|                          |
|--------------------------|
|                          |  |
| Nevada                   | 95-2636730 |
| (State of Incorporation) | (I.R.S. Employer Identification No.) |

|                                                                                      |
|--------------------------------------------------------------------------------------|
|                                                                                      |  |
| Large accelerated filer  £                                            | Accelerated filer  x |
| Non-accelerated filer  £(Do not check if a smaller reporting company) | Smaller reporting company  o |

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|                                   |
|-----------------------------------|
|                                   |  |  |  |
|                              | PART I - FINANCIAL INFORMATION |   | Page |
|                              |   |   |   |
| Item 1.                           | Financial Statements |   | 5 |
|                              | Condensed Consolidated Balance Sheets |   | 5 |
|                              | Condensed Consolidated Statements of Operations |   | 6 |
|                              | Condensed Consolidated Statements of Cash Flows |   | 7 |
|                              | Notes to Condensed Consolidated Financial Statements |   | 8 |
|                              |   1.  Nature of Operations and Basis of Presentation |   |   |
|                              |   2.  Recent Accounting Standards |   |   |
|                              |   3.  Fair Value Measurements and Disclosures |   |   |
|                              |   4.  Derivative Financial Instruments |   |   |
|                              |   5.  Properties and Equipment |   |   |
|                              |   6.  Income Taxes |   |   |
|                              |   7.  Long-Term Debt |   |   |
|                              |   8.  Asset Retirement Obligations |   |   |
|                              |   9.  Commitments and Contingencies |   |   |
|                              | 10.  Stock-Based Compensation Plans |   |   |
|                              | 11.  Earnings Per Share |   |   |
|                              | 12.  Divestitures and Discontinued Operations |   |   |
|                              | 13.  Transactions with Affiliates |   |   |
|                              | 14.  Business Segments |   |   |
|                              | 15.  Subsequent Events |   |   |
| Item 2.                           | Management’s Discussion and Analysis of Financial Condition and Results of Operations |   | 22 |
| Item 3.                           | Quantitative and Qualitative Disclosures About Market Risk |   | 36 |
| Item 4.                           | Controls and Procedures |   | 40 |
|                              |   |   |   |
| PART II – OTHER INFORMATION |
|                              |   |   |   |
| Item 1.                           | Legal Proceedings |   | 40 |
| Item 1A.                          | Risk Factors |   | 40 |
| Item 2.                           | Unregistered Sales of Equity Securities and Use of Proceeds |   | 40 |
| Item 3.                           | Defaults Upon Senior Securities |   | 40 |
| Item 4.                           | [Removed and Reserved] |   | 40 |
| Item 5.                           | Other Information |   | 40 |
| Item 6.                           | Exhibits |   | 40 |
|                              |   |   |   |
|                              | SIGNATURES |   | 42 |

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|         |                                                     |
|---------|-----------------------------------------------------|
| • | changes in production volumes and worldwide demand; |

|         |                                                               |
|---------|---------------------------------------------------------------|
| • | volatility of commodity prices for natural gas and crude oil; |

|         |                                          |
|---------|------------------------------------------|
| • | changes in estimates of proved reserves; |

|         |                                                                |
|---------|----------------------------------------------------------------|
| • | inaccuracy of reserve estimates and expected production rates; |

|         |                                                                                              |
|---------|----------------------------------------------------------------------------------------------|
| • | declines in the values of our natural gas and crude oil properties resulting in impairments; |

|         |                                                                        |
|---------|------------------------------------------------------------------------|
| • | the future cash flow, liquidity and financial position of the Company; |

|         |                                                                                                    |
|---------|----------------------------------------------------------------------------------------------------|
| • | the timing and extent of our success in discovering, acquiring, developing and producing reserves; |

|         |                                                                                           |
|---------|-------------------------------------------------------------------------------------------|
| • | our ability to acquire leases, drilling rigs, supplies and services at reasonable prices; |

|         |                                                             |
|---------|-------------------------------------------------------------|
| • | reductions in the borrowing base under our credit facility; |

|         |                                                                                    |
|---------|------------------------------------------------------------------------------------|
| • | risks incidental to the drilling and operation of natural gas and crude oil wells; |

|         |                                                                                                                                                  |
|---------|--------------------------------------------------------------------------------------------------------------------------------------------------|
| • | the availability of sufficient pipeline and other transportation facilities to carry our production and the impact of these facilities on price; |

|         |                                                                                                                                                                                    |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | the effect of existing and future laws, governmental regulations and the political and economic climate of the U.S. as well as other oil producing countries throughout the world; |

|         |                                                                                                                      |
|---------|----------------------------------------------------------------------------------------------------------------------|
| • | changes in environmental laws, the regulation and enforcement of those laws and the costs to comply with those laws; |

|         |                                                                                                                                    |
|---------|------------------------------------------------------------------------------------------------------------------------------------|
| • | the impact of environmental events, governmental responses to the events and our ability to insure adequately against such events; |

|         |                                          |
|---------|------------------------------------------|
| • | competition in the oil and gas industry; |

|         |                                                      |
|---------|------------------------------------------------------|
| • | the success of the Company in marketing oil and gas; |

|         |                                                                 |
|---------|-----------------------------------------------------------------|
| • | the effect of natural gas and crude oil derivatives activities; |

|         |                                             |
|---------|---------------------------------------------|
| • | the availability and cost of capital to us; |

|         |                                                                                                                                     |
|---------|-------------------------------------------------------------------------------------------------------------------------------------|
| • | our ability to consummate the prospective mergers of the 2005 partnerships and the timing of consummating these mergers, if at all; |

|         |                                                        |
|---------|--------------------------------------------------------|
| • | losses possible from pending or future litigation; and |

|         |                                                                                                   |
|---------|---------------------------------------------------------------------------------------------------|
| • | the success of strategic plans, expectations and objectives for future operations of the Company. |

----

----

|                                                                                                                           |
|---------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                           |  |  |  |  |  |  |  |  |
|                                                                                                                      |   | March 31, 2011 |   | December 31, 2010 (1) |
| Assets                                                                                                                    |   |   |   |   |
| Current assets:                                                                                                           |   |   |   |   |
| Cash and cash equivalents                                                                                                 |   | $ | 14,699 |   |   | $ | 54,372 |   |
| Accounts receivable, net                                                                                                  |   | 62,512 |   |   | 53,978 |   |
| Accounts receivable affiliates                                                                                            |   | 14,989 |   |   | 11,448 |   |
| Fair value of derivatives                                                                                                 |   | 40,190 |   |   | 42,953 |   |
| Prepaid expenses and other current assets                                                                                 |   | 20,415 |   |   | 14,072 |   |
| Total current assets                                                                                                      |   | 152,805 |   |   | 176,823 |   |
| Properties and equipment, net                                                                                             |   | 1,152,957 |   |   | 1,120,038 |   |
| Assets held for sale                                                                                                      |   | — |   |   | 5,191 |   |
| Fair value of derivatives                                                                                                 |   | 37,234 |   |   | 44,464 |   |
| Accounts receivable affiliates                                                                                            |   | 7,518 |   |   | 8,478 |   |
| Other assets                                                                                                              |   | 37,833 |   |   | 34,041 |   |
| Total Assets                                                                                                              |   | $ | 1,388,347 |   |   | $ | 1,389,035 |   |
|                                                                                                                      |   |   |   |   |
| Liabilities and Equity                                                                                                    |   |   |   |   |
| Liabilities                                                                                                               |   |   |   |   |
| Current liabilities:                                                                                                      |   |   |   |   |
| Accounts payable                                                                                                          |   | $ | 52,262 |   |   | $ | 47,271 |   |
| Accounts payable affiliates                                                                                               |   | 9,507 |   |   | 9,605 |   |
| Production tax liability                                                                                                  |   | 16,099 |   |   | 16,226 |   |
| Fair value of derivatives                                                                                                 |   | 42,266 |   |   | 29,998 |   |
| Funds held for distribution                                                                                               |   | 31,395 |   |   | 29,755 |   |
| Accrued interest payable                                                                                                  |   | 5,069 |   |   | 10,051 |   |
| Other accrued expenses                                                                                                    |   | 16,406 |   |   | 17,723 |   |
| Total current liabilities                                                                                                 |   | 173,004 |   |   | 160,629 |   |
| Long-term debt                                                                                                            |   | 296,709 |   |   | 295,695 |   |
| Deferred income taxes                                                                                                     |   | 181,407 |   |   | 187,999 |   |
| Asset retirement obligations                                                                                              |   | 27,937 |   |   | 27,797 |   |
| Fair value of derivatives                                                                                                 |   | 43,937 |   |   | 36,644 |   |
| Accounts payable affiliates                                                                                               |   | 10,297 |   |   | 12,111 |   |
| Other liabilities                                                                                                         |   | 30,455 |   |   | 25,919 |   |
| Total liabilities                                                                                                         |   | 763,746 |   |   | 746,794 |   |
|                                                                                                                      |   |   |   |   |
| Commitments and contingent liabilities                                                                                    |   |   |   |   |
|                                                                                                                      |   |   |   |   |
| Equity                                                                                                                    |   |   |   |   |
| Shareholders' equity:                                                                                                     |   |   |   |   |
| Preferred shares, par value $0.01 per share;  authorized 50,000,000shares; issued: none                                   |   | — |   |   | — |   |
| Common shares, par value $0.01 per share; authorized 100,000,000shares; issued: 23,478,611 in 2011 and 23,462,326 in 2010 |   | 235 |   |   | 235 |   |
| Additional paid-in capital                                                                                                |   | 211,482 |   |   | 209,198 |   |
| Retained earnings                                                                                                         |   | 412,919 |   |   | 432,843 |   |
| Treasury shares, at cost: 2,938 in 2011 and 2010                                                                          |   | (111 | ) |   | (111 | ) |
| Total shareholders' equity                                                                                                |   | 624,525 |   |   | 642,165 |   |
| Noncontrolling interest in subsidiary                                                                                     |   | 76 |   |   | 76 |   |
| Total equity                                                                                                              |   | 624,601 |   |   | 642,241 |   |
| Total Liabilities and Equity                                                                                              |   | $ | 1,388,347 |   |   | $ | 1,389,035 |   |
|                                                                                                                      |   |   |   |   |

