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Table of contents














10-Q





☒





June 30, 2019





☐











001-37419





PDC ENERGY, INC.





Delaware95-2636730(State of incorporation)(I.R.S. Employer Identification No.)


1775 Sherman Street,
  Suite 3000


Denver
  Colorado
  80203








303
  860-5800








Title of each classTicker SymbolName of each exchange on which registeredCommon stock, par value $0.01 per sharePDCENasdaq Global Select Market





Yes





Yes








Large Accelerated FilerxAccelerated filer☐Non-accelerated filer☐Smaller reporting company☐Emerging growth company☐








☐





62,597,588





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PART I – FINANCIAL INFORMATIONPageItem 1.Financial StatementsCondensed Consolidated Balance Sheets (unaudited)1Condensed Consolidated Statements of Operations (unaudited)2Condensed Consolidated Statements of Cash Flows (unaudited)3Condensed Consolidated Statements of Equity (unaudited)4Notes to Condensed Consolidated Financial Statements6Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations37Item 3.Quantitative and Qualitative Disclosures About Market Risk56Item 4.Controls and Procedures58PART II – OTHER INFORMATIONItem 1.Legal Proceedings59Item 1A.Risk Factors59Item 2.Unregistered Sales of Equity Securities and Use of Proceeds60Item 3.Defaults Upon Senior Securities60Item 4.Mine Safety Disclosures60Item 5.Other Information60Item 6.Exhibits61SIGNATURES62











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|  |                                                                                                                                                
|- | -----------------------------------------------------------------------------------------------------------------------------------------------
|• | changes in global production volumes and demand, including economic conditions that might impact demand and prices for the products we produce;

|  |                                                                                                                                                   
|- | --------------------------------------------------------------------------------------------------------------------------------------------------
|• | volatility of commodity prices for crude oil, natural gas and natural gas liquids ("NGLs") and the risk of an extended period of depressed prices;

|  |                                          
|- | -----------------------------------------
|• | volatility and widening of differentials;

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

|  |                                                                                                                                                                                                                                                                 
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|• | impact of governmental policies and/or regulations, including changes in environmental and other laws, the interpretation and enforcement of those laws and regulations, liabilities arising thereunder and the costs to comply with those laws and regulations;

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

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

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

|  |                                                                                   
|- | ----------------------------------------------------------------------------------
|• | potential for production decline rates from our wells being greater than expected;

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

|  |                                                                                                                                                                                                                                                            
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|• | availability of sufficient pipeline, gathering and other transportation facilities and related infrastructure to process and transport our production and the impact of these facilities and regional capacity on the prices we receive for our production;

|  |                                                    
|- | ---------------------------------------------------
|• | timing and receipt of necessary regulatory permits;

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

|  |                                                                                                             
|- | ------------------------------------------------------------------------------------------------------------
|• | difficulties in integrating our operations as a result of any significant acquisitions or acreage exchanges;

|  |                                            
|- | -------------------------------------------
|• | increases or changes in costs and expenses;

|  |                                                                                                                      
|- | ---------------------------------------------------------------------------------------------------------------------
|• | availability of supplies, materials, contractors and services that may delay the drilling or completion of our wells;

|  |                                                                   
|- | ------------------------------------------------------------------
|• | potential losses of acreage due to lease expirations or otherwise;

|  |                                            
|- | -------------------------------------------
|• | increases or changes in costs and expenses;

|  |                                                      
|- | -----------------------------------------------------
|• | future cash flows, liquidity and financial condition;

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

|  |                                  
|- | ---------------------------------
|• | availability and cost of capital;




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|  |                                                          
|- | ---------------------------------------------------------
|• | our success in marketing crude oil, natural gas and NGLs;

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

|  |                                                                                                                                  
|- | ---------------------------------------------------------------------------------------------------------------------------------
|• | impact to our operations, personnel retention, strategy, stock price and expenses caused by the actions of activist shareholders;

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

|  |                                      
|- | -------------------------------------
|• | cost of pending or future litigation;

|  |                                                                         
|- | ------------------------------------------------------------------------
|• | effect that acquisitions we may pursue have on our capital requirements;

|  |                                                                                    
|- | -----------------------------------------------------------------------------------
|• | our ability to retain or attract senior management and key technical employees; and

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






















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June 30, 2019December 31, 2018AssetsCurrent assets:Cash and cash equivalents$1,474$1,398Accounts receivable, net277,321181,434Fair value of derivatives41,42584,492Prepaid expenses and other current assets5,6077,136Total current assets325,827274,460Properties and equipment, net4,196,3354,002,862Assets held-for-sale, net—140,705Fair value of derivatives31,65593,722Other assets41,08732,396Total Assets$4,594,904$4,544,145Liabilities and Stockholders' EquityLiabilitiesCurrent liabilities:Accounts payable$219,158$181,864Production tax liability69,95160,719Fair value of derivatives19,7753,364Funds held for distribution88,879105,784Accrued interest payable14,27314,150Other accrued expenses86,52375,133Total current liabilities498,559441,014Long-term debt1,197,7441,194,876Deferred income taxes183,120198,096Asset retirement obligations78,90985,312Liabilities held-for-sale—4,111Fair value of derivatives9271,364Other liabilities257,23992,664Total liabilities2,216,4982,017,437Commitments and contingent liabilitiesStockholders' equityCommon shares - par value $0.01 per share, 150,000,000 authorized, 63,520,462 and 66,148,609 issued as of June 30, 2019 and December 31, 2018, respectively635661Additional paid-in capital2,433,9742,519,423Retained earnings (deficit)(42,901)8,727Treasury shares - at cost, 364,780 and 45,220 as of June 30, 2019 and December 31, 2018, respectively(13,302)(2,103)Total stockholders' equity2,378,4062,526,708Total Liabilities and Stockholders' Equity$4,594,904$4,544,145














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Three Months Ended June 30,Six Months Ended June 30,2019201820192018RevenuesCrude oil, natural gas and NGLs sales$338,956$325,933$660,055$631,158Commodity price risk management gain (loss), net47,349(116,126)(142,725)(163,366)Other income4,3532,7247,8285,339Total revenues390,658212,531525,158473,131Costs, expenses and otherLease operating expenses34,32832,26069,54961,896Production taxes22,64222,60444,81042,773Transportation, gathering and processing expenses12,2088,96423,63216,277Exploration, geologic and geophysical expense6408753,2833,521Impairment of properties and equipment28,979159,55436,854192,742General and administrative expense42,80837,24782,40672,943Depreciation, depletion and amortization168,523135,624319,945262,412Accretion of asset retirement obligations1,5631,2853,1472,573(Gain) loss on sale of properties and equipment(33,904)(351)(34,273)1,081Other expenses2,8362,7086,3905,476Total costs, expenses and other280,623400,770555,743661,694Income (loss) from operations110,035(188,239)(30,585)(188,563)Interest expense(18,905)(17,410)(35,883)(34,939)Interest income56915217Income (loss) before income taxes91,135(205,580)(66,453)(223,285)Income tax (expense) benefit(22,587)45,32314,82549,889Net income (loss)$68,548$(160,257)$(51,628)$(173,396)Earnings per share:Basic$1.04$(2.43)$(0.78)$(2.63)Diluted$1.04$(2.43)$(0.78)$(2.63)Weighted-average common shares outstanding:Basic65,81566,06665,99866,012Diluted65,92666,06665,99866,012

















