Tickers in this Article: PETD, CHK, CRZO, NBL
Petroleum Development (Nasdaq:PETD) is looking to start off the company's 2012 development program with a focus on three core oil and gas areas as it works for the balance of the year to complete the divestiture of most of its other assets.

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Operational Data
Petroleum Development estimates that production in 2011 will total 46.5 Bcfe, a 24% increase from 2010. The company has established initial 2012 production guidance of between 54 and 58 Bcfe, implying growth from 15 to 25% for the year.

Utica Shale
Petroleum Development has 40,000 net acres in Ohio that is prospective for the Utica Shale, an emerging shale play that has recently captured the attention of investors and the industry. This acreage is mostly in the wet gas and oil portions of this play. Petroleum Development plans to drill a vertical well here in the fourth quarter of 2011, and two horizontal wells in 2012. The company is looking for a joint venture partner in the Utica Shale to help share the costs of development. Some other exploration and production companies with Utica Shale exposure have entered into joint venture agreements. Carrizo Oil and Gas (Nasdaq:CRZO) signed a deal with Avista Capital Partners and recently closed on the ventures first acquisition.

Chesapeake Energy (NYSE:CHK) is the largest player in the Utica Shale, with 1.25 million acres under lease. The company may have as many as 20 rigs operating here in 2012 and is still looking for a joint venture partner. (To know more about Utica Shale, check out: What's The Utica Shale Worth? )

Marcellus Shale
Petroleum Development has long been active in the Appalachian Basin, and recently formed PDC Mountaineer LLC, a joint venture with Lime Rock Partners, to help accelerate development of the Marcellus Shale. The joint venture augmented its position here with a recent acquisition and now holds 157,000 net acres, with most of the leasehold in West Virginia. (To know more about Marcellus Shale, read: What We Learned About The Marcellus Shale.)

Niobrara Shale
Petroleum Development has acreage in the Wattenberg Field in Colorado and is moving forward with the horizontal development of the Niobrara. The company has drilled 14 horizontal wells into this formation and reported that the average well produced 76% oil and natural gas liquids. Petroleum Development will drill approximately 25 horizontal Niobrara wells in 2012 and estimates that the company has 350 future drilling locations on its acreage. The company also has thousands of vertical and refracturing drilling opportunities in the Wattenberg Field.

Another operator working the Niobrara is Noble Energy (NYSE:NBL), which is operating five rigs and drilled 25 wells during the third quarter of 2011.

Capital
Petroleum Development is also lining up the capital needed to carry out its development program in 2011 and 2012. The company recently secured an increase in its borrowing base from $350 million to $400 million. Petroleum Development estimates that the company will have from $128 million to $146 million of availability on this credit line, with the exact amount based on its operating cash flow.

Petroleum Development plans to help fund its capital budget through the divestiture of various oil and gas properties in its portfolio. These properties are in the Permian Basin and in Colorado, and along with the proceeds from the Utica shale joint venture, the company expects to raise from $350 million to $450 million.

The Bottom Line
Investors that buy Petroleum Development will get a fast-growing exploration and production company that should start off 2012 with a narrower focus on a number of popular domestic shale plays.

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