Exchange Commission on February 14, 2005.

** **

## **Section 16(a) Beneficial Ownership Reporting Compliance**

Section 16(a) of the Exchange Act requires theCompany's officers and directors, and persons who own more than 10% of aCompany's equity securities, to file reports of ownership and changes inownership with the Securities and Exchange Commission. Officers, directors andholders of more than 10% of the Common Stock are required by regulationspromulgated by the Commission pursuant to the Exchange Act to furnish theCompany with copies of all Section 16(a) forms they file. The Company assistsofficers and directors, and will assist beneficial owners, if any, of more than10% of the Common Stock, in complying with the reporting requirements ofSection 16(a) of the Exchange Act.

Based solely on its review of the copies of suchforms received by it, the Company believes that since January 1, 2004, allSection 16(a) filing requirements applicable to its directors, officers andgreater than 10% beneficial owners were met.

# PROPOSAL #2- RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLICACCOUNTING FIRM

Atthe Meeting, the Shareholders of the Company will be asked to ratify the AuditCommittee's selection of KPMG LLP as the Company's certified public accountantsfor the fiscal year ended December 31, 2005. KPMG LLP conducted the audit forthe fiscal year ended December 31, 2004. A representative of KPMG LLP will bepresent at the Meeting, will have an opportunity to make statements if he sodesires, and will be available to respond to appropriate questions.

##  

## **Vote Required******

Theaffirmative vote of a majority of the shares of Common Stock cast at the AnnualMeeting represented in person or by proxy and entitled to vote at the AnnualMeeting is required for approval.

**THE BOARD OF DIRECTORS RECOMMENDS A VOTE"FOR" PROPOSAL #2**

##  

## **Report of the Audit Committee**

The Audit Committee of the Board is composed of threedirectors and operates under a written charter adopted by the Board ofDirectors. Each member of the committee meets the independence requirements ofRule 4200(a)(15) of the NASDAQ's listing standards. The duties of the Committeeare summarized in this proxy statement under "Committees of the Board ofDirectors" and are more fully described in the charter, which is availableat the Company's website under "Corporate Governance".

Management isresponsible for the Company's internal controls and preparation of theconsolidated financial statements in accordance with generally acceptedaccounting principles. The Company's Independent Registered Public AccountingFirm is responsible for performing an independent audit of consolidatedfinancial statements in accordance with the standards of the Public CompanyAccounting Oversight Board (United States) and issuing a report thereon. TheCommittee's responsibilities include monitoring and overseeing these processes.

In this context,the Committee reviewed and discussed the Company's audited consolidatedfinancial statements for the year ended December 31, 2004 (the "AuditedFinancial Statements") with management and the Company's IndependentRegistered Public Accounting Firm for 2004, KPMG LLP. The Committee alsoprovided oversight and met numerous times with management and KPMG LLP for theplanning and implementation of the Company's compliance with the provision ofthe Sabanes Oxley Act of 2002 regarding the Company's internal controls. TheCommittee also discussed with KPMG LLP the matters required to be discussed byStatement of Auditing Standards No. 61, as amended (*Communication with AuditCommittees*), and KPMG LLP directly provided reports on significant mattersto the Committee. 

The Committee hasreceived the written disclosures and the letter from KPMG LLP required byIndependence Standards Board Standard No. 1 (*Independence Discussion withAudit Committees*), and has discussed with KPMG LLP its independence fromthe Company. The Committee also considered whether the provision of non-auditservices by KPMG LLP was compatible with maintaining the Independent RegisteredPublic Accounting Firm's independence and approved all non-audit services inadvance.

The Committee hasdiscussed with management and KPMG LLP such other matters and received suchassurances from them as the Committee deemed appropriate.

Based on theforegoing review and discussions and relying thereon, the Committee recommendedthat the Board of Directors include the Audited Financial Statements in theCompany's Annual Report on Form 10-K for the year ended December 31, 2004.

In addition, theCommittee appointed KPMG LLP as the Company's Independent Registered PublicAccounting Firm for 2005. This appointment is subject to ratification by theCompany's Shareholders.

| THE AUDIT COMMITTEE     |
|-------------------------|
|                         |
| Donald B. Nestor, Chair |
| Jeffrey C. Swoveland    |
| Kimberly Luff Wakim     |

##  

## **KPMG Fees**

The followingtable presents the aggregate fees billed to the Company by KPMG LLP (KPMG) forservices in 2004 and 2003:

|                                     | 2004                                                                                        | 2003                                                                |
|-------------------------------------|---------------------------------------------------------------------------------------------|---------------------------------------------------------------------|
| Audit Fees                          | $   708,524                                                                  | $115,880                                                            |
| Audit Related  Fees                 | 309,127                                                                                     | 284,188                                                             |
| Total Audit  and Audit Related Fees | $1,017,651                                                                                  | $400,068                                                            |
| Tax Fees                            | 4,000                                                                                       | 4,175                                                               |
| All Other Fees                      |                0 |            0 |
| Total Fees                          | $1,021,651                                                                                  | $404,243                                                            |

## **Audit Fees**

The aggregate audit fees billed for professionalservices rendered by KPMG LLP for the audit of our annual financial statements andthe audit of the Company's internal controls over financial reporting for the fiscalyears ended December 31, 2004 and 2003, including reviews of the condensedfinancial statements included in our quarterly reports on Form 10-Q for thefiscal years ended December 31, 2004 and 2003, were $708,524 and $115,880.  Forthe year ended December 31, 2004, $591,800 of the above amount paid to KPMG wasfor the report on management's assessment of the effectiveness of internalcontrol over financial reporting and the effectiveness of internal control overfinancial reporting as required by the Sarbanes Oxley Act of 2002.

##  

## **Audit Related Fees**

The aggregate of audit related fees relating toregistration statements filed with the Securities and Exchange Commissionamounted to $24,900 during the year ended December 31, 2004 and $25,040 for theyear ended December 31, 2003. Also included as audit related fees are the annualaudits on the financial statements for the fiscal years ended December 31, 2004and 2003 of sixty-two and fifty-eight limited partnerships, respectively, forwhich the Company acts as managing general partner. The aggregate billing forthose professional services was $284,227 for the year ended December 31, 2004and $259,148 for the year ended December 31, 2003.