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Six Months Ended June 30,20192018Cash flows from operating activities:Net loss$(51,628)$(173,396)Adjustments to net loss to reconcile to net cash from operating activities:Net change in fair value of unsettled commodity derivatives121,080120,920Depreciation, depletion and amortization319,945262,412Impairment of properties and equipment36,854192,742Accretion of asset retirement obligations3,1472,573Non-cash stock-based compensation12,25810,779(Gain) loss on sale of properties and equipment(34,273)1,081Amortization of debt discount and issuance costs6,7316,372Deferred income taxes(14,975)(50,181)Other395974Changes in assets and liabilities42,7026,581Net cash from operating activities442,236380,857Cash flows from investing activities:Capital expenditures for development of crude oil and natural gas properties(542,791)(432,635)Capital expenditures for other properties and equipment(10,453)(2,450)Acquisition of crude oil and natural gas properties(4,146)(181,052)Proceeds from sale of properties and equipment1,1541,782Proceeds from divestitures199,43039,023Restricted cash8,0011,249Net cash from investing activities(348,805)(574,083)Cash flows from financing activities:Proceeds from revolving credit facility890,000233,000Repayment of revolving credit facility(892,500)(211,000)Payment of debt issuance costs(36)(4,060)Purchase of treasury shares(94,113)—Purchase of treasury shares for employee stock-based compensation tax withholding obligations(3,717)(4,494)Other(990)(719)Net cash from financing activities(101,356)12,727Net change in cash, cash equivalents and restricted cash(7,925)(180,499)Cash, cash equivalents and restricted cash, beginning of period9,399189,925Cash, cash equivalents and restricted cash, end of period$1,474$9,426














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Three Months Ended June 30, 2019Common StockTreasury StockSharesAmountAdditional Paid-in CapitalSharesAmountRetained Earnings (Deficit)Total Stockholders' EquityBalance, March 31, 201966,196,863$662$2,521,558(22,635)$(1,016)$(111,449)$2,409,755Net income—————68,54868,548Stock-based compensation148,04017,574———7,575Purchase of treasury shares for employee stock-based compensation tax withholding obligations———(54,784)(2,257)—(2,257)Retirement of treasury shares for employee stock-based compensation tax withholding obligations(2,182)—(78)2,18278——Purchase of treasury shares———(3,136,406)(105,215)—(105,215)Retirement of treasury shares(2,822,259)(28)(94,085)2,822,25994,113——Issuance of treasury shares——(995)24,604995——Balance, June 30, 201963,520,462$635$2,433,974(364,780)$(13,302)$(42,901)$2,378,406








Three Months Ended June 30, 2018Common StockTreasury StockSharesAmountAdditional Paid-in CapitalSharesAmountRetained Earnings (Deficit)Total Stockholders' EquityBalance, March 31, 201865,999,010$660$2,504,663(29,255)$(1,514)$(6,435)$2,497,374Net loss—————(160,257)(160,257)Stock-based compensation134,01515,517———5,518Purchase of treasury shares for employee stock-based compensation tax withholding obligations———(45,706)(2,239)—(2,239)Issuance of treasury shares——(397)7,792397——Other——(90)———(90)Balance, June 30, 201866,133,025$661$2,509,693(67,169)$(3,356)$(166,692)$2,340,306

































































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Six Months Ended June 30, 2019Common StockTreasury StockSharesAmountAdditional Paid-in CapitalSharesAmountRetained Earnings (Deficit)Total Stockholders' EquityBalance, December 31, 201866,148,609$661$2,519,423(45,220)$(2,103)$8,727$2,526,708Net loss—————(51,628)(51,628)Stock-based compensation196,294212,256———12,258Purchase of treasury shares for employee stock-based compensation tax withholding obligations———(96,571)(3,717)—(3,717)Retirement of treasury shares for employee stock-based compensation tax withholding obligations(2,182)—(78)2,18278——Purchase of treasury shares———(3,136,406)(105,215)—(105,215)Retirement of treasury shares(2,822,259)(28)(94,085)2,822,25994,113——Issuance of treasury shares——(3,542)88,9763,542——Balance, June 30, 201963,520,462$635$2,433,974(364,780)$(13,302)$(42,901)$2,378,406








Six Months Ended June 30, 2018Common StockTreasury StockSharesAmountAdditional Paid-in CapitalSharesAmountRetained Earnings (Deficit)Total Stockholders' EquityBalance, December 31, 201765,955,080$659$2,503,294(55,927)$(3,008)$6,704$2,507,649Net loss—————(173,396)(173,396)Stock-based compensation177,945210,777———10,779Purchase of treasury shares for employee stock-based compensation tax withholding obligations———(87,063)(4,494)—(4,494)Issuance of treasury shares——(4,288)78,3954,288——Non-employee directors' deferred compensation plan———(2,574)(142)—(142)Other——(90)———(90)Balance, June 30, 201866,133,025$661$2,509,693(67,169)$(3,356)$(166,692)$2,340,306














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NATURE OF OPERATIONS AND BASIS OF PRESENTATION





2,800
  two





The accompanying unaudited condensed consolidated financial statements include the accounts of PDC, our wholly-owned subsidiaries and our proportionate share of our affiliated partnerships. Pursuant to the proportionate consolidation method, our accompanying condensed consolidated financial statements include our pro rata share of assets, liabilities, revenues and expenses of the entities which we proportionately consolidate. All material intercompany accounts and transactions have been eliminated in consolidation





In our opinion, the accompanying condensed consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of our financial statements for interim periods in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the SEC. Accordingly, pursuant to such rules and regulations, certain notes and other financial information included in audited financial statements have been condensed or omitted. TheDecember 31, 2018condensed consolidated balance sheet data was derived from audited statements, but does not include all disclosures required by U.S. GAAP. The information presented in this Quarterly Report on Form 10-Q should be read in conjunction with our audited consolidated financial statements and notes thereto included in our2018Form 10-K. Our results of operations and cash flows for thesixmonths endedJune 30, 2019 are not necessarily indicative of the results to be expected for the full year or any other future period








SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES











20.1
  4.6
  15.5




















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15, 2019, including interim periods within those fiscal years and early adoption is permitted. We are currently evaluating the impact these changes may have on our condensed consolidated financial statements.








REVENUE RECOGNITION




















Three Months Ended June 30,Six Months Ended June 30,Revenue by Commodity and Operating Region20192018Percent Change20192018Percentage ChangeCrude oilWattenberg Field$203,548$189,9927.1%$383,974$360,2996.6%Delaware Basin70,62062,59912.8%121,277116,0164.5%Utica Shale (1)——*—2,696*Total$274,168$252,5918.5%$505,251$479,0115.5%Natural gasWattenberg Field$30,129$22,64033.1%$76,831$52,41246.6%Delaware Basin9107,472(87.8)%6,68015,151(55.9)%Utica Shale (1)——*—1,109*Total$31,039$30,1123.1%$83,511$68,67221.6%NGLsWattenberg Field$22,677$30,271(25.1)%$50,399$59,041(14.6)%Delaware Basin11,07212,959(14.6)%20,89423,594(11.4)%Utica Shale (1)——*—840*Total$33,749$43,230(21.9)%$71,293$83,475(14.6)%Revenue by Operating RegionWattenberg Field$256,354$242,9035.5%$511,204$471,7528.4%Delaware Basin82,60283,030(0.5)%148,851154,761(3.8)%Utica Shale (1)——*—4,645*Total$338,956$325,9334.0%$660,055$631,1584.6%
 (1)In March 2018, we completed the disposition of our Utica Shale properties.











