10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

T QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2016

or

£ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to _________

Commission File Number 001-37419

PDC ENERGY, INC.

(Exact name of registrant as specified in its charter)

Delaware	95-2636730
(State of incorporation)	(I.R.S. Employer Identification No.)

1775 Sherman Street, Suite 3000

Denver, Colorado 80203

(Address of principal executive offices) (Zip code)

Registrant's telephone number, including area code: (303) 860-5800

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes xNo o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer  x	Accelerated filer  o
Non-accelerated filer  o (Do not check if a smaller reporting company)	Smaller reporting company  o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes oNo x

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 56,266,147 shares of the Company's Common Stock ($0.01 par value) were outstanding as of October 17, 2016.

PDC ENERGY, INC.

TABLE OF CONTENTS

	PART I – FINANCIAL INFORMATION	Page
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets (unaudited)	1
	Condensed Consolidated Statements of Operations (unaudited)	2
	Condensed Consolidated Statements of Cash Flows (unaudited)	3
	Condensed Consolidated Statements of Equity (unaudited)	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40
Item 4.	Controls and Procedures	42
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 3.	Defaults Upon Senior Securities	43
Item 4.	Mine Safety Disclosures	43
Item 5.	Other Information	43
Item 6.	Exhibits	44
	SIGNATURES	45

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 ("Securities Act") and Section 21E of the Securities Exchange Act of 1934 ("Exchange Act") regarding our business, financial condition, results of operations and prospects. All statements other than statements of historical facts included in and incorporated by reference into this report are "forward-looking statements" within the meaning of the safe harbor provisions of the United States ("U.S.") Private Securities Litigation Reform Act of 1995. Words such as expects, anticipates, intends, plans, believes, seeks, estimates and similar expressions or variations of such words are intended to identify forward-looking statements herein. These statements relate to, among other things: the closing of pending transactions and the effects of such transactions, including the fact that the pending Delaware Basin acquisition is subject to continuing diligence between the parties and accordingly, may not occur within the expected timeframe or at all; estimated future production (including the components of such production), sales, expenses, cash flows, liquidity and balance sheet attributes; estimated crude oil, natural gas and natural gas liquids (“NGLs”) reserves; the impact of prolonged depressed commodity prices, including potentially reduced production and associated cash flow; anticipated capital projects, expenditures and opportunities; expected capital budget allocations; our operational flexibility and ability to revise our development plan, either upward or downward; availability of sufficient funding and liquidity for our capital program and sources of that funding; expected positive net settlements on derivatives for the remainder of 2016; that we expect quarter-over-quarter production growth; future exploration, drilling and development activities, including non-operated activity, the number of drilling rigs we expect to run and lateral lengths of wells, including the number of rigs we expect to run in 2017 in the Delaware Basin; expected 2016 production and cash flow ranges and timing of turn-in-lines; our evaluation method of our customers' and derivative counterparties' credit risk; effectiveness of our derivative program in providing a degree of price stability; potential for future impairments; expected sustained relief of gathering system pressure; compliance with debt covenants; impact of litigation on our results of operations and financial position; that we do not expect to pay dividends in the foreseeable future; and our future strategies, plans and objectives.

The above statements are not the exclusive means of identifying forward-looking statements herein. Although forward-looking statements contained in this report reflect our good faith judgment, such statements can only be based on facts and factors currently known to us. Forward-looking statements are always subject to risks and uncertainties, and become subject to greater levels of risk and uncertainty as they address matters further into the future. Throughout this report or accompanying materials, we may use the terms “projection” or similar terms or expressions, or indicate that we have “modeled” certain future scenarios. We typically use these terms to indicate our current thoughts on possible outcomes relating to our business or the industry in periods beyond the current fiscal year. Because such statements relate to events or conditions further in the future, they are subject to increased levels of uncertainty.

Important factors that could cause actual results to differ materially from the forward-looking statements include, but are not limited to:

• changes in worldwide production volumes and demand, including economic conditions that might impact demand;

• volatility of commodity prices for crude oil, natural gas and NGLs and the risk of an extended period of depressed prices;

• reductions in the borrowing base under our revolving credit facility;

• impact of governmental policies and/or regulations, including changes in environmental and other laws, the interpretation and enforcement related to those laws and regulations, liabilities arising thereunder and the costs to comply with those laws and regulations;

• declines in the value of our crude oil, natural gas and NGLs properties resulting in further impairments;

• changes in estimates of proved reserves;

• inaccuracy of reserve estimates and expected production rates;

• potential for production decline rates from our wells being greater than expected;

• timing and extent of our success in discovering, acquiring, developing and producing reserves;

• availability of sufficient pipeline, gathering and other transportation facilities and related infrastructure to process and transport our production and the impact of these facilities and regional capacity on the prices we receive for our production;

• timing and receipt of necessary regulatory permits;

• risks incidental to the drilling and operation of crude oil and natural gas wells;

• future cash flows, liquidity and financial condition;

• competition within the oil and gas industry;

• availability and cost of capital;

• our success in marketing crude oil, natural gas and NGLs;

• effect of crude oil and natural gas derivatives activities;

• impact of environmental events, governmental and other third-party responses to such events, and our ability to insure adequately against such events;

• cost of pending or future litigation;

• effect that acquisitions we may pursue have on our capital expenditures;

• our ability to retain or attract senior management and key technical employees; and

• success of strategic plans, expectations and objectives for our future operations.

Further, we urge you to carefully review and consider the cautionary statements and disclosures, specifically those under the heading "Risk Factors," made in this Quarterly Report on Form 10-Q, our Annual Report on Form 10-K for the year ended December 31, 2015 (the "2015 Form 10-K"), filed with the U.S. Securities and Exchange Commission ("SEC") on February 22, 2016, and our other filings with the SEC for further information on risks and uncertainties that could affect our business, financial condition, results of operations and prospects, which

are incorporated by this reference as though fully set forth herein. We caution you not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. We undertake no obligation to update any forward-looking statements in order to reflect any event or circumstance occurring after the date of this report or currently unknown facts or conditions or the occurrence of unanticipated events. All forward-looking statements are qualified in their entirety by this cautionary statement.

REFERENCES

Unless the context otherwise requires, references in this report to "PDC Energy," "PDC," "the Company," "we," "us," "our" or "ours" refer to the registrant, PDC Energy, Inc. and all subsidiaries consolidated for the purposes of its financial statements, including our proportionate share of the financial position, results of operations, cash flows and operating activities of our affiliated partnerships. See Note 1, Nature of Operations and Basis of Presentation, to our condensed consolidated financial statements included elsewhere in this report for a description of our consolidated subsidiaries.

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PDC ENERGY, INC.

Condensed Consolidated Balance Sheets

(unaudited; in thousands, except share and per share data)

	September 30, 2016			December 31, 2015
Assets
Current assets:
Cash and cash equivalents	$	1,197,692		$	850
Accounts receivable, net	99,895			104,274
Fair value of derivatives	65,604			221,659
Prepaid expenses and other current assets	4,854			5,266
Total current assets	1,368,045			332,049
Properties and equipment, net	1,932,274			1,940,552
Fair value of derivatives	8,423			44,387
Other assets	108,538			53,555
Total Assets	$	3,417,280		$	2,370,543
Liabilities and Shareholders' Equity
Liabilities
Current liabilities:
Accounts payable	$	62,350		$	92,613
Production tax liability	22,141			26,524
Fair value of derivatives	22,563			1,595
Funds held for distribution	51,107			29,894
Current portion of long-term debt	—			112,940
Accrued interest payable	19,364			9,057
Other accrued expenses	41,756			28,709
Total current liabilities	219,281			301,332
Long-term debt	1,041,575			529,437
Deferred income taxes	44,340			143,452
Asset retirement obligation	82,509			84,032
Fair value of derivatives	17,885			695
Other liabilities	25,630			24,398
Total liabilities	1,431,220			1,083,346
Commitments and contingent liabilities
Shareholders' equity
Preferred shares - par value $0.01 per share, 50,000,000 shares authorized, none issued	—			—
Common shares - par value $0.01 per share, 150,000,000 authorized, 56,280,544 and 40,174,776 issued as of September 30, 2016 and December 31, 2015, respectively	563			402
Additional paid-in capital	1,796,664			907,382
Retained earnings	190,133			380,422
Treasury shares - at cost, 25,854 and 20,220  as of September 30, 2016 and December 31, 2015, respectively	(1,300		)	(1,009		)
Total shareholders' equity	1,986,060			1,287,197
Total Liabilities and Shareholders' Equity	$	3,417,280		$	2,370,543

See accompanying Notes to Condensed Consolidated Financial Statements

1

PDC ENERGY, INC.

Condensed Consolidated Statements of Operations

(unaudited; in thousands, except per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Revenues
Crude oil, natural gas and NGLs sales	$	141,805		$	104,483		$	328,013		$	275,520
Sales from natural gas marketing	2,678			2,580			6,728			8,336
Commodity price risk management gain (loss), net	19,397			123,549			(62,348		)	141,170
Well operations, pipeline income and other	10			488			2,425			1,666
Total revenues	163,890			231,100			274,818			426,692
Costs, expenses and other
Lease operating expenses	14,001			13,825			43,006			42,749
Production taxes	9,568			5,476			19,682			13,206
Transportation, gathering and processing expenses	5,048			3,938			13,554			6,584
Cost of natural gas marketing	3,092			2,781			7,795			8,875
Exploration expense	241			252			688			812
Impairment of properties and equipment	933			154,031			6,104			161,207
General and administrative expense	32,510			20,277			78,868			62,050
Depreciation, depletion and amortization	112,927			80,947			317,329			206,873
Provision for uncollectible notes receivable	(700		)	—			44,038			—
Accretion of asset retirement obligations	1,777			1,594			5,400			4,742
Gain on sale of properties and equipment	(219		)	(74		)	(43		)	(302		)
Total cost, expenses and other	179,178			283,047			536,421			506,796
Loss from operations	(15,288		)	(51,947		)	(261,603		)	(80,104		)
Interest expense	(20,193		)	(12,092		)	(42,759		)	(35,384		)
Interest income	140			1,378			1,875			3,626
Loss before income taxes	(35,341		)	(62,661		)	(302,487		)	(111,862		)
Provision for income taxes	12,032			21,167			112,198			40,560
Net loss	$	(23,309	)	$	(41,494	)	$	(190,289	)	$	(71,302	)
Earnings per share:
Basic	$	(0.48	)	$	(1.04	)	$	(4.16	)	$	(1.84	)
Diluted	$	(0.48	)	$	(1.04	)	$	(4.16	)	$	(1.84	)
Weighted-average common shares outstanding:
Basic	48,839			40,085			45,741			38,837
Diluted	48,839			40,085			45,741			38,837

See accompanying Notes to Condensed Consolidated Financial Statements

2

PDC ENERGY, INC.

Condensed Consolidated Statements of Cash Flows

(unaudited; in thousands)

	Nine Months Ended September 30,
	2016			2015
Cash flows from operating activities:
Net loss	$	(190,289	)	$	(71,302	)
Adjustments to net loss to reconcile to net cash from operating activities:
Net change in fair value of unsettled derivatives	230,177			21,322
Depreciation, depletion and amortization	317,329			206,873
Provision for uncollectible notes receivable	44,038			—
Impairment of properties and equipment	6,104			161,207
Accretion of asset retirement obligation	5,400			4,742
Stock-based compensation	15,205			14,278
Gain on sale of properties and equipment	(43		)	(302		)
Amortization of debt discount and issuance costs	12,951			5,308
Deferred income taxes	(114,136		)	(44,770		)
Non-cash interest income	(1,194		)	(3,624		)
Other	668			(174		)
Changes in assets and liabilities	34,621			(10,552		)
Net cash from operating activities	360,831			283,006
Cash flows from investing activities:
Capital expenditures	(353,722		)	(489,036		)
Acquisition of crude oil and natural gas properties	(100,000		)	—
Proceeds from sale of properties and equipment	4,945			319
Net cash from investing activities	(448,777		)	(488,717		)
Cash flows from financing activities:
Proceeds from sale of equity, net of issuance cost	855,072			202,851
Proceeds from senior notes	392,250			—
Proceeds from convertible senior notes	193,979			—
Proceeds from revolving credit facility	85,000			325,000
Repayment of revolving credit facility	(122,000		)	(331,000		)
Redemption of convertible notes	(115,000		)	—
Other	(4,513		)	(3,516		)
Net cash from financing activities	1,284,788			193,335
Net change in cash and cash equivalents	1,196,842			(12,376		)
Cash and cash equivalents, beginning of period	850			16,066
Cash and cash equivalents, end of period	$	1,197,692		$	3,690
Supplemental cash flow information:
Cash payments for:
Interest, net of capitalized interest	$	22,975		$	23,467
Income taxes	167			9,936
Non-cash investing and financing activities:
Change in accounts payable related to purchases of properties and equipment	$	(31,497	)	$	(68,529	)
Change in asset retirement obligation, with a corresponding change to crude oil and natural gas properties, net of disposals	1,137			1,642
Purchase of properties and equipment under capital leases	1,231			1,479

See accompanying Notes to Condensed Consolidated Financial Statements

3

PDC ENERGY, INC.