##  

## **Tax Fees**

Tax Fees include tax services for the fiscal yearended December 31, 2004 and 2003 provided for the four partnerships formed insuch year for which the Company acts as managing general partner, in theamounts of $4,000 and $4,175, respectively.

## **All Other Fees**

None.

## ** **

## **Pre-Approval Policies and Procedures**

The Sarbanes-Oxley Act of 2002 requires that allservices provided to the Company by its Independent Registered PublicAccounting Firm be subject to pre-approval by the Audit Committee or authorizedmembers of the Committee. The Audit Committee has adopted policies andprocedures for pre-approval of all audit services and non-audit services to beprovided by the Company's Independent Registered Public Accounting Firm.Services necessary to conduct the annual audit must be pre-approved by theAudit Committee annually at a meeting. Permissible non-audit services to beperformed by the independent accountant may also be approved on an annual basisby the Audit Committee if they are of a recurring nature. Permissible non-auditservices to be conducted by the independent accountant which are not eligiblefor annual pre-approval must be pre-approved individually by the full AuditCommittee or by an authorized Audit Committee member. Actual fees incurred forall services performed by the independent accountant will be reported to theAudit Committee after the services are fully performed. The duties of theCommittee are summarized in this Proxy Statement under "Committees of theBoard of Directors," above and are more fully described in the Audit CommitteeCharter, which is available at the Company's website under CorporateGovernance.

# PROPOSAL #3- APPROVAL OF THE 2005 NON-EMPLOYEE DIRECTOR RESTRICTED STOCKPLAN

The Board of Directors of the Company plays a keyrole in setting the direction of the Company and representing the shareholders'interests.  Recent changes in rules and regulations governing publiccorporations and in the general business environment have greatly increased thetime and effort required of all directors of publicly traded companies, includingthe Company's non-employee Directors. The Board of Directors believes that itis necessary to (i) compensate its non-employee Directors in a manner that willhelp attract qualified candidates to serve as non-employee Directors, and (ii)induce incumbent non-employee Directors to continue to serve if the Board ofDirectors desires that they remain on the Board.  At the same time, the Boardof Directors desires to provide a vehicle by which non-employee Directors canincrease their stock ownership and proprietary interest in the Company andenhance their identification with the Company shareholders.

In order to accomplish these objectives, the Board ofDirectors has adopted the Petroleum Development Corporation 2005 Non-EmployeeDirector Restricted Stock Plan (the "NDRSP") to provide the Company'snon-employee Directors with awards of shares of Common Stock, subject to therestrictions and other provisions of the NDRSP ("Restricted Stock"). The NDRSPis being presented to the shareholders for your approval as required by listingstandards of the NASDAQ Stock Market.

## ** **

## **VoteRequired**

The affirmative vote of a majority of the shares ofCommon Stock cast at the Annual Meeting represented in person or by proxy andentitled to vote at the Annual Meeting is required for approval of the NDRSP.

**THE BOARD OF DIRECTORS RECOMMENDS A VOTE"FOR" PROPOSAL #3**

## ** **

## **SummaryDescription of the NDRSP**

The following summary of the terms ofthe NDRSP is qualified in its entirety by reference to the text of the plan,which is attached as Exhibit B to this Proxy Statement. The NDRSP was adoptedby the Board of Directors effective as of April 27, 2005, subject to yourapproval.

### ***Administration***

The NDRSP is administered by theCompensation Committee of the Board of Directors or such other committee ofDirectors as may be designated by the Board (the "Committee").

### * *

### ***Eligibility***

Only Directors who are not employees ofthe Company or its subsidiaries are eligible to participate in the NDRSP.Currently five Directors of the Company are eligible to participate. However,because the size of the Board could change or other non-employee Directorscould be elected, the total number of persons who will be eligible toparticipate in the future and the respective benefits to be accorded to them cannotbe determined at this time.

### ***Stock Available for Issuance through the NDRSP***

Up to 40,000 shares of the Company'scommon stock, par value $0.01 per share, are authorized for issuance throughthe NDRSP. Shares issued under the NDRSP may be either authorized but unissuedshares, previously issued shares of stock reacquired by the Company, includingshares purchased in the open market, or any combination thereof. On April 27,2005, the closing price for a share of the Company's common stock on the NASDAQNational Market was $26.57.

The NDRSP provides for appropriate adjustments inthe number of shares of common stock subject to awards and available for futureawards in the event of changes in outstanding common stock by reason of arecapitalization, reorganization, merger, stock split, or certain other events.

### ***Description of Awards under the Plan***

As of the date of each annual meeting of shareholders("Annual Meeting"), commencing with the 2005 Annual Meeting, each non-employeeDirector will be awarded that number of shares of Restricted Stock asdetermined by the Board, after consideration of the recommendations of theCommittee. A non-employee Director who is elected to the Board on a date otherthan the date of an Annual Meeting shall be awarded that number of shares ofRestricted Stock as determined by the Board, after consideration of therecommendations of the Committee. The amount of the award for the upcoming planyear will be disclosed in the Company's proxy statement for the Company'sannual meeting of shareholders. For 2005, the Board has determined to awardeach non-employee director restricted stock with a market value of $40,000 onthe date of the annual meeting. Non-employee Directors receiving RestrictedStock will have, subject to the provisions of NDRSP, all of the rights of ashareholder with respect to the shares of Restricted Stock including the rightto vote the shares and receive cash dividends and other cash distributionsthereon.

Restricted Stock shall be subject to the restrictionsfor a period (the "Restricted Period") commencing on the date as of which theRestricted Stock is awarded and ending on the earliest of the first to occur ofthe following

•                    the retirement of the non-employeeDirector from the Board in compliance with the Board's retirement policy asthen in effect;

•                    the termination of thenon-employee Director's service on the Board as a result of the non-employeeDirector's not being nominated for reelection by the Board.

•                    the termination of thenon-employee Director's service on the Board because of the non-employeeDirector's resignation or failure to stand for reelection with the consent ofthe Board (which means approval by at least 80% of the directors voting, withthe affected non-employee Director abstaining);

•                    the termination of thenon-employee Director's service on the Board because the non-employee Director,although nominated for reelection by the Board, is not reelected by theshareholders;

•                    the termination of thenon-employee Director's service on the Board because of (i) thenon-employee Director's resignation at the request of the Nominating andGovernance Committee of the Board, (ii)  thenon-employee Director's removal by action of the shareholders or by the Board,or (iii) a Changein Control of the Company;

•                    the termination of thenon-employee Director's service on the Board because of disability or death. "Disability" will have the meaning ascribed to such term in theCompany's governing long-term disability plan, or if no such plan exists, atthe discretion of the Committee.