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FAIR VALUE OF FINANCIAL INSTRUMENTS
























































June 30, 2019December 31, 2018Significant OtherObservableInputs(Level 2)SignificantUnobservableInputs(Level 3)TotalSignificant OtherObservableInputs(Level 2)SignificantUnobservableInputs(Level 3)Total(in thousands)Total assets$48,200$24,880$73,080$118,521$59,693$178,214Total liabilities(18,326)(2,376)(20,702)(3,364)(1,364)(4,728)Net asset$29,874$22,504$52,378$115,157$58,329$173,486











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Three Months Ended June 30,Six Months Ended June 30,2019201820192018(in thousands)Fair value of Level 3 instruments, net asset (liability) beginning of period$12,990$(8,834)$58,329$(9,687)Changes in fair value included in condensed consolidated statement of operations line item:Commodity price risk management gain (loss), net10,597(4,701)(32,923)(6,854)Settlements included in condensed consolidated statement of operations line items:Commodity price risk management gain (loss), net(1,083)(5,565)(2,902)(2,559)Fair value of Level 3 instruments, net asset (liability) end of period$22,504$(19,100)$22,504$(19,100)Net change in fair value of Level 3 unsettled derivatives included in condensed consolidated statement of operations line item:Commodity price risk management gain (loss), net$6,200$(15,582)$(26,641)$(9,412)


























June 30, 2019December 31, 2018Estimated Fair ValuePercent of ParEstimated Fair ValuePercent of Par(in millions)Senior notes:2021 Convertible Notes$188.894.4%$175.487.7%2024 Senior Notes400.4100.1%370.292.5%2026 Senior Notes598.299.7%532.488.7%


























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COMMODITY DERIVATIVE FINANCIAL INSTRUMENTS























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CollarsFixed-Price SwapsCommodity/ Index/Maturity PeriodQuantity(Crude oil -MBlsNatural Gas - BBtu)Weighted-AverageContract PriceQuantity(Crude Oil - MBblsGas and Basis-BBtu )Weighted-AverageContractPriceFair ValueJune 30,2019 (1)(in thousands)FloorsCeilingsCrude OilNYMEX20192,500$57.40$67.263,900$55.08$(5,583)20203,60055.0071.686,20061.2848,8562021———1,20057.994,262Total Crude Oil6,10011,300$47,535Natural GasNYMEX2019—$—$—15,164$2.91$8,228Dominion South2019———422.5422020———142.54—Total Natural Gas—15,220$8,230Basis Protection - Natural GasCIG2019—$—$—22,322$(0.68)$(3,102)2020———10,500(0.64)(285)Total Basis Protection - Natural Gas—32,822$(3,387)Commodity Derivatives Fair Value$52,378





|    |                                                                                                                                                                                                                      
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Approximately34.0percent of the fair value of our commodity derivative assets and11.5percent of the fair value of our commodity derivative liabilities were measured using significant unobservable inputs (Level 3).
















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Fair ValueDerivative Instruments:Condensed Consolidated Balance Sheet Line ItemJune 30, 2019December 31, 2018(in thousands)Derivative assets:CurrentCommodity derivative contractsFair value of derivatives$41,214$84,492Basis protection derivative contractsFair value of derivatives211—41,42584,492Non-currentCommodity derivative contractsFair value of derivatives31,65593,722Total derivative assets$73,080$178,214Derivative liabilities:CurrentCommodity derivative contractsFair value of derivatives$16,410$748Basis protection derivative contractsFair value of derivatives3,3652,61619,7753,364Non-currentCommodity derivative contractsFair value of derivatives6941,364Basis protection derivative contractsFair value of derivatives233—9271,364Total derivative liabilities$20,702$4,728








Three Months Ended June 30,Six Months Ended June 30,Condensed Consolidated Statement of Operations Line Item2019201820192018(in thousands)Commodity price risk management gain (loss), netNet settlements$(13,193)$(16,408)$(21,645)$(42,446)Net change in fair value of unsettled derivatives60,542(99,718)(121,080)(120,920)Total commodity price risk management gain (loss), net$47,349$(116,126)$(142,725)$(163,366)














As of June 30, 2019Derivative Instruments, GrossEffect of Master Netting AgreementsDerivative Instruments, Net(in thousands)Asset derivatives:Derivative instruments, at fair value$73,080$(15,731)$57,349Liability derivatives:Derivative instruments, at fair value$20,702$(15,731)$4,971








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As of December 31, 2018Derivative Instruments, GrossEffect of Master Netting AgreementsDerivative Instruments, Net(in thousands)Asset derivatives:Derivative instruments, at fair value$178,214$(3,985)$174,229Liability derivatives:Derivative instruments, at fair value$4,728$(3,985)$743








PROPERTIES AND EQUIPMENT








June 30, 2019December 31, 2018(in thousands)Properties and equipment, net:Crude oil and natural gas propertiesProved$5,920,714$5,452,613Unproved480,316492,594Total crude oil and natural gas properties6,401,0305,945,207Equipment and other40,71660,612Land and buildings12,54711,243Construction in progress429,542356,095Properties and equipment, at cost6,883,8356,373,157Accumulated DD&A(2,687,500)(2,370,295)Properties and equipment, net$4,196,335$4,002,862





345.6
  179.6





126.3
  75.0
  25.7





37.3
  15.2
  0.2





182.0
  100.0
  82.0
  60.5
  82.0
  8.5

















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The following table presents balance sheet data related to assets and liabilities held-for-sale:


December 31, 2018(in thousands)AssetsProperties and equipment, net$137,448Other assets3,257Total assets$140,705LiabilitiesAsset retirement obligation$4,111Total liabilities$4,111





33.4





The following table presents impairment charges recorded for crude oil and natural gas properties:


Three Months Ended June 30,Six Months Ended June 30,2019201820192018(in thousands)Impairment of proved and unproved properties$2,229$159,528$10,104$192,658Amortization of individually insignificant unproved properties—26—84Impairment of infrastructure and other26,750—26,750—Impairment of properties and equipment$28,979$159,554$36,854$192,742





June 30, 2019
    10.1
  192.7
  2.2
  159.5
    June 30, 2019
      June 30, 2019
  26.8





6.3











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The following table presents the capitalized exploratory well cost pending determination of proved reserves and included in properties and equipment, net on the condensed consolidated balance sheets:


Six Months Ended June 30,Year Ended December 31, 2018(in thousands, except for number of wells)Beginning balance$12,188$15,448Additions to capitalized exploratory well costs pending the determination of proved reserves22,27035,127Reclassifications to proved properties(13,213)(38,387)Ending balance$21,245$12,188Number of wells pending determination at period-end32














OTHER ACCRUED EXPENSES AND OTHER LIABILITIES





The following table presents the components of other accrued expenses as of:


June 30, 2019December 31, 2018(in thousands)Employee benefits$16,229$25,811Asset retirement obligations29,85325,598Purchases of treasury shares11,102—Environmental expenses2,4243,038Operating and finance leases5,870—Other21,04520,686Other accrued expenses$86,523$75,133








June 30, 2019December 31, 2018(in thousands)Production taxes$34,608$61,310Deferred oil gathering credits21,70522,710Deferred midstream gathering credits178,918—Operating and finance leases18,292—Other3,7168,644Other liabilities$257,239$92,664