Condensed Consolidated Statements of Equity

(unaudited; in thousands, except share and per share data)

Nine Months Ended September 30,	2016			2015
Common shares, issued:
Shares beginning of period	40,174,776			35,927,985
Shares issued pursuant to sale of equity	15,799,906			4,002,000
Exercise of stock options	46,084			—
Issuance of stock awards, net of forfeitures	259,778			191,623
Shares end of period	56,280,544			40,121,608
Treasury shares:
Shares beginning of period	20,220			21,643
Purchase of treasury shares	90,695			93,898
Issuance of treasury shares	(91,895		)	(97,995		)
Non-employee directors' deferred compensation plan	6,834			4,872
Shares end of period	25,854			22,418
Common shares outstanding	56,254,690			40,099,190
Equity:
Shareholders' equity
Preferred shares, par value $0.01 per share:
Balance beginning and end of period	$	—		$	—
Common shares, par value $0.01 per share:
Balance beginning of period	402			359
Shares issued pursuant to sale of equity and note conversion	158			40
Issuance of stock awards, net of forfeitures	3			2
Balance end of period	563			401
Additional paid-in capital:
Balance beginning of period	907,383			689,209
Convertible debt discount, net of issuance costs and tax	23,264			—
Proceeds from sale of equity, net of issuance costs	854,932			202,811
Stock-based compensation expense	15,202			14,419
Issuance of treasury shares	(5,180		)	(4,633		)
Tax impact of stock-based compensation	1,063			1,232
Balance end of period	1,796,664			903,038
Retained earnings:
Balance beginning of period	380,422			448,702
Net loss	(190,289		)	(71,302		)
Balance end of period	190,133			377,400
Treasury shares, at cost:
Balance beginning of period	(1,009		)	(911		)
Purchase of treasury shares	(5,106		)	(4,575		)
Issuance of treasury shares	5,179			4,632
Non-employee directors' deferred compensation plan	(364		)	(249		)
Balance end of period	(1,300		)	(1,103		)
Total shareholders' equity	$	1,986,060		$	1,279,736

See accompanying Notes to Condensed Consolidated Financial Statements

4

PDC ENERGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

(unaudited)

NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION

PDC Energy, Inc. (the "Company," "we," "us," or "our") is a domestic independent exploration and production company that produces, develops, acquires and explores for crude oil, natural gas and NGLs, with primary operations in the Wattenberg Field in Colorado and the Utica Shale in southeastern Ohio. Our operations in the Wattenberg Field are focused in the horizontal Niobrara and Codell plays and our Ohio operations are focused in the Utica Shale play. In addition, we currently have a pending acquisition in the Delaware Basin in Texas. See Note 6, Pending Acquisition. As of September 30, 2016, we owned an interest in approximately 3,000 gross wells. We are engaged in two business segments: Oil and Gas Exploration and Production and Gas Marketing.

The accompanying unaudited condensed consolidated financial statements include the accounts of PDC, our wholly-owned subsidiary Riley Natural Gas ("RNG") and our proportionate share of our four affiliated partnerships. Pursuant to the proportionate consolidation method, our accompanying condensed consolidated financial statements include our pro rata share of assets, liabilities, revenues and expenses of the entities which we proportionately consolidate. All material intercompany accounts and transactions have been eliminated in consolidation.

In our opinion, the accompanying condensed consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary for a fair statement of our financial statements for interim periods in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the SEC. Accordingly, pursuant to such rules and regulations, certain notes and other financial information included in audited financial statements have been condensed or omitted. The December 31, 2015 condensed consolidated balance sheet data was derived from audited statements, but does not include all disclosures required by U.S. GAAP. The information presented in this Quarterly Report on Form 10-Q should be read in conjunction with our audited consolidated financial statements and notes thereto included in our 2015 Form 10-K. Our results of operations and cash flows for the three and nine months ended September 30, 2016 are not necessarily indicative of the results to be expected for the full year or any other future period.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Recently Issued Accounting Standards

In May 2014, the Financial Accounting Standards Board ("FASB") and the International Accounting Standards Board issued their converged standard on revenue recognition that provides a single, comprehensive model that entities will apply to determine the measurement of revenue and timing of when it is recognized. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. The standard outlines a five-step approach to apply the underlying principle: (1) identify the contract with the customer, (2) identify the separate performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to separate performance obligations and (5) recognize revenue when (or as) each performance obligation is satisfied. In March 2016, the FASB issued an update to the standard intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations when recognizing revenue. The revenue standard is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The revenue standard can be adopted under the full retrospective method or simplified transition method. Entities are permitted to adopt the revenue standard early, beginning with annual reporting periods after December 15, 2016. We are currently evaluating the impact these changes may have on our condensed consolidated financial statements.

In August 2014, the FASB issued a new standard related to the disclosure of uncertainties about an entity's ability to continue as a going concern. The new standard requires management to assess an entity's ability to continue as a going concern at the end of every reporting period and to provide related footnote disclosures in certain circumstances. The new standard will be effective for all entities in the first annual period ending after December 15, 2016, with early adoption permitted. We expect to adopt this standard in the fourth quarter of 2016. Adoption of this standard is not expected to have a significant impact on our condensed consolidated financial statements.

In February 2016, the FASB issued an accounting update aimed at increasing the transparency and comparability among organizations by recognizing lease assets and liabilities on the balance sheet and disclosing key information about related leasing arrangements. For leases with terms of more than 12 months, the accounting update requires lessees to recognize an asset for its right to use the underlying asset and a lease liability for the corresponding lease obligation. Both the lease asset and liability will initially be measured at the present value of the future minimum lease payments over the lease term. Subsequent measurement, including the presentation of expenses and cash flows, will depend upon the classification of the lease as either a finance or operating lease. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those years, with early adoption permitted, and is to be applied as of the beginning of the earliest period presented using a modified retrospective approach. We are currently evaluating the impact these changes may have on our condensed consolidated financial statements.

In March 2016, the FASB issued an accounting update on stock-based compensation intended to simplify several aspects of the accounting for employee share-based payment award transactions. Areas of simplification include income tax consequences, classification of the awards as either equity or liabilities and the classification on the statement of cash flows. The guidance is effective for fiscal years beginning

5

PDC ENERGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

(unaudited)

after December 15, 2016, and interim periods within those years, with early adoption permitted. We expect to adopt this standard in the fourth quarter of 2016. Adoption of this standard is not expected to have a significant impact on our condensed consolidated financial statements.

In August 2016, the FASB issued an accounting update on statements of cash flows to address diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. We are currently evaluating the impact these changes may have on our condensed consolidated financial statements.

NOTE 3 - FAIR VALUE OF FINANCIAL INSTRUMENTS

Determination of Fair Value

Our fair value measurements are estimated pursuant to a fair value hierarchy that requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date, giving the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable data (Level 3). In some cases, the inputs used to measure fair value might fall in different levels of the fair value hierarchy. The lowest level input that is significant to a fair value measurement in its entirety determines the applicable level in the fair value hierarchy. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgment, considering factors specific to the asset or liability, and may affect the valuation of the assets and liabilities and their placement within the fair value hierarchy levels. The three levels of inputs that may be used to measure fair value are defined as:

Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 – Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable for the asset or liability, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability and inputs that are derived from observable market data by correlation or other means.

Level 3 – Unobservable inputs for the asset or liability, including situations where there is little, if any, market activity.

Derivative Financial Instruments

We measure the fair value of our derivative instruments based upon a pricing model that utilizes market-based inputs, including, but not limited to, the contractual price of the underlying position, current market prices, crude oil and natural gas forward curves, discount rates such as the LIBOR curve for a similar duration of each outstanding position, volatility factors and nonperformance risk. Nonperformance risk considers the effect of our credit standing on the fair value of derivative liabilities and the effect of our counterparties' credit standings on the fair value of derivative assets. Both inputs to the model are based on published credit default swap rates and the duration of each outstanding derivative position.

We validate our fair value measurement through the review of counterparty statements and other supporting documentation, the determination that the source of the inputs is valid, the corroboration of the original source of inputs through access to multiple quotes, if available, or other information and monitoring changes in valuation methods and assumptions. While we use common industry practices to develop our valuation techniques and believe our valuation method is appropriate and consistent with those used by other market participants, changes in our pricing methodologies or the underlying assumptions could result in significantly different fair values.

6

PDC ENERGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

(unaudited)

Our fixed-price swaps, basis swaps and physical purchases are included in Level 2 and our collars and physical sales are included in Level 3. The following table presents, for each applicable level within the fair value hierarchy, our derivative assets and liabilities, including both current and non-current portions, measured at fair value on a recurring basis:

	September 30, 2016						December 31, 2015
	Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(in thousands)
Assets:
Commodity-based derivative contracts	$	49,021	$	24,582	$	73,603	$	174,657	$	91,288	$	265,945
Basis protection derivative contracts	424		—		424		101		—		101
Total assets	49,445		24,582		74,027		174,758		91,288		266,046
Liabilities:
Commodity-based derivative contracts	30,917		8,650		39,567		738		—		738
Basis protection derivative contracts	881		—		881		1,552		—		1,552
Total liabilities	31,798		8,650		40,448		2,290		—		2,290
Net asset	$	17,647	$	15,932	$	33,579	$	172,468	$	91,288	$	263,756

The following table presents a reconciliation of our Level 3 assets measured at fair value:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
	(in thousands)
Fair value, net asset beginning of period	$	27,285		$	58,256		$	91,288		$	62,356
Changes in fair value included in condensed consolidated statement of operations line item:
Commodity price risk management gain (loss), net	4,234			38,085			(16,023		)	42,525
Sales from natural gas marketing	—			51			(20		)	51
Settlements included in statement of operations line items:
Commodity price risk management gain (loss), net	(15,587		)	(12,530		)	(59,243		)	(21,063		)
Sales from natural gas marketing	—			—			(70		)	(7		)
Fair value, net asset end of period	$	15,932		$	83,862		$	15,932		$	83,862
Net change in fair value of unsettled derivatives included in condensed consolidated statement of operations line item:
Commodity price risk management gain (loss), net	$	(2,240	)	$	34,564		$	(8,273	)	$	31,794

The significant unobservable input used in the fair value measurement of our derivative contracts is the implied volatility curve, which is provided by a third-party vendor. A significant increase or decrease in the implied volatility, in isolation, would have a directionally similar effect resulting in a significantly higher or lower fair value measurement of our Level 3 derivative contracts. There has been no change in the methodology we apply to measure the fair value of our Level 3 derivative contracts during the periods covered by this report.

Non-Derivative Financial Assets and Liabilities

The carrying value of the financial instruments included in current assets and current liabilities approximate fair value due to the short-term maturities of these instruments.

We utilize fair value on a nonrecurring basis to review our crude oil and natural gas properties for possible impairment when events and circumstances indicate a possible decline in the recoverability of the carrying value of such properties. The fair value of the properties is determined based upon estimated future discounted cash flow, a Level 3 input, using estimated production and prices at which we reasonably expect the crude oil and natural gas will be sold.

7

PDC ENERGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

(unaudited)

The liability associated with our non-qualified deferred compensation plan for non-employee directors may be settled in cash or shares of our common stock. The carrying value of this obligation is based on the quoted market price of our common stock, which is a Level 1 input. The liability related to this plan, which was included in other liabilities on the condensed consolidated balance sheets, was immaterial as of September 30, 2016 and December 31, 2015.

The portion of our long-term debt related to our revolving credit facility approximates fair value due to the variable nature of related interest rates. We have not elected to account for the portion of our debt related to our senior notes under the fair value option; however, as of September 30, 2016, we estimate the fair value of the portion of our long-term debt related to our 1.125% senior notes due 2021 to be $214.8 million, or 107.4% of par value, 6.125% senior notes due 2024 to be $415.6 million, or 103.9% of par value, and 7.75% senior notes due 2022 to be $530.3 million, or 106.1% of par value. We determined these valuations based upon measurements of trading activity and broker and/or dealer quotes, respectively, which are published market prices, and therefore are Level 2 inputs.

The carrying value of our capital lease obligations approximates fair value due to the variable nature of the imputed interest rates and the duration of the related vehicle lease.

Concentration of Risk

Derivative Counterparties. Our derivative arrangements expose us to credit risk of nonperformance by our counterparties. We primarily use financial institutions who are also lenders under our revolving credit facility as counterparties to our derivative contracts. To date, we have had no counterparty default losses relating to our derivative arrangements. We have evaluated the credit risk of our derivative assets from our counterparties using relevant credit market default rates, giving consideration to amounts outstanding for each counterparty and the duration of each outstanding derivative position. Based on our evaluation, we have determined that the potential impact of nonperformance of our counterparties on the fair value of our derivative instruments was not significant at September 30, 2016, taking into account the estimated likelihood of nonperformance.

The following table presents the counterparties that expose us to credit risk as of September 30, 2016 with regard to our derivative assets:

Counterparty Name	Fair Value of Derivative Assets
	(in thousands)
Canadian Imperial Bank of Commerce (1)	$	21,343
JP Morgan Chase Bank, N.A (1)	17,929
Bank of Nova Scotia (1)	15,166
Wells Fargo Bank, N.A. (1)	9,891
NATIXIS (1)	7,171
Other lenders in our revolving credit facility	2,491
Various (2)	36
Total	$	74,027

__________

(1)Major lender in our revolving credit facility. See Note 8, Long-Term Debt.

(2)Represents a total of two counterparties.

Cash and Cash Equivalents.We consider all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents potentially subject us to a concentration of credit risk as substantially all of our deposits held in financial institutions were in excess of the FDIC insurance limits at September 30, 2016. We maintain our cash and cash equivalents in the form of money market and checking accounts with financial institutions that we believe are creditworthy.

