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***NEWS******   FROM***

**Petroleum Development Corporation**

** **

**FOR IMMEDIATE RELEASE:**  May 5, 2005

**CONTACT:**  Steven R. Williams - (304)842-3597   http://www.petd.com

Petroleum Development Announces Record First QuarterResults

Energy Prices, Drilling Activity, and Lease SaleIncrease Net Income 58%

Bridgeport, West Virginia.Petroleum Development Corporation (NASDAQ/NMS PETD) today announced that itrecorded record first quarter earnings of $13.3 million, or $0.80 per share(diluted).  This was a 58% increase from earnings of $8.4 million in the firstquarter of 2004 ($0.52 per share). Driving the improved performance were strongenergy prices, higher levels of drilling activity and the sale of a portion of anundeveloped Colorado lease.

|                                                                               | Three Months Ended March 31, |
|-------------------------------------------------------------------------------|------------------------------|
|                                                                               | 2005                         | 2004 |
| Revenues                                                                      | $83,441,600                  | $71,048,500 |
| Income before income taxes                                                    | $21,171,100                  | $13,186,600 |
| Net income                                                                    | $13,337,800                  | $8,439,400 |
| Basic earnings per share                                                      | $  .80             | $  .53 |
| Diluted earnings per share                                                    | $  .80             | $  .52 |
| Weighted average common shares outstanding                                    | 16,589,824                   | 15,861,897 |
| Weighted average common and

  common equivalent shares outstanding | 16,642,888                   | 16,304,526 |

Steven R. Williams, CEO of Petroleum DevelopmentCorporation (PDC), said, "Our operating performance in the first quarterof 2005 was outstanding and contributed to the substantial increase in netincome and earnings per share.  Key factors contributing to the performancewere high energy prices, the increase in our drilling activity, increased oiland gas sales and the Colorado lease sale."

Operations

Strong sales of public drilling partnerships during2004 and the first quarter of 2005 enabled the Company to utilize $32.4 millionto drill 38 wells during the first quarter of 2005 for its public partnerships. All of the 38 wells are successful and all are located in Colorado.  The Company drilled 29 successful wells in itsWattenberg field in the Denver-Julesburg Basin and nine successful wells in thePiceance Basin in western Colorado. All of the wells that the Company drills inthese two areas are in conjunction with its public drilling fund partnerships.The Company plans to conduct the remainder of its 2005 partnership drillingactivity in these two areas. As of March 31, 2005 the Company has funds forfuture drilling of $54.4 million and will combine them with the funds from thefunding of its second partnership of the year which closed with subscriptionsof $40 million, to drill wells during the remainder of 2005. The Company plansto offer its third and final partnership of 2005 in late third or early fourthquarter with maximum allowable subscriptions of $35 million. The Companypurchases a 20% interest in each partnership.  

The Company also drilled four wells for its ownaccount on its northeast Colorado properties (NECO), completing a 20 wellprogram that was begun in the fourth quarter of 2004. The Company plans atleast an additional 60 wells for its own account during the remainder of 2005.The wells are being drilled on locations created by the regulatory approval ofthe reduction in well spacing from 80 to 40 acres on the properties the Companyacquired in Yuma County in 2003.

In addition to drilling theCompany also continued its Codell recompletion program in Wattenberg Field, recompletinganother 25 wells during the first quarter of 2005. The Company plans tocontinue this program throughout 2005.  Most of the wells drilled on the NECOproperties and recompleted in Wattenberg Field were placed in production duringthe first quarter at varying times. 

*Continue to Page 2*

*Page 2*

Included in other incomefor the quarter is the gain from a sale of a portion of one of the Company'sundeveloped Garfield County, Colorado leases that the Company sold to anunaffiliated entity.  The proceeds of the sale were $6.2 million.  The Companyis required to remit $1.0 million to the original lessor, unless it constructscertain facilities adjacent to this undeveloped property subject to certaintiming conditions.  The Company at this time cannot determine if it will beable to comply with this provision, therefore a $1.0 million accrual has beenestablished and the pre-tax gain on the sale was reduced to $5.2 million.  

The Company drilled oneexploratory well in 2004 (Fox Federal #1-13) and drilled another one in thefirst quarter of 2005 (Coffeepot Springs #24-34). The Fox Federal #1-13 hasbeen completed and testing was begun at the end of 2004. Testing of the wellwas suspended in January due to lease restrictions on the Federal lease. Testingis expected to resume late in the second quarter of 2005.  The well has not yetbeen classified as successful or dry. The cost of this well as of April 30,2005 is $4.5 million.  The CoffeepotSprings #24-34 has been drilled to total depth and is scheduled to be fracturedin the next few weeks and has not been classified as successful or dry.  Thecost of this well as of April 30, 2005 is $2.6 million.  If either of thesewells is determined to be a dry hole, its cost will be expensed in the periodwhen the determination is made as required by the successful efforts method ofaccounting.  Currently the Company plans to retain most if not all ofthe working interest in these and future exploratory wells, since the Companypartnerships focus on developmental activities and are allowed only limitedparticipation in exploratory drilling.  The Company currently has 6,300 acresin the two prospect areas, with options on approximately another 55,000acres. 