0.5
  0.4
    June 30, 2019
    1.0
  0.7
    June 30, 2019








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15
  28.9





15
  40.5
    June 30, 2019





22
  110.2
    June 30, 2019








LONG-TERM DEBT








June 30, 2019December 31, 2018(in thousands)Senior Notes:1.125% Convertible Notes due September 2021:Principal amount$200,000$200,000Unamortized discount(18,821)(22,766)Unamortized debt issuance costs(2,153)(2,640)Net of unamortized discount and debt issuance costs179,026174,5946.125% Senior Notes due September 2024:Principal amount400,000400,000Unamortized debt issuance costs(5,101)(5,590)Net of unamortized debt issuance costs394,899394,4105.75% Senior Notes due May 2026:Principal amount600,000600,000Unamortized debt issuance costs(6,181)(6,628)Net of unamortized debt issuance costs593,819593,372Total senior notes1,167,7441,162,376Revolving Credit Facility:Revolving credit facility due May 202330,00032,500Total long-term debt, net of unamortized discount and debt issuance costs$1,197,744$1,194,876











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200
  1.125
    semi-annually
      85.39
  160.5
  4.8
  June 30, 2019











400
  6.125
  semi-annually
      7.8





600
  5.75
  semi-annually
      7.6











June 30, 2019











2.5
  1.6
  1.3











June 30, 2019
  0.25
  1.25








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0.375





June 30, 2019





As ofJune 30, 2019andDecember 31, 2018, debt issuance costs related to our revolving credit facility were$10.2 millionand$11.5 million, respectively, and are included in other assets on the condensed consolidated balance sheets. As ofJune 30, 2019, the weighted-average interest rate on the outstanding balance on our revolving credit facility, exclusive of fees on the unused commitment, was5.8 percent .








LEASES











five years





Lease CostsThree Months Ended June 30, 2019Six Months Ended June 30, 2019(in thousands)Operating lease costs$1,384$2,731Finance lease costs:Amortization of ROU assets$497$987Interest on lease liabilities67129Total finance lease costs5641,116Short-term lease costs51,074112,105Total lease costs$53,022$115,952











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LeasesCondensed Consolidated Balance Sheet Line ItemJune 30, 2019(in thousands)Operating Leases:Operating lease ROU assetsOther assets$16,665Operating lease obligation - short-termOther accrued expense$4,028Operating lease obligation - long-termOther liabilities15,016Total operating lease liabilities$19,044Finance Leases:Finance lease ROU assetsProperties and equipment, net$5,161Finance lease obligation - short-termOther accrued expense$1,842Finance lease obligation - long-termOther liabilities3,276Total finance lease liabilities$5,118Weighted-average remaining lease term (years)Operating leases4.71Finance leases3.27Weighted-average discount rateOperating leases5.0%Finance leases5.0%


June 30, 2019


Operating LeasesFinance LeasesTotal(in thousands)2019$2,387$1,044$3,43120204,8471,9566,80320214,9231,3136,23620225,0167115,72720231,5594962,055Thereafter2,648292,677Total lease payments21,3805,54926,929Less interest and discount(2,336)(431)(2,767)Present value of lease liabilities$19,044$5,118$24,162











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ASSET RETIREMENT OBLIGATIONS








Amount(in thousands)Balance at December 31, 2018$115,021Obligations incurred with development activities4,066Accretion expense3,147Revisions in estimated cash flows3,556Obligations discharged with asset retirements(11,687)Obligations discharged with divestitures(5,341)Balance at June 30, 2019108,762Current portion(29,853)Long-term portion$78,909











COMMITMENTS AND CONTINGENCIES














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For the Twelve Months Ending June 30,Area20202021202220232024 andThroughExpirationTotalExpirationDateNatural gas (MMcf)Wattenberg Field29,82031,02531,02531,02577,556200,451June 30, 2026Delaware Basin44,90729,32610,770——85,003December 31, 2021Gas Marketing7,1377,1166,8751,147—22,275August 31, 2022Total81,86467,46748,67032,17277,556307,729Crude oil (MBbls)Wattenberg Field11,71312,38914,96514,05036,92690,043December 31, 2027Delaware Basin8,7408,3988,0308,0304,04837,246December 31, 2023Total20,45320,78722,99522,08040,974127,289Water (MBbls)Wattenberg Field4,6596,2076,2076,2079,35232,632December 31, 2024Dollar commitment (in thousands)$104,184$92,260$98,773$92,994$202,488$590,699





200
  51.5
  33.5
  51.5
  33.5





21,000
  26,400





June 30, 2019
    12.2
  2.6
    June 30, 2019
    23.1
  5.2

















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June 30, 2019























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Further, we could be the subject of other enforcement actions by regulatory authorities in the future relating to our past, present or future operations.








COMMON STOCK











1,800,000
    June 30, 2019
  June 30, 2019
  1,425,570





June 30, 2019
  111,317








Three Months Ended June 30,Six Months Ended June 30,2019201820192018(in thousands)Stock-based compensation expense$7,575$5,518$12,258$10,779Income tax benefit(1,812)(1,323)(2,932)(2,584)Stock-based compensation expense, net of tax$5,763$4,195$9,326$8,195











The fair value of the time-based RSUs is amortized ratably over the requisite service period, primarily three years. The time-based RSUs generally vest ratably on each anniversary following the grant date provided that a participant is continuously employed.











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June 30, 2019


SharesWeighted-AverageGrant DateFair Value per ShareNon-vested at December 31, 2018618,407$54.16Granted576,77640.47Vested(266,329)54.00Forfeited(74,319)46.40Non-vested at June 30, 2019854,53545.64








Six Months Ended June 30,20192018(in thousands, except per share data)Total intrinsic value of time-based awards vested$10,424$10,482Total intrinsic value of time-based awards non-vested30,81536,934Market price per share as of June 3036.0660.45Weighted-average grant date fair value per share40.4749.73





June 30, 2019
  30.9
  2.2











The fair value of the market-based PSUs is amortized ratably over the requisite service period, primarily three years. The market-based shares vest if the participant is continuously employed throughout the performance period and the market-based performance measure is achieved, with a maximum vesting period of three years. All compensation cost related to the market-based awards will be recognized if the requisite service period is fulfilled, even if the market condition is not achieved.





139,197
    June 30, 2019
  zero
  200


Six Months Ended June 30,20192018Expected term of award (in years)33Risk-free interest rate2.5%2.4%Expected volatility41.4%42.3%

















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June 30, 2019


SharesWeighted-AverageGrant DateFair Value per ShareNon-vested at December 31, 2018102,914$74.88Granted139,19756.68Non-vested at June 30, 2019242,11164.42








Six Months Ended June 30,20192018(in thousands, except per share data)Total intrinsic value of market-based awards non-vested$8,731$8,402Market price per common share as of June 30,36.0660.45Weighted-average grant date fair value per share56.6869.98





June 30, 2019
  10.3
  2.0











June 30, 2019





June 30, 2019
  0.3
  0.6











50,000,000
  June 30, 2019
  no











200.0
  December 31, 2020





June 30, 2019
  3,136,406
  105.2
  94.1
  June 30, 2019








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569,733
  19.8
  75.0








INCOME TAXES











June 30, 2019
  2.5
  3.0
  2.7
  4.5
    June 30, 2019





June 30, 2019
  24.8
    June 30, 2019
  22.3
  22.0
  22.3





June 30, 2019








EARNINGS PER SHARE














Three Months Ended June 30,Six Months Ended June 30,2019201820192018(in thousands)Weighted-average common shares outstanding - basic65,81566,06665,99866,012Dilutive effect of:Restricted stock and PSU85———Other equity-based awards26———Weighted-average common shares and equivalents outstanding - diluted65,92666,06665,99866,012





June 30, 2019











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Three Months Ended June 30,Six Months Ended June 30,2019201820192018(in thousands)Weighted-average common share equivalents excluded from diluted earnings per share due to their anti-dilutive effect:RSUs and PSUs7708031,048698Other equity-based awards2089330285Total anti-dilutive common share equivalents9788961,350783





2.3
  85.39
  85.39
    June 30, 2019








SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION


Six Months Ended June 30,20192018 (1)(in thousands)Supplemental cash flow information:Cash payments for:Interest, net of capitalized interest$29,034$27,817Income taxes200393Non-cash investing and financing activities:Change in accounts payable related to capital expenditures$16,520$72,334Change in asset retirement obligations, with a corresponding change to crude oil and natural gas properties, net of disposals(1,139)6,248Change in accounts payable related to the purchase and retirement of treasury shares11,102—Cash paid for amounts included in the measurement of lease liabilities:Operating cash flows from operating leases$2,914$—Operating cash flows from finance leases127—Financing cash flows from finance leases988—ROU assets obtained in exchange for lease obligations:Operating leases$1,428$—Finance leases1,593—





not been restated for thesix months endedJune 30, 2018 .