8

PDC ENERGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

(unaudited)

Notes Receivable. The following table presents information regarding a note receivable outstanding as of September 30, 2016:

	Amount
	(in thousands)
Note receivable:
Principal outstanding, December 31, 2015	$	43,069
Paid-in-kind interest	969
Principal outstanding, September 30, 2016	44,038
Allowance for uncollectible notes receivable	(44,038		)
Note receivable, net	$	—

In October 2014, we sold our entire 50% ownership interest in PDCM to an unrelated third-party. As part of the consideration, we received a promissory note (the “Note”) for a principal sum of $39 million, bearing interest at varying rates beginning at 8%, and increasing annually. Pursuant to the Note agreement, interest is payable quarterly, in arrears, commencing in December 2014 and continuing on the last business day of each fiscal quarter thereafter. At the option of the issuer of the Note, an unrelated third-party, interest can be paid-in-kind (the “PIK Interest”) and any such PIK Interest will be added to the outstanding principal amount of the Note. As of September 30, 2016, the issuer of the Note had elected the PIK Interest option. The principal and any unpaid interest is due and payable in full in September 2020 and can be prepaid in whole or in part at any time without premium or penalty. If an event of default occurs under the Note agreement, the Note must be repaid prior to maturity. Legally, the Note is secured by a pledge of stock in certain subsidiaries of the unrelated third-party, debt securities and other assets; however, we believe that collection of the Note is not reasonably assured.

On a quarterly basis, we examine the Note for evidence of impairment, evaluating factors such as the creditworthiness of the issuer of the Note and the value of the underlying assets that secure the Note. We performed our quarterly evaluation and cash flow analysis as of March 31, 2016 and, based upon the unaudited year-end financial statements and reserve report of the issuer of the Note received by us in late March 2016 and existing market conditions, determined that collection of the Note and PIK Interest was not reasonably assured. As a result, we recognized a provision and recorded an allowance for uncollectible notes receivable for the $44 million outstanding balance as of March 31, 2016, which was included in the condensed consolidated balance sheet line item other assets. As of September 30, 2016, there has been no change to our assessment of the collectibility of the note or related interest since March 31, 2016. Commencing in the second quarter of 2016, we ceased recognizing interest income on the Note and are accounting for the Note under the cash basis method.

Under the effective interest method, we recognized $1.2 million of interest income related to the Note for the three months ended March 31, 2016, of which $1 million was PIK Interest, and we recognized $1.1 million and $3.4 million of interest income related to the Note for the three and nine months ended September 30, 2015, respectively, of which $0.8 million and $2.4 million, respectively, was PIK Interest.

Additionally, during the three months ended March 31, 2016, we recorded a $0.7 million provision and allowance for uncollectible notes receivable to impair a promissory note related to a previous divestiture as collection of the promissory note was not reasonably assured based on the analysis we performed as of March 31, 2016. In August 2016, we collected the $0.7 million promissory note and reversed the related provision and allowance for uncollectible notes receivable during the three months ended September 30, 2016.

NOTE 4 - DERIVATIVE FINANCIAL INSTRUMENTS

Our results of operations and operating cash flows are affected by changes in market prices for crude oil, natural gas and NGLs. To manage a portion of our exposure to price volatility from producing crude oil and natural gas, we utilize the following economic hedging strategies for each of our business segments.

• For crude oil and natural gas sales, we enter into derivative contracts to protect against price declines in future periods. While we structure these derivatives to reduce our exposure to changes in price associated with the derivative commodity, they also limit the benefit we might otherwise have received from price increases in the physical market; and

• For natural gas marketing, we enter into fixed-price physical purchase and sale agreements that qualify as derivative contracts. In order to offset the fixed-price physical derivatives in our natural gas marketing, we enter into financial derivative instruments that have the effect of locking in the prices we will receive or pay for the same volumes and period, offsetting the physical derivative.

We believe our derivative instruments continue to be effective in achieving the risk management objectives for which they were intended. As of September 30, 2016, we had derivative instruments, which were comprised of collars, fixed-price swaps, basis protection swaps and physical sales and purchases, in place for a portion of our anticipated production through 2018 for a total of 90,425 BBtu of natural gas and

9

PDC ENERGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

(unaudited)

8,857 MBbls of crude oil. The majority of our derivative contracts are entered into at no cost to us as we hedge our anticipated production at the then-prevailing commodity market prices.

We have not elected to designate any of our derivative instruments as hedges, and therefore do not qualify for use of hedge accounting. Accordingly, changes in the fair value of our derivative instruments are recorded in the statements of operations. Changes in the fair value of derivative instruments related to our Oil and Gas Exploration and Production segment are recorded in commodity price risk management, net. Changes in the fair value of derivative instruments related to our Gas Marketing segment are recorded in sales from and cost of natural gas marketing.

The following table presents the balance sheet location and fair value amounts of our derivative instruments on the condensed consolidated balance sheets:

			Fair Value
Derivative instruments:		Condensed Consolidated Balance sheet line item	September 30, 2016		December 31, 2015
			(in thousands)
Derivative assets:	Current
	Commodity contracts
	Related to crude oil and natural gas sales	Fair value of derivatives	$	65,191	$	221,161
	Related to natural gas marketing	Fair value of derivatives	270		441
	Basis protection contracts
	Related to crude oil and natural gas sales	Fair value of derivatives	143		57
			65,604		221,659
	Non-current
	Commodity contracts
	Related to crude oil and natural gas sales	Fair value of derivatives	8,122		44,292
	Related to natural gas marketing	Fair value of derivatives	20		51
	Basis protection contracts
	Related to crude oil and natural gas sales	Fair value of derivatives	281		44
			8,423		44,387
Total derivative assets			$	74,027	$	266,046
Derivative liabilities:	Current
	Commodity contracts
	Related to crude oil and natural gas sales	Fair value of derivatives	$	21,639	$	—
	Related to natural gas marketing	Fair value of derivatives	221		417
	Basis protection contracts
	Related to crude oil and natural gas sales	Fair value of derivatives	703		1,178
			22,563		1,595
	Non-current
	Commodity contracts
	Related to crude oil and natural gas sales	Fair value of derivatives	17,698		275
	Related to natural gas marketing	Fair value of derivatives	9		46
	Basis protection contracts
	Related to crude oil and natural gas sales	Fair value of derivatives	178		374
			17,885		695
Total derivative liabilities			$	40,448	$	2,290

10

PDC ENERGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

(unaudited)

The following table presents the impact of our derivative instruments on our condensed consolidated statements of operations:

	Three Months Ended September 30,						Nine Months Ended September 30,
Condensed consolidated statement of operations line item	2016			2015			2016			2015
	(in thousands)
Commodity price risk management gain (loss), net
Net settlements	$	47,728		$	67,993		$	167,859		$	162,454
Net change in fair value of unsettled derivatives	(28,331		)	55,556			(230,207		)	(21,284		)
Total commodity price risk management gain (loss), net	$	19,397		$	123,549		$	(62,348	)	$	141,170
Sales from natural gas marketing
Net settlements	$	122		$	165		$	420		$	561
Net change in fair value of unsettled derivatives	255			(5		)	(263		)	(298		)
Total sales from natural gas marketing	$	377		$	160		$	157		$	263
Cost of natural gas marketing
Net settlements	$	(103	)	$	(157	)	$	(380	)	$	(531	)
Net change in fair value of unsettled derivatives	(277		)	(5		)	293			260
Total cost of natural gas marketing	$	(380	)	$	(162	)	$	(87	)	$	(271	)

All of our financial derivative agreements contain master netting provisions that provide for the net settlement of all contracts through a single payment in the event of early termination. Our fixed-price physical purchase and sale agreements that qualify as derivative contracts are not subject to master netting provisions and are not significant. We have elected not to offset the fair value positions recorded on our condensed consolidated balance sheets.

The following table reflects the impact of netting agreements on gross derivative assets and liabilities:

As of September 30, 2016	Derivative instruments, recorded in condensed consolidated balance sheet, gross		Effect of master netting agreements			Derivative instruments, net
	(in thousands)
Asset derivatives:
Derivative instruments, at fair value	$	74,027	$	(22,520	)	$	51,507
Liability derivatives:
Derivative instruments, at fair value	$	40,448	$	(22,520	)	$	17,928

As of December 31, 2015	Derivative instruments, recorded in condensed consolidated balance sheet, gross		Effect of master netting agreements			Derivative instruments, net
	(in thousands)
Asset derivatives:
Derivative instruments, at fair value	$	266,046	$	(1,921	)	$	264,125
Liability derivatives:
Derivative instruments, at fair value	$	2,290	$	(1,921	)	$	369

11

PDC ENERGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

(unaudited)

NOTE 5 - PROPERTIES AND EQUIPMENT

The following table presents the components of properties and equipment, net of accumulated depreciation, depletion and amortization ("DD&A"):

	September 30, 2016			December 31, 2015
	(in thousands)
Properties and equipment, net:
Crude oil and natural gas properties
Proved	$	3,183,772		$	2,881,189
Unproved	61,838			60,498
Total crude oil and natural gas properties	3,245,610			2,941,687
Equipment and other	31,410			30,098
Land and buildings	10,900			12,667
Construction in progress	107,794			113,115
Properties and equipment, at cost	3,395,714			3,097,567
Accumulated DD&A	(1,463,440		)	(1,157,015		)
Properties and equipment, net	$	1,932,274		$	1,940,552

In September 2016, we closed on an acreage exchange transaction with Noble Energy, Inc. and certain of its subsidiaries ("Noble") to consolidate certain acreage positions in the core area of the Wattenberg Field. Pursuant to the transaction, we exchanged leasehold acreage and, to a lesser extent, interests in certain development wells. Upon closing, we received approximately 13,500 net acres in exchange for approximately 11,700 net acres, with no cash exchanged between the parties.

The following table presents impairment charges recorded for crude oil and natural gas properties:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
	(in thousands)
Impairment of proved and unproved properties	$	338	$	150,840	$	2,391	$	152,764
Amortization of individually insignificant unproved properties	595		3,191		681		8,443
Impairment of crude oil and natural gas properties	933		154,031		3,072		161,207
Land and buildings	—		—		3,032		—
Impairment of properties and equipment	$	933	$	154,031	$	6,104	$	161,207

NOTE 6 - PENDING ACQUISITION

In August 2016, we entered into acquisition agreements to purchase Arris Petroleum Corporation (“Arris”) and the assets of 299 Resources, LLC, 299 Production, LLC and 299 Pipeline, LLC (collectively, “299 Sellers”) pursuant to which, and subject to the terms and conditions of those agreements, we have agreed to acquire an aggregate of approximately 57,000 net acres, approximately 30 wells and other related midstream infrastructure in Reeves and Culberson Counties, Texas, for an aggregate consideration to Arris and 299 Sellers of approximately $915 million in cash and approximately 9.4 million shares of our common stock (valued at approximately $590 million at the time the acquisition agreements were executed), subject to certain adjustments, and ongoing due diligence (the "Delaware Basin Acquisition"). The acquisition agreements allow the sellers to include a specified amount of additional leases in the transaction, which would increase the purchase price. Upon executing the acquisition agreements, we paid a $100 million deposit toward the cash portion of the purchase price into an escrow account, which is included in other assets in our September 30, 2016 condensed consolidated balance sheet. In some circumstances set forth in the acquisition agreements, we could be required to forfeit the $100 million deposit. The acquisition is expected to close in December 2016; however, there can be no assurance that conditions to closing will be satisfied.

In order to fund the cash portion of the Delaware Basin Acquisition, we completed a public offering of shares of our common stock, a public offering of convertible senior notes and a private offering of senior notes in September 2016. See Note 8, Long-Term Debt, and Note 12, Common Stock, for further information. Prior to the September 2016 issuances of common stock, convertible senior notes and senior notes, we entered into a commitment letter with JPMorgan Chase Bank, N.A. (“JPMorgan”), for short-term bridge financing of the Delaware Basin Acquisition. The commitment letter contemplated, among other things, (i) a senior unsecured bridge loan to us in an aggregate principal amount not to exceed $600 million, to be drawn, if at all, at the closing of the Delaware Basin Acquisition, (ii) a $250 million increase in the commitments under our existing revolving credit facility and (iii) certain related proposed amendments and waivers to our existing credit facility agreement. Upon issuance of the common stock, convertible senior notes and senior notes, the bridge loan commitment was terminated. Upon closing of

12

PDC ENERGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

(unaudited)

the Delaware Basin Acquisition, we will be required to pay approximately $9 million in fees related to the bridge loan commitment, approximately $6 million in fees related to the increase in commitments under the revolving credit facility and approximately $10 million in other direct acquisition-related costs. During the three months ended September 30, 2016, we recorded charges for the bridge loan fees and the other direct acquisition-related costs. The $9 million charge for fees related to the bridge loan commitment is included in interest expense and the $10 million charge for other direct acquisition-related costs is included in general and administrative expenses. The liabilities associated with both amounts are included in other accrued expenses on our condensed consolidated balance sheet as of September 30, 2016.

NOTE 7 - INCOME TAXES

We evaluate and update our estimated annual effective income tax rate on a quarterly basis based on current and forecasted operating results and tax laws. Consequently, based upon the mix and timing of our actual earnings compared to annual projections, our effective tax rate may vary quarterly and may make quarterly comparisons not meaningful. A tax expense or benefit unrelated to the current year income or loss is recognized in its entirety as a discrete item of tax in the period identified. The quarterly income tax provision is generally comprised of tax expense on income or benefit on loss at the most recent estimated annual effective tax rate, adjusted for the effect of discrete items.

The effective tax rate for the three and nine months ended September 30, 2016 was a 34.0% and 37.1% benefit on loss compared to a 33.8% and 36.3% benefit on loss for the three and nine months ended September 30, 2015. The effective tax rate for the three and nine months ended September 30, 2016 is based upon a full year forecasted tax benefit on loss and is greater than the statutory federal tax rate, primarily due to state taxes, partially offset by nondeductible officers’ compensation and nondeductible lobbying expenses. The effective tax rate for the three and nine months ended September 30, 2015 differs from the statutory rate primarily due to state taxes and percentage depletion, partially offset by nondeductible officers' compensation. There were no significant discrete tax items recorded during the three and nine months ended September 30, 2016 or September 30, 2015.