 To the north of the two SandWash Basin prospects the Company has acquired development rights toapproximately 27,000 acres in the Red Desert Basin, Sweetwater County, Wyoming.Current plans call for a well later this year to test various Upper Cretaceousformations at depths of up to 12,000 feet.

The Company has also acquired anoption to develop approximately 35,000 acres of oil and gas leasehold locatedin McKenzie, Mountrail, Williams and Dunn Counties, North Dakota. The agreementcontemplates the drilling of up to three (3) horizontal test wells targetingoil and gas reserves in the Bakken Shale during 2005. The first test well isscheduled to be drilled early in the third quarter. Horizontal development ofthe Bakken Shale interval has been very successful west of the project area in RichlandCounty, Montana.

Oil and natural gas productionfor the first quarter of 2005 increased to 3.30 billion cubic feet equivalent(Bcfe) from 3.17 Bcfe in the fourth quarter of 2004 (an increase of 4.1%) andfrom 3.25 Bcfe in the first quarter of 2004 (an increase of 1.6%) .  All of theincrease was attributable to the Rocky Mountains Region where the Company'sdrilling, development and acquisition activities have been focused for the pastseveral years.  

Oil and gas sales also benefitedfrom higher prices for both oil and natural gas compared to the first quarterof 2004. In the first quarter of 2005 the Company sold its natural gas for anaverage price of $5.27 per thousand cubic feet (Mcf), compared to $4.91 per Mcfin the first quarter of 2004. Similarly the average price of oil this year was$42.27 per barrel (Bbl) compared to $31.84 in the first quarter of 2004.  Thefollowing table summarizes the production and pricing by region for the firstquarters of 2005 and 2004.

|                   | Three Months  Ended March 31, 2005 |                     | Three Months  Ended March 31, 2004 |
|-------------------|------------------------------------|---------------------|------------------------------------|
|                   | Oil  

(Bbl)        | Natural

Gas

(Mcf) | Natural  Gas 

Equivalents

(Mcfe) |   | Oil  

(Bbl)  | Natural

Gas

(Mcf) | Natural  Gas 

Equivalents

(Mcfe) |
| Appalachian Basin | 1,099                              | 451,052             | 457,646                            |  | 1,204 | 457,218 | 464,442 |
| Michigan Basin    | 982                                | 412,548             | 418,440                            |  | 1,151 | 443,962 | 450,868 |
| Rocky Mountains   |  98,815                       | 1,832,635           | 2,425,525                          |  | 101,781 | 1,721,812 | 2,332,498 |
| Total             | 100,896                            | 2,696,235           | 3,301,611                          |   | 104,136 | 2,622,992 | 3,247,808 |
|                   |                               |                |                               |   |   |   |   |
| Average Price     | $42.27                             | $5.27               | $5.59                              |   | $31.84 | $4.91 | $4.99 |

*Continued to Page3*

*Page 3*

The Company has entered intocommodity-based derivative transactions to manage a portion of the exposure toprice risk associated with its sales of oil and natural gas. During the firstquarter of 2005 the Company had average production per month of 899,000 Mcf ofnatural gas and 33,600 Bbls of oil. The current positions in effect on theCompany's share of production are shown in the following table:

|           |  |                                                             |            Floors              |                             |         Ceilings               |
|-----------|--|-------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------|----------------------------------------------------------------------------------------------------------------------------------------------|
| Month Set |  | Month                                                       | Monthly Quantity

Mmbtu                                                                                                                                | Contract

 Price  |                                                                                                                                              | Monthly Quantity