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SUBSIDIARY GUARANTOR





(i)PDC Energy, Inc. ("Parent"), the issuer of the guaranteed obligations, including non-material subsidiaries;(ii)PDC Permian, Inc., the guarantor subsidiary ("Guarantor"), as specified in the indentures related to our senior notes;(iii)Eliminations representing adjustments to (a) eliminate intercompany transactions between or among Parent, Guarantor and our other subsidiaries and (b) eliminate the investments in our subsidiaries; and(iv)Parent and subsidiaries on a consolidated basis ("Consolidated").












































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Condensed Consolidating Balance SheetsJune 30, 2019ParentGuarantorEliminationsConsolidated(in thousands)Current assets:Cash and cash equivalents$1,474$—$—$1,474Accounts receivable, net157,661119,660—277,321Fair value of derivatives41,425——41,425Prepaid expenses and other current assets5,200407—5,607Total current assets205,760120,067—325,827Properties and equipment, net2,345,0721,851,263—4,196,335Intercompany receivable327,983—(327,983)—Investment in subsidiaries1,317,269—(1,317,269)—Fair value of derivatives31,655——31,655Other assets36,0315,056—41,087Total Assets$4,263,770$1,976,386$(1,645,252)$4,594,904Liabilities and Stockholders' EquityLiabilitiesCurrent liabilities:Accounts payable$133,024$86,134$—$219,158Production tax liability64,9335,018—69,951Fair value of derivatives19,775——19,775Funds held for distribution76,42412,455—88,879Accrued interest payable14,2694—14,273Other accrued expenses83,6242,899—86,523Total current liabilities392,049106,510—498,559Intercompany payable—327,983(327,983)—Long-term debt1,197,744——1,197,744Deferred income taxes147,44435,676—183,120Asset retirement obligations71,9067,003—78,909Fair value of derivatives927——927Other liabilities75,294181,945—257,239Total liabilities1,885,364659,117(327,983)2,216,498Commitments and contingent liabilitiesStockholders' EquityCommon shares635——635Additional paid-in capital2,433,9741,766,775(1,766,775)2,433,974Retained deficit(42,901)(449,506)449,506(42,901)Treasury shares(13,302)——(13,302)Total stockholders' equity2,378,4061,317,269(1,317,269)2,378,406Total Liabilities and Stockholders' Equity$4,263,770$1,976,386$(1,645,252)$4,594,904











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Condensed Consolidating Balance SheetsDecember 31, 2018ParentGuarantorEliminationsConsolidated(in thousands)Current assets:Cash and cash equivalents$1,398$—$—$1,398Accounts receivable, net146,52934,905—181,434Fair value of derivatives84,492——84,492Prepaid expenses and other current assets6,725411—7,136Total current assets239,14435,316—274,460Properties and equipment, net2,270,7111,732,151—4,002,862Assets held-for-sale—140,705—140,705Intercompany receivable451,601—(451,601)—Investment in subsidiaries1,316,945—(1,316,945)—Fair value of derivatives93,722——93,722Other assets30,0842,312—32,396Total Assets$4,402,207$1,910,484$(1,768,546)$4,544,145Liabilities and Stockholders' EquityLiabilitiesCurrent liabilities:Accounts payable$110,847$71,017$—$181,864Production tax liability53,3097,410—60,719Fair value of derivatives3,364——3,364Funds held for distribution90,18315,601—105,784Accrued interest payable14,1437—14,150Other accrued expenses73,6891,444—75,133Total current liabilities345,53595,479—441,014Intercompany payable—451,601(451,601)—Long-term debt1,194,876——1,194,876Deferred income taxes162,36835,728—198,096Asset retirement obligations79,9045,408—85,312Liabilities held-for-sale—4,111—4,111Fair value of derivatives1,364——1,364Other liabilities91,4521,212—92,664Total liabilities1,875,499593,539(451,601)2,017,437Commitments and contingent liabilitiesStockholders' EquityCommon shares661——661Additional paid-in capital2,519,4231,766,775(1,766,775)2,519,423Retained earnings8,727(449,830)449,8308,727Treasury shares(2,103)——(2,103)Total stockholders' equity2,526,7081,316,945(1,316,945)2,526,708Total Liabilities and Stockholders' Equity$4,402,207$1,910,484$(1,768,546)$4,544,145











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Condensed Consolidating Statements of OperationsThree Months Ended June 30, 2019ParentGuarantorEliminationsConsolidated(in thousands)RevenuesCrude oil, natural gas and NGLs sales$256,355$82,601$—$338,956Commodity price risk management gain, net47,349——47,349Other income2,5551,798—4,353Total revenues306,25984,399—390,658Costs, expenses and otherLease operating expenses23,55410,774—34,328Production taxes17,9284,714—22,642Transportation, gathering and processing expenses5,8696,339—12,208Exploration, geologic and geophysical expense259381—640Impairment of properties and equipment—28,979—28,979General and administrative expense37,2855,523—42,808Depreciation, depletion and amortization116,96451,559—168,523Accretion of asset retirement obligations1,351212—1,563Gain on sale of properties and equipment(66)(33,838)—(33,904)Other expenses2,836——2,836Total costs, expenses and other205,98074,643—280,623Income from operations100,2799,756—110,035Interest expense(19,750)845—(18,905)Interest income5——5Income before income taxes80,53410,601—91,135Income tax expense(20,068)(2,519)—(22,587)Equity in income of subsidiary8,082—(8,082)—Net income$68,548$8,082$(8,082)$68,548














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Condensed Consolidating Statements of OperationsThree Months Ended June 30, 2018ParentGuarantorEliminationsConsolidated(in thousands)RevenuesCrude oil, natural gas and NGLs sales$242,903$83,030$—$325,933Commodity price risk management loss, net(116,126)——(116,126)Other income2,479245—2,724Total revenues129,25683,275—212,531Costs, expenses and otherLease operating expenses23,4328,828—32,260Production taxes16,1896,415—22,604Transportation, gathering and processing expenses3,6105,354—8,964Exploration, geologic and geophysical expense296579—875Impairment of properties and equipment86159,468—159,554General and administrative expense33,1524,095—37,247Depreciation, depletion and amortization93,21742,407—135,624Accretion of asset retirement obligations1,177108—1,285Gain on sale of properties and equipment(351)——(351)Other expenses2,708——2,708Total costs, expenses and other173,516227,254—400,770Loss from operations(44,260)(143,979)—(188,239)Interest expense(17,915)505—(17,410)Interest income69——69Loss before income taxes(62,106)(143,474)—(205,580)Income tax benefit13,34831,975—45,323Equity in loss of subsidiary(111,499)—111,499—Net loss$(160,257)$(111,499)$111,499$(160,257)