As of September 30, 2016, there is no liability for unrecognized tax benefits. As of the date of this report, we are current with our income tax filings in all applicable state jurisdictions and are not currently under any state income tax examinations. We continue to voluntarily participate in the Internal Revenue Service's ("IRS") Compliance Assurance Program ("CAP") for the 2015 and 2016 tax years. With respect to the 2014 tax year, we have agreed to a post filing adjustment with the IRS which resulted in an immaterial tax payment for the 2014 tax year. The IRS has fully accepted the 2014 federal return, as adjusted. The IRS has partially accepted our recently filed 2015 return that is now going through the IRS CAP post-filing review process.

13

PDC ENERGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

(unaudited)

NOTE 8 - LONG-TERM DEBT

Long-term debt consisted of the following as of:

	September 30, 2016			December 31, 2015
	(in thousands)
Senior notes:
1.125% Convertible senior notes due 2021:
Principal amount	$	200,000		$	—
Unamortized discount	(39,199		)	—
Unamortized debt issuance costs	(4,793		)	—
1.125% Convertible senior notes due 2021, net of unamortized discount and debt issuance costs	156,008			—
6.125% Senior notes due 2024:
Principal amount	400,000			—
Unamortized debt issuance costs	(7,710		)	—
6.125% Senior notes due 2024, net of unamortized debt issuance costs	392,290			—
7.75% Senior notes due 2022:
Principal amount	500,000			500,000
Unamortized debt issuance costs	(6,723		)	(7,563		)
7.75% Senior notes due 2022, net of unamortized debt issuance costs	493,277			492,437
3.25% Convertible senior notes due 2016:
Principal amount	—			115,000
Unamortized discount	—			(1,852		)
Unamortized debt issuance costs	—			(208		)
3.25% Convertible senior notes due 2016, net of unamortized discount and debt issuance costs	—			112,940
Total senior notes	1,041,575			605,377
Revolving credit facility	—			37,000
Total debt, net of unamortized discount and debt issuance costs	1,041,575			642,377
Less current portion of long-term debt	—			112,940
Long-term debt	$	1,041,575		$	529,437

Senior Notes

1.125% Convertible Senior Notes Due 2021. In September 2016, we issued $200 million of 1.125% convertible senior notes due 2021 (the "2021 Convertible Notes") in a public offering. The 2021 Convertible Notes are governed by an indenture dated September 14, 2016 between us and the U.S. Bank National Association, as trustee. The maturity for the payment of principal is September 15, 2021. Interest at the rate of 1.125% per year is payable in cash semiannually in arrears on each March 15 and September 15, commencing on March 15, 2017. The 2021 Convertible Notes are senior unsecured obligations and rank senior in right of payment to our future indebtedness that is expressly subordinated to the 2021 Convertible Notes; equal in right of payment to our existing and future indebtedness that is not so subordinated; effectively junior in right of payment to all of our secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by our non-guarantor subsidiaries. The proceeds from the issuance of the 2021 Convertible Notes, after deducting offering expenses and underwriting discounts, are expected to be used to fund a portion of the purchase price of the Delaware Basin Acquisition (see Note 6, Pending Acquisition), to pay related fees and expenses and for general corporate purposes.

The 2021 Convertible Notes are convertible prior to March 15, 2021 only upon specified events and during specified periods and, thereafter, at any time, in each case at an initial conversion rate of 11.7113 per $1,000 principal amount of the 2021 Convertible Notes, which is equal to an initial conversion price of approximately $85.39 per share. The conversion rate is subject to adjustment upon certain events. Upon

14

PDC ENERGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

(unaudited)

conversion, the 2021 Convertible Notes may be settled, at our election, in shares of our common stock, cash or a combination of cash and shares of our common stock. We have initially elected a combination settlement method to satisfy our conversion obligation, which allows us to settle the principal amount of the 2021 Convertible Notes in cash and to settle the excess conversion value, if any, in shares, as well as cash in lieu of fractional shares.

We may not redeem the 2021 Convertible Notes prior to their maturity date. If we undergo a fundamental change, as defined in the indenture for the 2021 Convertible Notes, subject to certain conditions, holders of the 2021 Convertible Notes may require us to repurchase all or part of the 2021 Convertible Notes for cash at a price equal to 100% of the principal amount of the 2021 Convertible Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The occurrence of a fundamental change will also result in the 2021 Convertible Notes becoming convertible.

We allocated the gross proceeds of the 2021 Convertible Notes between the liability and equity components of the debt. The initial $160.5 million million liability component was determined based on the fair value of similar debt instruments excluding the conversion feature for similar terms and priced on the same day we issued the 2021 Convertible Notes. The initial $39.5 million equity component represents the debt discount and was calculated as the difference between the fair value of the debt and the gross proceeds of the 2021 Convertible Notes. Approximately $4.8 million in costs associated with the issuance of the 2021 Convertible Notes have been capitalized as debt issuance costs and are being amortized as interest expense over the life of the notes using the effective interest method. As of September 30, 2016, the unamortized debt discount will be amortized over the remaining contractual term to maturity of the 2021 Convertible Notes using an effective interest rate of 5.8%. Based upon a September 30, 2016 stock price of $67.06 per share, the “if-converted” value of the 2021 Convertible Notes did not exceed the principal amount.

6.125% Senior Notes Due 2024. In September 2016, we issued $400 million aggregate principal amount of 6.125% senior notes due September 15, 2024 (the “2024 Senior Notes”) in a private placement. The proceeds from the issuance of the 2024 Senior Notes, after deducting offering expenses and underwriting discounts, are expected to be used to fund a portion of the purchase price of the Delaware Basin Acquisition (see Note 6, Pending Acquisition), to pay related fees and expenses and for general corporate purposes. If the acquisition is not completed on or prior to December 31, 2016 (or in some circumstances by or on January 15, 2017), the 2024 Senior Notes will be redeemed in whole at a special mandatory redemption price equal to 100% of the aggregate principal amount of the 2024 notes, plus accrued and unpaid interest.

The 2024 Senior Notes accrue interest from the date of issuance and interest is payable semi-annually in arrears on March 15 and September 15, commencing on March 15, 2017. Approximately $7.8 million in costs associated with the issuance of the 2024 Senior Notes have been capitalized as debt issuance costs and are being amortized as interest expense over the life of the notes using the effective interest method. The 2024 Senior Notes are senior unsecured obligations and rank senior in right of payment to our future indebtedness that is expressly subordinated to the notes; equal in right of payment to all our existing and future indebtedness that is not so subordinated; effectively junior in right of payment to all of our secured indebtedness to the extent of the value of the collateral securing such indebtedness, including borrowings under our revolving credit facility; and structurally junior to all existing and future indebtedness (including trade payables) incurred by our non-guarantor subsidiaries.

In connection with the issuance of the 2024 Senior Notes, we entered into a registration rights agreement with the initial purchasers in which we agreed to file a registration statement with the SEC relating to an offer to exchange the 2024 Senior Notes for registered notes with substantially identical terms. In addition, we have agreed, in certain circumstances, to file a shelf registration statement covering the resale of the 2024 Senior Notes by holders.

At any time prior to September 15, 2019, we may redeem up to 35% of the outstanding 2024 Senior Notes with proceeds from certain equity offerings at a redemption price of 106.125% of the principal amount of the notes redeemed, plus accrued and unpaid interest, if at least 65% of the aggregate principal amount of the 2024 Senior Notes remains outstanding after each such redemption and the redemption occurs within 180 days after the closing of the equity offering.

Upon the occurrence of a "change of control," as defined in the indenture for the 2024 Senior Notes, holders will have the right to require us to repurchase all or a portion of the notes at a price equal to 101% of the aggregate principal amount of the notes repurchased, together with any accrued and unpaid interest to the date of purchase. In connection with certain asset sales, we may, under certain circumstances, be required to use the net cash proceeds of such asset sale to make an offer to purchase the notes at 100% of the principal amount, together with any accrued and unpaid interest to the date of purchase.

The indenture governing the 2024 Senior Notes contains covenants that, among other things, limit our ability and the ability of our subsidiaries to incur additional indebtedness; pay dividends or make distributions on our stock; purchase or redeem stock or subordinated indebtedness; make investments; create certain liens; enter into agreements that restrict distributions or other payments by restricted subsidiaries to us; enter into transactions with affiliates; sell assets; consolidate or merge with or into other companies or transfer all or substantially of our assets; and create unrestricted subsidiaries.

7.75% Senior Notes Due 2022. In October 2012, we issued $500 million aggregate principal amount of 7.75% senior notes due October 15, 2022 (the “2022 Senior Notes”) in a private placement. The 2022 Senior Notes accrue interest from the date of issuance and interest

15

PDC ENERGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

(unaudited)

is payable semi-annually in arrears on April 15 and October 15. The indenture governing the 2022 Senior Notes contains customary restrictive incurrence covenants, and customary repurchase and redemption provisions, generally similar to those in the indenture governing the 2024 Senior Notes. Capitalized debt issuance costs are being amortized as interest expense over the life of the 2022 Senior Notes using the effective interest method.

3.25% Convertible Senior Notes Due 2016. In November 2010, we issued $115 million aggregate principal amount of 3.25% convertible senior notes due 2016 (the "2016 Convertible Notes") in a private placement. The maturity for the payment of principal was May 15, 2016. At December 31, 2015, our indebtedness included the 2016 Convertible Notes. Upon settlement in May 2016, we paid the aggregate principal amount of the 2016 Convertible Notes, plus cash for fractional shares, totaling approximately 115 million, utilizing proceeds from our March 2016 equity offering. Additionally, we issued 792,406 shares of common stock for the $47.9 million excess conversion value. See Note 12, Common Stock, for more information.

As of September 30, 2016, we were in compliance with all covenants related to the 2021 Convertible Notes, 2024 Senior Notes and 2022 Senior Notes and expect to remain in compliance throughout the next 12-month period.

Credit Facility

Revolving Credit Facility. We are party to a Third Amended and Restated Credit Agreement with JPMorgan Chase Bank, N.A. as administrative agent, and other lenders party thereto (sometimes referred to as the "revolving credit facility"). The revolving credit facility matures in May 2020 and is available for working capital requirements, capital expenditures, acquisitions, general corporate purposes and to support letters of credit. The revolving credit facility provides for a maximum of $1 billion in allowable borrowing capacity, subject to the borrowing base, which is currently $700 million, and the aggregate commitments, which are currently $450 million. The borrowing base is based on, among other things, the loan value assigned to the proved reserves attributable to our crude oil and natural gas interests, excluding proved reserves attributable to our affiliated partnerships. The borrowing base is subject to a semi-annual size redetermination based upon quantification of our reserves at June 30 and December 31, and is also subject to a redetermination upon the occurrence of certain events. The revolving credit facility is secured by substantially all of our assets, including mortgages of producing crude oil and natural gas properties. Our affiliated partnerships are not guarantors of our obligations under the revolving credit facility.

In September 2016, we entered into a Third Amendment to the Third Amended and Restated Credit Agreement. The amendment, among other things, amends the revolving credit facility to permit the completion of the Delaware Basin Acquisition (see Note 6, Pending Acquisition) and, effective upon closing of the acquisition, adjusts the interest rate payable on amounts borrowed under the facility and increases the aggregate commitments under the facility from $450 million to $700 million (with the borrowing base remaining at $700 million).

In October 2016, we entered into a Fourth Amendment to the Third Amended and Restated Credit Agreement. The amendment, among other things, reaffirmed of our borrowing base at $700 million and made certain other immaterial modifications to the existing agreement, including an increase in the amount of our future production that we are permitted to hedge.

We had no outstanding balance on our revolving credit facility as of September 30, 2016, compared to $37 million outstanding as of December 31, 2015. The weighted-average interest rate on the outstanding balance on our revolving credit facility, exclusive of fees on the unused commitment and the letter of credit noted below, was 2.6% per annum as of December 31, 2015.

As of September 30, 2016, RNG had an irrevocable standby letter of credit of approximately $11.7 million in favor of a third-party transportation service provider to secure firm transportation of the natural gas produced by third-party producers for whom we market production in the Appalachian Basin. The letter of credit is currently scheduled to expire in September 2017 but is expected to be automatically extended annually in accordance with the letter of credit's terms and conditions. The letter of credit reduces the amount of available funds under our revolving credit facility by an amount equal to the letter of credit. As of September 30, 2016, the available funds under our revolving credit facility, including the reduction for the $11.7 million letter of credit, was $438.3 million.

The revolving credit facility contains covenants customary for agreements of this type, with the most restrictive being certain financial tests on a quarterly basis. The financial tests, as defined per the revolving credit facility as of September 30, 2016, include requirements to: (a) maintain a minimum current ratio of 1.00 to 1.00 and (b) not exceed a maximum leverage ratio of 4.25 to 1.00. As of September 30, 2016, we were in compliance with all of the revolving credit facility covenants and expect to remain in compliance throughout the next 12-month period. Effective upon closing of the Delaware Basin Acquisition, the maximum permitted leverage ratio will be reduced to 4.00 to 1.00.

16

PDC ENERGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

(unaudited)

NOTE 9 - CAPITAL LEASES

We periodically enter into non-cancelable lease agreements for vehicles utilized by our operations and field personnel. These leases are being accounted for as capital leases, as the present value of minimum monthly lease payments, including the residual value guarantee, exceeds 90% of the fair value of the leased vehicles at inception of the lease.

The following table presents leased vehicles under capital leases as of September 30, 2016:

	Amount
	(in thousands)
Vehicles	$	2,801
Accumulated depreciation	(613		)
	$	2,188

Future minimum lease payments by year and in the aggregate, under non-cancelable capital leases with terms of one year or more, consist of the following:

For the Twelve Months Ending September 30,	Amount
	(in thousands)
2017	$	860
2018	1,167
2019	553
	2,580
Less executory cost	(101		)
Less amount representing interest	(280		)
Present value of minimum lease payments	$	2,199
Short-term capital lease obligations	$	646
Long-term capital lease obligations	1,553
	$	2,199

Short-term capital lease obligations are included in other accrued expenses on the condensed consolidated balance sheets. Long-term capital lease obligations are included in other liabilities on the condensed consolidated balance sheets.