###  

"Change in Control" of theCompany is deemed to have occurred as of the first day that any one or more ofthe following conditions shall have been satisfied:  

#### •                    the"Beneficial Ownership" of securities representing more thanthirty-three percent (33%) of the combined voting power of the Company isacquired by any "person" as defined in Section 13(d) and 14(d) of theSecurities Exchange Act of 1934 (other than the Company, any trustee or otherfiduciary holding securities under an employee benefit plan of the Company, orany corporation owned, directly or indirectly, by the shareholders of theCompany in substantially the same proportions as their ownership of stock ofthe Company); or

#### •                    theshareholders of the Company approve a definitive agreement to merge orconsolidate the Company with or into another corporation or to sell orotherwise dispose of all or substantially all of its assets, or adopt a plan ofliquidation; or

•                    during any period of threeconsecutive years, individuals who at the beginning of such period were membersof the Board cease for any reason to constitute at least a majority thereof(unless the election, or the nomination for election by the Company'sshareholders, of each new director was approved by a vote of at least amajority of the directors then still in office who were directors at thebeginning of such period or whose election or nomination was previously soapproved).

If a non-employee Director ceases to be a member ofthe Board for any other reason, including but not limited to removal orresignation for "Cause," the non-employee Director will forfeit to the Companyall Restricted Stock awarded to the non-employee Director for which theRestricted Period has not ended.  For purposes of the NDRSP, "Cause"will be a good faith determination by the Board that the non-employee Director (i) failed tosubstantially perform his or her duties (other than a failure resulting fromhis or her incapacity due to physical or mental illness) after a written demandfor substantial performance has been delivered to the non-Employee Director bythe Board, which demand specifically identifies the manner in which the Boardbelieves he or she has not substantially performed his her duties; (ii) has engagedin conduct the consequences of which are materially adverse to the Company,monetarily or otherwise; or (iii) haspleaded guilty to or been convicted of a felony.  The non-employee Directorwill not be deemed to have been terminated for Cause unless there shall havebeen delivered to the non-employee Director a letter setting forth the reasonsfor the Company's termination of the non-employee Director for Cause and theDirector has failed to cure that reason for termination within thirty daysafter the receipt of the notice.

Following satisfaction of the Restricted Period, theRestricted Stock will be released to the non-employee Director, free and clearof all restrictions and other provisions of the NDRSP.  The non-employeeDirector will continue to be subject to the restrictions imposed by the federalsecurities laws, including the ownership reporting requirements of § 16(a)under the Securities Exchange Act and the short-swing profits prohibitions of §16(b) of the Securities Exchange Act.

Any additional Company stock or other securities orproperty (other than cash) that may be issued with respect to Restricted Stockas a result of any stock dividend, stock split, business combination or otherevent, will be subject to the restrictions and other provisions of the NDRSP.The Company will have the right to withhold from any settlement of stock madeunder the NDRSP any federal, state, or local taxes of any kind subsequentlyrequired by law to be withheld or paid by the Company on behalf of anon-employee Director with respect to the settlement.  In the event any suchtaxes are imposed, the subject non-employee Director will be required to makearrangements satisfactory to the Company for the satisfaction of any suchwithholding tax obligation. The Company will not be required to deliver stockunder the NDRSP until any such obligation is satisfied.  Neither theestablishment of the NDRSP or the awarding of Restricted Stock to anon-employee Director will be considered to give the non-employee Director anyright to be retained on, or nominated for reelection to, the Board, or to anybenefits or awards not specifically provided for by the NDRSP.\

### * *

### ***Nontransferability***

The Restricted Stock may not be sold,assigned, transferred, pledged, hypothecated or otherwise disposed of, andneither the right to receive Restricted Stock nor any interest under the NDRSPmay be assigned by a non-employee Director, until such time as the restrictionhas lapsed in accordance with the terms of the NDRSP.

* *

### ***Amendment and Termination of theNDRSP***

* *

The Board may at any time amend orterminate the NDRSP provided that no amendment or termination shall, withoutthe written consent of the affected non-employee Director, adversely affect thenon-employee Director's rights under outstanding awards of Restricted Stock. Shareholder approval of any such amendment will be required if it is requiredunder law or any exchange on which are listed any of the Company's equitysecurities.

* *

### ***Tax Treatment of the NDRSP***

* *

The federal income tax consequences ofthe issuance of awards under the NDRSP are described below.  The followinginformation is only a summary of the tax consequences of the awards, andrecipients should consult with their own tax advisors with respect to the taxconsequences inherent in the ownership of the awards.

A recipient will not be taxed at thedate of an award of shares of Restricted Stock under the NDRSP, but will betaxed at ordinary income rates on the fair market value of any Restricted Stockas of the date that the restrictions lapse, unless the recipient, within 30days after transfer of such Restricted Stock to the recipient, elects underSection 83(b) of the Code to include in income the fair market value of theRestricted Stock as of the date of such transfer.  The Company will be entitledto a corresponding deduction.  Any disposition of shares after restrictionslapse will be subject to the regular rules governing long-term and short-termcapital gains and losses, with the basis for this purpose equal to the fairmarket value of the shares at the end of the Restricted Period (or on the dateof the transfer of the Restricted Stock, if the non-employee Director elects tobe taxed on the fair market value upon such transfer).  Dividends received by arecipient during the Restricted Period will be taxable to the recipient atordinary income tax rates and will be deductible by the Company unless therecipient has elected to be taxed on the fair market value of the RestrictedStock upon transfer, in which case they will thereafter be taxable to thenon-employee Director as dividends and will not be deductible by the Company.

**THE BOARD OF DIRECTORSRECOMMENDS A VOTE "FOR" PROPOSAL #3**

** **

# OTHER BUSINESS

As of the date of this Proxy Statement, management ofthe Company is not aware of any matters to be brought before the Annual Meetingother than the matters set forth in this Proxy Statement. However, if othermatters properly come before the Meeting, it is the intention of the proxyholders named in the enclosed form of proxy to vote in accordance with theirdiscretion on such matters pursuant to such proxy.