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Condensed Consolidating Statements of OperationsSix Months Ended June 30, 2019ParentGuarantorEliminationsConsolidated(in thousands)RevenuesCrude oil, natural gas and NGLs sales$511,204$148,851$—$660,055Commodity price risk management loss, net(142,725)——(142,725)Other income5,1882,640—7,828Total revenues373,667151,491—525,158Costs, expenses and otherLease operating expenses47,18822,361—69,549Production taxes33,81310,997—44,810Transportation, gathering and processing expenses11,30912,323—23,632Exploration, geologic and geophysical expense5762,707—3,283Impairment of properties and equipment—36,854—36,854General and administrative expense71,71910,687—82,406Depreciation, depletion and amortization229,59590,350—319,945Accretion of asset retirement obligations2,729418—3,147Gain on sale of properties and equipment(448)(33,825)—(34,273)Other expenses6,390——6,390Total costs, expenses and other402,871152,872—555,743Loss from operations(29,204)(1,381)—(30,585)Interest expense(37,685)1,802—(35,883)Interest income15——15Income (loss) before income taxes(66,874)421—(66,453)Income tax (expense) benefit14,923(98)—14,825Equity in income of subsidiary323—(323)—Net income (loss)$(51,628)$323$(323)$(51,628)














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Condensed Consolidating Statements of OperationsSix Months Ended June 30, 2018ParentGuarantorEliminationsConsolidated(in thousands)RevenuesCrude oil, natural gas and NGLs sales$476,397$154,761$—$631,158Commodity price risk management loss, net(163,366)——(163,366)Other income4,995344—5,339Total revenues318,026155,105—473,131Costs, expenses and otherLease operating expenses44,79417,102—61,896Production taxes32,27010,503—42,773Transportation, gathering and processing expenses6,8419,436—16,277Exploration, geologic and geophysical expense6092,912—3,521Impairment of properties and equipment92192,650—192,742General and administrative expense64,7118,232—72,943Depreciation, depletion and amortization187,59374,819—262,412Accretion of asset retirement obligations2,377196—2,573Loss on sale of properties and equipment1,081——1,081Other expenses5,476——5,476Total costs, expenses and other345,844315,850—661,694Loss from operations(27,818)(160,745)—(188,563)Interest expense(36,012)1,073—(34,939)Interest income217——217Loss before income taxes(63,613)(159,672)—(223,285)Income tax benefit13,92535,964—49,889Equity in loss of subsidiary(123,708)—123,708—Net loss$(173,396)$(123,708)$123,708$(173,396)














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Condensed Consolidating Statements of Cash FlowsSix Months Ended June 30, 2019ParentGuarantorEliminationsConsolidated(in thousands)Cash flows from operating activities$263,339$178,897$—$442,236Cash flows from investing activities:Capital expenditures for development of crude oil and natural gas properties(292,743)(250,048)—(542,791)Capital expenditures for other properties and equipment(10,235)(218)—(10,453)Acquisition of crude oil and natural gas properties(83)(4,063)—(4,146)Proceeds from sale of properties and equipment1541,000—1,154Proceeds from divestitures—199,430—199,430Restricted cash8,001——8,001Intercompany transfers124,848—(124,848)—Net cash from investing activities(170,058)(53,899)(124,848)(348,805)Cash flows from financing activities:Proceeds from revolving credit facility890,000——890,000Repayment of revolving credit facility(892,500)——(892,500)Payment of debt issuance costs(36)——(36)Purchase of treasury shares(94,113)——(94,113)Purchase of treasury shares for employee stock-based compensation tax withholding obligations(3,717)——(3,717)Other(840)(150)—(990)Intercompany transfers—(124,848)124,848—Net cash from financing activities(101,206)(124,998)124,848(101,356)Net change in cash, cash equivalents and restricted cash(7,925)——(7,925)Cash, cash equivalents and restricted cash, beginning of period9,399——9,399Cash, cash equivalents and restricted cash, end of period$1,474$—$—$1,474











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Condensed Consolidating Statements of Cash FlowsSix Months Ended June 30, 2018ParentGuarantorEliminationsConsolidated(in thousands)Cash flows from operating activities$267,551$113,306$—$380,857Cash flows from investing activities:Capital expenditures for development of crude oil and natural gas properties(218,614)(214,021)—(432,635)Capital expenditures for other properties and equipment(1,898)(552)—(2,450)Acquisition of crude oil and natural gas properties, including settlement adjustments(180,981)(71)—(181,052)Proceeds from sale of properties and equipment1,782——1,782Proceeds from divestitures39,023——39,023Restricted cash1,249——1,249Intercompany transfers(101,398)—101,398—Net cash from investing activities(460,837)(214,644)101,398(574,083)Cash flows from financing activities:Proceeds from revolving credit facility233,000——233,000Repayment of revolving credit facility(211,000)——(211,000)Payment of debt issuance costs(4,060)——(4,060)Purchase of treasury shares for employee stock-based compensation tax withholding obligations(4,494)——(4,494)Other(659)(60)—(719)Intercompany transfers—101,398(101,398)—Net cash from financing activities12,787101,338(101,398)12,727Net change in cash, cash equivalents and restricted cash(180,499)——(180,499)Cash, cash equivalents and restricted cash, beginning of period189,925——189,925Cash, cash equivalents and restricted cash, end of period$9,426$—$—$9,426








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Operated WellsWattenberg FieldDelaware BasinTotalGrossNetGrossNetGrossNetIn-process as of December 31, 2018133122.41817.4151139.8Spud8177.42018.910196.3Turned-in-line(59)(54.4)(17)(16.5)(76)(70.9)In-process as of June 30, 2019155145.42119.8176165.2





Non-Operated WellsWattenberg FieldDelaware BasinTotalGrossNetGrossNetGrossNetIn-process as of December 31, 201852.060.9112.9Spud283.520.4303.9Turned-in-line(17)(1.1)(8)(1.3)(25)(2.4)In-process as of June 30, 2019164.4——164.4


















































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LowHighOperating ExpensesLease operating expenses ($/Boe)$2.85$3.00Transportation, gathering and processing expenses ("TGP") ($/Boe)$0.90$1.00Production taxes (% of crude oil, natural gas and NGLs sales)6%7%General and administrative expense ("G&A") ($/Boe)$3.00$3.20Estimated Price Realizations (% of NYMEX, excludes TGP)Crude oil90%95%Natural gas40%45%NGLs20%25%
































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Three Months Ended June 30,Six Months Ended June 30,20192018Percent Change20192018Percent Change(dollars in millions, except per unit data)ProductionCrude oil (MBbls)4,8993,94824.1%9,4257,74521.7%Natural gas (MMcf)28,99220,68740.1%54,64340,27435.7%NGLs (MBbls)2,6931,98735.5%5,1083,83333.3%Crude oil equivalent (MBoe)12,4259,38232.4%23,64018,29029.3%Average Boe per day (Boe)136,539103,09932.4%130,608101,04929.3%Crude Oil, Natural Gas and NGLs SalesCrude oil$274.2$252.68.6%$505.3$479.05.5%Natural gas31.030.03.3%83.568.721.5%NGLs33.843.3(21.9)%71.383.5(14.6)%Total crude oil, natural gas and NGLs sales$339.0$325.94.0%$660.1$631.24.6%Net Settlements on Commodity DerivativesCrude oil$(14.7)$(25.5)(42.4)%$(17.6)$(52.5)(66.5)%Natural gas1.511.2(86.6)%(4.0)13.9*NGLs—(2.1)*—(3.8)*Total net settlements on derivatives$(13.2)$(16.4)(19.5)%$(21.6)$(42.4)(49.1)%Average Sales Price (excluding net settlements on derivatives)Crude oil (per Bbl)$55.96$63.99(12.5)%$53.61$61.85(13.3)%Natural gas (per Mcf)1.071.46(26.7)%1.531.71(10.5)%NGLs (per Bbl)12.5321.76(42.4)%13.9621.78(35.9)%Crude oil equivalent (per Boe)27.2834.74(21.5)%27.9234.51(19.1)%Average Costs and Expenses (per Boe)Lease operating expenses$2.76$3.44(19.8)%$2.94$3.38(13.0)%Production taxes1.822.41(24.5)%1.902.34(18.8)%Transportation, gathering and processing expenses0.990.963.1%1.000.8912.4%General and administrative expense3.453.97(13.1)%3.493.99(12.5)%Depreciation, depletion and amortization13.5614.46(6.2)%13.5314.35(5.7)%Lease Operating Expenses by Operating Region (per Boe)Wattenberg Field$2.46$3.29(25.2)%$2.55$3.16(19.3)%Delaware Basin3.763.92(4.1)%4.374.165.0%Utica Shale (1)——*—3.46*