NOTE 10 - ASSET RETIREMENT OBLIGATIONS

The following table presents the changes in carrying amounts of the asset retirement obligations associated with our working interests in crude oil and natural gas properties:

	Amount
	(in thousands)
Balance at beginning of period, January 1, 2016	$	89,492
Obligations incurred with development activities	1,137
Accretion expense	5,400
Obligations discharged with disposal of properties and asset retirements	(6,620		)
Balance end of period, September 30, 2016	89,409
Less current portion	(6,900		)
Long-term portion	$	82,509

Our estimated asset retirement obligation liability is based on historical experience in plugging and abandoning wells, estimated economic lives and estimated plugging and abandonment cost considering federal and state regulatory requirements in effect. The liability is discounted using the credit-adjusted risk-free rate estimated at the time the liability is incurred or revised. In 2016, the credit-adjusted risk-free

17

PDC ENERGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

(unaudited)

rates used to discount our plugging and abandonment liabilities ranged from 7.6% to 8.0%. In periods subsequent to initial measurement of the liability, we must recognize period-to-period changes in the liability resulting from the passage of time, revisions to either the amount of the original estimate of undiscounted cash flows or changes in inflation factors and changes to our credit-adjusted risk-free rate as market conditions warrant. Short-term asset retirement obligations are included in other accrued expenses on the condensed consolidated balance sheets.

NOTE 11 - COMMITMENTS AND CONTINGENCIES

Firm Transportation, Processing and Sales Agreements. We enter into contracts that provide firm transportation, sales and processing agreements on pipeline systems through which we transport or sell crude oil and natural gas. Satisfaction of the volume requirements includes volumes produced by us, purchased from third parties and produced by our affiliated partnerships and other third-party working interest owners. We record in our financial statements only our share of costs based upon our working interest in the wells. These contracts require us to pay these transportation and processing charges whether or not the required volumes are delivered. As natural gas prices continue to remain depressed, certain third-party producers under our Gas Marketing segment have begun and continue to experience financial distress, which has led to certain contractual defaults and litigation; however, to date, we have had no material counterparty default losses. As of September 30, 2016, we have recorded an allowance for doubtful accounts of approximately $1.1 million. We have initiated several legal actions for breach of contract, collection, and related claims against certain third-party producers that are delinquent in their payment obligations, which have to date resulted in one default judgment.

The following table presents gross volume information related to our long-term firm transportation, sales and processing agreements for pipeline capacity:

	For the Twelve Months Ending September 30,
Area	2017		2018		2019		2020		2021 and Through Expiration		Total		Expiration Date
Natural gas (MMcf)
Gas Marketing segment	7,117		7,117		7,117		7,136		13,344		41,831		August 31, 2022
Utica Shale	2,738		2,738		2,738		2,745		7,754		18,713		July 22, 2023
Total	9,855		9,855		9,855		9,881		21,098		60,544
Crude oil (MBbls)
Wattenberg Field	2,413		2,413		2,413		1,813		—		9,052		June 30, 2020
Dollar commitment (in thousands)	$	17,470	$	16,324	$	16,324	$	13,205	$	8,102	$	71,425

Litigation. We are involved in various legal proceedings that we consider normal to our business. We review the status of these proceedings on an ongoing basis and, from time to time, may settle or otherwise resolve these matters on terms and conditions that management believes are in our best interests. There is no assurance that settlements can be reached on acceptable terms or that adverse judgments, if any, in the remaining litigation will not exceed the amounts reserved. Although the results cannot be known with certainty, we currently believe that the ultimate results of such proceedings will not have a material adverse effect on our financial position, results of operations or liquidity.

A group of 42 independent West Virginia natural gas producers has filed a lawsuit in Marshall County, West Virginia, naming Dominion Transmission, Inc. (“Dominion”), certain entities affiliated with Dominion, and RNG as defendants, alleging various contractual, fiduciary and related claims against the defendants, all of which are associated with firm transportation contracts entered into by plaintiffs and relating to pipelines owned and operated by Dominion and its affiliates. RNG and Dominion have removed the case to the U.S. District Court for the Northern District of West Virginia and are preparing pre-trial pleadings, including an answer to the complaint and a motion to dismiss the case. At this time, RNG is unable to estimate any potential damages associated with the claims, but believes the complaint is without merit and intends to vigorously pursue its defenses.

Environmental. Due to the nature of the natural gas and oil industry, we are exposed to environmental risks. We have various policies and procedures to minimize and mitigate the risks from environmental contamination. We conduct regular reviews to identify changes in our environmental risk profile. Liabilities are recorded when environmental damages resulting from past events that require remediation are probable and the costs can be reasonably estimated. As of September 30, 2016 and December 31, 2015, we had accrued environmental liabilities in the amount of $3.2 million and $4.1 million, respectively, included in other accrued expenses on the condensed consolidated balance sheets. We are not aware of any environmental claims existing as of September 30, 2016 which have not been provided for or would otherwise have a material impact on our financial statements; however, there can be no assurance that current regulatory requirements will not change or that unknown past non-compliance with environmental laws will not be discovered on our properties.

18

PDC ENERGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

(unaudited)

In August 2015, we received a Clean Air Act Section 114 Information Request (the "Information Request") from the U.S. Environmental Protection Agency ("EPA"). The Information Request sought, among other things, information related to the design, operation, and maintenance of our production facilities in the Denver-Julesburg Basin of Colorado. The Information Request focused on historical operation and design information for 46 of our production facilities and asks that we conduct sampling and analyses at the identified 46 facilities. We responded to the Information Request in January 2016. We continue to meet with the EPA and provide additional information, but cannot predict the outcome of this matter at this time.

In addition, in December 2015, we received a Compliance Advisory pursuant to C.R.S. § 25-7-115(2) from the Colorado Department of Public Health and Environment's Air Quality Control Commission's Air Pollution Control Division alleging that we failed to design, operate, and maintain certain condensate collection, storage, processing and handling operations to minimize leakage of volatile organic compounds to the maximum extent possible at 65 facilities consistent with applicable standards under Colorado law. We are working with the agency to address the allegations, but cannot predict the outcome of this matter at this time.

Employment Agreements with Executive Officers. Each of our senior executive officers may be entitled to a severance payment and certain other benefits upon the termination of the officer's employment pursuant to the officer's employment agreement and/or the Company's executive severance compensation plan. The nature and amount of such benefits would vary based upon, among other things, whether the termination followed a change of control of the Company.

NOTE 12 - COMMON STOCK

Sale of Equity Securities

In September 2016, we completed a public offering of 9,085,000 shares of our common stock at a price to us of $61.51 per share. Net proceeds of the offering were $558.5 million, after deducting offering expenses and underwriting discounts, of which $90,850 is included in common shares-par value and $558.4 million is included in additional paid-in capital ("APIC") on the September 30, 2016 condensed consolidated balance sheet. The shares were issued pursuant to an effective shelf registration statement on Form S-3 filed with the SEC in March 2015.

In March 2016, we completed a public offering of 5,922,500 shares of our common stock at a price to us of $50.11 per share. Net proceeds of the offering were $296.6 million, after deducting offering expenses and underwriting discounts, of which $59,225 is included in common shares-par value and $296.5 million is included in APIC on the September 30, 2016 condensed consolidated balance sheet. The shares were issued pursuant to the effective shelf registration statement on Form S-3 filed with the SEC in March 2015.

In March 2015, we completed a public offering of 4,002,000 shares of our common stock at a price to us of $50.73 per share. Net proceeds of the offering were $202.9 million, after deducting offering expenses and underwriting discounts, of which $40,020 is included in common shares-par value and $202.8 million is included in APIC on the condensed consolidated balance sheets. The shares were issued pursuant to the effective shelf registration statement on Form S-3 filed with the SEC in March 2015.

Stock-Based Compensation Plans

The following table provides a summary of the impact of our outstanding stock-based compensation plans on the results of operations for the periods presented:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
	(in thousands)
Stock-based compensation expense	$	4,079		$	4,813		$	15,205		$	14,278
Income tax benefit	(1,552		)	(1,828		)	(5,786		)	(5,423		)
Net stock-based compensation expense	$	2,527		$	2,985		$	9,419		$	8,855

Stock Appreciation Rights ("SARs")

The SARs vest ratably over a three-year period and may be exercised at any point after vesting through ten years from the date of issuance. Pursuant to the terms of the awards, upon exercise, the executive officers will receive, in shares of common stock, the excess of the market price of the award on the date of exercise over the market price of the award on the date of issuance.

19

PDC ENERGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

(unaudited)

In January 2016, the Compensation Committee awarded 58,709 SARs to our executive officers. The fair value of each SAR award was estimated on the date of grant using a Black-Scholes pricing model using the following assumptions:

	Nine Months Ended September 30,
	2016			2015
Expected term of award	6.0 years			5.2 years
Risk-free interest rate	1.8		%	1.4		%
Expected volatility	54.5		%	58.0		%
Weighted-average grant date fair value per share	$	26.96		$	22.23

The expected term of the award was estimated using historical stock option exercise behavior data. The risk-free interest rate was based on the U.S. Treasury yields approximating the expected life of the award in effect at the time of grant. Expected volatilities were based on our historical volatility. We do not expect to pay or declare dividends in the foreseeable future.

The following table presents the changes in our SARs for all periods presented:

	Nine Months Ended September 30,
	2016							2015
	Number of SARs		Weighted-Average Exercise Price		Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)		Number of SARs	Weighted-Average Exercise Price		Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding beginning of year, January 1,	326,453		$	38.99				279,011	$	38.77
Awarded	58,709		51.63					68,274	39.63
Exercised	(141,084	)	40.16			$	2,770	—	—
Outstanding at September 30,	244,078		41.36		7.1	6,273		347,285	38.94		7.5	$	4,888
Vested and expected to vest at September 30,	238,671		41.20		7.1	6,171		341,423	38.89		7.5	4,821
Exercisable at September 30,	136,644		36.74		5.9	4,143		191,149	35.68		6.6	3,312

Total compensation cost related to SARs granted, net of estimated forfeitures, and not yet recognized in our condensed consolidated statement of operations as of September 30, 2016 was $1.7 million. The cost is expected to be recognized over a weighted-average period of 1.9 years.

Restricted Stock Awards

Time-Based Awards.The fair value of the time-based restricted shares is amortized ratably over the requisite service period, primarily three years. The time-based shares generally vest ratably on each anniversary following the grant date provided that a participant is continuously employed.

In January 2016, the Compensation Committee awarded to our executive officers a total of 61,634 time-based restricted shares that vest ratably over a three-year period ending in January 2019.

The following table presents the changes in non-vested time-based awards to all employees, including executive officers, for the nine months ended September 30, 2016:

	Shares		Weighted-Average Grant Date Fair Value
Non-vested at December 31, 2015	525,081		$	50.23
Granted	269,709		57.12
Vested	(256,976	)	48.60
Forfeited	(14,716	)	55.70
Non-vested at September 30, 2016	523,098		54.43

20

PDC ENERGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

(unaudited)

The following table presents the weighted-average grant date fair value per share and related information as of/for the periods presented:

	As of/for the Nine Months Ended September 30,
	2016		2015
	(in thousands, except per share data)
Total intrinsic value of time-based awards vested	$	14,675	$	13,061
Total intrinsic value of time-based awards non-vested	35,079		30,959
Market price per common share as of September 30,	67.06		53.01
Weighted-average grant date fair value per share	57.12		48.58

Total compensation cost related to non-vested time-based awards, net of estimated forfeitures, and not yet recognized in our condensed consolidated statements of operations as of September 30, 2016 was $18.7 million. This cost is expected to be recognized over a weighted-average period of 1.9 years.

Market-Based Awards.The fair value of the market-based restricted shares is amortized ratably over the requisite service period, primarily three years. The market-based shares vest if the participant is continuously employed throughout the performance period and the market-based performance measure is achieved, with a maximum vesting period of three years. All compensation cost related to the market-based awards will be recognized if the requisite service period is fulfilled, even if the market condition is not achieved.

In January 2016, the Compensation Committee awarded a total of 24,280 market-basedrestricted shares to our executive officers. In addition to continuous employment, the vesting of these shares is contingent on the Company's total shareholder return ("TSR"), which is essentially the Company’s stock price change including any dividends, as compared to the TSR of a group of peer companies. The shares are measured over a three-year period ending on December 31, 2018 and can result in a payout between 0% and 200% of the total shares awarded. The weighted-average grant date fair value per market-based share for these awards was computed using the Monte Carlo pricing model using the following assumptions:

	Nine Months Ended September 30,
	2016			2015
Expected term of award	3 years			3 years
Risk-free interest rate	1.2		%	0.9		%
Expected volatility	52.3		%	53.0		%
Weighted-average grant date fair value per share	$	72.54		$	66.16

The expected term of the awards was based on the requisite service period. The risk-free interest rate was based on the U.S. Treasury yields in effect at the time of grant and extrapolated to approximate the life of the award. The expected volatility was based on our historical volatility.

The following table presents the change in non-vested market-based awards during the nine months ended September 30, 2016:

	Shares		Weighted-Average Grant Date Fair Value per Share
Non-vested at December 31, 2015	71,549		$	63.60
Granted	24,280		72.54
Vested (1)	(11,283	)	98.50
Non-vested at September 30, 2016	84,546		61.51

__________

(1)Vested shares were issued at 200% based on our relative total shareholder return as ranked among the Company's peer group.

