Petroleum Development Corp. (PDC) said Monday it would pay $330.6 million to acquire close to 35,000 net acres in a liquids-rich area of the Niobrara and Codell formations in Colorado from an undisclosed seller.

The Denver-based company plans to ramp up development in the Niobrara by adding a second horizontal drilling rig this year and a third in 2013.

According to PDC, the assets are about 94% operated and almost entirely in the core area of the Wattenberg Field, straddling Adams and Weld counties. The leasehold is held entirely by production, with an average working interest of about 93% and an average net revenue interest of about 81%. Current net production in the leasehold is 2,800 boe/d, with production from around 700 wells. An independent engineering reserve analysis by Ryder Scott Co. estimated net proved reserves of 29.2 million boe, about 58% weighted to oil and natural gas liquids (NGL); 54% are proved developed.

PDC said it has identified 180 gross proven plus probable drilling locations in the acquired leasehold, which would increase its position in the Wattenberg to about 109,000 net acres. The acquisition also would solidify it as the third-largest leaseholder in the play, it said. The acquisition would also boost net production and net proved reserves from the field to 15,600 boe/d and 106 MMboe, respectively.

“This core Wattenberg acquisition provides substantial upside opportunities and is a very significant step toward completing our transition to a liquid-rich company,” said PDC CEO James Trimble. “We now have the capability to reach a 50% liquids production mix over the next several years…This acquisition should enable [us] to deliver double-digit liquid-rich production growth for the next several years without requiring significant capital investment…”

PDC plans to deploy a second horizontal drilling rig to the field in 3Q2012 and spud around 37 wells there by the end of the year. Funding for the second drilling rig will come in part by redeploying capital expenditures from the company’s suspended Marcellus Shale dry gas drilling program (see Shale Daily, March 5). A third horizontal drilling rig is to be added to the Niobrara play in 2013.

According to PDC, net production in 2012 could increase to about 54.5 Bcfe from continuing operations, a figure that includes 55 Bcfe from divested holdings in the Permian Basin (see Shale Daily, Dec. 27, 2011). The company also projected that its net exit rate for 2012 would increase to 160 MMcfe/d (26,500 boe/d), with 41% comprising NGLs. Its liquids-only exit rate would also climb 22%, from 8,900 to 10,900 b/d.

PDC also announced Monday that it plans to offer 6.5 million shares of common stock, with underwriters having an option to purchase an aggregate of 975,000 additional shares. For 1Q2011 PDC reported net income of $15.8 million (66 cents/share), compared with a net loss of $19.9 million (minus 85 cents) in 1Q2011.

Production in the latest quarter totaled 8.37 Bcf of natural gas (up 9.2% from 7.66 Bcf); 552.2 million bbl of crude oil (up 72.9%, 321.2 million bbl); and 228.8 million bbl of NGLs (up 53.8%, 148.8 million bbl). Natural gas equivalent production also rose 24.7%, from 10.49 Bcfe to 13.08 Bcfe.