Mmbtu | Contract

 Price  |
|           |  |                                                             |
|           |  | NYMEX Based Hedges - (Appalachian and Michigan Basins)      |
| 2/04      |  | Apr 2005 - Oct 2005                                         | 122,000                                                                                                                                                | $4.28                       |                                                                                                                                              | 61,000 | $5.00 |
| 3/05      |  | Apr 2005 - Oct 2005                                         | 39,000                                                                                                                                                 | $5.75                       |                                                                                                                                              | 19,500 | $8.37 |
| 1/05      |  | Nov 2005 - Mar 2006                                         | 156,000                                                                                                                                                | $5.00                       |                                                                                                                                              | 78,000 | $8.50 |
| 3/05      |  | Apr 2006 -Oct 2006                                          | 78,000                                                                                                                                                 | $5.50                       |                                                                                                                                              | 39,000 | $7.40 |
|           |  |                                                             |                                                                                                                                                        |                             |                                                                                                                                              |  |  |
|           |  | Colorado Interstate Gas (CIG) Based Hedges (Piceance Basin) |
|           |  |                                                             |                                                                                                                                                        |                             |                                                                                                                                              |  |  |
| 2/04      |  | Apr 2005- Oct 2005                                          | 33,000                                                                                                                                                 | $3.10                       |                                                                                                                                              | 16,000 | $4.43 |
| 3/05      |  | Apr 2005 - Oct 2005                                         | 38,000                                                                                                                                                 | $4.75                       |                                                                                                                                              | 19,000 | $8.12 |
| 1/05      |  | Nov 2005 - Mar 2006                                         | 60,000                                                                                                                                                 | $4.50                       |                                                                                                                                              | 30,000 | $7.15 |
| 3/05      |  | Apr 2006 - Oct 2006                                         | 42,000                                                                                                                                                 | $4.50                       |                                                                                                                                              | 21,000 | $7.25 |
|           |  |                                                             |                                                                                                                                                        |                             |                                                                                                                                              |  |  |
|           |  | NYMEX Based Hedges (NECO Area)                              |
|           |  |                                                             |                                                                                                                                                        |                             |                                                                                                                                              |  |  |
| 2/04      |  | Apr 2005 - Oct 2005                                         | 150,000                                                                                                                                                | $4.26                       |                                                                                                                                              | 75,000 | $5.00 |
| 1/05      |  | Nov 2005 - Mar 2006                                         | 150,000                                                                                                                                                | $5.00                       |                                                                                                                                              | 75,000 | $8.45 |
| 4/05      |  | Apr 2006 - Oct 2006                                         | 150,000                                                                                                                                                | $5.00                       |                                                                                                                                              | 75,000 | $8.62 |
|           |  |                                                             |                                                                                                                                                        |                             |                                                                                                                                              |  |  |
|           |  | Oil - NYMEX Based (Wattenberg)                              |                                                                                                                                                        |                             |                                                                                                                                              |  |  |
|           |  |                                                             | Bbls                                                                                                                                                   |                             |                                                                                                                                              |  Bbls |  |
| 8/04      |  | Apr 2005 - Dec 2005                                         | 15,000                                                                                                                                                 | $32.30                      |                                                                                                                                              | 7,500 | $40.00 |

The Company's natural gasmarketing segment had excellent results in the first quarter of 2005. Withnatural gas prices moderately higher than the first quarter of 2004, RileyNatural Gas (RNG), the Company's gas marketing subsidiary, increased revenuesby 3.4% to $24.3 million compared to $23.5 million in 2004 for the quarter.This segment contributed income before income taxes of $368,000 during thefirst quarter of 2005 compared with $601,000 for the same period last year. 

Included in other income for thequarter is the sale to an unaffiliated entity of a portion of one of ourundeveloped leases in Garfield County, Colorado, which we sold in January 2005for a pre-tax profit of $5.2 million which resulted in an effect on earningsper share of $.20.  The Company retained the other half of the lease in acheckerboard pattern, and the terms of the agreement require the purchaser todrill a number of wells on the property in the future.  The results of thisdrilling will help the company better assess how to develop the acreage it hasretained.

On April 27, 2005, the Companycompleted the sale to an unaffiliated entity of 111 Pennsylvania wells itpurchased from the Pemco Gas, Inc. 1998. The Company received proceeds of $3.4million and will record a gain of approximately $1.1 million in the secondquarter of 2005. The transaction was effective April 1, 2005.

*Continue to Page 4*

*Page 4*

PETROLEUM DEVELOPMENT CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Income

Three Months ended March 31, 2005 and 2004

(Unaudited)