21

PDC ENERGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

(unaudited)

The following table presents the weighted-average grant date fair value per share and related information as of/for the periods presented:

	As of/for the Nine Months Ended September 30,
	2016		2015
	(in thousands, except per share data)
Total intrinsic value of market-based awards vested	$	1,174	$	—
Total intrinsic value of market-based awards non-vested	5,670		5,996
Market price per common share as of September 30,	67.06		53.01
Weighted-average grant date fair value per share	72.54		66.16

Total compensation cost related to non-vested market-based awards, net of estimated forfeitures, and not yet recognized in our condensed consolidated statements of operations as of September 30, 2016 was $1.9 million. This cost is expected to be recognized over a weighted-average period of 1.9 years.

NOTE 13 - EARNINGS PER SHARE

Basic earnings per share is computed by dividing net earnings by the weighted-average number of common shares outstanding for the period. Diluted earnings per share is similarly computed, except that the denominator includes the effect, using the treasury stock method, of unvested restricted stock, outstanding SARs, stock options, convertible notes and shares held pursuant to our non-employee director deferred compensation plan, if including such potential shares of common stock is dilutive.

The following table presents a reconciliation of the weighted-average diluted shares outstanding:

	Three Months Ended September 30,		Nine Months Ended September 30,
	2016	2015	2016	2015
	(in thousands)
Weighted-average common shares outstanding - basic	48,839	40,085	45,741	38,837
Weighted-average common shares and equivalents outstanding - diluted	48,839	40,085	45,741	38,837

We reported a net loss for the three and nine months ended September 30, 2016 and 2015, respectively. As a result, our basic and diluted weighted-average common shares outstanding were the same because the effect of the common share equivalents was anti-dilutive.

The following table presents the weighted-average common share equivalents excluded from the calculation of diluted earnings per share due to their anti-dilutive effect:

	Three Months Ended September 30,		Nine Months Ended September 30,
	2016	2015	2016	2015
	(in thousands)
Weighted-average common share equivalents excluded from diluted earnings
per share due to their anti-dilutive effect:
Restricted stock	660	816	705	836
Convertible notes	—	468	345	505
Other equity-based awards	97	95	103	97
Total anti-dilutive common share equivalents	757	1,379	1,153	1,438

In September 2016, we issued the 2021 Convertible Notes, which give the holders the right to convert the aggregate principal amount into 2.3 million shares of our common stock at a conversion price of $85.39 per share. The 2021 Convertible Notes could be included in the diluted earnings per share calculation using the treasury stock method if the average market share price exceeds the $85.39 conversion price during the periods presented.

22

PDC ENERGY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

(unaudited)

In November 2010, we issued the 2016 Convertible Notes, which gave the holders the right to convert the aggregate principal amount into 2.7 million shares of our common stock at a conversion price of $42.40 per share. The 2016 Convertible Notes matured in May 2016. See Note 8, Long-Term Debt, for additional information. Prior to maturity, the 2016 Convertible Notes were included in the diluted earnings per share calculation using the treasury stock method if the average market share price exceeded the $42.40 conversion price during the period presented.

Shares issuable upon conversion of the 2021 Convertible Notes and 2016 Convertible Notes were excluded from the diluted earnings per share calculation for the applicable periods as the effect would be anti-dilutive to our earnings per share.

NOTE 14 - BUSINESS SEGMENTS

We separate our operating activities into two segments: Oil and Gas Exploration and Production and Gas Marketing. All material inter-company accounts and transactions between segments have been eliminated.

Oil and Gas Exploration and Production. Our Oil and Gas Exploration and Production segment includes all of our crude oil and natural gas properties. The segment represents revenues and expenses from the production and sale of crude oil, natural gas and NGLs. Segment revenue includes crude oil, natural gas and NGLs sales, commodity price risk management, net and well operation and pipeline income. Segment income (loss) consists of segment revenue less production cost, exploration expense, impairment of properties and equipment, direct general and administrative expense and depreciation, depletion and amortization expense.

Gas Marketing. Our Gas Marketing segment purchases, aggregates and resells natural gas produced by unrelated third-parties. Segment income (loss) primarily represents sales from natural gas marketing and direct interest income, less costs of natural gas marketing and direct general and administrative expense.

Unallocated Amounts. Unallocated income includes unallocated other revenue, less corporate general and administrative expense, corporate DD&A expense, interest income and interest expense. Unallocated assets include assets utilized for corporate general and administrative purposes, as well as assets not specifically included in our two business segments.

The following tables present our segment information:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
	(in thousands)
Segment revenues:
Oil and gas exploration and production	$	161,212		$	228,520		$	268,090		$	418,356
Gas marketing	2,678			2,580			6,728			8,336
Total revenues	$	163,890		$	231,100		$	274,818		$	426,692
Segment income (loss) before income taxes:
Oil and gas exploration and production	$	17,809		$	(30,296	)	$	(134,731	)	$	(14,134	)
Gas marketing	(414		)	(201		)	(1,067		)	(539		)
Unallocated	(52,736		)	(32,164		)	(166,689		)	(97,189		)
Loss before income taxes	$	(35,341	)	$	(62,661	)	$	(302,487	)	$	(111,862	)

	September 30, 2016		December 31, 2015
	(in thousands)
Segment assets:
Oil and gas exploration and production	$	3,390,005	$	2,294,288
Gas marketing	3,735		4,217
Unallocated	23,540		72,038
Total assets	$	3,417,280	$	2,370,543

23

PDC ENERGY, INC.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis, as well as other sections in this report, should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this report. Further, we encourage you to revisit the Special Note Regarding Forward-Looking Statements.

EXECUTIVE SUMMARY

Financial Overview

Production volumes increased substantially to 6.0 MMboe and 15.8 MMboe for the three and nine months ended September 30, 2016, respectively, representing increases of 39% and 49%, respectively, as compared to the three and nine months ended September 30, 2015. The increase in production volumes was primarily attributable to our successful horizontal Niobrara and Codell drilling program in the Wattenberg Field. Crude oil production increased 17% and 27% for the three and nine months ended September 30, 2016, respectively, compared to the same prior year periods. Crude oil production comprised approximately 39% and 40% of total production in the three and nine months ended September 30, 2016. Our ratio of crude oil production to total production decreased as compared to 2015 as expected as we shifted our focus to the higher gas to oil ratio inner core area of the Wattenberg Field during the first half of 2016. We expect our ratio of crude oil to total production to increase by the end of 2016 as we move drilling operations back toward the middle core area of the Wattenberg Field. Natural gas production increased 47% and 60% in the three and nine months ended September 30, 2016, respectively, compared to the three and nine months ended September 30, 2015. NGL production increased 80% and 83% for the three and nine months ended September 30, 2016, respectively, compared to the same prior year periods. Our inner core wells have shown stronger wet gas production than anticipated, which has contributed to the growth of gas and NGL production. Our production for the three months ended September 30, 2016 increased approximately 0.8 MMboe, or 16%, as compared to the three months ended June 30, 2016. We expect a modest increase in production for the fourth quarter of 2016 as compared to the third quarter, as we have approximately 20 fewer wells scheduled to be turned-in-line during the fourth quarter, and we expect all remaining 2016 well completions to be concluded by the middle of the fourth quarter of 2016. For the month ended September 30, 2016, our average production rate was 63 MBoe per day, up from 47 MBoe per day for the month ended September 30, 2015.

Crude oil, natural gas and NGLs sales, coupled with the impact of settled derivatives, increased during the three and nine months ended September 30, 2016 relative to the same prior year periods. Crude oil, natural gas and NGLs sales increased to $141.8 million and $328 million during the three and nine months ended September 30, 2016 compared to $104.5 million and $275.5 million in the same prior year periods due to 39% and 49% increases in production, respectively, offset in part by 2% and 20% decreases, respectively, in the realized price per barrel of crude oil equivalent ("Boe"). The realized prices per Boe were $23.62 and $20.80 for the three and nine months ended September 30, 2016, respectively, compared to $24.15 and $26.02, respectively, for the same prior year periods. Positive net settlements on derivatives decreased to $47.7 million for the three months ended September 30, 2016 and increased to $167.9 million during the nine months ended September 30, 2016 compared to positive net settlements on derivatives of $68 million and $162.5 million in the same prior year periods. As a result of these aggregate changes, crude oil, natural gas and NGLs sales and the impact of net settled derivatives totaled $189.5 million and $495.9 million during the three and nine months ended September 30, 2016, respectively, compared to $172.5 million and $438 million during the three and nine months ended September 30, 2015, respectively. This represents increases of 10% and 13% during the three and nine months ended September 30, 2016, respectively, compared to the same prior year periods. The realized prices per Boe, including the impact of net settlements on derivatives, were $31.56 and $31.44 for the three and nine months ended September 30, 2016, respectively, compared to $39.88 and $41.37 for the same prior year periods, respectively.

Additional significant changes impacting our results of operations for the three months ended September 30, 2016 include the following:

• Negative net change in the fair value of unsettled derivative positions during the three months ended September 30, 2016 was $28.3 million compared to a positive net change in the fair value of unsettled derivative positions of $55.5 million during the same prior year period. The decrease in fair value of unsettled derivative positions was primarily attributable to a less significant upward shift in the crude oil and natural gas forward curves, offset by the impact of the beginning of period fair value of derivative instruments settled in the respective periods, during the current quarter as compared to the three months ended September 30, 2015;

• Impairment of properties and equipment decreased to $0.9 million for the three months ended September 30, 2016 compared to $154 million in the same prior year period, primarily related to the $150.3 million write-down of our Utica Shale producing and non-producing crude oil and natural gas properties to their estimated fair value in the three months ended September 30, 2015;

• General and administrative expense increased to $32.5 million for the three months ended September 30, 2016 compared to $20.3 million in the same prior year period, primarily due to $11.3 million of fees and expenses related to the pending Delaware Basin Acquisition;

• Depreciation, depletion and amortization expense increased to $112.9 million during the three months ended September 30, 2016 compared to $80.9 million in the same prior year period, primarily due to increased production; and

• Interest expense increased to $20.2 million for the three months ended September 30, 2016 compared to $12.1 million in the same prior year period, primarily attributable to a $9 million charge for the bridge loan commitment related to the Delaware Basin Acquisition.

24

PDC ENERGY, INC.

Additional significant changes impacting our results of operations for the nine months ended September 30, 2016 include the following:

• Negative net change in the fair value of unsettled derivative positions during the nine months ended September 30, 2016 was $230.2 million compared to a negative net change in the fair value of unsettled derivative positions of $21.3 million during the same prior year period. The decrease in fair value of unsettled derivative positions was primarily attributable to an upward shift in the crude oil and natural gas forward curves that occurred during 2016;

• Impairment of properties and equipment decreased to $6.1 million for the nine months ended September 30, 2016 compared to $161.2 million in the same prior year period, primarily related to the $150.3 million write-down of our Utica Shale producing and non-producing crude oil and natural gas properties to their estimated fair value in the three months ended September 30, 2015;

• General and administrative expense increased to $78.9 million for the nine months ended September 30, 2016 compared to $62.1 million in the same prior year period, primarily due to $11.3 million of fees and expenses related to the Delaware Basin Acquisition;

• Depreciation, depletion and amortization expense increased to $317.3 million during the nine months ended September 30, 2016 compared to $206.9 million in the same prior year period, primarily due to increased production and, to a lesser extent, a higher weighted-average depreciation, depletion and amortization rate;

• During the first quarter of 2016, we determined that collection of a third-party note receivable arising from the sale of our interest in properties in the Marcellus Shale was not reasonably assured based then current market conditions and new information made available to us. As a result, we recognized a provision and recorded an allowance for uncollectible notes receivable for the $44 million outstanding balance as of March 31, 2016. As of September 30, 2016, there has been no change to our assessment of the collectibility of the note. See Note 3, Fair Value of Financial Instruments - Notes Receivable, to our condensed consolidated financial statements included elsewhere in this report for additional information; and

• Interest expense increased to $42.8 million for the nine months ended September 30, 2016 compared to $35.4 million in the same prior year period, primarily attributable to a $9 million charge for the bridge loan commitment related to the Delaware Basin Acquisition.

In March 2016, we completed a public offering of 5,922,500 shares of our common stock at a price to us of $50.11 per share. Net proceeds of the offering were $296.6 million, after deducting offering expenses and underwriting discounts. We used a portion of the net proceeds of the offering to repay all amounts then outstanding on our revolving credit facility and the principal amount owed upon the maturity of the Convertible Notes in May 2016 and retained the remainder for general corporate purposes.

The 2016 Convertible Notes matured in May 2016. We settled the 2016 Convertible Notes with a combination of cash and stock, paying the aggregate principal amount, plus cash for fractional shares, totaling approximately $115 million, utilizing proceeds from the offering. Additionally, we issued 792,406 shares of common stock for the excess conversion value.

In June 2016, we entered into definitive agreements with Noble to consolidate certain acreage positions in the core Wattenberg Field.

In September 2016, we closed the acreage exchange transaction. Pursuant to the transaction, we exchanged leasehold acreage and, to a lesser extent, interests in certain development wells. Upon closing, we received approximately 13,500 net acres in exchange for approximately 11,700 net acres, with no cash exchanged between the parties. The difference in net acres is primarily due to variances in leasehold net revenue interests and third-party mid-stream contracts. This acreage trade is expected to increase opportunities for longer horizontal laterals with significantly increased working interests, while minimizing potential surface impact.

Pending Delaware Basin Acquisition

We seek acquisition opportunities as part of our overall growth strategy, and in particular have recently engaged in the process of searching for, and evaluating, a large-scale acquisition in a new U.S. onshore basin capable of creating material long-term value-added growth, focusing on four key criteria: top-tier acreage in core geologic positions, significant drilling inventory with additional expansion through downspacing, portfolio optionality for capital allocation and diversification and the ability to deliver long-term corporate accretion.  In August 2016, we identified a potential acquisition, which we refer to as the Delaware Basin Acquisition, that we believe met our four key criteria.

