PDC Energy Inc. has signed a midstream services agreement with MarkWest Utica EMG LLC and plans to nearly double its capital expenditures (capex) in the Utica Shale for 2013 while also increasing its estimated net production.

Denver-based PDC said it has increased capex for 2013 from $365 million to $443 million and plans to allocate 85% of it toward liquids-rich projects in the Utica and in the Wattenberg Field, part of the Denver-Julesberg (DJ) Basin in Weld County, CO.

The company said Monday it plans to maintain a one-rig drilling program in the Utica throughout 2013 but will deploy a third rig in the Wattenberg in May. PDC said it plans to drill 11 horizontal wells in the Utica and 69 in the liquids-rich Niobrara and Codell formations this year.

Capex devoted to the Utica would increase from $53 million to $96 million, with about $7 million going toward leasehold acquisitions, the company said. Meanwhile, capex for the Wattenberg, which was $254 million, would be raised to $280 million.

CEO James Trimble said the Utica and the Wattenberg “are expected to drive the company’s organic growth for many years as we continue to increase the liquids percentage of our production and reserves and establish a more balanced portfolio of oil and natural gas.”

According to PDC, the remaining $9 million of the capex increase will be allocated to PDC Mountaineer LLC, its joint venture (JV) in the Marcellus Shale with Lime Rock Partners (see Shale Daily, March 5, 2012). The company said the JV started its horizontal drilling program in the Marcellus in January instead of March, and the capex increase will be funded through the JV’s cash flow and borrowings under its revolving credit facility.

PDC said its guidance for 2013 net production — excluding the sale of non-core assets in the Piceance Basin in Colorado (see Shale Daily, Feb. 11) — has been adjusted to a range of 7.0 to 7.5 million boe due to the increase in capex and the drilling of 13 additional horizontal wells. The company said net production volumes are estimated to be 54% weighted toward liquids and 46% natural gas.

PDC’s agreement with MarkWest Utica — a JV of MarkWest Energy Partners LP and The Energy and Minerals Group (EMG) — calls for the latter to provide gathering, processing, fractionation and marketing services in the Utica.

Under the deal, MarkWest will begin gathering and processing PDC’s liquids-rich gas production from Guernsey County, OH, by the end of 2Q2013. Initial production from PDC’s operations will be sent to MarkWest’s Cadiz processing complex in Harrison County, OH, but during the second half of 2013 PDC’s gas will be transported via gathering lines to MarkWest’s Seneca complex in Noble County, OH.

MarkWest Utica is developing an integrated system in the Utica to provide low- and high-pressure natural gas gathering systems, natural gas liquids pipelines and processing complexes that would have nearly 800 MMcf/d of capacity and provide 100,000 b/d of C2+ fractionation capacity (see Shale Daily, Jan. 5, 2012).