*Percent change is not meaningful.Amounts may not recalculate due to rounding.(1) In March 2018, we completed the disposition of our Utica Shale properties.























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Three Months Ended June 30, 2019Six Months Ended June 30, 2019(in millions)Increase in production$88.4$156.2Decrease in average crude oil price(39.4)(39.9)Decrease in average natural gas price(11.2)(9.7)Decrease in average NGLs price(24.8)(77.7)Total increase in crude oil, natural gas and NGLs sales revenue$13.0$28.9














Three Months Ended June 30,Six Months Ended June 30,Production by Operating Region20192018Percent Change20192018Percent ChangeCrude oil (MBbls)Wattenberg Field3,6812,94325.1%7,2535,82324.6%Delaware Basin1,2181,00521.2%2,1721,87615.8%Utica Shale (1)——*—46*Total4,8993,94824.1%9,4257,74521.7%Natural gas (MMcf)Wattenberg Field23,23315,83646.7%44,19331,36040.9%Delaware Basin5,7594,85118.7%10,4508,50022.9%Utica Shale (1)——*—414*Total28,99220,68740.1%54,64340,27435.7%NGLs (MBbls)Wattenberg Field2,0071,54430.0%3,9082,97331.4%Delaware Basin68644354.9%1,20082645.3%Utica Shale (1)——*—34*Total2,6931,98735.5%5,1083,83333.3%Crude oil equivalent (MBoe)Wattenberg Field9,5617,12634.2%18,52614,02332.1%Delaware Basin2,8642,25627.0%5,1144,11824.2%Utica Shale (1)——*—149*Total12,4259,38232.4%23,64018,29029.3%Average crude oil equivalent per day (Boe)Wattenberg Field105,06678,30834.2%102,35477,47532.1%Delaware Basin31,47324,79127.0%28,25422,75124.2%Utica Shale (1)——*—823*Total136,539103,09932.4%130,608101,04929.3%


Amounts may not recalculate due to rounding.(1) In March 2018, we completed the disposition of our Utica Shale properties.














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Three Months Ended June 30, 2019Crude OilNatural GasNGLsTotalWattenberg Field39%40%21%100%Delaware Basin42%34%24%100%Three Months Ended June 30, 2018Crude OilNatural GasNGLsTotalWattenberg Field41%37%22%100%Delaware Basin44%36%20%100%





Six Months Ended June 30, 2019Crude OilNatural GasNGLsTotalWattenberg Field39%40%21%100%Delaware Basin43%34%23%100%Six Months Ended June 30, 2018Crude OilNatural GasNGLsTotalWattenberg Field42%37%21%100%Delaware Basin46%34%20%100%
































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Three Months Ended June 30,Six Months Ended June 30,Weighted-Average Realized Sales Price by Operating RegionPercent ChangePercent Change(excluding net settlements on derivatives)2019201820192018Crude oil (per Bbl)Wattenberg Field$55.30$64.57(14.4)%$52.94$61.88(14.4)%Delaware Basin57.9762.31(7.0)%55.8361.86(9.7)%Utica Shale (1)——*—58.10*Weighted-average price55.9663.99(12.5)%53.6161.85(13.3)%Natural gas (per Mcf)Wattenberg Field$1.30$1.43(9.1)%$1.74$1.674.2%Delaware Basin0.161.54(89.6)%0.641.78(64.0)%Utica Shale (1)——*—2.68*Weighted-average price1.071.46(26.7)%1.531.71(10.5)%NGLs (per Bbl)Wattenberg Field$11.30$19.60(42.3)%$12.90$19.86(35.0)%Delaware Basin16.1429.26(44.8)%17.4128.56(39.0)%Utica Shale (1)——*—24.29*Weighted-average price12.5321.76(42.4)%13.9621.78(35.9)%Crude oil equivalent (per Boe)Wattenberg Field$26.81$34.09(21.4)%$27.59$33.64(18.0)%Delaware Basin28.8436.80(21.6)%29.1137.58(22.5)%Utica Shale (1)——*—30.98*Weighted-average price27.2834.74(21.5)%27.9234.51(19.1)%
 Amounts may not recalculate due to rounding.(1) In March 2018, we completed the disposition of our Utica Shale properties.




















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For the Three Months Ended June 30, 2019Average NYMEX PriceAverage Realized Price Before Transportation, Gathering and Processing ExpensesAverage Realization Percentage Before Transportation, Gathering and Processing ExpensesAverage Transportation, Gathering and Processing ExpensesAverage Realized Price After Transportation, Gathering and Processing ExpensesAverage Realization Percentage After Transportation, Gathering and Processing ExpensesCrude oil (per Bbl)$59.81$55.9694%$1.20$54.7692%Natural gas (per MMBtu)2.641.0741%0.190.8833%NGLs (per Bbl)59.8112.5321%0.1812.3521%Crude oil equivalent (per Boe)42.7827.2864%0.9626.3262%For the Three Months Ended June 30, 2018Average NYMEX PriceAverage Realized Price Before Transportation, Gathering and Processing ExpensesAverage Realization Percentage Before Transportation, Gathering and Processing ExpensesAverage Transportation, Gathering and Processing ExpensesAverage Realized Price After Transportation, Gathering and Processing ExpensesAverage Realization Percentage After Transportation, Gathering and Processing ExpensesCrude oil (per Bbl)$67.88$63.9994%$0.92$63.0793%Natural gas (per MMBtu)2.801.4652%0.241.2244%NGLs (per Bbl)67.8821.7632%0.1821.5832%Crude oil equivalent (per Boe)49.1134.7471%0.9633.7869%








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For the Six Months Ended June 30, 2019Average NYMEX PriceAverage Realized Price Before Transportation, Gathering and Processing ExpensesAverage Realization Percentage Before Transportation, Gathering and Processing ExpensesAverage Transportation, Gathering and Processing ExpensesAverage Realized Price After Transportation, Gathering and Processing ExpensesAverage Realization Percentage After Transportation, Gathering and Processing ExpensesCrude oil (per Bbl)$57.36$53.6193%$1.21$52.4091%Natural gas (per MMBtu)2.891.5353%0.191.3446%NGLs (per Bbl)57.3613.9624%0.2113.7524%Crude oil equivalent (per Boe)41.9327.9267%0.9726.9564%For the Six Months Ended June 30, 2018Average NYMEX PriceAverage Realized Price Before Transportation, Gathering and Processing ExpensesAverage Realization Percentage Before Transportation, Gathering and Processing ExpensesAverage Transportation, Gathering and Processing ExpensesAverage Realized Price After Transportation, Gathering and Processing ExpensesAverage Realization Percentage After Transportation, Gathering and Processing ExpensesCrude oil (per Bbl)$65.37$61.8595%$0.80$61.0593%Natural gas (per MMBtu)2.901.7159%0.231.4851%NGLs (per Bbl)65.3721.7833%0.2121.5733%Crude oil equivalent (per Boe)47.7734.5172%0.8933.6270%






