----

|                                                                         |
|-------------------------------------------------------------------------|
|                                                                         |  |  |  |  |  |  |  |  |
|                                                                    |   | Three Months Ended March 31, |
|                                                                    |   | 2011 |   | 2010 |
| Revenues:                                                               |   |   |   |   |
| Natural gas, NGL and crude oil sales                                    |   | $ | 63,879 |   |   | $ | 57,827 |   |
| Sales from natural gas marketing                                        |   | 15,202 |   |   | 22,687 |   |
| Commodity price risk management gain (loss), net                        |   | (23,882 | ) |   | 43,222 |   |
| Well operations, pipeline income and other                              |   | 1,876 |   |   | 2,589 |   |
| Total revenues                                                          |   | 57,075 |   |   | 126,325 |   |
|                                                                    |   |   |   |   |
| Costs, expenses and other:                                              |   |   |   |   |
| Production costs                                                        |   | 21,039 |   |   | 14,961 |   |
| Cost of natural gas marketing                                           |   | 14,993 |   |   | 22,323 |   |
| Exploration expense                                                     |   | 2,151 |   |   | 6,418 |   |
| General and administrative expense                                      |   | 13,873 |   |   | 10,694 |   |
| Depreciation, depletion and amortization                                |   | 32,357 |   |   | 27,458 |   |
| Total costs, expenses and other                                         |   | 84,413 |   |   | 81,854 |   |
|                                                                    |   |   |   |   |
| Income (loss) from operations                                           |   | (27,338 | ) |   | 44,471 |   |
| Interest income                                                         |   | 9 |   |   | 5 |   |
| Interest expense                                                        |   | (9,062 | ) |   | (7,800 | ) |
|                                                                    |   |   |   |   |
| Income (loss) from continuing operations before income taxes            |   | (36,391 | ) |   | 36,676 |   |
| Provision (benefit) for income taxes                                    |   | (13,847 | ) |   | 13,804 |   |
| Income (loss) from continuing operations                                |   | (22,544 | ) |   | 22,872 |   |
| Income from discontinued operations, net of tax                         |   | 2,620 |   |   | 797 |   |
| Net income (loss)                                                       |   | (19,924 | ) |   | 23,669 |   |
| Less:  net loss attributable to noncontrolling interests                |   | — |   |   | (55 | ) |
| Net income (loss) attributable to shareholders                          |   | $ | (19,924 | ) |   | $ | 23,724 |   |
|                                                                    |   |   |   |   |
| Amounts attributable to Petroleum Development Corporation shareholders: |   |   |   |   |
| Income (loss) from continuing operations                                |   | $ | (22,544 | ) |   | $ | 22,927 |   |
| Income from discontinued operations, net of tax                         |   | 2,620 |   |   | 797 |   |
| Net income (loss) attributable to shareholders                          |   | $ | (19,924 | ) |   | $ | 23,724 |   |
|                                                                    |   |   |   |   |
| Earnings (loss) per share attributable to shareholders:                 |   |   |   |   |
| Basic                                                                   |   |   |   |   |
| Income (loss) from continuing operations                                |   | $ | (0.96 | ) |   | $ | 1.19 |   |
| Income from discontinued operations                                     |   | 0.11 |   |   | 0.04 |   |
| Net income (loss) attributable to shareholders                          |   | $ | (0.85 | ) |   | $ | 1.23 |   |
| Diluted                                                                 |   |   |   |   |
| Income (loss) from continuing operations                                |   | $ | (0.96 | ) |   | $ | 1.19 |   |
| Income from discontinued operations                                     |   | 0.11 |   |   | 0.04 |   |
| Net income (loss) attributable to shareholders                          |   | $ | (0.85 | ) |   | $ | 1.23 |   |
|                                                                    |   |   |   |   |
| Weighted average common shares outstanding:                             |   |   |   |   |
| Basic                                                                   |   | 23,428 |   |   | 19,191 |   |
| Diluted                                                                 |   | 23,428 |   |   | 19,287 |   |
|                                                                    |   |   |   |   |

----

|                                                                                                                    |
|--------------------------------------------------------------------------------------------------------------------|
|                                                                                                                    |  |  |  |  |  |  |  |  |
|                                                                                                               |   | Three Months Ended March 31, |
|                                                                                                               |   | 2011 |   | 2010 |
| Cash flows from operating activities:                                                                              |   |   |   |   |
| Net income (loss)                                                                                                  |   | $ | (19,924 | ) |   | $ | 23,669 |   |
| Adjustments to net income (loss) to reconcile to net cash provided by operating activities:                        |   |   |   |   |
| Unrealized (gain) loss on derivatives, net                                                                         |   | 27,745 |   |   | (20,490 | ) |
| Depreciation, depletion and amortization                                                                           |   | 32,357 |   |   | 28,389 |   |
| Amortization and impairment of unproved natural gas and crude oil properties                                       |   | 453 |   |   | 600 |   |
| Exploratory dry hole costs                                                                                         |   | 35 |   |   | 2,902 |   |
| Loss (gain) from sale of leaseholds/assets                                                                         |   | (3,928 | ) |   | 270 |   |
| Deferred income taxes                                                                                              |   | (14,024 | ) |   | 11,632 |   |
| Other                                                                                                              |   | 3,385 |   |   | 2,357 |   |
| Changes in assets and liabilities                                                                                  |   | (10,623 | ) |   | 2,016 |   |
| Net cash provided by operating activities                                                                          |   | 15,476 |   |   | 51,345 |   |
| Cash flows from investing activities:                                                                              |   |   |   |   |
| Capital expenditures                                                                                               |   | (71,079 | ) |   | (32,581 | ) |
| Deconsolidation/change in ownership effect on cash and cash equivalents                                            |   | (101 | ) |   | (3,074 | ) |
| Proceeds from sale of leaseholds/assets                                                                            |   | 9,952 |   |   | 16 |   |
| Net cash used in investing activities                                                                              |   | (61,228 | ) |   | (35,639 | ) |
| Cash flows from financing activities:                                                                              |   |   |   |   |
| Proceeds from credit facility                                                                                      |   | — |   |   | 64,000 |   |
| Payment of credit facility                                                                                         |   | — |   |   | (85,000 | ) |
| Contribution by investing partner in PDCM                                                                          |   | 6,407 |   |   | — |   |
| Other                                                                                                              |   | (328 | ) |   | (190 | ) |
| Net cash provided by (used in) financing activities                                                                |   | 6,079 |   |   | (21,190 | ) |
| Net decrease in cash and cash equivalents                                                                          |   | (39,673 | ) |   | (5,484 | ) |
| Cash and cash equivalents, beginning of period                                                                     |   | 54,372 |   |   | 31,944 |   |
| Cash and cash equivalents, end of period                                                                           |   | $ | 14,699 |   |   | $ | 26,460 |   |
|                                                                                                               |   |   |   |   |
| Supplemental cash flow information:                                                                                |   |   |   |   |
| Cash payments (receipts) for:                                                                                      |   |   |   |   |
| Interest, net of capitalized interest                                                                              |   | $ | 12,314 |   |   | $ | 7,067 |   |
| Income taxes, net of refunds                                                                                       |   | 85 |   |   | (33 | ) |
| Non-cash investing activities:                                                                                     |   |   |   |   |
| Change in accounts payable related to purchases of properties and equipment                                        |   | 5,832 |   |   | 6,056 |   |
| Change in asset retirement obligation, with a corresponding increase to properties and equipment, net of disposals |   | 229 |   |   | 207 |   |
|                                                                                                               |   |   |   |   |

----

|                                    |
|------------------------------------|
|                                    |  |  |  |  |  |  |  |  |
|                               |   | March 31, 2011 |   | December 31, 2010 |
|                               |   | (in thousands) |
|                               |   |   |   |   |
| Cash and cash equivalents          |   | $ | 1,808 |   |   | $ | 1,560 |   |
| Other current assets               |   | 2,560 |   |   | 3,206 |   |
| Property, plant and equipment, net |   | 103,018 |   |   | 101,679 |   |
| Other assets                       |   | 1,979 |   |   | 1,986 |   |
| Total assets                       |   | $ | 109,365 |   |   | $ | 108,431 |   |
|                               |   |   |   |   |
| Total current liabilities          |   | $ | 6,622 |   |   | $ | 4,641 |   |
| Asset retirement obligations       |   | 8,322 |   |   | 8,681 |   |
| Other liabilities                  |   | 1,784 |   |   | 1,370 |   |
| Equity                             |   | 92,637 |   |   | 93,739 |   |
| Total liabilities and equity       |   | $ | 109,365 |   |   | $ | 108,431 |   |
|                               |   |   |   |   |

----

|                                       |
|---------------------------------------|
|                                       |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                  | March 31, 2011 |   | December 31, 2010 |
|                                  | Quoted Prices inActive Markets(Level 1) |    | SignificantUnobservableInputs(Level 3) |    | Total |   | Quoted Prices inActive Markets(Level 1) |    | SignificantUnobservableInputs(Level 3) |    | Total |
|                                  | (in thousands) |
| Assets:                               |   |   |   |   |   |   |   |   |   |   |   |
| Commodity based derivatives contracts | $ | 58,740 |   |     | $ | 18,624 |   |     | $ | 77,364 |   |   | $ | 64,138 |   |     | $ | 23,168 |   |     | $ | 87,306 |   |
| Basis protection derivative contracts | — |   |   | 60 |   |   | 60 |   |   | — |   |   | 111 |   |     | 111 |   |
| Total assets                          | 58,740 |   |   | 18,684 |   |   | 77,424 |   |   | 64,138 |   |   | 23,279 |   |   | 87,417 |   |
| Liabilities:                          |   |     |   |     |   |   |   |     |   |     |   |
| Commodity based derivatives contracts | 644 |   |   | 39,717 |   |     | 40,361 |   |   | 51 |   |   | 20,011 |   |     | 20,062 |   |
| Basis protection derivative contracts | — |   |   | 45,842 |   |     | 45,842 |   |   | — |   |   | 46,580 |   |     | 46,580 |   |
| Total liabilities                     | 644 |   |   | 85,559 |   |   | 86,203 |   |   | 51 |   |   | 66,591 |   |   | 66,642 |   |
| Net asset (liability)                 | $ | 58,096 |   |   | $ | (66,875 | ) |   | $ | (8,779 | ) |   | $ | 64,087 |   |   | $ | (43,312 | ) |   | $ | 20,775 |   |
|                                  |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                  |
|----------------------------------------------------------------------------------|
|                                                                                  |  |  |  |  |  |  |  |  |
|                                                                             |   | Three Months Ended March 31, |
|                                                                             |   | 2011 |   | 2010 |
|                                                                             |   | (in thousands) |
|                                                                             |   |   |   |   |
| Fair value, net liability, beginning of period                                   |   | $ | (43,312 | ) |   | $ | (28,994 | ) |
| Changes in fair value included in statement of operations line item:             |   |   |   |   |
| Commodity price risk management gain (loss), net                                 |   | (24,405 | ) |   | 12,431 |   |
| Sales from natural gas marketing                                                 |   | 14 |   |   | 383 |   |
| Cost of natural gas marketing                                                    |   | (6 | ) |   | (3,293 | ) |
| Changes in fair value included in balance sheet line item (1):                   |   |   |   |   |
| Accounts receivable affiliates                                                   |   | (104 | ) |   | (2,320 | ) |
| Accounts payable affiliates                                                      |   | (654 | ) |   | (4,538 | ) |
| Settlements included in statement of operations line items:                      |   |   |   |   |
| Commodity price risk management gain (loss), net                                 |   | 720 |   |   | (20,980 | ) |
| Sales from natural gas marketing                                                 |   | (75 | ) |   | — |   |
| Cost of natural gas marketing                                                    |   | 947 |   |   | (5 | ) |
| Fair value, net liability, end of period                                         |   | $ | (66,875 | ) |   | $ | (47,316 | ) |
|                                                                             |   |   |   |   |
| Changes in unrealized gains (losses) relating to assets (liabilities) still held |   |   |   |   |
| as of period end, included in statement of operations line item:                 |   |   |   |   |
| Commodity price risk management gain (loss), net                                 |   | $ | (18,906 | ) |   | $ | 8,477 |   |
| Sales from natural gas marketing                                                 |   | (7 | ) |   | 353 |   |
| Cost of natural gas marketing                                                    |   | (46 | ) |   | (3,604 | ) |
|                                                                             |   | $ | (18,959 | ) |   | $ | 5,226 |   |
|                                                                             |   |   |   |   |