##  

## **Advance Notice Procedures**

Under the Company's By-Laws, no business may bebrought before an annual meeting of the Company unless it is specified in thenotice of the meeting or is otherwise brought before the meeting by or at thedirection of the Board of Directors or by a Shareholder entitled to vote whohas delivered advance notice to the Company. The notice must contain certaininformation specified in the By-Laws and be delivered to the CorporateSecretary of the Company at 103 East Main Street, Bridgeport, West Virginia26330, not less than 80 days nor more than 90 days prior to the firstanniversary of the preceding year's annual meeting. These requirements areseparate from and in addition to the SEC's requirements that a Shareholder mustmeet in order to have a Shareholder proposal included in the Company's proxystatement pursuant to Rule 14a-8 under the Securities Exchange Act of 1934.Under federal proxy rules, if a Shareholder wishes to present such a proposal,but fails to notify the Company by the date required by the Company's By-laws,the proxies solicited by the Board of Directors will include discretionaryauthority to vote on the Shareholder's proposal in the event the proposal isproperly brought before the meeting.

##  

## **General**

The enclosed Proxy is solicited by the Company's Boardof Directors. The cost of solicitation of such proxies will be borne by theCompany. The Company will reimburse brokerage firms and other custodians,nominees and fiduciaries for reasonable and appropriate expenses incurred bythem in sending proxy materials to the beneficial owners of the Company'scommon stock. In addition to solicitations by mail, directors, officers andemployees of the Company may solicit proxies personally, by telephone or bytelegraph without additional compensation.

## ** **

## **Shareholder Proposals for 2006 Annual Meeting**

In order to be included in the Company's proxystatement for the 2006 annual meeting of Shareholders, Shareholder proposalsmust be received by the Company at its principal executive office on or priorto January 20, 2006. Proposals should be addressed to Corporate Secretary,Petroleum Development Corporation, 103 East Main Street, Bridgeport, WestVirginia 26330.

In addition, for any proposal that is not submittedfor inclusion in next year's proxy statement, but is instead sought to bepresented directly at the 2006 annual meeting of Shareholders, SEC rules permitmanagement to vote proxies in its discretion if the Company (1) receives writtennotice of the proposal not later than March 25, 2006, nor earlier than March14, 2006, and advises Shareholders in the 2006 proxy statement about the natureof the matter and how management intends to vote on the matter; or (2) does notreceive written notice of the proposal prior to the close of business on March25, 2006. Notices of intention to present proposals at the 2006 annual meetingof Shareholders should be addressed to Corporate Secretary, PetroleumDevelopment Corporation, 103 East Main Street, Bridgeport, West Virginia 26330.

|  | By Order Of The  Board of Directors |
|--|-------------------------------------|
|  |                                     |
|  |                                     |
|  |                                     |
|  | Steven R.  Williams                 |
|  | Chairman                            |

Dated:May 11, 2005

THE COMPANY WILLPROVIDE WITHOUT CHARGE TO ANY PERSON WHO IS A RECORD OR BENEFICIAL HOLDER OFCOMMON STOCK OF THE COMPANY, ON WRITTEN REQUEST OF SUCH PERSON, A COPY OF THECOMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31,2004 INCLUDING FINANCIAL STATEMENTS AND SCHEDULES THERETO, WHICH THE COMPANYFILED WITH THE SECURITIES AND EXCHANGE COMMISSION. COPIES MAY BE OBTAINED BYWRITING TO CORPORATE COMMUNICATIONS DEPARTMENT, PETROLEUM DEVELOPMENTCORPORATION, P.O. BOX 26, BRIDGEPORT, WEST VIRGINIA 26330.

** **

**Petroleum Development Corporation**

***Proxy Solicited by the Board of Directors For Annual Meeting of Shareholders***

Theundersigned hereby appoints STEVEN R. WILLIAMS and DARWIN L. STUMP, and eitherof them, proxies, each with full power to act without the other and with fullpower of substitution for and in the name of the undersigned at the AnnualMeeting of Shareholders of Petroleum Development Corporation (the"Company") to be held on June 10, 2005 at 10:00 A.M. and at anyadjournment or postponement thereof to vote all shares of the Common Stock ofthe Company, held by the undersigned with respect to the following matters orpostponement and on such other matters as may properly come before the meeting.

(1)ELECTION OF DIRECTORS

* *

JeffreyC. Swoveland and David C. Parke

(INSTRUCTION:To withhold authority to vote for any nominee, circle that nominee's nameabove.)

(2) Toratify the selection of Independent Registered Public Accounting Firm for theCompany for the fiscal year ending December 31, 2005.

(3) Toapprove the 2005 Non-Employee Director Restricted Stock Plan.

(CONTINUEDAND TO BE SIGNED ON THE OTHER SIDE)

Theundersigned hereby acknowledges receipt of the Notice of Annual Meeting of Shareholdersand Proxy Statement for such meeting dated June 10, 2005 and a copy of theCompany's 2004 Annual Report.

THISPROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE REVOKED PRIORTO ITS EXERCISE. THIS PROXY, WHEN PROPERLY EXECUTED AND RETURNED, WILL BE VOTEDAS DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS INDICATED,IT WILL BE VOTED FOR PROPOSALS 1, 2 AND 3.

___________________,2005

(Pleasesign EXACTLY as your name appears hereon) when signing as a representativecapacity, please give full title.

IMPORTANTINFORMATION IS CONTAINED ON OTHER SIDE OF THIS CARD, PLEASE READ BOTH SIDES OFTHIS CARD, SIGN, DATE AND RETURN YOUR PROXY PROMPTLY IN THE ENCLOSED ENVELOPE. 

# Exhibit A - CORPORATE GOVERNANCEGUIDELINES

**(**ApprovedJanuary 18, 2005)

** **

The Board of Directors (the"Board") of Petroleum Development Corporation ("PDC" or the"Corporation") has adopted these guidelines to promote the effectivefunctioning of the Board and its committees.

