PDC Energy Announces 2016 Capital Budget of $450 to $500 Million; Anticipates 35% to 40% Annual Production Growth With Projected Year-End 2016 Debt to EBITDA of Approximately 1.4x
Targeted cash flow neutrality with planned capital budget of
$450to $500 million.
Anticipated annual production of 20.0 to 22.0 MMBoe, 35% to 40% year-over-year growth.
Projected 2016 year-end debt to EBITDA of approximately 1.4x.
Hedged approximately 50% of 2016 oil volumes and 62% of natural gas volumes at nearly
$85per barrel and $3.65per Mcf, respectively.
- Continued improvements in capital efficiencies through anticipated reductions in drilling times and well costs, enhanced completion designs and extended reach lateral development.
2016 Capital Plan and Production Guidance
PDC's 2016 capital budget, of
PDC's 2016 production guidance of 20.0 to 22.0 million barrels of oil equivalent ("MMBoe"), or 54,650 to 60,100 Boe per day, represents an increase of 35 to 40 percent over anticipated 2015 levels. The commodity mix is expected to be approximately 42 percent oil, 20 percent NGLs and 38 percent natural gas. The mix is slightly gassier than 2015 due to a number of higher GOR Inner Core Wattenberg wells being turned-in-line in the second half of 2015 and first half of 2016. The Company's long-term commodity mix expectation remains approximately 45 percent oil and 65 percent liquids.
The majority of production growth in 2016 is expected to occur in the second and third quarters while the first and fourth quarters are expected to show relatively flat sequential quarter-over-quarter growth.
2016 Financial Positioning
PDC is projected to exit 2016 with a debt to EBITDA ratio of approximately 1.4 times and total liquidity of approximately
Based on the mid-point of PDC's production guidance, nearly 50 percent of 2016 expected crude oil volumes are hedged at approximately
Using internal weighted-average NYMEX pricing of
|2016 Sensitivity Table(1)|
|Oil price per barrel (NYMEX)||
|Year-end debt to EBITDA(2)||1.7x||1.6x||1.4x|
|Year-end Liquidity (millions)||
(1) Assumes four rig program throughout 2016; Natural gas and NGL prices held constant at
Wattenberg Operations Details
In 2016, the Company plans to spend approximately
The Company plans to drill standard reach lateral ("SRL"), mid-length lateral ("ERL") and extended reach lateral ("XRL") wells in 2016. Reduced drill times, from spud-to-spud, have led to an approximate 25% increase in lateral feet drilled per rig-year compared to 2015. In 2016, the Company plans to spud and turn-in-line approximately 135 and 160 wells, respectively.
|2016 Wattenberg Program Details|
|All numbers approximate||SRL||ERL||XRL|
|Drilling days (spud-to-spud)||7||11||14|
|% of 2016 spuds||32%||36%||32%|
|% of 2016 TILs||50%||40%||10%|
|Well cost (millions)||
Due to successful testing of new completion technologies in 2015, projected well costs are now inclusive of plug-and-perf technology and production guidance now includes an associated uplift from plug-and-perf completions of up to 15 percent. The Company plans to test the potential additive effect of AccessFrac with plug-and-perf completions but has not included any potential impact of such completions in its 2016 guidance.
Utica Operations Update
Early in 2016, PDC plans to spend approximately
Upcoming Investor Conferences
PDC is scheduled to present at the following conferences: Wells Fargo's 2015 Energy Symposium in
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 PDC's 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, forecast, guidance, anticipates, intends, plans, believes, seeks, estimates and similar expressions or variations of such words are intended to identify forward-looking statements herein, which may include statements regarding PDC's future production, cash flows, capital expenditures and projects, cost-saving initiatives, operational enhancements, rates-of-return, debt metrics, liquidity, future differentials and 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 press release reflect the Company's good faith judgment, such statements can only be based on facts and factors currently known to PDC. 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 crude oil, natural gas and NGLs, 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: unanticipated changes relating to the following:
- 2016 capital budget and production forecasts, including anticipated liquidity;
- year-end debt to EBITDA range;
- future exploration, drilling and development activities, including expected rig counts;
- potential additional revisions to the 2016 capital and production forecasts, including anticipated exit rates;
- anticipated number of wells spud and turned-in-line and growth level expectation;
- anticipated commodity mix in 2016;
- anticipated cash flow and spend rates, targeting cash flow neutrality;
- changes in hydrocarbon production volumes and demand, including economic conditions that might impact demand;
- volatility of commodity prices for crude oil, natural gas and NGLs, including the risk of an extended period of low commodity prices;
- the impact of governmental policies and/or regulations, including changes in environmental and other laws, the interpretation and enforcement related to those laws and regulations, liabilities arising thereunder and the costs to comply with those laws and regulations;
- potential declines in the value of crude oil, natural gas and NGLs properties resulting in impairments;
- potential inability to achieve expected improvements in efficiency and drilling results;
- changes in estimates of proved reserves;
- inaccuracy of reserve estimates and expected production rates;
- potential for production decline rates from wells being greater than expected;
- timing and extent of success in discovering, acquiring, developing and producing reserves;
- ability to secure leases, drilling rigs, supplies and services at reasonable prices;
- impact of high line pressure;
- 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 received for production;
- timing and receipt of necessary regulatory permits;
- risks incidental to the drilling and operation of crude oil and natural gas wells;
- future cash flows, liquidity and financial condition;
- competition within the oil and gas industry;
- cost and availability of capital;
- reductions in the borrowing base under the revolving credit facility;
- success in marketing crude oil, natural gas and NGLs;
- effect of crude oil and natural gas derivatives activities;
- impact of environmental events, governmental and other third-party responses to such events, and the ability to insure adequately against such events;
- cost of pending or future litigation;
- effect that acquisitions we may pursue have on capital expenditures;
- ability to retain or attract senior management and key technical employees; and
- success of strategic plans, expectations and objectives for future operations.
Further, PDC urges you to carefully review and consider the cautionary statements made in this press release and the Company's filings with the
Michael EdwardsSenior Director Investor Relations 303-860-5820 email@example.com Kyle SourkManager Investor Relations 303-318-6150 firstname.lastname@example.org
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