----

|                                                       |
|-------------------------------------------------------|
|                                                       |  |  |  |  |  |  |  |  |  |  |  |
|                                                  |   |   |   |   | Fair Value |
| Derivatives instruments not designated as hedges (1): |   | Balance sheet line item |   | March 31,2011 |   | December 31,2010 |
|                                                  |   |   |   |   | (in thousands) |
| Derivative assets:                                    | Current |   |   |   |   |   |   |
|                                                  | Commodity contracts |   |   |   |   |   |   |
|                                                  | Related to natural gas and crude oil sales |   | Fair value of derivatives |   | $ | 30,500 |   |   | $ | 32,837 |   |
|                                                  | Related to affiliated partnerships (2) |   | Fair value of derivatives |   | 8,471 |   |   | 8,231 |   |
|                                                  | Related to natural gas marketing |   | Fair value of derivatives |   | 1,171 |   |   | 1,811 |   |
|                                                  | Basis protection contracts |   |   |   |   |   |   |
|                                                  | Related to natural gas marketing |   | Fair value of derivatives |   | 48 |   |   | 74 |   |
|                                                  |   |   |   |   | 40,190 |   |   | 42,953 |   |
|                                                  | Non Current |   |   |   |   |   |   |
|                                                  | Commodity contracts |   |   |   |   |   |   |
|                                                  | Related to natural gas and crude oil sales |   | Fair value of derivatives |   | 26,845 |   |   | 32,270 |   |
|                                                  | Related to affiliated partnerships (2) |   | Fair value of derivatives |   | 10,297 |   |   | 12,111 |   |
|                                                  | Related to natural gas marketing |   | Fair value of derivatives |   | 80 |   |   | 46 |   |
|                                                  | Basis protection contracts |   |   |   |   |   |   |
|                                                  | Related to natural gas marketing |   | Fair value of derivatives |   | 12 |   |   | 37 |   |
|                                                  |   |   |   |   | 37,234 |   |   | 44,464 |   |
| Total derivative assets                               |   |   |   |   | $ | 77,424 |   |   | $ | 87,417 |   |
|                                                  |   |   |   |   |   |   |   |
| Derivative liabilities:                               | Current |   |   |   |   |   |   |
|                                                  | Commodity contracts |   |   |   |   |   |   |
|                                                  | Related to natural gas and crude oil sales |   | Fair value of derivatives |   | $ | 20,487 |   |   | $ | 10,636 |   |
|                                                  | Related to affiliated partnerships (3) |   | Fair value of derivatives |   | 1,986 |   |   | 1,676 |   |
|                                                  | Related to natural gas marketing |   | Fair value of derivatives |   | 912 |   |   | 1,492 |   |
|                                                  | Basis protection contracts |   |   |   |   |   |   |
|                                                  | Related to natural gas and crude oil sales |   | Fair value of derivatives |   | 13,665 |   |   | 11,725 |   |
|                                                  | Related to affiliated partnerships (3) |   | Fair value of derivatives |   | 5,215 |   |   | 4,462 |   |
|                                                  | Related to natural gas marketing |   | Fair value of derivatives |   | 1 |   |   | 7 |   |
|                                                  |   |   |   |   | 42,266 |   |   | 29,998 |   |
|                                                  | Non Current |   |   |   |   |   |   |
|                                                  | Commodity contracts |   |   |   |   |   |   |
|                                                  | Related to natural gas and crude oil sales |   | Fair value of derivatives |   | 16,943 |   |   | 6,231 |   |
|                                                  | Related to affiliated partnerships (3) |   | Fair value of derivatives |   | — |   |   | (3 | ) |
|                                                  | Related to natural gas marketing |   | Fair value of derivatives |   | 33 |   |   | 30 |   |
|                                                  | Basis protection contracts |   |   |   |   |   |   |
|                                                  | Related to natural gas and crude oil sales |   | Fair value of derivatives |   | 19,442 |   |   | 21,905 |   |
|                                                  | Related to affiliated partnerships (3) |   | Fair value of derivatives |   | 7,518 |   |   | 8,481 |   |
|                                                  | Related to natural gas marketing |   | Fair value of derivatives |   | 1 |   |   | — |   |
|                                                  |   |   |   |   | 43,937 |   |   | 36,644 |   |
| Total derivative liabilities                          |   |   |   |   | $ | 86,203 |   |   | $ | 66,642 |   |
|                                                  |   |   |   |   |   |   |   |

----

|                                                            |
|------------------------------------------------------------|
|                                                            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                       |   | Three Months Ended March 31, |
|                                                       |   | 2011 |   | 2010 |
| Statement of operations line item                          |   | Reclassificationof RealizedGains (Losses)Included in Prior PeriodsUnrealized |   | Realized and UnrealizedGains(Losses) FortheCurrentPeriod |   | Total |   | Reclassificationof RealizedGains (Losses)Included in Prior PeriodsUnrealized |   | Realized and UnrealizedGains(Losses) FortheCurrentPeriod |   | Total |
|                                                       |   | (in thousands) |
| Commodity price risk management gain (loss), net           |   |   |   |   |   |   |   |   |   |   |   |   |
| Realized gains                                             |   | $ | 3,322 |   |   | $ | 466 |   |   | $ | 3,788 |   |   | $ | 21,067 |   |   | $ | 1,857 |   |   | $ | 22,924 |   |
| Unrealized gains (losses)                                  |   | (3,322 | ) |   | (24,348 | ) |   | (27,670 | ) |   | (21,067 | ) |   | 41,365 |   |   | 20,298 |   |
| Total commodity price risk management gain (loss), net (1) |   | $ | — |   |   | $ | (23,882 | ) |   | $ | (23,882 | ) |   | $ | — |   |   | $ | 43,222 |   |   | $ | 43,222 |   |
| Sales from natural gas marketing                           |   |   |   |   |   |   |   |   |   |   |   |   |
| Realized gains                                             |   | $ | 1,007 |   |   | $ | 135 |   |   | $ | 1,142 |   |   | $ | 752 |   |   | $ | 308 |   |   | $ | 1,060 |   |
| Unrealized gains (losses)                                  |   | (1,007 | ) |   | (10 | ) |   | (1,017 | ) |   | (752 | ) |   | 4,264 |   |   | 3,512 |   |
| Total sales from natural gas marketing (2)                 |   | $ | — |   |   | $ | 125 |   |   | $ | 125 |   |   | $ | — |   |   | $ | 4,572 |   |   | $ | 4,572 |   |
| Cost of natural gas marketing                              |   |   |   |   |   |   |   |   |   |   |   |   |
| Realized losses                                            |   | $ | (770 | ) |   | $ | (190 | ) |   | $ | (960 | ) |   | $ | (774 | ) |   | $ | (322 | ) |   | $ | (1,096 | ) |
| Unrealized gains (losses)                                  |   | 770 |   |   | 172 |   |   | 942 |   |   | 774 |   |   | (4,094 | ) |   | (3,320 | ) |
| Total cost of natural gas marketing (2)                    |   | $ | — |   |   | $ | (18 | ) |   | $ | (18 | ) |   | $ | — |   |   | $ | (4,416 | ) |   | $ | (4,416 | ) |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |

|                               |
|-------------------------------|
|                               |  |  |  |  |
| Counterparty Name             |   | Fair Value ofDerivative AssetsAs of March 31, 2011 |
|                          |   | (in thousands) |
|                          |   |   |
| JPMorgan Chase Bank, N.A. (1) |   | $ | 35,522 |   |
| Crèdit Agricole CIB (1)  |   | 25,370 |   |
| Wells Fargo Bank, N.A. (1)    |   | 13,667 |   |
| Various (2)                   |   | 2,865 |   |
| Total                         |   | $ | 77,424 |   |
|                          |   |   |

----

|                                            |
|--------------------------------------------|
|                                            |  |  |  |  |  |  |  |
|                                       | March 31, 2011 |   | December 31, 2010 |
|                                       | (in thousands) |
| Properties and equipment, net:             |   |   |   |
| Natural gas and crude oil properties       |   |   |   |
| Proved                                     | $ | 1,488,520 |   |   | $ | 1,429,667 |   |
| Unproved                                   | 69,906 |   |   | 79,053 |   |
| Total natural gas and crude oil properties | 1,558,426 |   |   | 1,508,720 |   |
| Pipelines and related facilities           | 34,203 |   |   | 34,262 |   |
| Transportation and other equipment         | 32,456 |   |   | 32,410 |   |
| Land, buildings and leasehold improvements | 14,514 |   |   | 13,379 |   |
| Construction in progress                   | 54,260 |   |   | 42,128 |   |
|                                       | 1,693,859 |   |   | 1,630,899 |   |
| Accumulated DD&A                       | (540,902 | ) |   | (510,861 | ) |
| Properties and equipment, net              | $ | 1,152,957 |   |   | $ | 1,120,038 |   |
|                                       |   |   |   |