** **

**Role of the Board**

** **

The business and affairs of PDC aremanaged by or under the direction of its Board in accordance with Nevada law. Thedirectors' fiduciary duty is to exercise their business judgment in the bestinterests of PDC's shareholders.

** **

**Board Structure**

** **

*Board Size and Composition.*The size of the Board will provide forsufficient diversity among nonemployee directors while also facilitatingsubstantive discussions in which each director can participate meaningfully.The Board size is prescribed by PDC's By-Laws, which currently provide that theBoard shall have 7 members. Currently, the Board intends to have 7 members with2 employee directors and 5 non-employee directors.

*Independent Directors.*A substantial majority of the Board willconsist of directors whom the Board has determined to be independent. Ingeneral, an independent director must have no material relationship with PDC,directly or indirectly, except as a director. The Board will determineindependence on the basis of the standards specified in the corporategovernance rules of the NASDAQ, applicable laws and regulations and other factsand circumstances the Board considers relevant.

*Election of Directors.*Directors will stand for election at theannual meeting of shareholders for a three year term in three classes of thesame size as nearly as possible.

*Chairman and CEO.*The Board believes it is appropriate andefficient for PDC's Chief Executive Officer (CEO) also to serve as Chairman ofthe Board. However, the Board retains the authority to separate those functionsif it deems such action appropriate in the future.

*Lead Director.*The non-employee directors shall select alead director from among their ranks who shall preside at executive sessions. 

*Term Limits.*The Board believes that experience as anPDC director is a valuable asset. Therefore, directors are not subject to termlimits except as a result of reaching the Board's mandatory retirement age.

*Mandatory Retirement.*No director may stand for election afterreaching age 72.

*Other Directorships.*Recognizing the substantial timecommitment required of directors, it is expected that directors will serve onthe boards of other public companies only to the extent that, in the judgmentof the Board, such services do not detract from the directors' ability todevote the necessary time and attention to PDC. In no case will a directorserve on the boards of more than two other public companies. The Nominating andGovernance Committee will, at least annually, review all directors' service onthe boards of other public companies. 

*Change in Status.*To avoid any potential conflict ofinterest, directors will not accept a seat on any additional public companyboard without first reviewing the matter with the Nominating and GovernanceCommittee. In addition, a non-employee director will tender his or herresignation for consideration by the Board in the event of retirement or othersubstantial change in the nature of the director's employment or othersignificant responsibilities.

*Former Officers.*The Board does not believe that formerofficers of PDC should continue to serve on the Board after they no longer holdthat officer position.

** **

**Director Selection; Qualifications;Education**

* *

*Selection.*The Board, acting on the recommendationof the Nominating and Governance Committee, will nominate a slate of directorcandidates for election at each annual meeting of shareholders and will electdirectors to fill vacancies, including vacancies created as a result of anyincrease in the size of the Board, between annual meetings.

*Qualifications.*The Board maintains separate guidelinesdescribing the desired qualifications for non-employee directors. At leastannually, the Nominating and Governance Committee will review these guidelinesand make such recommendations to the Board as the Committee may deemappropriate.

* *

*Orientation.*New non-employee directors will receive acomprehensive orientation from appropriate executives regarding PDC's businessand affairs.

*Continuing Education.*Reviews of aspects of PDC's operationswill be presented by appropriate executives from time to time as part of theagenda of regular Board meetings. The Board will also normally conduct anon-site visit to an PDC facility other than the corporate headquarters inconjunction with a regular Board meeting at least once every other year.Directors are encouraged to participate in approved board governance trainingon a periodic basis.  If approved in advance of the training by the Nominatingand Governance Committee, the Company will reimburse directors for the cost ofsuch training.

** **

**Board Meetings; Director Responsibilities**

* *

*Number of Regular Meetings.*The Board normally holds six regularmeetings per year. Additional meetings may be scheduled as required.

*Agenda and Briefing Material.*An agenda for each Board meeting andbriefing materials will, to the extent practicable in light of the timing ofmatters that require Board attention, be distributed to each directorapproximately 5 days prior to each meeting. The Chairman will normally set theagenda for Board meetings. Any director may request the inclusion of specificitems.

*Meeting Attendance.*It is expected that each director willmake every effort to attend each Board meeting and each meeting of anycommittee on which he or she sits. Attendance in person is preferred butattendance by teleconference is permitted if necessary.

*Director Preparedness.*Each director should be familiar with theagenda for each meeting, have carefully reviewed all other materialsdistributed in advance of the meeting, and be prepared to participatemeaningfully in the meeting, and to discuss all scheduled items of business.

*Confidentiality.*The proceedings and deliberations of theBoard and its committees are confidential. Each director will maintain theconfidentiality of information received in connection with his or her serviceas a director, and the CEO will speak for the Corporation.

** **

**Non-Employee Director Executive Sessions**

** **

An executive session of the independentdirectors will normally be held immediately following each meeting of the fullBoard. The Lead Director will preside at the executive sessions' unless, takinginto account the subject matter under discussion, the independent directorsselect another leader for a particular session. Any independent director mayraise issues for discussion at an executive session.

** **

**Board Self-Evaluation**

** **

At least annually, the Board willevaluate its performance and effectiveness.

** **

**Committees**

** **

*Committees.*The Board will appoint from among itsmembers committees it determines are necessary or appropriate to conduct itsbusiness. Currently, the standing committees of the Board are the ExecutiveCommittee, Audit Committee, Nominating and Governance Committee, CompensationCommittee, and Qualified Legal Compliance Committee.

*Committee Composition.*The Nominating and Governance Committee,Audit Committee, and Compensation Committee will consist solely of independentdirectors. With the exception of the Executive Committee where the Chairman ofthe Board will also be the Chair, the Nominating and Governance Committee willrecommend committee Chairs to the full Board for approval.

*Committee Charters.*Each of the committees will have awritten charter outlining its responsibilities. Charters will be adopted by theBoard based on the recommendation of the applicable committee.

*Committee Assignments and Rotation.*Membership of each committee will bedetermined by the Board after receiving the recommendation of the Nominatingand Governance Committee. Consideration will be given to rotating committeememberships from time to time.

*Committee Funding.*The Corporation will provide each Board committeewith sufficient funds to discharge the committee's responsibilities inaccordance with its charter.

*Committee Self-Evaluation.*At least annually, each of the Boardcommittees will conduct an evaluation of its performance and effectiveness, andwill consider whether any changes to the committee's charter are appropriate.

