PDC Energy Inc. plans to drop a rig this month, but it has increased its full-year production guidance after better than expected second quarter results.
CEO Bart Brookman said the company will drop from four to three rigs in the company's Wattenberg field in Northeast Colorado. Drilling efficiencies, cost-cutting, outperforming wells and increased working interests in the company's operations led to the decision. PDC also cut its full-year capital expenditures to $400-420 million from the previous range of $410-440 million.
The company produced 57,112 boe/d during the second quarter, led by 54,478 boe/d of production from its assets in the Denver-Julesburg Basin. Second quarter production was up from the same time last year when the company produced 37,001 boe/d and up 14% from 1Q2016 production of 50,216 boe/d.
Better wells, the company said, have it increasing full-year production guidance to 21-22 million boe from the previous forecast of 20-22 million boe. PDC turned in line 37 wells during the quarter. Three of the five Utica Shale wells it planned to turn to sales this year came on line during the quarter as well. Second quarter volumes were also pushed up by 34 Wattenberg wells that were turned to sales late in the first quarter.
Brookman said the company would enter 2017 running three rigs. The lower count isn't expected to negatively impact production growth next year, he said, with the company still tentatively calling for 20-30% year/year growth.
PDC continued to test enhanced Wattenberg completion designs during the second quarter, using various proppant loads, longer laterals, adjusted choke and more stages to continue optimizing its wells. The company is still waiting on test results from some of those wells.
On Monday, organizers in Colorado turned two ballot measures into the state for signature verification (see Shale Daily, Aug. 9). One of those measures would create a patchwork of different local rules and oil and gas bans, while another would increase mandatory well setbacks to 2,500 feet from the current 1,000 foot requirement. Management said they're monitoring the progress of those initiatives.
Brookman said company officials believe that organizers failed to obtain enough signatures.
"In the event that these do make the ballot, the industry is extremely organized, sophisticated and well-funded in its efforts to prevent them from passing," said Senior Vice President of Operations Scott Reasoner. "We are confident in our efforts to defeat this initiative, and we continue to educate the voters on the negative impacts of these proposals on the state of Colorado."
PDC's average sales price during the quarter, excluding hedges, was $21.33/boe, down from $28.79/boe in the year-ago period. While the company earned $53.3 million on hedges, it lost another $146.1 million because commodity prices increased during the quarter. Revenue was down to $20.1 million from $60 million in 2Q2015.
PDC reported a net loss of $95.5 million (minus $2.04/share) for the second quarter, compared to a net loss of $46.9 million (minus $1.17) in the year-ago period. Stay up to date on 2Q2016 earnings and projections for the remainder of the year with NGI's Earnings Call and Coverage sheet.