----

|                                                          |
|----------------------------------------------------------|
|                                                          |  |  |  |  |  |  |  |
|                                                     | March 31, 2011 |   | December 31, 2010 |
|                                                     | (in thousands) |
| Senior notes                                             |   |   |   |
| 3.25% Convertible senior notes due 2016:                 |   |   |   |
| Principal amount                                         | $ | 115,000 |   |   | $ | 115,000 |   |
| Unamortized discount                                     | (19,310 | ) |   | (20,252 | ) |
| 3.25% Convertible senior notes due 2016, net of discount | 95,690 |   |   | 94,748 |   |
| 12% Senior notes due 2018:                               |   |   |   |   |   |
| Principal amount                                         | 203,000 |   |   | 203,000 |   |
| Unamortized discount                                     | (1,981 | ) |   | (2,053 | ) |
| 12% Senior notes due 2018, net of discount               | 201,019 |   |   | 200,947 |   |
| Total senior notes                                       | 296,709 |   |   | 295,695 |   |
| Total long-term debt                                     | $ | 296,709 |   |   | $ | 295,695 |   |
|                                                     |   |   |   |

----

|                                                                               |
|-------------------------------------------------------------------------------|
|                                                                               |  |  |  |
|                                                                          | Amount |
|                                                                          | (in thousands) |
|                                                                          |   |
| Balance at December 31, 2010 (1)                                              | $ | 28,047 |   |
| Change in ownership interest of PDCM                                          | (485 | ) |
| Obligations incurred with development activites and assumed with acquisitions | 450 |   |
| Accretion expense                                                             | 396 |   |
| Obligations discharged with disposal of properties and asset retirements      | (221 | ) |
| Balance at March 31, 2011                                                     | 28,187 |   |
| Less current portion                                                          | (250 | ) |
| Long-term portion                                                             | $ | 27,937 |   |
|                                                                          |   |

----

|                                  |
|----------------------------------|
|                                  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                             |   | For the Twelve Months Ending March 31, |   |   |   |   |
| Area                             |   | 2012 |   | 2013 |   | 2014 |   | 2015 |   | 2016 ThroughExpiration |   | Total |   | ExpirationDate |
|                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Volume (MMcf)                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Piceance                         |   | 32,466 |   |   | 32,872 |   |   | 29,399 |   |   | 23,584 |   |   | 65,969 |   |   | 184,290 |   |   | May 31, 2021 |
| Appalachian Basin (1)            |   | 4,587 |   |   | 11,776 |   |   | 15,992 |   |   | 15,992 |   |   | 114,653 |   |   | 163,000 |   |   | August 31, 2022 |
| NECO                             |   | 3,200 |   |   | 1,825 |   |   | 1,825 |   |   | 1,825 |   |   | 3,200 |   |   | 11,875 |   |   | December 31, 2016 |
| Total                            |   | 40,253 |   |   | 46,473 |   |   | 47,216 |   |   | 41,401 |   |   | 183,822 |   |   | 359,165 |   |   |   |
|                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Dollar commitment (in thousands) |   | $ | 19,801 |   |   | $ | 22,941 |   |   | $ | 23,343 |   |   | $ | 20,290 |   |   | $ | 86,878 |   |   | $ | 173,253 |   |   |   |
|                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1) | Includes a precedent agreement that becomes effective when a planned pipeline is placed in service, currently expected to be September 2012 and represents 10,629 MMcf of the total MMcf presented for each of the years ending March 31, 2013 and 2014, and 78,915 MMcf thereafter. This agreement will be null and void if the pipeline is not completed. In August 2009, we issued a letter of credit related to this agreement, see Note 7. |

----

----

|                                        |
|----------------------------------------|
|                                        |  |  |  |  |  |  |  |  |
|                                   |   | Three Months Ended March 31, |
|                                   |   | 2011 |   | 2010 |
|                                   |   | (in thousands) |
|                                   |   |   |   |   |
| Total stock-based compensation expense |   | $ | 1,545 |   |   | $ | 1,005 |   |
| Income tax benefit                     |   | (587 | ) |   | (386 | ) |
| Net income (loss) impact               |   | $ | 958 |   |   | $ | 619 |   |
|                                   |   |   |   |   |

|                                                  |
|--------------------------------------------------|
|                                                  |  |  |  |
|                                             | Three Months Ended |
|                                             | March 31, 2011 |
|                                             |   |
| Expected term of the award                       | 6 years |   |
| Risk-free interest rate                          | 2.5 | % |
| Volatility                                       | 60.2 | % |
| Weighted average grant date fair value per share | $ | 25.22 |   |

|                                               |
|-----------------------------------------------|
|                                               |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                          |   | Number ofSharesUnderlyingSARs |   | Grant Date Market PricePer Share |   | Average Remaining ContractualTerm(in years) |   | Aggregate IntrinsicValue(in thousands) |
|                                          |   |   |   |   |   |   |   |   |
| Outstanding at December 31, 2010              |   | 57,282 |   |   | $ | 24.44 |   |   | 9.3 |   |   | $ | — |   |
| Awarded                                       |   | 31,552 |   |   | 43.95 |   |   | 10.0 |   |   | — |   |
| Outstanding at March 31, 2011                 |   | 88,834 |   |   | 31.37 |   |   | 9.4 |   |   | 1,478 |   |
| Vested and expected to vest at March 31, 2011 |   | 79,951 |   |   | 31.37 |   |   | 9.4 |   |   | 1,330 |   |
| Exercisable at March 31, 2011                 |   | — |   |   | — |   |   | — |   |   | — |   |
|                                          |   |   |   |   |   |   |   |   |

----

|                                 |
|---------------------------------|
|                                 |  |  |  |  |  |  |  |
|                            |   | Shares |   | Weighted AverageGrant-DateFair Value per Share |
|                            |   |   |   |   |
| Non-vested at December 31, 2010 |   | 525,715 |   |   | $ | 25.53 |   |
| Granted                         |   | 48,173 |   |   | 43.95 |   |
| Vested                          |   | (30,137 | ) |   | 29.26 |   |
| Forfeited                       |   | (9,707 | ) |   | 23.39 |   |
| Non-vested at March 31, 2011    |   | 534,044 |   |   | 27.02 |   |
|                            |   |   |   |   |

|                                                       |
|-------------------------------------------------------|
|                                                       |  |  |  |
|                                                  | As of/Three Months Ended |
|                                                  | March 31, 2011 |
|                                                  | (in thousands, except per share data) |
|                                                  |   |
| Total intrinsic value of time-based awards vested     | $ | 1,400 |   |
| Total intrinsic value of time-based awards non-vested | 25,639 |   |
| Market price per common share as of March 31          | 48.01 |   |

|                                                  |
|--------------------------------------------------|
|                                                  |  |  |  |  |
|                                             |   | Three Months Ended |
|                                             |   | March 31, 2011 |
|                                             |   |   |
| Expected term of award                           |   | 3 years |   |
| Risk-free interest rate                          |   | 1.1 | % |
| Volatility                                       |   | 74.2 | % |
| Weighted average grant date fair value per share |   | $ | 58.53 |   |

|                                 |
|---------------------------------|
|                                 |  |  |  |  |  |  |
|                            | Shares |   | Weighted AverageGrant-DateFair Value per Share |
|                            |   |   |   |
| Non-vested at December 31, 2010 | 79,550 |   |   | $ | 32.52 |   |
| Granted                         | 13,531 |   |   | 58.53 |   |
| Non-vested at March 31, 2011    | 93,081 |   |   | 36.30 |   |
|                            |   |   |   |

----

|                                                                            |
|----------------------------------------------------------------------------|
|                                                                            |  |  |  |  |  |
|                                                                       | Three Months Ended March 31, |
|                                                                       | 2011 |   | 2010 |
|                                                                       | (in thousands) |
|                                                                       |   |   |   |
| Weighted average common shares outstanding - basic                         | 23,428 |   |   | 19,191 |   |
| Dilutive effect of share-based compensation:                               |   |   |   |
| Restricted stock                                                           | — |   |   | 88 |   |
| Non employee director deferred compensation                                | — |   |   | 8 |   |
| Weighted average common and common share equivalents outstanding - diluted | 23,428 |   |   | 19,287 |   |
|                                                                       |   |   |   |

|                                                                          |
|--------------------------------------------------------------------------|
|                                                                          |  |  |  |  |  |
|                                                                     | Three Months Ended March 31, |
|                                                                     | 2011 |   | 2010 |
|                                                                     | (in thousands) |
|                                                                     |   |   |   |
| Weighted average common share equivalents excluded from diluted earnings |   |   |   |
| per share due to their anti-dilutive effect:                             |   |   |   |
| Restricted stock                                                         | 603 |   |   | 146 |   |
| Stock options                                                            | 10 |   |   | 10 |   |
| SARs                                                                     | 64 |   |   | — |   |
| Convertible debt                                                         | 161 |   |   | — |   |
| Non employee director deferred compensation                              | 3 |   |   | — |   |
| Total anti-dilutive common share equivalents                             | 841 |   |   | 156 |   |
|                                                                     |   |   |   |

----

|                                                   |
|---------------------------------------------------|
|                                                   |  |  |  |  |  |  |  |  |
|                                              |   | Three Months Ended March 31, |
| Statement of Operations - Discontinued Operations |   | 2011 |   | 2010 |
|                                              |   | (dollars in thousands) |
| Revenues                                          |   |   |   |   |
| Natural gas, NGL and crude oil sales              |   | $ | 447 |   |   | $ | 2,541 |   |
| Sales from natural gas marketing                  |   | — |   |   | 1,624 |   |
| Well operations, pipeline income and other        |   | 10 |   |   | 256 |   |
| Total revenues                                    |   | 457 |   |   | 4,421 |   |
|                                              |   |   |   |   |
| Costs, expenses and other                         |   |   |   |   |
| Production costs                                  |   | 132 |   |   | 715 |   |
| Cost of natural gas marketing                     |   | — |   |   | 1,531 |   |
| Depreciation, depletion and amortization          |   | — |   |   | 931 |   |
| Gain on sale of leaseholds                        |   | (3,854 | ) |   | — |   |
| Total costs, expenses and other                   |   | (3,722 | ) |   | 3,177 |   |
|                                              |   |   |   |   |
| Income from discontinued operations               |   | 4,179 |   |   | 1,244 |   |
| Provision for income taxes                        |   | 1,559 |   |   | 447 |   |
| Income from discontinued operations, net of tax   |   | $ | 2,620 |   |   | $ | 797 |   |
|                                              |   |   |   |   |
| Operational Data                                  |   |   |   |   |
|                                              |   |   |   |   |
| Production                                        |   |   |   |   |
| Natural gas (MMcf)                                |   | 8.7 |   |   | 368.5 |   |
| Crude oil (MBbls)                                 |   | 3.8 |   |   | 12.0 |   |
| Natural gas equivalent (MMcfe)                    |   | 31.5 |   |   | 440.4 |   |

