NEWS FROM
  Petroleum
Development Corporation
 
 
 FOR
IMMEDIATE RELEASE
 February
17, 2010
 
 Petroleum
Development Corporation Reports 2009 Key Operating Results;
 Expanded
2010 Capital Budget; 250% Increase in 2010 Planned Drilling
Activity
 
 DENVER, CO, February 17, 2010:Petroleum Development Corporation (NASDAQ: PETD) today reported 2009 key
operating results which were in line with the Company’s prior
estimates.  Additionally, the Company provided estimates of 2010
capital spending and production.
 
 For the
year-ended December 31, 2009 year-over-year total production growth was 12%, or
43.3 Bcfe versus 38.7 Bcfe in 2008.  During 2009, the Company drilled
100 gross wells compared to 379 gross wells drilled in 2008.  2009
production growth was 100% organic from development of existing core operating
areas.
 
 The
Company’s 2009 operating focus was primarily in the DJ Basin / Wattenberg Field
where PDC drilled 82 of its 100 wells.  The decrease in drilling
activity for 2009 was in response to the decline in natural gas prices and a
corporate decision to preserve liquidity.  For the year ending 2009,
PDC achieved significant cost reductions in capital expenditures (CAPEX) and
lifting costs in each of the Company’s operating basins.  2009
CAPEX/well and lifting costs/Mcfe declined approximately 25% and 22%,
respectively, versus 2008 levels.
 
 During
2009 the Company made important strides in the emerging Marcellus Shale
program.  PDC’s focus in the Marcellus Shale was to solidify its
existing acreage position, raise developmental capital through the formation of
PDC Mountaineer, a joint venture (the “JV”) with an equity partner, and evaluate
the play’s potential through implementation of a vertical well drilling
program.  Seven vertical wells were drilled in West Virginia, and one
delineation well is currently being drilled in Pennsylvania.  The
technical results of the vertical wells were encouraging and support the
drilling of the first horizontal Marcellus test, scheduled to commence this
month.  A total of three horizontal tests are planned for the first
half of 2010.  The JV is also preparing a Marcellus midstream strategy
which should be finalized by mid-year 2010.
 
 The
Company’s independent reserve engineers have completed estimates of year-end
2009 proved reserves in accordance with new SEC guidelines.  The new
SEC reserve quantification guidelines stipulate the adoption of several changes
to the methodology utilized to quantify year-end reported
reserves.  The change in pricing from a year-end spot price to a
12-month average price had the most significant contribution to the
year-over-year variation of the Company’s year-end 2009 reported
reserves.  Total proved reserves as of December 31, 2009 were 717 Bcfe
compared to 753 Bcfe of total proved reserves reported at the end of
2008.  Reserve values in 2009 were based on an average natural gas
price of $3.17/Mcf and an average oil price of $54.64/Bbl, versus an average
natural gas price of $4.98/Mcf and an average oil price of $37.85/Bbl in
2008.  Using year-end spot pricing methodology, as was used at
year-end 2008, reserve values would have been calculated at $5.51/Mcf for
natural gas and $72.91/Bbl for oil on December 31, 2009, and reported reserves
would have been 811 Bcfe.  At year-end 2009, natural gas represents
approximately 85% of proved reserves and the remaining 15% is
oil.  Additionally, 41.2% of the proved reserve total is developed and
58.8% is undeveloped.
  
  The
following table provides a more detailed breakdown of the
categories:
 
 2009
      Reserves and Production
                  (Bcfe)Total
      Proved (1P)
                Total
      Proved, Probable and Possible
                  (3P)*
                Total
      ProductionRocky
      Mountain Region
                641
                
                830
                
                37.8Appalachian
      Basin (1)
                61
                
                145
                
                4.1Michigan
      Basin
                15
                
                15
                
                1.4Total
      All Fields
                717
                
                990
                
                43.3
 * Non-SEC
3P reserves.
 (1)
Includes 100% of JV reserves and production.
 
 PDC’s
CAPEX for 2010 is expected to be approximately $150 million, representing a 36%
increase over the 2009 CAPEX budget of $110 million.  The JV plans to
drill approximately 26 wells in 2010 to develop the Marcellus Shale in the
Appalachian basin.  The JV’s 2010 drilling program requires no capital
contribution from PDC.  Drilling will be funded from JV cash flow and
by PDC’s JV partner.
 