*Committee Reports.*The Chair of each Board committee willreport to the full Board on the activities of his or her committee, includingthe results of the committee's self-evaluation and any recommended changes tothe committee's charter.

** **

**CEO Performance Review**

At least annually, the independentdirectors will, in conjunction with the Compensation Committee, review theperformance of the CEO in light of the Corporation's goals and objectives.

** **

**Succession Planning**

** **

At least annually, the Board will reviewsuccession plans for the CEO and other senior executives. Succession planningwill address both succession in the ordinary course of business and contingencyplanning in case of unexpected events.

** **

**Board Resources**

** **

*Access to Employees.*Non-employee directors will have fullaccess to senior management of the Corporation and other employees on requestto discuss the business and affairs of the Corporation. The Board expects thatthere will be regular opportunities for directors to meet with the CEO andother members of management in Board and committee meetings and in other formalor informal settings.

*Authority to Retain Advisors.*It is normally expected that informationregarding the Corporation's business and affairs will be provided to the Boardby PDC management and staff and by the Corporation's Independent RegisteredPublic Accounting Firm. However, the Board has the authority to retain suchoutside advisors, including accountants, legal counsel, or other experts, as itdeems appropriate. The fees and expenses of any such advisors will be paid bythe Corporation.

** **

**Standards of Business Conduct**

** **

PDC has adopted comprehensive standardsof business conduct. Each director is expected to be familiar with and tofollow these standards. The Nominating and Governance Committee will review anyissues arising under the applicable standards of business conduct with respectto an executive officer or director and will report its findings to the fullBoard. The Board does not envision that any waivers will be authorized.

** **

**Communication by Interested Parties withNon-Employee Directors**

** **

The Nominating and Governance Committeewill maintain procedures for interested parties to communicate with thenon-employee directors. Contact information and a description of the proceduresfor handling these communications will be published in the proxy statement foreach annual meeting of shareholders and posted on PDC's internet site.

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**Non-Employee Director Compensation**

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Compensation for non-employee directorswill be determined by the Board on the recommendation of the CompensationCommittee and will be reviewed annually. Non-employee director compensationwill be set at a level that is consistent with market practice, taking intoaccount the size and scope of the Corporation's business and theresponsibilities of its directors. A substantial portion of the compensationpaid to non-employee directors for service on the Board will be paid in stockof the Corporation which must be held until the director retires from theBoard.

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**Shareholder Matters**

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*Voting Rights.*Each share of the Corporation's commonstock is entitled to one vote. PDC's charter and By-Laws will not impose votingrequirements for actions by holders of its common stock higher than the minimumrequirements of Nevada law and will not restrict the ability of shareholders toact by written consent.

*Annual Meeting Attendance.*It is expected that each director willmake every effort to attend each annual meeting of shareholders.

*Ratification of Auditors.*The appointment of Independent RegisteredPublic Accounting Firm will be submitted for ratification by the shareholdersat each annual meeting.

*Shareholder Proposals Receiving MajorityApproval.*If ashareholder proposal that is not supported by the Board receives a majority ofthe votes cast at a meeting at which a quorum is present, the proposal will bereconsidered by the Board. Action taken on the proposal will be reported toshareholders in a timely manner.

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**Corporate Governance Guidelines Revision**

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The Nominating and Governance Committeeand the Board will review and revise these Corporate Governance Guidelines andrelated documents as and when appropriate.

# Exhibit B - PETROLEUM DEVELOPMENTCORPORATION2005 NON-EMPLOYEE DIRECTOR RESTRICTED STOCK PLAN

Section 1.               ***Introduction***

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1.1*           The Plan; EffectiveDate; Duration.*  This Petroleum Development Corporation 2005 Non-EmployeeDirector Restricted Stock Plan (the "Plan"), shall be effective as of June 10,2005 ("Effective Date").  The Plan shall continue in effect until all awardshave been granted covering all available shares of Stock (as hereinafterdefined) or until the termination of the Plan.  For purposes of the Plan, a"non-employee director" shall mean any director of the Corporation (ashereinafter defined) who is not an employee of the Corporation or any of itsaffiliates or subsidiaries.

1.2           *Purpose*.  The purpose of the Planis to provide each non-employee member ("Director") of the Board of Directors(the "Board") of Petroleum Development Corporation, a Nevada corporation (the"Corporation") with awards of shares of common stock, par value $.01 per shareor other successor security ("Stock") of the Corporation, subject to therestrictions and other provisions of the Plan ("Restricted Stock").  It isintended that the Plan will (a) permit Directors to increase their stockownership and proprietary interest in the Corporation and enhance theiridentification with the interests of the Corporation's stockholders("Stockholders"), (b) provide a means of compensating Directors that will helpattract qualified candidates to serve as Directors, and (c) induce incumbentDirectors to continue to serve if the Board desires that they remain on theBoard.

1.3           Shares of Stock AvailableUnder the Plan.  

a.             Subject to any adjustmentsmade pursuant to Section 1.3(c), the aggregate number of shares of Stock thatmay be issued under the Plan shall be 40,000.  No fractional shares of Stockwill be issued under the Plan.

b.             Shares of Stock awardedunder the Plan may be (i)authorized but unissued shares of Stock, (ii)previously issued shares of Stock reacquired by the Corporation, includingshares purchased in the open market, or (iii) a combination thereof.

c.             As determined by theCompensation Committee of the Board or such other committee of directors (the"Committee") as may be designated by the Board, in their best judgment,appropriate and equitable adjustment shall be made in the number of shares ofStock available under the Plan and covered by Plan awards in the event of anyrecapitalization, reorganization, merger, consolidation, spin-off, combination,repurchase, exchange of shares or other securities of the Corporation, stocksplit, reverse stock split, stock dividend, extraordinary dividend,liquidation, dissolution, or other similar corporate transaction or eventaffecting the Corporation.