----

|                                            |
|--------------------------------------------|
|                                            |  |  |  |  |  |  |  |
|                                       | Three Months Ended March 31, |
|                                       | 2011 |   | 2010 |
|                                       | (in thousands) |
| Revenues:                                  |   |   |   |
| Natural gas and crude oil sales            | $ | 41,873 |   |   | $ | 103,635 |   |
| Natural gas marketing                      | 15,202 |   |   | 22,687 |   |
| Unallocated                                | — |   |   | 3 |   |
| Total                                      | $ | 57,075 |   |   | $ | 126,325 |   |
|                                       |   |   |   |
| Segment income (loss) before income taxes: |   |   |   |
| Natural gas and crude oil sales            | $ | (12,910 | ) |   | $ | 55,654 |   |
| Natural gas marketing                      | 209 |   |   | 357 |   |
| Unallocated                                | (23,690 | ) |   | (19,335 | ) |
| Total                                      | $ | (36,391 | ) |   | $ | 36,676 |   |
|                                       |   |   |   |
|                                       | March 31, 2011 |   | December 31, 2010 |
|                                       | (in thousands) |
| Segment assets:                            |   |   |   |
| Natural gas and crude oil sales            | $ | 1,313,163 |   |   | $ | 1,313,805 |   |
| Natural gas marketing                      | 15,170 |   |   | 16,338 |   |
| Unallocated                                | 60,014 |   |   | 53,701 |   |
| Assets held for sale                       | — |   |   | 5,191 |   |
| Total                                      | $ | 1,388,347 |   |   | $ | 1,389,035 |   |
|                                       |   |   |   |

----

----

|                                                          |
|----------------------------------------------------------|
|                                                          |  |  |  |  |  |  |  |  |  |  |
|                                                     | Three Months Ended March 31, |
|                                                     | 2011 |   | 2010 |   | Change |
|                                                     | (dollars in thousands, except per unit data) |   |   |
| Production (1)                                           |   |   |   |   |   |
| Natural gas (MMcf)                                       | 7,747.3 |   |   | 6,513.4 |   |   | 18.9 |  % |
| Crude oil (MBbls)                                        | 371.3 |   |   | 284.8 |   |   | 30.4 |  % |
| NGLs (MBbls)                                             | 166.9 |   |   | 149.1 |   |   | 11.9 |  % |
| Natural gas equivalent (MMcfe) (2)                       | 10,976.6 |   |   | 9,116.4 |   |   | 20.4 |  % |
| Average MMcfe per day                                    | 122.0 |   |   | 101.3 |   |   | 20.4 |  % |
| Natural Gas, NGL and Crude Oil Sales                     |   |   |   |   |   |
| Natural gas                                              | $ | 23,855 |   |   | $ | 30,647 |   |   | (22.2 | )% |
| Crude oil                                                | 32,517 |   |   | 20,951 |   |   | 55.2 |  % |
| NGLs                                                     | 7,507 |   |   | 6,229 |   |   | 20.5 |  % |
| Total natural gas, NGL and crude oil sales               | $ | 63,879 |   |   | $ | 57,827 |   |   | 10.5 |  % |
|                                                     |   |   |   |   |   |
| Realized Gain (Loss) on Derivatives, net (3)             |   |   |   |   |   |
| Natural gas                                              | $ | 6,899 |   |   | $ | 20,879 |   |   | (67.0 | )% |
| Crude oil                                                | (3,111 | ) |   | 2,045 |   |   | (252.1 | )% |
| Total realized gain on derivatives, net                  | $ | 3,788 |   |   | $ | 22,924 |   |   | (83.5 | )% |
|                                                     |   |   |   |   |   |
| Average Sales Price (excluding gain/loss on derivatives) |   |   |   |   |   |
| Natural gas (per Mcf)                                    | $ | 3.08 |   |   | $ | 4.71 |   |   | (34.6 | )% |
| Crude oil (per Bbl)                                      | 87.56 |   |   | 73.57 |   |   | 19.0 |  % |
| NGLs (per Bbl)                                           | 44.99 |   |   | 41.80 |   |   | 7.6 |  % |
| Natural gas equivalent (per Mcfe)                        | 5.82 |   |   | 6.34 |   |   | (8.2 | )% |
|                                                     |   |   |   |   |   |
| Average Sales Price (including gain/loss on derivatives) |   |   |   |   |   |
| Natural gas (per Mcf)                                    | $ | 3.97 |   |   | $ | 7.91 |   |   | (49.8 | )% |
| Crude oil (per Bbl)                                      | 79.20 |   |   | 80.74 |   |   | (1.9 | )% |
| NGLs (per Bbl)                                           | 44.99 |   |   | 41.80 |   |   | 7.6 |  % |
| Natural gas equivalent (per Mcfe)                        | 6.16 |   |   | 8.86 |   |   | (30.5 | )% |
|                                                     |   |   |   |   |   |
| Average Lifting Cost (per Mcfe) (4)                      | $ | 1.17 |   |   | $ | 0.97 |   |   | 20.6 |  % |
|                                                     |   |   |   |   |   |
| Natural Gas Marketing (5)                                | $ | 209 |   |   | $ | 364 |   |   | (42.6 | )% |
|                                                     |   |   |   |   |   |
| Other Costs and Expenses                                 |   |   |   |   |   |
| Exploration expense                                      | $ | 2,151 |   |   | $ | 6,418 |   |   | (66.5 | )% |
| General and administrative expense                       | 13,873 |   |   | 10,694 |   |   | 29.7 |  % |
| Depreciation, depletion and amortization                 | 32,357 |   |   | 27,458 |   |   | 17.8 |  % |
|                                                     |   |   |   |   |   |
| Interest Expense, net                                    | $ | 9,053 |   |   | $ | 7,795 |   |   | 16.1 |  % |

|     |                                                                                                                                                           |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1) | Production is net and determined by multiplying the gross production volume of properties in which we have an interest by the percentage interest we own. |

|     |                                                            |
|-----|------------------------------------------------------------|
| (2) | Six Mcf of natural gas equals one Bbl of crude oil or NGL. |

|     |                                                                                                                                                                                                 |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (3) | Represents realized derivative gains and losses related to natural gas and crude oil sales segment, which do not include realized derivative gains and losses related to natural gas marketing. |

|     |                                                          |
|-----|----------------------------------------------------------|
| (4) | Represents lease operating expenses on a per unit basis. |

|     |                                                                                                                                                                                                |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (5) | Represents sales from natural gas marketing, net of costs of natural gas marketing, including realized and unrealized derivative gains and losses related to natural gas marketing activities. |

----

|                                |
|--------------------------------|
|                                |  |  |  |  |  |  |  |  |  |
|                           |   | Three Months Ended March 31, |
|                           |   | 2011 |   | 2010 |   | PercentageChange |
| Production                     |   |   |   |   |   |   |
| Natural gas (MMcf)             |   |   |   |   |   |   |
| Rocky Mountain Region (1)      |   | 6,787.5 |   |   | 5,873.2 |   |   | 15.6 |  % |
| Permian Basin (2)              |   | 81.1 |   |   | — |   |   | * |   |
| Appalachian Basin              |   | 866.9 |   |   | 630.5 |   |   | 37.5 |  % |
| Other                          |   | 11.8 |   |   | 9.7 |   |   | 21.6 |  % |
| Total                          |   | 7,747.3 |   |   | 6,513.4 |   |   | 18.9 |  % |
| Crude oil (MBbls)              |   |   |   |   |   |   |
| Rocky Mountain Region          |   | 320.0 |   |   | 284.1 |   |   | 12.6 |  % |
| Permian Basin (2)              |   | 50.1 |   |   | — |   |   | * |   |
| Appalachian Basin              |   | 1.1 |   |   | 0.7 |   |   | 57.1 |  % |
| Other                          |   | 0.1 |   |   | — |   |   | * |   |
| Total                          |   | 371.3 |   |   | 284.8 |   |   | 30.4 |  % |
| NGLs (MBbls)                   |   |   |   |   |   |   |
| Rocky Mountain Region          |   | 147.5 |   |   | 148.0 |   |   | (0.3 | )% |
| Permian Basin (2)              |   | 18.1 |   |   | — |   |   | * |   |
| Other                          |   | 1.3 |   |   | 1.1 |   |   | 18.2 |  % |
| Total                          |   | 166.9 |   |   | 149.1 |   |   | 11.9 |  % |
| Natural gas equivalent (MMcfe) |   |   |   |   |   |   |
| Rocky Mountain Region          |   | 9,592.0 |   |   | 8,465.5 |   |   | 13.3 |  % |
| Permian Basin (2)              |   | 490.7 |   |   | — |   |   | * |   |
| Appalachian Basin              |   | 873.7 |   |   | 634.8 |   |   | 37.6 |  % |
| Other                          |   | 20.2 |   |   | 16.1 |   |   | 25.5 |  % |
| Total                          |   | 10,976.6 |   |   | 9,116.4 |   |   | 20.4 |  % |
|                           |   |   |   |   |   |   |

|     |                                                                                                                                                                                                                                   |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1) | Approximately 27.7% of the 15.6% , or 253 MMcf, increase in our natural gas production was the result of a settlement with a gas purchaser recorded during the three months ended 2011 related to prior years' volume imbalances. |

|     |                                                                       |
|-----|-----------------------------------------------------------------------|
| (2) | Our Permian Basin properties were acquired in July and November 2010. |

