PDC Energy (NYSE:PETD) estimates that net oil and gas production will increase by a double-digit percentage in 2012, as the company works during the year to develop its properties in the onshore United States. (To know more about oil and gas, read Oil And Gas Industry Primer.)

Investopedia Markets: Explore the best one-stop source for financial news, quotes and insights.

2012 Production
PDC Energy expects oil and gas production to reach 53 Bcfe in 2012, with the growth generated by the company's $184 million development budget for the year. The company has allocated most of the funds for an active development program in the Wattenberg Field in Colorado.

This production stream in 2012 is still expected to be dominated by natural gas, with 64% of production composed of this commodity.

PDC Energy's 2012 capital program includes the drilling of 35 gross horizontal wells during the year, as well as hundreds of refracturings and recompletions of existing wells.

Wattenberg Field
PDC Energy has approximately 74,000 net acres under lease in the Wattenberg Field and reported production of 23.3 Bcfe from this area in 2011. This represents nearly 50% of the company's total production for the year.

The Wattenberg Field also dominated the company's proved reserve profile, with proved reserves of 459 Bcfe at the end of 2011, or approximately 46% of the company's total proved reserves.

PDC Energy drilled 17 horizontal wells into the Niobrara in 2011, and plans to continue developing this play in 2012, with 27 horizontal wells during the year.

Another company active in the Wattenberg Field is Bill Barrett Corporation (NYSE:BBG), which plans to drill 40 horizontal wells here in 2012.

Utica Shale
PDC Energy has also budgeted $100 million in 2012 for leasehold acquisitions and is targeting the Utica Shale area. The company has signed agreements to acquire 45,000 net acres for $78 million, with the acreage located in several counties in Ohio.

PDC Energy will use 2012 to test its acreage in the Utica Shale and has already put one vertical well onto production. The company plans to drill three additional horizontal wells and one vertical during the year.

The company is also soliciting a joint venture partner for the Utica Shale and expects to reach agreement by the middle of 2012. This partner will help offset the cost and risk of exploration and development in this play.

Other operators targeting the Utica Shale during 2012 include Gulfport Energy (Nasdaq:GPOR), which has 62,500 net acres under lease exposed to the Utica Shale. The company recently started to drill its first horizontal well here and has permitted a total of five wells as of February 2012.

Chesapeake Energy (NYSE:CHK) is the most active exploration and production company in the Utica Shale, with eight rigs currently operating. The company plans to ramp up to 20 rigs by the end of 2012.

The Bottom Line
PDC Energy is aggressively working to develop various opportunities in its oil and gas portfolio as the company generates short-term production growth. The company is also looking for a partner in the Utica Shale to set up for growth in the long term. (For additional reading, check out A Guide To Investing In Oil Markets.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

At the time of writing, Eric Fox did not own shares in any of the companies mentioned in this article.

Related Articles
  1. Stock Analysis

    Analyzing Altria's Return on Equity (ROE) (MO)

    Learn about Altria Group's return on equity (ROE) and analyze net profit margin, asset turnover and financial leverage to determine what is causing its high ROE.
  2. Fundamental Analysis

    4 Predictions for Oil in 2016

    Learn four predictions for oil markets in 2016 including where prices are heading and the key fundamental factors driving the market.
  3. Investing News

    Icahn's Bet on Cheniere Energy: Should You Follow?

    Investing legend Carl Icahn continues to lose money on Cheniere Energy, but he's increasing his stake. Should you follow his lead?
  4. Stock Analysis

    Analyzing Google's Return on Equity (ROE) (GOOGL)

    Learn about Alphabet's return on equity. How has its ROE changed over time, how does it compare to its peers and what factors are driving ROE for the company?
  5. Investing News

    Is Buffett's Bet on Oil Right for You? (XOM, PSX)

    Oil stocks are getting trounced, but Warren Buffett still likes one of them. Should you follow the leader?
  6. Economics

    Will Silver Recover in 2016? (SLV, GLD, JJC)

    The end of the silver downtrend is likely to coincide with similar recoveries in gold, iron and copper.
  7. Stock Analysis

    The Top 5 Silver Penny Stocks for 2016 (LODE,AG)

    Learn about five of the top silver penny stocks and why investors may want to consider adding them to their investment portfolios in 2016.
  8. Investing News

    Chipotle Served with Criminal Probe

    Chipotle's beat muted expectations and got a clear bill from the CDC, but it now appears that an investigation into its E.coli breakout has expanded.
  9. Stock Analysis

    Analyzing Sprint Corp's Return on Equity (ROE) (S)

    Learn about Sprint's return on equity. Find out why its ROE is negative and how asset turnover and financial leverage impact ROE relative to Sprint's peers.
  10. Stock Analysis

    Why Alphabet is the Best of the 'FANGs' for 2016

    Alphabet just impressed the street, but is it the best FANG stock?
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>
Trading Center