Section 2.               *RestrictedStock Awards*

2.1           Award Dates

a.     As of the date of each annual meeting of Stockholders("Annual Meeting"), commencing with the 2005 Annual Meeting, each Directorshall be awarded such number of shares of Restricted Stock as determined by theBoard, after consideration of the recommendation of the Committee.  Directorsmay, but need not be, awarded the same number of shares of Restricted Stock.

b.             A Director who is electedto the Board on a date other than the date of an Annual Meeting shall beawarded such number of shares of Restricted Stock as of such date of electionas determined by the Board, after consideration of the recommendation of theCommittee.

c.             The Board will cause theamount of the award for the plan year commencing upon the next Annual Meetingto be disclosed in the Corporation's proxy statement for that Annual Meeting.

2.2*   **Issuance of Stock*.  Subject to Section 2.7(c), as promptlyas practical after the date as of which an award is made, the Corporation shallissue a certificate ("Certificate"), registered in the name of the Directorreceiving an award, representing the number of shares of Restricted Stockcovered by the Director's award.

2.3*           Rights of Holders ofRestricted Stock*.  Upon issuance of a Certificate, the Director in whosename the Certificate is registered shall, subject to the provisions of the Planincluding Section 2.7(b), have all of the rights of a Stockholder with respectto the shares of Restricted Stock represented by the Certificate, including theright to vote the shares and receive cash dividends and other cashdistributions thereon.

2.4*           Restricted Period.* Restricted Stock shall be subject to the restrictions set forth in Sections 2.5and 2.7 of the Plan and the other provisions of the Plan for a period (the"Restricted Period") commencing on the date as of which the Restricted Stock isawarded (the "Award Date") and ending on the earliest of the first to occur ofthe following:

a.             the retirement of theDirector from the Board in compliance with the Board's retirement policy asthen in effect; 

b.             the termination of theDirector's service on the Board as a result of the Director's not beingnominated for reelection by the Board;

c.             the termination of theDirector's service on the Board because of the Director's resignation orfailure to stand for reelection with the consent of the Corporation's Board(which means approval by at least 80% of the directors voting, with theaffected Director abstaining);

d.             the termination of theDirector's service on the Board because the Director, although nominated forreelection by the Board, is not reelected by the Stockholders;

e.             the termination of theDirector's service on the Board because of (i)the Director's resignation at the request of the Nominating and GovernanceCommittee of the Board, (ii) the Director's removal by action of the Stockholders or by the Board, or (iii) a Change in Control of the Corporation.  A "Change inControl" of the Corporation is deemed to have occurred as of the first day thatany one or more of the following conditions shall have been satisfied:  

(1)           the "Beneficial Ownership"of securities representing more than thirty-three percent (33%) of the combinedvoting power of the Corporation is acquired by any "person" as defined inSection 13(d) and 14(d) of the Securities Exchange Act of 1934 (other than theCorporation, any trustee or other fiduciary holding securities under anemployee benefit plan of the Corporation, or any corporation owned, directly orindirectly, by the stockholders of the Corporation in substantially the sameproportions as their ownership of stock of the Corporation); or

(2)           the Stockholders of theCorporation approve a definitive agreement to merge or consolidate theCorporation with or into another corporation or to sell or otherwise dispose ofall or substantially all of its assets, or adopt a plan of liquidation; or

(3)           during any period of threeconsecutive years, individuals who at the beginning of such period were membersof the Board cease for any reason to constitute at least a majority thereof(unless the election, or the nomination for election by the Corporation'sStockholders, of each new director was approved by a vote of at least amajority of the directors then still in office who were directors at thebeginning of such period or whose election or nomination was previously soapproved); or

f.              the termination of theDirector's service on the Board because of Disability or death. "Disability"shall have the meaning ascribed to such term in the Corporation's governinglong-term disability plan, or if no such plan exists, at the discretion of theCommittee, as hereinafter defined.

Section 2.4(a) through (f) above are subject to thefurther restriction that a removal or resignation for "Cause" will not bedeemed to constitute completion of the Restricted Period, but will result in aforfeiture under Section 2.5.  For purposes of this Plan, "Cause" shall be agood faith determination of the Board that the Director (i) failed tosubstantially perform his duties (other than a failure resulting from hisincapacity due to physical or mental illness) after a written demand forsubstantial performance has been delivered to him by the Board, which demandspecifically identifies the manner in which the Board believes he has notsubstantially performed his duties; (ii) has engagedin conduct the consequences of which are materially adverse to the Corporation,monetarily or otherwise; or (iii) haspleaded guilty to or been convicted of a felony.  The Director shall not bedeemed to have been terminated for Cause unless there shall have been deliveredto the Director a letter setting forth the reasons for the Corporation'stermination of the Director for Cause and the Director has failed to cure suchreason for termination within thirty (30) days of the receipt of such notice.

2.5*           Forfeiture of RestrictedStock*.  As of the date ("Termination Date") a Director ceases to be amember of the Board for any reason, including but not limited to removal orresignation for Cause, the Director shall forfeit to the Corporation allRestricted Stock awarded to the Director for which the Restricted Period hasnot ended pursuant to Section 2.4 as of or prior to the Termination Date.

2.6*           Release of RestrictedStock*.  Upon completion of the Restricted Period, as provided in Section2.4, Restricted Stock shall be released to the Director, free and clear of allrestrictions and other provisions of the Plan, on the first business dayimmediately following the last day of the Restricted Period with respect tosuch Restricted Stock.

2.7*           Restrictions*. Restricted Stock shall be subject to the following restrictions during theRestricted Period:

a.             The Restricted Stock shallbe subject to forfeiture to the Corporation as provided in Section 2.5 of thePlan.

b.             The Restricted Stock maynot be sold, assigned, transferred, pledged, hypothecated or otherwise disposedof, and neither the right to receive Restricted Stock nor any interest underthe Plan may be assigned by a Director, and any attempted assignment shall bevoid.

c.             Each Certificaterepresenting shares of Restricted Stock shall be held  by the Corporation andshall, at the option of the Corporation, bear an appropriate restrictive legendand be subject to appropriate "stop transfer" orders.  The Director shalldeliver to the Corporation a stock power endorsed in blank to the Corporation.

d.             Any additional Stock orother securities or property (other than cash) that may be issued with respectto Restricted Stock as a result of any stock dividend, stock split, businesscombination or other event, shall be subject to the restrictions and otherprovisions of the Plan.

e.             The issuance of anyRestricted Stock award shall be subject to and contingent upon (i)completion of any registration or qualification of the Stock under any federalor state law or governmental rule or regulation that the Corporation, in itssole discretion, determines to be necessary or advisable; and (ii)the execution by the Director and delivery to the Corporation of (A) anyagreement reasonably required by the Corporation, and (B) the stock powerreferred to in Section 2.7(c).