----

|                                                         |
|---------------------------------------------------------|
|                                                         |  |  |  |  |  |  |  |  |  |  |  |
|                                                    |   | Three Months Ended March 31, |
| Average Sales Price(excluding gain/loss on derivatives) |   | 2011 |   | 2010 |   | PercentageChange |
| Natural gas (per Mcf)                                   |   |   |   |   |   |   |
| Rocky Mountain Region (1)                               |   | $ | 2.92 |   |   | $ | 4.64 |   |   | (37.1 | )% |
| Permian Basin (2)                                       |   | 5.23 |   |   | — |   |   | * |   |
| Appalachian Basin                                       |   | 4.11 |   |   | 5.34 |   |   | (23.0 | )% |
| Other                                                   |   | 2.56 |   |   | 3.22 |   |   | (20.5 | )% |
| Weighted average price                                  |   | 3.08 |   |   | 4.71 |   |   | (34.6 | )% |
| Crude oil (per Bbl)                                     |   |   |   |   |   |   |
| Rocky Mountain Region                                   |   | 89.67 |   |   | 73.55 |   |   | 21.9 |  % |
| Permian Basin (2)                                       |   | 74.39 |   |   | — |   |   | * |   |
| Appalachian Basin                                       |   | 76.00 |   |   | 79.18 |   |   | (4.0 | )% |
| Other                                                   |   | 85.61 |   |   | — |   |   | * |   |
| Weighted average price                                  |   | 87.56 |   |   | 73.57 |   |   | 19.0 |  % |
| NGLs (per Bbl)                                          |   |   |   |   |   |   |
| Rocky Mountain Region                                   |   | 44.10 |   |   | 41.51 |   |   | 6.2 |  % |
| Permian Basin (2)                                       |   | 50.46 |   |   | — |   |   | * |   |
| Other                                                   |   | 69.50 |   |   | 80.77 |   |   | (14.0 | )% |
| Weighted average price                                  |   | 44.99 |   |   | 41.80 |   |   | 7.6 |  % |
| Natural gas equivalent (per Mcfe)                       |   |   |   |   |   |   |
| Rocky Mountain Region                                   |   | 5.74 |   |   | 6.41 |   |   | (10.5 | )% |
| Permian Basin                                           |   | 10.33 |   |   | — |   |   | * |   |
| Appalachian Basin                                       |   | 4.17 |   |   | 5.39 |   |   | (22.6 | )% |
| Other                                                   |   | 6.39 |   |   | 7.29 |   |   | (12.3 | )% |
| Weighted average price                                  |   | 5.82 |   |   | 6.34 |   |   | (8.2 | )% |

|     |                                                                                                                                                                                                                        |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1) | Approximately $1.3 million, or $0.19 per Mcf,  in natural gas sales revenue was the result of a settlement with a gas purchaser recorded during the three months ended 2011 related to prior years' volume imbalances. |

|     |                                                                       |
|-----|-----------------------------------------------------------------------|
| (2) | Our Permian Basin properties were acquired in July and November 2010. |

|                                                                |
|----------------------------------------------------------------|
|                                                                |  |  |  |  |
| Increase in production                                         |   | $ | 12.9 |   |
| Increase in average crude oil price                            |   | 5.2 |   |
| Increase in average NGL price                                  |   | 0.6 |   |
| Decrease in average natural gas price                          |   | (12.6 | ) |
| Total increase in natural gas, NGL and crude oil sales revenue |   | $ | 6.1 |   |
|                                                           |   |   |

----

|                                                |
|------------------------------------------------|
|                                                |  |  |  |  |  |  |  |
|                                           | Three Months Ended March 31, |
|                                           | 2011 |   | 2010 |
|                                           | (in millions) |
|                                           |   |   |   |
| Lease operating expenses                       | $ | 12.8 |   |   | $ | 8.8 |   |
| Production taxes                               | 4.7 |   |   | 2.4 |   |
| Costs of well operations and pipeline services | 1.9 |   |   | 1.9 |   |
| Overhead and other production expenses         | 1.6 |   |   | 1.9 |   |
| Total production costs                         | $ | 21.0 |   |   | $ | 15.0 |   |
|                                           |   |   |   |

|                                                                         |
|-------------------------------------------------------------------------|
|                                                                         |  |  |  |  |  |  |  |
|                                                                    | Three Months Ended March 31, |
|                                                                    | 2011 |   | 2010 |
|                                                                    | (in millions) |
| Commodity price risk management gain (loss), net:                       |   |   |   |
| Realized gains (losses):                                                |   |   |   |
| Natural gas                                                             | $ | 6.9 |   |   | $ | 20.9 |   |
| Crude oil                                                               | (3.1 | ) |   | 2.0 |   |
| Total realized gains, net                                               | 3.8 |   |   | 22.9 |   |
| Unrealized gains (losses):                                              |   |   |   |
| Reclassification of realized gains included in prior periods unrealized | (3.3 | ) |   | (21.1 | ) |
| Unrealized gains (losses) for the period                                | (24.4 | ) |   | 41.4 |   |
| Total unrealized gains (losses), net                                    | (27.7 | ) |   | 20.3 |   |
| Total commodity price risk management gain (loss), net                  | $ | (23.9 | ) |   | $ | 43.2 |   |
|                                                                    |   |   |   |

----

|                                           |
|-------------------------------------------|
|                                           |  |  |  |  |  |  |  |  |
|                                      |   | Three Months Ended March 31, |
|                                      |   | 2011 |   | 2010 |
|                                      |   | (in millions) |
| Sales from natural gas marketing          |   |   |   |   |
| Natural gas sales revenue                 |   | $ | 15.1 |   |   | $ | 18.1 |   |
| Realized derivative gain                  |   | 1.1 |   |   | 1.1 |   |
| Unrealized derivative gain (loss)         |   | (1.0 | ) |   | 3.5 |   |
| Total sales from natural gas marketing    |   | 15.2 |   |   | 22.7 |   |
|                                      |   |   |   |   |
| Costs of natural gas marketing            |   |   |   |   |
| Costs of natural gas purchases            |   | 14.6 |   |   | 17.6 |   |
| Realized derivative loss                  |   | 1.0 |   |   | 1.1 |   |
| Unrealized derivative loss (gain)         |   | (0.9 | ) |   | 3.3 |   |
| Other                                     |   | 0.3 |   |   | 0.3 |   |
| Total costs of natural gas marketing      |   | 15.0 |   |   | 22.3 |   |
|                                      |   |   |   |   |
| Natural gas marketing contribution margin |   | $ | 0.2 |   |   | $ | 0.4 |   |
|                                      |   |   |   |   |

----

|                                                                |
|----------------------------------------------------------------|
|                                                                |  |  |  |  |  |  |  |  |
|                                                           |   | Three Months Ended March 31, |
|                                                           |   | 2011 |   | 2010 |
|                                                           |   | (in millions) |
|                                                           |   |   |   |   |
| Amortization of individually insignificant unproved properties |   | $ | 0.5 |   |   | $ | 0.6 |   |
| Exploratory dry hole costs                                     |   | 0.1 |   |   | 2.9 |   |
| Geological and geophysical costs                               |   | 0.9 |   |   | 1.0 |   |
| Operating, personnel and other                                 |   | 0.7 |   |   | 1.9 |   |
| Total exploration expense                                      |   | $ | 2.2 |   |   | $ | 6.4 |   |
|                                                           |   |   |   |   |

|                        |
|------------------------|
|                        |  |  |  |  |  |  |  |
|                   | Three Months Ended March 31, |
|                   | 2011 |   | 2010 |
|                   | (per Mcfe) |
| Rocky Mountain Region: |   |   |   |
| Wattenberg Field       | $ | 3.26 |   |   | $ | 3.66 |   |
| Grand Valley Field     | 2.54 |   |   | 2.45 |   |
| Weighted average       | 2.82 |   |   | 2.97 |   |
|                   |   |   |   |
| Permian Basin          | 2.79 |   |   | — |   |
| Appalachian Basin      | 2.52 |   |   | 2.64 |   |
|                   |   |   |   |
| Total weighted average | 2.79 |   |   | 2.96 |   |

----

----

----

----

|                           |
|---------------------------|
|                           |  |  |  |  |  |  |  |  |  |  |  |  |
|                      |   | Gross Drilling Activity |
|                      |   | Three Months Ended March 31, |
|                      |   | 2011 |   | 2010 |
|                      |   | Productive |   | In-Process (1) |   | Productive |   | In-Process |
| Development Wells         |   |   |   |   |   |   |   |   |
| Rocky Mountain Region     |   | 17 |   |   | 31 |   |   | 20 |   |   | 23 |   |
| Permian Basin             |   | — |   |   | 6 |   |   | — |   |   | — |   |
| Total development wells   |   | 17 |   |   | 37 |   |   | 20 |   |   | 23 |   |
| Exploratory Wells         |   |   |   |   |   |   |   |   |
| Rocky Mountain Region     |   | — |   |   | 1 |   |   | — |   |   | — |   |
| Appalachian Basin         |   | — |   |   | — |   |   | — |   |   | 1 |   |
| Total exploratory wells   |   | — |   |   | 1 |   |   | — |   |   | 1 |   |
| Total drilling activity   |   | 17 |   |   | 38 |   |   | 20 |   |   | 24 |   |
| Recompletions/refractures |   | 31 |   |   |   |   | 11 |   |   |   |
|                      |   |   |   |   |   |   |   |   |

|     |                                                                                                                                                                                                                |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1) | As of March 31, 2011, a total of 50 wells, including the 38 wells drilled during the three months ended 2011 and still in-process as of March 31, were waiting to be completed and/or for pipeline connection. |

|                           |
|---------------------------|
|                           |  |  |  |  |  |  |  |  |  |  |  |  |
|                      |   | Net Drilling Activity |
|                      |   | Three Months Ended March 31, |
|                      |   | 2011 |   | 2010 |
|                      |   | Productive |   | In-Process |   | Productive |   | In-Process |
| Development Wells         |   |   |   |   |   |   |   |   |
| Rocky Mountain Region     |   | 9.3 |   |   | 24.6 |   |   | 17.9 |   |   | 20.0 |   |
| Permian Basin             |   | — |   |   | 6.0 |   |   | — |   |   | — |   |
| Total development wells   |   | 9.3 |   |   | 30.6 |   |   | 17.9 |   |   | 20.0 |   |
| Exploratory Wells         |   |   |   |   |   |   |   |   |
| Rocky Mountain Region     |   | — |   |   | 1.0 |   |   | — |   |   | — |   |
| Appalachian Basin         |   | — |   |   | — |   |   | — |   |   | 0.7 |   |
| Total exploratory wells   |   | — |   |   | 1.0 |   |   | — |   |   | 0.7 |   |
| Total drilling activity   |   | 9.3 |   |   | 31.6 |   |   | 17.9 |   |   | 20.7 |   |
| Recompletions/refractures |   | 28.9 |   |   |   |   | 10.5 |   |   |   |
|                      |   |   |   |   |   |   |   |   |