|                                                                        |                                              |                                              |
|------------------------------------------------------------------------|---------------------------------------------------|---------------------------------------------------|
|                                                                        | 2005                                              | 2004                                              |
| Revenues:                                                              |                                                   |                                                   |
|   Oil and gas well drilling operations                       | $32,351,200                                       | $29,499,300                                       |
|   Gas sales from marketing activities                        | 24,301,000                                        | 23,457,400                                        |
|   Oil and gas sales                                          | 18,463,200                                        | 16,196,200                                        |
|   Well operations and pipeline income                        | 2,112,400                                         | 1,837,500                                         |
|   Other income                                               |    6,213,800                            |         58,100 |
|                                                                        |                                                   |                                                   |
|                                                                        | 83,441,600                                        | 71,048,500                                        |
|                                                                        |                                                   |                                                   |
| Costs and expenses:                                                    |                                                   |                                                   |
|   Cost of oil and gas well drilling operations               | 27,629,000                                        | 25,355,700                                        |
|   Cost of gas marketing activities                           | 23,991,700                                        | 22,854,700                                        |
|   Oil and gas production costs                               | 4,163,400                                         | 3,906,100                                         |
|   General and administrative expenses                        | 1,617,500                                         | 994,200                                           |
|   Depreciation, depletion, and amortization                  | 4,825,000                                         | 4,507,700                                         |
|   Interest                                                   |         43,900 |       243,500            |
|                                                                        |                                                   |                                                   |
|                                                                        | 62,270,500                                        |  57,861,900                                  |
|                                                                        |                                                   |                                                   |
|  Income before income taxes                                       | 21,171,100                                        | 13,186,600                                        |
|                                                                        |                                                   |                                                   |
| Income taxes                                                           | 7,833,300                                         | 4,747,200                                         |
|                                                                        |                                                   |                                                   |
|           Net income | $13,337,800                                       | 8,439,400                                         |
|                                                                        |                                                   |                                                   |
| Basic earnings per common share                                        | $0.80                                             | $0.53                                             |
|                                                                        |                                                   |                                                   |
| Diluted earnings per common share                                      | $0.80                                             | $0.52                                             |

*Continued to Page 5*

*Page 5*

 

 

Non-GAAP Financial Measure

The United States Securities andExchange Commission has disclosure requirements for public companies concerningreferences to Non-GAAP financial measures. (GAAP refers to generally acceptedaccounting principles.) Non-GAAP financial measures may be provided if thecompany explains the relevance of the information. The company must alsoreconcile the Non-GAAP financial measure to related GAAP information."Adjusted Cash Flow" is a Non-GAAP financial measure provided by PDCin this earnings release. Adjusted Cash Flow is net income before deferredincome taxes, depreciation, depletion, and amortization. PDC believes AdjustedCash Flow is relevant because it is a measure of cash available to fund thecompany's capital expenditures and to service its debt. PDC also believesAdjusted Cash Flow is a valuable measure for estimating the value of thecompany's operations.

|                                          | Three months  Ended March 31, |
|------------------------------------------|-------------------------------|
|                                          | 2005                          | 2004 |
| Net income                               | $13,337,800                   | $ 8,439,400 |
| Deferred income tax expense              |   3,109,800         |   2,786,600 |
| Depreciation, depletion and amortization |   4,825,000         |   4,507,700 |
| Adjusted cash flow                       | $21,272,600                   | $15,733,700 |

10-Q and Quarterly Conference Call

 

The Company will file itsQuarterly Report on Form 10-Q on May 6, 2005. You can access the report at theCompany's website (www.petd.com), or contact the Company for apaper copy. The Company invites you to join Steve Williams, Chief ExecutiveOfficer, and Darwin Stump, Chief Financial Officer, for a conference call onMay 9, 2005 for a discussion of the results.

What:     Petroleum DevelopmentCorporation First Quarter Earnings Conference Call

When:    Monday, May 9, 2005 at11:00 a.m. Eastern Daylight Time

Where:   www.petd.com

How:       Log on to the web address above or call****(877)407-8033 

                Replay Number: (877) 660-6853 (Account #286and Conference ID #149988)

                (Replay will be available approximately onehour after the conclusion of the call)

Contact:  Steve Williams,Petroleum Development Corporation, (800) 624-3821 E-mail: petd@petd.com

About Petroleum Development Corporation

Petroleum Development Corporation(www.petd.com) is an independent energy company engaged in the development,production and marketing of natural gas.  The Company operations are focused inthe Rocky Mountains with additional operations in the Appalachian Basin andMichigan. During the third quarter of 2004, the Company was added to theS&P SmallCap 600 Index. Additionally, PDC was added to the Russell 3000Index of companies in 2003.  PDC was named on the FSB: Fortune Small BusinessMagazine list of America's 100 Fastest-Growing Small Companies in 2001 and2002.  

Certainmatters discussed within this press release are forward-looking statementswithin the meaning of the Private Securities Litigation Reform Act of 1995.Although PDC believes the expectations reflected in such forward- lookingstatements are based on reasonable assumptions, it can give no assurance thatits expectations will be attained. Factors that could cause actual results todiffer materially from expectations include financial performance, oil and gasprices, drilling program results, drilling results, regulatory changes, changesin local or national economic conditions and other risks detailed from time totime in the Company's reports filed with the SEC, including quarterly reportson Form 10-Q, reports on Form 8-K and annual reports on Form 10-K.

###

**103 East Main Street • P. O. Box26 • Bridgeport, West Virginia • Phone:  (304) 842-3597**