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    PDC to sell interest in PDCM Marcellus JV; increases Utica acreage

    PDC Energy Inc.

    PDC Energy Inc. (Nasdaq:PDCE) has agreed to sell its 50% interest in PDC Mountaineer LLC (PDCM), a Marcellus joint venture (JV), to Mountaineer Keystone Energy LLC for $250 million.

    PDC's net pre-tax proceeds from the sale, after its share of JV debt repayment and other working capital adjustments, is expected to be $190 million, comprising $150 million in cash and a $40 million note. The transaction includes the buyer's assumption of PDC's share of the firm transportation obligations related to the assets owned by PDCM, as well as PDC's share of certain PDCM natural gas hedging positions for 2014 and 2015.

    The effective date of the transaction is Jan. 1, and it is expected to close on or about Oct. 15. The assets are 99% natural gas and include an estimated 240 billion cubic feet (Bcf) of proved reserves net to PDC, as of Dec. 31, 2013. The assets produced 24 million cubic feet equivalent per day (MMcfe/d) net to PDC in the first quarter of 2014. Tudor Pickering Holt acted as advisor on the sale.

    Through a series of transactions, PDC has also recently added 13,000 net acres, subject to confirmation of title, in the liquid-rich windows of the Utica shale play in southeast Ohio. The newly acquired acreage closely offsets PDC's existing acreage in southern Utica, including the company's recently drilled Palmer unit acreage in eastern Morgan County, along with leasehold in northern Washington County. The cost for the additional acreage is $35 million, which the company expects to be funded within its existing 2014 capital budget of $647 million.

    PDC's total acreage position in the Utica shale play, with the additional acreage, increases from 54,000 to 67,000 net acres. Total gross horizontal well inventory is projected to increase from 300 to 350 locations. The company's acreage position in southern Utica is substantially contiguous in the wet-gas and condensate windows, and provides for increased drilling, operational, and midstream synergies. The company continues to pursue additional acreage acquisitions that complement its existing Utica shale position.

    PDC has also added a second drilling rig in the Utica shale play. The company is progressing with completion operations on its two-well Palmer pad, and has reinitiated production from its three-well Garvin pad in Washington County, which was temporarily shut in due to midstream issues.

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