----

|                                                                        |
|------------------------------------------------------------------------|
|                                                                        |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                                   |   | Payments due by period |
|                                                                   |   |   |   | Less than |   | 1-3 |   | 3-5 |   | More than |
| Contractual Obligations and Contingent Commitments                     |   | Total |   | 1 year |   | years |   | years |   | 5 years |
|                                                                   |   | (in millions) |
| Long-term liabilities reflected on the consolidated balance sheets (1) |   |   |   |   |   |   |   |   |   |   |
| Long-term debt (2)                                                     |   | $ | 318.0 |   |   | $ | — |   |   | $ | — |   |   | $ | — |   |   | $ | 318.0 |   |
| Derivative contracts (3)                                               |   | 67.6 |   |   | 23.6 |   |   | 43.1 |   |   | 0.9 |   |   | — |   |
| Derivative contracts - affiliated partnerships (4)                     |   | 17.6 |   |   | 7.3 |   |   | 10.3 |   |   | — |   |   | — |   |
| Production tax liability                                               |   | 36.6 |   |   | 16.1 |   |   | 20.5 |   |   | — |   |   | — |   |
| Asset retirement obligations                                           |   | 28.2 |   |   | 0.2 |   |   | 0.4 |   |   | 0.8 |   |   | 26.8 |   |
| Other liabilities (5)                                                  |   | 9.9 |   |   | 0.3 |   |   | 3.7 |   |   | 0.6 |   |   | 5.3 |   |
|                                                                   |   | 477.9 |   |   | 47.5 |   |   | 78.0 |   |   | 2.3 |   |   | 350.1 |   |
|                                                                   |   |   |   |   |   |   |   |   |   |   |
| Commitments, contingencies and other arrangements (6)             |   |   |   |   |   |   |   |   |   |   |
| Interest on long-term debt (7)                                         |   | 195.1 |   |   | 30.1 |   |   | 59.3 |   |   | 58.6 |   |   | 47.1 |   |
| Operating leases                                                       |   | 8.2 |   |   | 2.1 |   |   | 3.5 |   |   | 2.6 |   |   | — |   |
| Rig commitment (8)                                                     |   | 5.3 |   |   | 3.4 |   |   | 1.9 |   |   | — |   |   | — |   |
| Drilling commitment                                                    |   | 0.9 |   |   | — |   |   | — |   |   | — |   |   | 0.9 |   |
| Firm transportation and processing agreements (9)                      |   | 173.3 |   |   | 19.8 |   |   | 46.3 |   |   | 37.8 |   |   | 69.4 |   |
| Other                                                                  |   | 0.5 |   |   | 0.1 |   |   | 0.3 |   |   | 0.1 |   |   | — |   |
|                                                                   |   | 383.3 |   |   | 55.5 |   |   | 111.3 |   |   | 99.1 |   |   | 117.4 |   |
| Total                                                                  |   | $ | 861.2 |   |   | $ | 103.0 |   |   | $ | 189.3 |   |   | $ | 101.4 |   |   | $ | 467.5 |   |
|                                                                   |   |   |   |   |   |   |   |   |   |   |

|     |                                                                                                                                                                                                      |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1) | Table does not include deferred income tax liability to taxing authorities of $181.4 million, due to the uncertainty surrounding the ultimate settlement of amounts and timing of these obligations. |

|     |                                                                                                                                                                                                                                             |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Amount presented does not agree with the balance sheet in that it excludes $21.3 million in unamortized debt discount. See Note 7, Long-Term Debt, to the accompanying condensed consolidated financial statements included in this report. |

|     |                                                                                                                                                                                                                                                                                                   |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (3) | Represents our gross liability related to the fair value of derivative positions, including the fair value of derivative contracts we entered into on behalf of our affiliated partnerships as the managing general partner. We have a related receivable from the partnerships of $14.7 million. |

|     |                                                                                                              |
|-----|--------------------------------------------------------------------------------------------------------------|
| (4) | Represents our affiliated partnerships' designated portion of the fair value of our gross derivative assets. |

|     |                                                                                                                                                                |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (5) | Includes funds held from revenue distribution to third party investors for plugging liabilities related to wells we operate and deferred officer compensation. |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (6) | Table does not include an undrawn $18.7 million irrevocable standby letter of credit issued in August 2009 to a transportation service provider; see Note 7, Long-Term Debt, in the accompanying condensed consolidated financial statements included in this report.  Additionally, the table does not include the annual repurchase obligations to investing partners of our affiliated partnerships or termination benefits related to employment agreements with our executive officers, due to the uncertainty surrounding the ultimate settlement of amounts and timing of these obligations; see Note 9, Commitments and Contingencies - Partnership Repurchase Provision; Employment Agreements with Executive Offers, to the accompanying condensed consolidated financial statements included in this report. |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (7) | Amounts presented include $20.1 million payable to the holders of our 3.25% convertible senior notes due 2016 and $167.5 million to the holders of our 12% senior notes due 2018. Amounts also include $7.4 million payable to the participating banks of our revolving credit facility. As of March 31, 2011, there were no borrowings outstanding on our revolving bank credit facility; however, the $7.4 million represents amounts due on the unutilized commitment at a rate of 0.5% per annum plus a rate of 2.125% per annum related to our outstanding letter of credit. |

|     |                                                                                                                                                                      |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (8) | Drilling rig commitment in the above table reflects our proportionate share of the maximum obligation for the services of one drilling rig in the Appalachian Basin. |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                              |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (9) | Represents our gross commitment, including our proportionate share of PDCM. We will recognize in our financial statements our proportionate share based on our working interest; however, the costs of all volume shortfalls will be borne by PDC only. See Note 9, Commitments and Contingencies - Firm Transportation Agreements, to the accompanying condensed consolidated financial statements included in this report. |

----

|                                                          |
|----------------------------------------------------------|
|                                                          |  |  |  |  |  |  |  |
|                                                     | Three Months Ended March 31, |
|                                                     | 2011 |   | 2010 |
|                                                     | (in millions) |
| Adjusted cash flows from operations:                     |   |   |   |
| Adjusted cash flows from operations                      | $ | 26.1 |   |   | $ | 49.3 |   |
| Changes in assets and liabilities                        | (10.6 | ) |   | 2.0 |   |
| Net cash provided by operating activities                | $ | 15.5 |   |   | $ | 51.3 |   |
|                                                     |   |   |   |
| Adjusted net income (loss) attributable to shareholders: |   |   |   |
| Adjusted net income (loss) attributable to shareholders  | $ | (2.7 | ) |   | $ | 11.1 |   |
| Unrealized gain (loss) on derivatives, net               | (27.7 | ) |   | 20.5 |   |
| Tax effect of above adjustments                          | 10.5 |   |   | (7.9 | ) |
| Net income (loss) attributable to shareholders           | $ | (19.9 | ) |   | $ | 23.7 |   |
|                                                     |   |   |   |
| Adjusted EBITDA:                                         |   |   |   |
| Adjusted EBITDA                                          | $ | 36.9 |   |   | $ | 53.7 |   |
| Unrealized gain (loss) on derivatives, net               | (27.7 | ) |   | 20.5 |   |
| Interest expense, net                                    | (9.0 | ) |   | (7.8 | ) |
| Income tax benefit (expense)                             | 12.3 |   |   | (14.3 | ) |
| Depreciation, depletion and amortization                 | (32.4 | ) |   | (28.4 | ) |
| Net income (loss) attributable to shareholders           | $ | (19.9 | ) |   | $ | 23.7 |   |
|                                                     |   |   |   |

----

|         |                                                                                                                                                                                                                                                                                                                                                                  |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | For natural gas and crude oil sales, we enter into derivative contracts to protect against price declines in future periods. While we structure these derivatives to reduce our exposure to changes in price associated with the derivative commodity, they also limit the benefit we might otherwise have received from price increases in the physical market. |

|         |                                                                                                                                                                                                                                                                                                                                                                                                                 |
|---------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | For natural gas marketing, we enter into fixed-price physical purchase and sale agreements that qualify as derivative contracts. In order to offset the fixed-price physical derivatives in our natural gas marketing, we enter into financial derivative instruments that have the effect of locking in the prices we will receive or pay for the same volumes and period, offsetting the physical derivative. |