We entered into definitive agreements relating to the Delaware Basin Acquisition in August 2016. The agreements contemplate that we will acquire an aggregate of approximately 57,000 net acres, approximately 30 wells and related midstream infrastructure in Reeves and Culberson Counties, Texas, for an aggregate consideration to the sellers of approximately $915 million in cash and approximately 9.4 million shares of our common stock (valued at approximately $590 million at the time the acquisition agreements were executed), subject to certain adjustments and ongoing due diligence. The acquisition agreements allow the sellers to include a specified amount of additional leases in the transaction, which would increase the purchase price. Upon executing the acquisition agreements, we paid a $100 million deposit toward the cash portion of the purchase price into an escrow account. In some circumstances set forth in the acquisition agreements, we could be required to forfeit the $100 million deposit. The Delaware Basin Acquisition is expected to initially increase our daily production by approximately 7,000 Boe per day. The acquisition is expected to close in December 2016; however, there can be no assurance conditions to closing will be satisfied. Upon closing, we currently expect to initially run a two rig drilling program in the Delaware Basin. We are currently completing our budgeting process for 2017, but anticipate running two to three rigs in the Delaware Basin during 2017. Taking into account the anticipated plans for the Delaware Basin Acquisition properties, we expect that pursuit of our development program will require capital in excess of our projected cash flows from operations for some period of time beginning in 2017.

25

PDC ENERGY, INC.

In order to fund the cash portion of the Delaware Basin Acquisition, we completed a public offering of 9,085,000 shares of our common stock, a public offering of the 2021 Convertible Notes and a private offering of the 2024 Senior Notes in September 2016 (collectively, the "Securities Issuances"). The common stock was issued at a price to us of $61.51 per share for net proceeds of approximately $558.5 million, after deducting offering expenses and underwriting discounts. Net proceeds of the issuances of the 2021 Convertible Notes and 2024 Senior Notes were approximately $194 million and $392.3 million, respectively, after deducting offering expenses and underwriting discounts. If the Delaware Basin Acquisition is not completed on or prior to December 31, 2016 (or in some circumstances by or on January 15, 2017), the 2024 Senior Notes will be redeemed in whole at a special mandatory redemption price equal to 100% of the aggregate principal amount of the 2024 Senior Notes, plus accrued and unpaid interest.

Prior to the Securities Issuances, we entered into a commitment letter with JPMorgan regarding certain aspects of the temporary financing of the Delaware Basin Acquisition. The commitment letter contemplated, among other things, (i) a senior unsecured bridge loan to us in an aggregate principal amount not to exceed $600 million, to be drawn, if at all, at the closing of the Delaware Basin Acquisition, (ii) a $250 million increase in the commitments under our existing revolving credit facility and (iii) certain related proposed amendments and waivers to our existing credit facility agreement. We expect to fund the cash consideration payable in the Delaware Basin Acquisition with proceeds from the Securities Issuances. Following the completion of the Securities Issuances, the bridge loan commitment was terminated. Upon closing of the Delaware Basin Acquisition, we will be required to pay approximately $9 million in fees related to the bridge loan commitment, approximately $6 million in fees related to the increase in commitments under the revolving credit facility and approximately $10 million in other direct acquisition-related costs. During the three months ended September 30, 2016, we recorded charges for the bridge loan commitment fees and the other direct acquisition-related costs. The $9 million charge for fees related to the bridge loan commitment is included in interest expense and the $10 million charge for other direct acquisition-related costs is included in general and administrative expenses. The liabilities associated with both amounts are included in other accrued expenses on our condensed consolidated balance sheet as of September 30, 2016.

Liquidity

Available liquidity as of September 30, 2016 was $1,636 million compared to $402.2 million as of December 31, 2015. Available liquidity as of September 30, 2016 is comprised of $1,197.7 million of cash and cash equivalents and $438.3 million available for borrowing under our revolving credit facility. These amounts exclude an additional $250 million available under our revolving credit facility that will be available following the closing of the Delaware Basin Acquisition and may be available in other circumstances subject to certain terms and conditions of the agreement. In October 2016, we completed the semi-annual redetermination of our revolving credit facility by the lenders, which resulted in the reaffirmation of the borrowing base at $700 million. We have elected to maintain the aggregate commitment level at $450 million until the closing of the Delaware Basin Acquisition. Cash and cash equivalents as of September 30, 2016 included approximately $392.3 million of proceeds from the issuance of the 2024 Senior Notes. If, however, the Delaware Basin Acquisition is not completed prior to or on December 31, 2016 (or in some circumstances by or on January 15, 2017), the $400 million principal amount of the 2024 Senior Notes is required to be redeemed with interest. If required, we will redeem the 2024 Senior Notes with available cash. With our current derivative position, available liquidity and expected cash flows from operations, we believe we have sufficient liquidity to allow us to fund our operations and the cash portion of the purchase price for the Delaware Basin Acquisition and execute our expected 2016 development program.

The following table presents our liquidity as of September 30, 2016 pro forma for the closing of the Delaware Basin Acquisition, reflecting cash to be paid and the increase in the aggregate commitments under our revolving credit facility:

As of September 30, 2016	Amount
	(in millions)
Cash and cash equivalents	$	1,197.7
Available for borrowing under our credit facility	438.3
Available liquidity	1,636.0
Increase in aggregate commitments under our revolving credit facility	250.0
Cash due upon closing of the Delaware Basin Acquisition (1)	(840.0		)
Adjusted liquidity	$	1,046.0

__________

(1)Amount includes total cash portion of purchase price due to sellers, less $100 million deposit in escrow and estimated acquisition-related costs. Amount does not reflect potential purchase price adjustments to be determined upon and post closing.

26

PDC ENERGY, INC.

Operational Overview

During the nine months ended September 30, 2016, we continued to execute our strategic plan to grow production while preserving our financial strength and liquidity. Through July 2016, we ran four automated drilling rigs in the Wattenberg Field. In August 2016, we decreased the number of automated drilling rigs running in the Wattenberg Field to three in anticipation of higher working interests in wells drilled resulting from the aforementioned acreage exchange with Noble. During the nine months ended September 30, 2016, we spud 107 horizontal wells and turned-in-line 121 horizontal wells in the Wattenberg Field. We also participated in 11 gross, 2.8 net, horizontal non-operated wells that were spud and 24 gross, 5.0 net, horizontal non-operated wells which were turned-in-line. During the nine months ended September 30, 2016, we drilled and completed five wells in the Utica Shale, three of which were turned-in-line during the period. Of these three wells, one is an approximately 10,000 foot lateral well located in Guernsey County and two are approximately 6,000 foot lateral wells located in Washington County. We plan to turn-in-line the two remaining wells over the next several months.

2016 Operational Outlook

We expect our production for 2016 to be at the high end or slightly exceed the 21.0 MMBoe to 22.0 MMBoe range disclosed earlier in the year and our production rate for December 2016 to exceed 71,000 Boe per day, including the impact of expected production from the Delaware Basin Acquisition, assuming the acquisition closes in December 2016. Our revised 2016 capital forecast of $400 million to $420 million is focused on continuing to provide value-driven production growth by exploiting our substantial inventory of projects in the Wattenberg Field. Currently, excluding acquisition costs that we expect to incur in 2016 related to the Delaware Basin Acquisition, we expect to be near or slightly below the low end of the expected range of our capital expenditures.

27

PDC ENERGY, INC.

Colorado Ballot Initiative Update

During 2016, certain interest groups in Colorado opposed to oil and natural gas development generally, or hydraulic fracturing in particular, advanced various options for ballot initiatives aimed at significantly limiting or effectively preventing oil and natural gas development in the state of Colorado. Proponents of two such initiatives attempted to qualify the initiatives to appear on the ballot for the November 2016 election. On August 29, 2016, the Colorado Secretary of State issued a press release and statements of insufficiency of signatures, stating that the proponents of the proposals had failed to collect enough valid signatures to have the proposals included on the ballot.

One of the initiatives, which we refer to as the “local control” initiative, would have amended the state constitution to give city, town and county governments the right to regulate, or to ban, oil and gas development and production within their boundaries, notwithstanding rules and approvals to the contrary at the state level. This proposal was motivated in part by a decision of the Colorado Supreme Court earlier this year holding that local government restrictions on oil and gas activities are subject to preemption by state rules.

A second initiative, which we refer to as the “setback” initiative, would have amended the state constitution to require all new oil and gas development facilities to be located at least 2,500 feet away from any occupied structure or broadly defined “area of special concern,” including public and community drinking water sources, lakes, rivers, perennial or intermittent streams, creeks, irrigation canals, riparian areas, playgrounds, permanent sports fields, amphitheaters, public parks and public open space.

If implemented, the setback initiative would have effectively prohibited the vast majority of our planned future drilling activities in Colorado and would therefore have made it impossible to pursue our current development plans. The local control proposal would potentially have had a similar effect, depending on the nature and extent of regulations implemented by relevant local governmental authorities. Pursuant to the determination of the Colorado Secretary of State, these proposals will not appear on the November 2016 ballot. However, future proposals of this nature are possible.

Because substantially all of our current operations and reserves are located in Colorado, the risks we face with respect to such future proposals are greater than those of our competitors with more geographically diverse operations. Although we cannot predict the outcome of future ballot initiatives, statutes or regulatory developments, such developments could materially impact our results of operations, production and reserves.

28

PDC ENERGY, INC.

Results of Operations

Summary Operating Results

The following table presents selected information regarding our operating results:

	Three Months Ended September 30,								Nine Months Ended September 30,
	2016			2015			Percentage Change		2016			2015			Percentage Change
	(dollars in millions, except per unit data)
Production (1)
Crude oil (MBbls)	2,339.8			2,007.8			16.5	%	6,240.2			4,895.9			27.5	%
Natural gas (MMcf)	13,417.4			9,148.9			46.7	%	36,768.2			22,997.0			59.9	%
NGLs (MBbls)	1,428.1			793.0			80.1	%	3,402.8			1,858.5			83.1	%
Crude oil equivalent (MBoe) (2)	6,004.2			4,325.6			38.8	%	15,771.0			10,587.3			49.0	%
Average MBoe per day	65.3			47.0			38.8	%	57.6			38.8			49.0	%
Crude Oil, Natural Gas and NGLs Sales
Crude oil	$	98.5		$	78.3		25.8	%	$	233.0		$	206.7		12.7	%
Natural gas	27.4			18.8			45.7	%	59.6			49.4			20.6	%
NGLs	15.9			7.4			114.9	%	35.4			19.4			82.5	%
Total crude oil, natural gas and NGLs sales	$	141.8		$	104.5		35.7	%	$	328.0		$	275.5		19.1	%
Net Settlements on Derivatives (3)
Crude oil	$	39.5		$	60.7		(34.9	)%	$	131.6		$	142.4		(7.6	)%
Natural gas	8.2			7.3			12.3	%	36.3			20.1			80.6	%
Total net settlements on derivatives	$	47.7		$	68.0		(29.9	)%	$	167.9		$	162.5		3.3	%
Average Sales Price (excluding net settlements on derivatives)
Crude oil (per Bbl)	$	42.11		$	38.98		8.0	%	$	37.33		$	42.22		(11.6	)%
Natural gas (per Mcf)	2.04			2.05			(0.5	)%	1.62			2.15			(24.7	)%
NGLs (per Bbl)	11.12			9.40			18.3	%	10.41			10.45			(0.4	)%
Crude oil equivalent (per Boe)	23.62			24.15			(2.2	)%	20.80			26.02			(20.1	)%
Average Lease Operating Expenses (per Boe) (4)
Wattenberg Field	$	2.39		$	3.31		(27.8	)%	$	2.77		$	4.24		(34.7	)%
Utica Shale	1.27			1.74			(27.0	)%	1.87			1.77			5.6	%
Weighted-average	2.33			3.20			(27.2	)%	2.73			4.04			(32.4	)%
Natural Gas Marketing Contribution Margin (5)	$	(0.4	)	$	(0.2	)	100.0	%	$	(1.1	)	$	(0.6	)	(83.3	)%
Other Costs and Expenses
Production taxes	$	9.6		$	5.5		74.7	%	$	19.7		$	13.2		49.0	%
Transportation, gathering and processing expenses	5.0			3.9			28.2	%	13.6			6.6			105.9	%
Impairment of properties and equipment	0.9			154.0			(99.4	)%	6.1			161.2			(96.2	)%
General and administrative expense	32.5			20.3			60.3	%	78.9			62.1			27.1	%
Depreciation, depletion and amortization	112.9			80.9			39.5	%	317.3			206.9			53.4	%
Provision for uncollectible notes receivable	(0.7		)	—			*		44.0			—			*
Interest expense	$	20.2		$	12.1		67.0	%	$	42.8		$	35.4		20.8	%

* Percentage change is not meaningful or equal to or greater than 300%.

Amounts may not recalculate due to rounding.

______________

(1) Production is net and determined by multiplying the gross production volume of properties in which we have an interest by our ownership percentage.

(2) One Bbl of crude oil or NGL equals six Mcf of natural gas.

(3) Represents net settlements on derivatives related to crude oil and natural gas sales, which do not include net settlements on derivatives related to natural gas marketing.

(4) Represents lease operating expenses, exclusive of production taxes, on a per unit basis.

(5) Represents sales from natural gas marketing, net of costs of natural gas marketing, including net settlements and net change in fair value of unsettled derivatives related to natural gas marketing activities.

29

PDC ENERGY, INC.