*2.8          Tax Withholding*.  The Corporation will have the right towithhold from any settlement of Stock made under the Plan (or deemed settlementdue to an Internal Revenue Code ("Code") Section 83(b) election) any federal,state, or local taxes of any kind subsequently required by law to be withheldor paid by the Corporation on behalf of a Director with respect to suchsettlement.  In the event any such taxes are imposed, the subject Director willbe required to make arrangements satisfactory to the Corporation for thesatisfaction of any such withholding tax obligation.  The Corporation will notbe required to deliver Stock under the Plan until any such obligation issatisfied.

*2.9          Effect of Tax Election*.  In the event any Director makes atimely election under Code Section 83(b) with respect to any award, the Stockwill be deemed (for income tax purposes) to be transferred to the Directoreffective as of the Award Date (and any obligation for withholding taxliability imposed by subsequent changes in tax laws that would be due as of theAward Date).  However, such an election will not affect the restrictions orterminate the Restriction Period for such award.

Section 3.               *GeneralProvisions*

3.1*           Administration*.  ThePlan shall be administered by the Committee. The Committee shall have fullpower, discretion and authority to interpret and administer the Plan, exceptthat the Committee shall have no power to (a)determine the eligibility for awards of Restricted Stock or the number ofshares of Restricted Stock to be awarded or the timing or value of awards ofRestricted Stock to be awarded to any Director, or (b)take any action specifically delegated to the Board under the Plan.  TheCommittee's interpretations and actions shall, except as otherwise determinedby the Board, be final, conclusive and binding upon all persons for allpurposes.  The Committee may employ such legal counsel, consultants and agentsas it may deem desirable for the administration of the Plan, and may rely uponany advice or opinion received from any such counsel or consultant and anycomputation received from any such consultant or agent.  Expenses incurred bythe Committee in the engagement of such counsel, consultant or agent shall bepaid by the Corporation.

3.2*           No Retention Rights.* Neither the establishment of the Plan or the awarding of Restricted Stock to aDirector shall be considered to give the Director the right to be retained on,or nominated for reelection to, the Board, or to any benefits or awards notspecifically provided for by the Plan.

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3.3*           Interests NotTransferable.*  Except as to withholding of any tax required under the lawsof the United States or any state or locality, no benefit payable at any timeunder the Plan shall be subject in any manner to alienation, sale, transfer,assignment, pledge, attachment, or other legal process, or encumbrance of anykind.  Any attempt to alienate, sell, transfer, assign, pledge, attach orotherwise encumber any such benefits whether currently or thereafter payable,shall be void.  No benefit shall, in any manner, be liable for or subject tothe debts or liabilities of any person entitled to such benefits.  If anyperson shall attempt to, or shall alienate, sell, transfer, assign, pledge orotherwise encumber such person's benefits under the Plan, or if by reason ofsuch person's bankruptcy or any other event, such benefits would devolve uponany other person or would not be enjoyed by the person entitled thereto underthe Plan, then the Committee, in its discretion, may terminate the interest inany such benefits of the person entitled thereto under the Plan and hold orapply them to or for the benefit of such person entitled thereto under the Planor such person's spouse, children or other dependents, or any of them, in suchmanner as the Committee may deem proper.

3.4*           Amendment andTermination*.  The Board may at any time amend or terminate the Plan;provided that:

a.             no amendment ortermination shall, without the written consent of a Director, adversely affectthe Director's rights under outstanding awards of Restricted Stock; and

b.             Stockholder approval ofany amendment shall be required if Stockholder approval is required underapplicable law or the listing requirements of any national securities exchangeor Nasdaq on which are listed any of the Corporation's equity securities.

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3.5*           Severability*.  Ifall or any part of the Plan is declared by any court or governmental authorityto be unlawful or invalid, such unlawfulness or invalidity shall not serve toinvalidate any portion of the Plan not declared to be unlawful or invalid.  AnySection or part hereof so declared to be unlawful or invalid shall, ifpossible, be construed in a manner which will give effect to the terms of suchSection or part thereof to the fullest extent possible while remaining lawfuland valid.

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3.6*           Controlling Law.* The law of West Virginia, except with reference to the Code or Federalsecurities law, shall be controlling in all matters relating to the Plan.

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3.7*           Stockholder Approval*. The Plan will be submitted for approval by Corporation's Stockholders at theCorporation's 2005 annual meeting of stockholders and, if not so approved, willbe deemed terminated immediately following the meeting.

**PETROLEUM DEVELOPMENT CORPORATION2005 NON-EMPLOYEE DIRECTOR RESTRICTED STOCK PLAN**

**DESIGNATIONOF BENEFICIARY(Please type or print)**

| Name of  Director:    |                                                                 | Marital  Status: | Single:  |  |
|-----------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------|----------|--|
| Social  Security No.: |                                                                 |                  | Married: |  |

I hereby revokeany previous designation(s) of beneficiary made by me with respect to amountspayable by Petroleum Development Corporation (the "Corporation") under theCorporation's 2005 Non-Employee Director Restricted Stock Plan in the event ofmy death; and I hereby designate the following person(s) or entity to receive,upon my death, any such amounts:

**Primary Beneficiaryor Beneficiaries**:

| Name:    |  | Share: | % | Relationship: |  | Birth Date: |
|----------|--|--------|---|---------------|--|-------------|
| Address: |  | SS #   |   |

** **

| Name:    |  | Share: | % | Relationship: |  | Birth Date: |
|----------|--|--------|---|---------------|--|-------------|
| Address: |  | SS #   |

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**ContingentBeneficiary or Beneficiaries**(ifyour Primary Beneficiary(ies) all predecease you):

| Name:    |  | Share: | % | Relationship: |  | Birth Date: |
|----------|--|--------|---|---------------|--|-------------|
| Address: |  | SS #   |

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| Name:    |  | Share: | % | Relationship: |  | Birth Date: |
|----------|--|--------|---|---------------|--|-------------|
| Address: |  | SS #   |

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| Date: | Director's  Signature |
|-------|-----------------------|

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