----

|                                   |
|-----------------------------------|
|                                   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                              |   | Floors |   | Collars |   | Fixed-Price Swaps |   | CIGBasis Protection Swaps |   |   |
| Commodity/ Index/ Maturity Period |   | Quantity(Oil - MBbls) |   | Weighted Average Contract Price |   | Quantity (Gas - BBtu (1) Oil - MBbls) |   | Weighted Average Contract Price |   | Quantity (Gas - BBtu (1) Oil - MBbls) |   | Weighted Average Contract Price |   | Quantity(BBtu) (1) |   | Weighted Average Contract Price |   | Fair Value March 31, 2011 (2) (in thousands) |
|                              |   |   | Floors |   | Ceilings |   |   |   |   |   |
| Natural Gas                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NYMEX                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2011                              |   | — |   |   | $ | — |   |   | — |   |   | $ | — |   |   | $ | — |   |   | 9,322.8 |   |   | $ | 6.76 |   |   | 7,526.2 |   |   | $ | (1.81 | ) |   | $ | 10,375 |   |
| 2012                              |   | — |   |   | — |   |   | 4,831.5 |   |   | 6.00 |   |   | 8.27 |   |   | 7,066.3 |   |   | 6.55 |   |   | 9,046.1 |   |   | (1.80 | ) |   | 4,200 |   |
| 2013                              |   | — |   |   | — |   |   | 4,438.1 |   |   | 6.10 |   |   | 8.60 |   |   | 5,461.0 |   |   | 6.78 |   |   | 8,159.7 |   |   | (1.80 | ) |   | 1,509 |   |
| 2014                              |   | — |   |   | — |   |   | — |   |   | — |   |   | — |   |   | 379.2 |   |   | 5.56 |   |   | — |   |   | — |   |   | (59 | ) |
|                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| CIG                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2011                              |   | — |   |   | — |   |   | — |   |   | — |   |   | — |   |   | 3,982.5 |   |   | 4.46 |   |   | — |   |   | — |   |   | 1,108 |   |
| 2012                              |   | — |   |   | — |   |   | — |   |   | — |   |   | — |   |   | 700.0 |   |   | 4.11 |   |   | — |   |   | — |   |   | (373 | ) |
| 2013                              |   | — |   |   | — |   |   | 235.0 |   |   | 4.00 |   |   | 5.45 |   |   | — |   |   | — |   |   | — |   |   | — |   |   | (63 | ) |
| 2014                              |   | — |   |   | — |   |   | 1,115.0 |   |   | 4.50 |   |   | 5.67 |   |   | — |   |   | — |   |   | — |   |   | — |   |   | (271 | ) |
| 2015                              |   | — |   |   | — |   |   | 1,040.0 |   |   | 4.50 |   |   | 5.67 |   |   | — |   |   | — |   |   | — |   |   | — |   |   | (500 | ) |
|                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| PEPL                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2011                              |   | — |   |   | — |   |   | — |   |   | — |   |   | — |   |   | 2,615.8 |   |   | 5.64 |   |   | — |   |   | — |   |   | 3,423 |   |
| 2012                              |   | — |   |   | — |   |   | — |   |   | — |   |   | — |   |   | 1,355.8 |   |   | 6.18 |   |   | — |   |   | — |   |   | 1,922 |   |
| 2013                              |   | — |   |   | — |   |   | — |   |   | — |   |   | — |   |   | 990.4 |   |   | 6.18 |   |   | — |   |   | — |   |   | 1,113 |   |
| Total Natural Gas                 |   | — |   |   |   |   | 11,659.6 |   |   |   |   |   |   | 31,873.8 |   |   |   |   | 24,732.0 |   |   |   |   | 22,384 |   |
|                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Crude Oil                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NYMEX                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2011                              |   | 170.0 |   |   | 78.37 |   |   | 267.1 |   |   | 79.59 |   |   | 104.58 |   |   | 548.6 |   |   | 82.59 |   |   | — |   |   | — |   |   | (16,693 | ) |
| 2012                              |   | 36.0 |   |   | 65.38 |   |   | 643.6 |   |   | 81.53 |   |   | 94.63 |   |   | 444.0 |   |   | 81.60 |   |   | — |   |   | — |   |   | (12,071 | ) |
| 2013                              |   | — |   |   | — |   |   | 317.6 |   |   | 75.00 |   |   | 104.30 |   |   | 186.9 |   |   | 84.15 |   |   | — |   |   | — |   |   | (6,581 | ) |
| 2014                              |   | — |   |   | — |   |   | 36.0 |   |   | 90.00 |   |   | 106.15 |   |   | — |   |   | — |   |   | — |   |   | — |   |   | (132 | ) |
| 2015                              |   | — |   |   | — |   |   | 36.0 |   |   | 90.00 |   |   | 106.15 |   |   | — |   |   | — |   |   | — |   |   | — |   |   | (99 | ) |
| Total Crude Oil                   |   | 206.0 |   |   |   |   | 1,300.3 |   |   |   |   |   |   | 1,179.5 |   |   |   |   | — |   |   |   |   | (35,576 | ) |
| Total Natural Gas and Crude Oil   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | $ | (13,192 | ) |
|                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

|    |
|----|
|    |  |  |
| (1 | ) | A standard unit of measurement for natural gas (one BBtu equals one MMcf). |
| (2 | ) | Approximately 31.5% of the fair value of our derivative assets and 99.4% of our derivative liabilities were measured using significant unobservable inputs (Level 3); see Note 3, Fair Value Measurements and Disclosures, to the accompanying condensed consolidated financial statements. |

----

|                                                   |
|---------------------------------------------------|
|                                                   |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                              |   | Fixed-Price Swaps |   | NYMEXBasis Protection Swaps |   |   |
| Commodity/ Derivative Instrument/ Maturity Period |   | Quantity(BBtu)(1) |   | Weighted Average Contract Price |   | Quantity(BBtu)(1) |   | Weighted Average Contract Price |   | Fair Value March 31, 2011 (2) (in thousands) |
|                                              |   |   |   |   |
| Natural Gas                                       |   |   |   |   |   |   |   |   |   |   |
| Sales                                             |   |   |   |   |   |   |   |   |   |   |
| Physical                                          |   |   |   |   |   |   |   |   |   |   |
| 2011                                              |   | 7.2 |   |   | $ | 5.60 |   |   | 40.6 |   |   | $ | 0.93 |   |   | $ | 33 |   |
| 2012                                              |   | — |   |   | — |   |   | 53.3 |   |   | 0.93 |   |   | 32 |   |
|                                              |   |   |   |   |   |   |   |   |   |   |
| Financial                                         |   |   |   |   |   |   |   |   |   |   |
| 2011                                              |   | 1,234.0 |   |   | 5.32 |   |   | — |   |   | — |   |   | 941 |   |
| 2012                                              |   | 629.0 |   |   | 4.81 |   |   | — |   |   | — |   |   | (145 | ) |
| 2013                                              |   | 90.0 |   |   | 5.00 |   |   | — |   |   | — |   |   | (45 | ) |
|                                              |   |   |   |   |   |   |   |   |   |   |
| Purchases                                         |   |   |   |   |   |   |   |   |   |   |
| Physical                                          |   |   |   |   |   |   |   |   |   |   |
| 2011                                              |   | 1,235.0 |   |   | 5.31 |   |   | — |   |   | — |   |   | (738 | ) |
| 2012                                              |   | 629.0 |   |   | 4.79 |   |   | — |   |   | — |   |   | 233 |   |
| 2013                                              |   | 90.0 |   |   | 4.99 |   |   | — |   |   | — |   |   | 54 |   |
|                                              |   |   |   |   |   |   |   |   |   |   |
| Financial                                         |   |   |   |   |   |   |   |   |   |   |
| 2011                                              |   | 6.2 |   |   | 4.42 |   |   | 12.6 |   |   | 0.13 |   |   | — |   |
| 2012                                              |   | — |   |   | — |   |   | 30.4 |   |   | 0.13 |   |   | (1 | ) |
| Total Natural Gas                                 |   | 3,920.4 |   |   |   |   | 136.9 |   |   |   |   | $ | 364 |   |
|                                              |   |   |   |   |   |   |   |   |   |   |

|    |
|----|
|    |  |  |
| (1 | ) | A standard unit of measurement for natural gas (one BBtu equals one MMcf). |
| (2 | ) | Approximately 29.1% of the fair value of our derivative assets and 81.2% of our derivative liabilities were measured using significant unobservable inputs (Level 3); see Note 3, Fair Value Measurements and Disclosures, to the accompanying condensed consolidated financial statements. |

|                                              |
|----------------------------------------------|
|                                              |  |  |  |  |  |  |  |
|                                         | Three Months Ended |   | Year Ended |
|                                         | March 31, 2011 |   | December 31, 2010 |
| Average Index Closing Price                  |   |   |   |
| Natural Gas (per MMBtu)                      |   |   |   |
| CIG                                          | $ | 3.83 |   |   | $ | 3.92 |   |
| NYMEX                                        | 4.11 |   |   | 4.39 |   |
| Crude Oil (per Bbl)                          |   |   |   |
| NYMEX                                        | 90.41 |   |   | 77.32 |   |
|                                         |   |   |   |
| Average Sales Price Realized                 |   |   |   |
| Excluding realized derivative gains/(losses) |   |   |   |
| Natural Gas (per Mcf)                        | $ | 3.08 |   |   | $ | 3.61 |   |
| Crude Oil (per Bbl)                          | 87.56 |   |   | 74.03 |   |
| Including realized derivative gains/(losses) |   |   |   |
| Natural Gas (per Mcf)                        | 3.97 |   |   | 5.12 |   |
| Crude Oil (per Bbl)                          | 79.20 |   |   | 79.62 |   |

----

----

|                       |
|-----------------------|
|                       |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Period                |   | Total Number of Shares Purchased (1) |   | Average Price Paid per Share |   | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |   | Maximum Number of Shares that May Yet Be Purchased Under the Plansor Programs |
|                  |   |   |   |   |   |   |   |   |
| January 1 - 31, 2011  |   | 2,636 |   |   | $ | 42.72 |   |   | — |   |   | — |   |
| February 1 - 28, 2011 |   | 1,095 |   |   | 46.96 |   |   | — |   |   | — |   |
| March 1 - 31, 2011    |   | 8,143 |   |   | 47.56 |   |   | — |   |   | — |   |
| Total                 |   | 11,874 |   |   | 46.43 |   |   |   |   |   |
|                  |   |   |   |   |   |   |   |   |

|     |                                                                                                                                                                                                |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1) | Purchases represent shares purchased by us from employees for the payment of their tax liabilities related to the vesting of securities issued pursuant to our stock-based compensation plans. |

----

|                                                           |
|-----------------------------------------------------------|
|                                                           |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                      |   |   |   | Incorporated by Reference |   |   |   |   |
| Exhibit                                                   |   |   |   |   |   | SEC File |   |   |   |   |   | Filed |
| Number                                                    |    | Exhibit Description |   | Form |    | Number |    | Exhibit |   | Filing Date |    | Herewith |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |
| 10.1 *                                                    |   | 2011 Executive Compensation, Short-Term Incentive Cash Bonus Program and Long-Term Incentive Compensation. |   | 8-K |   | 000-07246 |   |   |   | 3/17/2011 |   |   |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |
| 10.2 *                                                    |   | Form of Performance Share Agreement. |   | 8-K |   | 000-07246 |   | 10.1 |   | 3/17/2011 |   |   |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |
| 12.1                                                      |   | Computation of Ratio of Earnings to Fixed Charges. |   |   |   |   |   |   |   |   |   | X |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |
| 31.1                                                      |   | Certification by Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Exchange Act Rules, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |   |   |   |   |   |   |   |   |   | X |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |
| 31.2                                                      |   | Certification by Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Exchange Act Rules, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |   |   |   |   |   |   |   |   |   | X |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |
| 32.1                                                      |   | Certifications by Chief Executive Officer and Chief Financial Officer pursuant to Title 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002. |   |   |   |   |   |   |   |   |   | X |
|                                                      |   |   |   |   |   |   |   |   |   |   |   |   |
| *Management contract or compensatory plan or arrangement. |   |   |   |   |   |   |   |   |   |   |

----

|                     |
|---------------------|
|                     |  |
|                | Petroleum Development Corporation |
|                | (Registrant) |
|                |   |
|                |   |
|                |   |
|                |   |
| Date:  May 10, 2011 | /s/ Richard W. McCullough |
|                | Richard W. McCullough, |
|                | Chairman and Chief Executive Officer |
|                | (principal executive officer) |
|                |   |
|                | /s/ Gysle R. Shellum |
|                | Gysle R. Shellum |
|                | Chief Financial Officer |
|                | (principal financial officer) |
|                |   |
|                | /s/ R. Scott Meyers |
|                | R. Scott Meyers |
|                | Chief Accounting Officer |
|                | (principal accounting officer) |