 For the
full-year 2010, PDC plans to drill 252 gross wells, compared to 100 gross wells
drilled in 2009.  The following table provides a summary of PDC’s
planned 2010 drilling activity:
 
 
 Planned
      2010 Drilling ActivityRegion
                Piceance
                Wattenberg
                Northeastern
                  Colorado
                Marcellus
      JV
                TotalPlanned
      New Drills
                21
                180
                25
                26
                252
 The
Company expects its 2010 production to be approximately 35.7 Bcfe, an 18%
reduction from 2009 production of 43.3 Bcfe.  Approximately 7% of the
year-over-year production decline is related to the loss of Shallow Devonian
production in the Appalachian Basin which was contributed to the
JV.  The remainder of the production decline results from the 70%
reduction in CAPEX in 2009 versus 2008.  PDC expects its 2010 exit
rate to approximate its 2009 exit rate of 107/MMcfe per day.
 
 Richard
W. McCullough, Chairman and Chief Executive Officer, stated, “2009 was a
challenging year for the E&P industry.  Due to the significantly
depressed commodity price environment and the turmoil in the country’s financial
markets, we meaningfully reduced our CAPEX for 2009.  Hedges that were
put in place in 2008, for 2009, provided substantial relative price realizations
during the year which protected our cash flow and related capital
programs.  Strong hedge positions exist for 2010 and beyond and are
expected to continue to provide protection from commodity price
declines.  Additionally, during 2009, we were able to grow our
production by double digits, substantially reduce our operating costs, bolster
our liquidity, and strengthen our balance sheet leverage and coverage
measures.
 
 “2010
will present opportunities for us from a production standpoint.  We’re
pleased that our 2010 CAPEX budget allocates drilling capital to all of our
major basins.  While the tough markets that existed in 2009 and our
related reductions in capital spending will result in a year-over-year
production decline, with increased drilling in 2010 we expect a net exit rate
equal to that of the beginning of the year.  More importantly, if
drilling economics continue to improve, we’ve positioned ourselves to achieve
additional growth during the year.  We have the opportunity to achieve
growth through additional organic drilling acceleration of the JV’s development,
and partnership repurchases and/or acquisitions.  We are excited about
the opportunities that face us in 2010.”
  
  
 About Petroleum Development
Corporation
 
 Petroleum
Development Corporation (www.petd.com) is an independent energy company engaged
in the development, production and marketing of natural gas and oil. Its
operations are focused in the Rocky Mountains with additional operations in the
Appalachian Basin and Michigan. PDC is included in the S&P SmallCap 600
Index and the Russell 3000 Index of Companies.
 
 SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
 This
press release contains “forward-looking statements” within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934 regarding our business, financial condition, results of
operations and prospects. All statements other than statements of historical
facts included in and incorporated by reference into this release are
forward-looking statements.   Words such as expects, anticipates,
intends, plans, believes, seeks, estimates and similar expressions or variations
of such words are intended to identify forward-looking statements herein, which
include statements of estimated oil and natural gas production and reserves,
drilling plans, future cash flows, anticipated liquidity, anticipated capital
expenditures and our management’s strategies, plans and
objectives.  However, these are not the exclusive means of identifying
forward-looking statements herein.  Although forward-looking
statements contained in this release reflect our good faith judgment, such
statements can only be based on facts and factors currently known to
us.  Consequently, forward-looking statements are inherently subject
to risks and uncertainties, including risks and uncertainties incidental to the
exploration for, and the acquisition, development, production and marketing of,
natural gas and oil, and actual outcomes may differ materially from the results
and outcomes discussed in the forward-looking statements.  Important
factors that could cause actual results to differ materially from the forward
looking statements include, but are not limited to:
 
 ·
              changes
      in production volumes, worldwide and national demand, and commodity prices
      for oil and natural gas;
 ·
              the
      timing and extent of our success in discovering, acquiring, developing and
      producing natural gas and oil
reserves;
 ·
              our
      ability to acquire leases, drilling rigs, supplies and services at
      reasonable prices;
 ·
              the
      availability and cost of capital to
us;
 ·
              risks
      incident to the drilling and operation of natural gas and oil
      wells;
 ·
              future
      production and development costs;
 ·
              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 United States of
      America;
 ·
              the
      effect of natural gas and oil derivatives
  activities;
 ·
              conditions
      in the capital markets; and
 ·
              losses
      possible from pending or future
litigation.
 
 Further,
we urge you to carefully review and consider the cautionary statements made in
this release, our annual report on Form 10-K for the year ended December 31,
2008, and our other filings with the Securities and Exchange Commission (“SEC”)
and public disclosures.  We caution you not to place undue reliance on
forward-looking statements, which speak only as of the date of this press
release.  We
undertake no obligation to update any forward-looking statements in order to
reflect any event or circumstance occurring after the date of this report or
currently unknown facts or conditions.
 
 CONTACT: Marti Dowling,
Manager - Investor Relations, 303.831.3926, mdowling@petd.com
 
 ###
 
 
 1775
Sherman Street • Suite 3000 • Denver, Colorado • 80203-4341 • Phone:
303.860.5800
 ~www.petd.com~