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Three Months Ended June 30,Six Months Ended June 30,2019201820192018(in millions)Commodity price risk management gain (loss), net:Net settlements of commodity derivative instruments:Crude oil fixed price swaps, collars and rollfactors$(14.7)$(37.2)$(17.5)$(63.9)Crude oil basis protection swaps—11.7—11.4Natural gas fixed price swaps and collars2.12.50.52.6Natural gas basis protection swaps(0.6)8.7(4.6)11.2NGLs fixed price swaps—(2.1)—(3.8)Total net settlements of commodity derivative instruments(13.2)(16.4)(21.6)(42.5)Change in fair value of unsettled commodity derivative instruments:Reclassification of settlements included in prior period changes in fair value of commodity derivative instruments15.418.1(39.7)32.0Crude oil fixed price swaps, collars and rollfactors38.3(111.4)(85.6)(152.9)Natural gas fixed price swaps and collars7.2(2.3)6.7(3.2)Natural gas basis protection swaps(0.4)(1.7)(2.5)5.0NGLs fixed price swaps—(2.4)—(1.8)Net change in fair value of unsettled commodity derivative instruments60.5(99.7)(121.1)(120.9)Total commodity price risk management gain (loss), net$47.3$(116.1)$(142.7)$(163.4)












































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Three Months Ended June 30,Six Months Ended June 30,2019201820192018(in millions)Impairment of proved and unproved properties$2.2$159.5$10.1$192.6Amortization of individually insignificant unproved properties———0.1Impairment of infrastructure and other26.8—26.8—Impairment of properties and equipment$29.0$159.5$36.9$192.7















































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Three Months Ended June 30, 2019Six Months Ended June 30, 2019(in millions)Increase in production$42.6$77.2Decrease in weighted-average depreciation, depletion and amortization rates(9.1)(18.5)Total increase in DD&A expense related to crude oil and natural gas properties$33.5$58.7








Three Months Ended June 30,Six Months Ended June 30,Operating Region/Area2019201820192018(per Boe)Wattenberg Field$12.12$12.94$12.27$13.23Delaware Basin17.8818.3417.5317.69Total weighted-average$13.45$14.24$13.41$14.13
























































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|• | operating performance and return on capital as compared to our peers;

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|• | financial performance of our assets and our valuation without regard to financing methods, capital structure or historical cost basis;

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|• | our ability to generate sufficient cash to service our debt obligations; and

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|• | the viability of acquisition opportunities and capital expenditure projects, including the related rate of return.







Three Months Ended June 30,Six Months Ended June 30,2019201820192018(in millions)Adjusted cash flows from operations:Net cash from operating activities$260.4$175.7$442.2$380.9Changes in assets and liabilities(53.4)23.6(42.7)(6.6)Adjusted cash flows from operations$207.0$199.3$399.5$374.3Adjusted net income (loss):Net income (loss)$68.5$(160.3)$(51.6)$(173.4)(Gain) loss on commodity derivative instruments(47.3)116.1142.7163.4Net settlements on commodity derivative instruments(13.2)(16.4)(21.6)(42.4)Tax effect of above adjustments14.5(23.9)(29.0)(29.0)Adjusted net income (loss)$22.5$(84.5)$40.5$(81.4)Net income (loss) to adjusted EBITDAX:Net income (loss)$68.5$(160.3)$(51.6)$(173.4)(Gain) loss on commodity derivative instruments(47.3)116.1142.7163.4Net settlements on commodity derivative instruments(13.2)(16.4)(21.6)(42.4)Non-cash stock-based compensation7.65.512.310.8Interest expense, net18.917.335.934.7Income tax expense (benefit)22.6(45.3)(14.8)(49.9)Impairment of properties and equipment29.0159.536.9192.7Exploration, geologic and geophysical expense0.60.93.33.5Depreciation, depletion and amortization168.5135.6319.9262.4Accretion of asset retirement obligations1.61.43.12.6Adjusted EBITDAX$256.8$214.3$466.1$404.4Cash from operating activities to adjusted EBITDAX:Net cash from operating activities$260.4$175.7$442.2$380.9Interest expense, net18.917.335.934.7Amortization of debt discount and issuance costs(3.4)(3.1)(6.7)(6.4)Gain (loss) on sale of properties and equipment33.90.434.3(1.1)Exploration, geologic and geophysical expense0.60.93.33.5Other(0.2)(0.5)(0.2)(0.6)Changes in assets and liabilities(53.4)23.6(42.7)(6.6)Adjusted EBITDAX$256.8$214.3$466.1$404.4








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Three Months EndedSix Months EndedYear EndedJune 30, 2019June 30, 2019December 31, 2018Average NYMEX Index Price:Crude oil (per Bbl)$59.81$57.36$64.77Natural gas (per MMBtu)2.642.893.09Average Sales Price Realized:Excluding net settlements on commodity derivativesCrude oil (per Bbl)$55.96$53.61$61.19Natural gas (per Mcf)1.071.531.85NGLs (per Bbl)12.5313.9622.14

















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PeriodTotal Number of Shares Purchased (1) (2)Average Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)Approximate Dollar Value of Shares that may yet be Purchased Under the Plans or Programs (in millions) (3)April 1 - 30, 201951,059$41.67—$200.0May 1 - 31, 2019———200.0June 1 - 30, 20193,140,13133.553,136,40694.8Total second quarter 2019 purchases3,191,190$33.683,136,406$94.8





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|(1) | Certain purchases represent shares withheld from employees for the payment of their tax liabilities related to the vesting of securities issued pursuant to our stock-based compensation plans. The withheld shares are not issued or considered common stock repurchased under the Stock Repurchase Program described in the footnote titled Common Stock to our condensed consolidated financial statements included elsewhere in this report.

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|(2) | In April 2019, our Board of Directors approved a program to acquire up to $200 million of our outstanding common stock. The Stock Repurchase Program does not require any specific number of shares to be acquired, and can be modified or discontinued by the Board of Directors at any time.

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|(3) | In July 2019, we repurchased$19.8 millionof our outstanding common stock as part of the Stock Repurchase Program. At July 31, 2019,$75.0 millionof shares remained available for repurchase that may yet be purchased under the Stock Repurchase Program.





































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Incorporated by ReferenceExhibit NumberExhibit DescriptionFormSEC File NumberExhibitFiling DateFiled Herewith31.1Certification 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.X31.2Certification 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.X32.1*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 2002.101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL documentX101.SCHXBRL Taxonomy Extension Schema DocumentX101.CALXBRL Taxonomy Extension Calculation Linkbase DocumentX101.DEFXBRL Taxonomy Extension Definition Linkbase DocumentX101.LABXBRL Taxonomy Extension Label Linkbase DocumentX101.PREXBRL Taxonomy Extension Presentation Linkbase DocumentX











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PDC Energy, Inc.(Registrant)Date:   August 7, 2019/s/ Barton BrookmanBarton BrookmanPresident and Chief Executive Officer(principal executive officer)/s/ R. Scott MeyersR. Scott MeyersSenior Vice President and Chief Financial Officer(principal financial officer)