Energy Prospectus

2016 Third Quarter Highlights

Production of approximately 65,263 barrels of oil equivalent ("Boe") per day; 39% increase year-over-year and 14% over the second quarter of 2016.

Reduced per Boe lease operating expense ("LOE") 27% year-over-year to $2.33.

Turned-in-line 40 gross operated wells, including the Company's first two-mile lateral wells in the Core Wattenberg.

Closed previously announced strategic acreage trade in the Middle Core area of the Wattenberg Field.

Announced transformative $1.5 billion acquisition ("the Acquisition") of approximately 57,000 net acres in the Core Delaware Basin with approximately 7,000 Boe per day of net production. Closing of the Acquisition is expected in December 2016.

Executed financial transactions to fund the cash portion of the Acquisition including: equity offering of approximately nine million shares for net proceeds of approximately $560 million, issuance of $200 million of 1.125% convertible senior notes due 2021 and issuance of $400 million of 6.125% senior notes due 2024.
Bart Brookman, President and Chief Executive Officer, commented, "The third quarter was truly transformational for PDC. The announcement of our large-scale entry into the Core Delaware Basin, combined with the closing of our Core Wattenberg acreage trade and the production from our first two-mile lateral wells, demonstrates our ongoing focus on capital efficiency and substantial future growth. Our priorities are to continue building upon the tremendous momentum in the Wattenberg while we integrate and develop our new Delaware assets. As we begin our budget process for 2017, look for us to emphasize a strong balance sheet while delivering top-tier production growth from our premier asset portfolio."

Liquidity as of September 30, 2016 was approximately $1.6 billion, consisting of approximately $1.2 billion in cash and cash equivalents and an undrawn credit facility of $450 million, net of an $11.7 million letter of credit related to a third-party transportation obligation. In October 2016, the Company completed the semi-annual redetermination of the borrowing base under its revolving credit facility, which resulted in the reaffirmation of the borrowing base at $700 million. The Company elected to maintain its commitment level of $450 million until the expected closing of the Acquisition in December 2016, at which time it will increase to the full $700 million.

Pro forma for the expected closing of the Acquisition in December 2016, available third quarter liquidity was approximately $1.0 billion, consisting of the $700 million borrowing base, net of the $11.7 million letter of credit, and cash on hand.

I have updated my forecast/valuation model and it will be posted to the EPG website later today.

I am raising my valuation by $4.00/share to $94.00. This compares to First Call's price target of $77.38.

I have gained more confidence in my forecast model for this one, so I feel comfortable in raising the valuation multiple to 10X operating cash flow per share. In addition to their core area in the Wattenberg Field, PDC is going to ramp up a two rig program in the Delaware Basin that should build on their production and proven reserve growth.