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.)

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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.)

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

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