Crude Oil, Natural Gas and NGLs Sales

The following tables present crude oil, natural gas and NGLs production and weighted-average sales price:

	Three Months Ended September 30,				Nine Months Ended September 30,
Production by Operating Region	2016	2015	Percentage Change		2016	2015	Percentage Change
Crude oil (MBbls)
Wattenberg Field	2,216.3	1,868.6	18.6	%	5,928.5	4,509.5	31.5	%
Utica Shale	123.5	139.2	(11.3	)%	311.7	386.4	(19.3	)%
Total	2,339.8	2,007.8	16.5	%	6,240.2	4,895.9	27.5	%
Natural gas (MMcf)
Wattenberg Field	12,700.0	8,478.3	49.8	%	34,968.2	21,040.7	66.2	%
Utica Shale	717.4	670.6	7.0	%	1,800.0	1,956.3	(8.0	)%
Total	13,417.4	9,148.9	46.7	%	36,768.2	22,997.0	59.9	%
NGLs (MBbls)
Wattenberg Field	1,353.0	730.6	85.2	%	3,240.4	1,692.5	91.5	%
Utica Shale	75.1	62.4	20.4	%	162.4	166.0	(2.2	)%
Total	1,428.1	793.0	80.1	%	3,402.8	1,858.5	83.1	%
Crude oil equivalent (MBoe)
Wattenberg Field	5,686.0	4,012.3	41.7	%	14,996.9	9,708.8	54.5	%
Utica Shale	318.2	313.3	1.6	%	774.1	878.5	(11.9	)%
Total	6,004.2	4,325.6	38.8	%	15,771.0	10,587.3	49.0	%

Amounts may not recalculate due to rounding.

	Three Months Ended September 30,						Nine Months Ended September 30,
Average Sales Price by Operating Region					Percentage Change						Percentage Change
(excluding net settlements on derivatives)	2016		2015				2016		2015
Crude oil (per Bbl)
Wattenberg Field	$	42.29	$	38.90	8.7	%	$	37.42	$	42.13	(11.2	)%
Utica Shale	38.93		40.02		(2.7	)%	35.61		43.28		(17.7	)%
Weighted-average price	42.11		38.98		8.0	%	37.33		42.22		(11.6	)%
Natural gas (per Mcf)
Wattenberg Field	$	2.08	$	2.11	(1.4	)%	$	1.63	$	2.17	(24.9	)%
Utica Shale	1.33		1.36		(2.2	)%	1.44		1.92		(25.0	)%
Weighted-average price	2.04		2.05		(0.5	)%	1.62		2.15		(24.7	)%
NGLs (per Bbl)
Wattenberg Field	$	11.07	$	9.62	15.1	%	$	10.32	$	10.36	(0.4	)%
Utica Shale	12.14		6.80		78.5	%	12.22		11.40		7.2	%
Weighted-average price	11.12		9.40		18.3	%	10.41		10.45		(0.4	)%
Crude oil equivalent (per Boe)
Wattenberg Field	$	23.77	$	24.32	(2.3	)%	$	20.83	$	26.07	(20.1	)%
Utica Shale	20.98		22.04		(4.8	)%	20.26		25.47		(20.5	)%
Weighted-average price	23.62		24.15		(2.2	)%	20.80		26.02		(20.1	)%

Amounts may not recalculate due to rounding.

30

PDC ENERGY, INC.

For the three and nine months ended September 30, 2016, crude oil, natural gas and NGLs sales revenue increased compared to the three and nine months ended September 30, 2015 due to the following:

	September 30, 2016
	Three Months Ended			Nine Months Ended
	(in millions)
Increase in production	$	27.7		$	102.5
Increase (decrease) in average crude oil price	7.3			(30.5		)
Decrease in average natural gas price	(0.1		)	(19.4		)
Increase (decrease) in average NGLs price	2.4			(0.1		)
Total increase in crude oil, natural gas and NGLs sales revenue	$	37.3		$	52.5

Production for the third quarter of 2016 was 6.0 million Boe, up from 4.3 million Boe in the third quarter of 2015. Year-to-date, production was 15.8 million Boe, up from 10.6 million Boe in the first nine months of 2015. Production increased as a result of continued drilling and completion activities as discussed in Operational Overview.

From time to time, our production has been adversely affected by high line pressures in the Wattenberg Field. Such pressures did not materially affect our production for the three or nine months ended September 30, 2016. We rely on our third-party midstream service providers to construct compression, gathering and processing facilities to keep pace with our production growth. We, along with other operators in the Wattenberg Field, continue to work closely with our third-party midstream providers in an effort to ensure adequate system capacity going forward. The timing and availability of adequate infrastructure, including potential line pressure impacts in 2017, is not within our control and may be affected by a number of factors, including potential increases in production from the Wattenberg Field and warmer than expected weather.

Crude Oil, Natural Gas and NGLs Pricing. Our results of operations depend upon many factors, particularly the price of crude oil, natural gas and NGLs and our ability to market our production effectively. Crude oil, natural gas and NGL prices are among the most volatile of all commodity prices. While the price of crude oil decreased during the first nine months of 2016 compared to the first nine months of 2015, prices increased during the third quarter of 2016 as compared to the first half of 2016 as the number of U.S. crude oil rigs and inventories declined. Natural gas prices decreased during the first nine months of 2016 when compared to the same prior year period. Although we did experience improved pricing by the end of the third quarter of 2016, due to an oversupply of nearly all domestic NGLs products, our average realized sales price for NGLs during the first nine months of 2016 reflected the same low levels seen during 2015. With the initiation of ethane exports and increased demand for NGLs, we are starting to see NGL prices trend upward.

Crude oil pricing is predominately driven by the physical market, supply and demand, financial markets and national and international politics. In the Wattenberg Field, crude oil is sold under various purchase contracts with monthly and longer term pricing provisions based on NYMEX pricing, adjusted for differentials. We have entered into longer term commitments ranging from three months to six months to deliver crude oil to competitive markets and these agreements have resulted in significantly improved deductions compared to the comparable period in 2015. We continue to pursue various alternatives with respect to oil transportation, particularly in the Wattenberg Field, with a view toward further improving pricing and limiting our use of trucking of production. We began delivering crude oil in accordance with our long term commitment to the White Cliffs Pipeline, LLC ("White Cliffs") pipeline in July 2015. This is one of several agreements we have entered into to facilitate deliveries of a portion of our crude oil to the Cushing, Oklahoma market. In addition, we have signed a long-term agreement for gathering of crude oil at the wellhead by pipeline from several of our pads in the Wattenberg Field, with a view toward minimizing truck traffic, increasing reliability and reducing the overall physical footprint of our well pads. We began delivering crude oil into this pipeline during the fourth quarter of 2015 and the system was fully operational on certain wells in 2016. In the Utica Shale, crude oil and condensate is sold to local purchasers at each individual pad based on NYMEX pricing, adjusted for differentials, and is typically transported by the purchasers via truck to local refineries, rail facilities or barge loading terminals on the Ohio River.

Natural gas prices vary by region and locality, depending upon the distance to markets, availability of pipeline capacity and supply and demand relationships in that region or locality. The price we receive for our natural gas produced in the Wattenberg Field is based on CIG and local utility prices, adjusted for certain deductions, while natural gas produced in the Utica Shale is based on TETCO M-2 pricing. We anticipate that the significant Appalachian pipeline differentials that impact our Utica Shale natural gas will continue through the remainder of 2016 and into 2017.

Our price for NGLs produced in the Wattenberg Field is based on a combination of prices from the Conway hub in Kansas and Mt. Belvieu in Texas where this production is marketed. The NGLs produced in the Utica Shale are sold based on month-to-month pricing to various markets. While NGL prices had been declining, we have seen a stabilization of prices in 2016.

Our crude oil, natural gas and NGLs sales are recorded under either the “net-back” or "gross" method of accounting, depending upon the related purchase agreement. We use the "net-back" method of accounting for natural gas and NGLs, as well as the majority of our crude oil production, from the Wattenberg Field and for crude oil from the Utica Shale as the majority of the purchasers of these commodities also provide transportation, gathering and processing services. We sell our commodities at the wellhead and collect a price and recognize revenues based on the wellhead sales price as transportation and processing costs downstream of the wellhead are incurred by the purchaser and reflected in the

31

PDC ENERGY, INC.

wellhead price. The net-back method results in the recognition of a sales price that is below the indices for which the production is based. We use the "gross" method of accounting for Wattenberg Field crude oil delivered through the White Cliffs and Saddle Butte pipelines and for natural gas and NGLs sales related to production from the Utica Shale as the purchasers do not provide transportation, gathering or processing services. Under this method, we recognize revenues based on the gross selling price and recognize transportation, gathering and processing expenses. As a result of the White Cliffs and Saddle Butte agreements, during the nine months ended September 30, 2016, our Wattenberg Field crude oil average sales price increased approximately $1.24 per barrel relative to the benchmark price because we recognized the costs for transportation on the White Cliffs and Saddle Butte pipelines as an increase in transportation expense, rather than as a deduction from revenues.

Lease Operating Expenses

Lease operating expenses during the three months ended September 30, 2016 increased $0.2 million as compared to the three months ended September 30, 2015, primarily due to increases of $0.8 million for payroll and employee benefits and $0.8 million for leased compressors to address increases in line pressure. These increases were partially offset by decreases of $1 million related to mechanical integrity testing of wells and $0.2 million in environmental project costs. Lease operating expenses during the nine months ended September 30, 2016 increased $0.3 million as compared to the nine months ended September 30, 2015, primarily due to increases of $1.6 million for payroll and employee benefits, $1.1 million for leased compressors to address line pressure issues and $1 million for various other lease operating expenses. These increases were partially offset by decreases of $2.6 million for environmental project costs and $0.7 million for plugging and abandonment costs. Lease operating expenses per Boe decreased 27% and 32% to $2.33 and $2.73 during the three and nine months ended September 30, 2016, respectively, compared to $3.20 and $4.04 during the three and nine months ended September 30, 2015, respectively. The significant decreases in lease operating expense per Boe were the result of production growth of 39% and 49%, respectively.

Production Taxes

Production taxes are directly related to crude oil, natural gas and NGLs sales. The $4.1 million increase in production taxes during the three months ended September 30, 2016 compared to the three months ended September 30, 2015 was primarily related to the 36% increase in crude oil, natural gas and NGLs sales, as well as higher severance tax rates based upon projected sales revenue. The $6.5 million increase in production taxes during the nine months ended September 30, 2016 compared to the nine months ended September 30, 2015 was primarily related to the 19% increase in crude oil, natural gas and NGLs sales, as well as higher severance tax rates due to higher projected sales revenue coupled with a decrease in ad valorem tax credits available from 2015 production due to depressed commodity pricing in 2015.

Transportation, Gathering and Processing Expenses

The $1.1 million increase in transportation, gathering and processing expenses during the three months ended September 30, 2016 compared to the three months ended September 30, 2015 was mainly attributable to oil transportation costs on the Saddle Butte pipeline as we began delivering crude oil on this pipeline in December 2015. The $7 million increase in transportation, gathering and processing expenses during the nine months ended September 30, 2016, compared to the nine months ended September 30, 2015, was mainly attributable to oil transportation costs on the White Cliffs and Saddle Butte pipelines as we began delivering crude oil on these pipelines in July 2015 and December 2015, respectively. We expect to continue to incur these oil transportation costs pursuant to our long-term transportation agreements.

Commodity Price Risk Management, Net

We use various derivative instruments to manage fluctuations in natural gas and crude oil prices. We have in place a variety of collars, fixed-price swaps and basis swaps on a portion of our estimated natural gas and crude oil production. Because we sell all of our natural gas and crude oil production at prices similar to the indexes inherent in our derivative instruments, adjusted for certain fees and surcharges stipulated in the applicable sales agreements, we ultimately realize a price, before contract fees, related to our collars of no less than the floor and no more than the ceiling and, for our commodity swaps, we ultimately realize the fixed price related to our swaps, less deductions. See Note 4, Derivative Financial Instruments, to our condensed consolidated financial statements included elsewhere in this report for a detailed presentation of our derivative positions as of September 30, 2016.

Commodity price risk management, net, includes cash settlements upon maturity of our derivative instruments and the change in fair value of unsettled derivatives related to our crude oil and natural gas production. Commodity price risk management, net, does not include derivative transactions related to our natural gas marketing, which are included in sales from and cost of natural gas marketing. See Note 3, Fair Value of Financial Instruments, and Note 4, Derivative Financial Instruments, to our condensed consolidated financial statements included elsewhere in this report for additional details of our derivative financial instruments.

Net settlements are primarily the result of crude oil and natural gas index prices at maturity of our derivative instruments compared to the respective strike prices. Net change in fair value of unsettled derivatives is comprised of the net asset increase or decrease in the beginning-of- period fair value of derivative instruments that settled during the period and the net change in fair value of unsettled derivatives during the period. The corresponding impact of settlement of the derivative instruments that settled during the period is included in net settlements for the period as discussed above. Net change in fair value of unsettled derivatives during the period is primarily related to shifts in the crude oil and natural gas forward curves and changes in basis index pricing. See Note 4, Derivative Financial Instruments, to our condensed consolidated financial statements included elsewhere in this report for a detailed description of net settlements on our various derivatives.

32

PDC ENERGY, INC.

The following table presents net settlements and net change in fair value of unsettled derivatives included in commodity price risk management, net:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
	(in millions)
Commodity price risk management gain (loss), net:
Net settlements:
Crude oil	$	39.5		$	60.7		$	131.6		$	142.4
Natural gas	8.2			7.3			36.3			20.1
Total net settlements	47.7			68.0			167.9			162.5
Change in fair value of unsettled derivatives:
Reclassification of settlements included in prior period changes in fair value of derivatives	(40.6		)	(48.1		)	(169.5		)	(140.2		)
Crude oil fixed price swaps	3.3			50.4			(33.8		)	51.4
Crude oil collars	1.5			28.5			(14.5		)	28.6
Natural gas fixed price swaps	5.4			19.5			(10.7		)	31.0
Natural gas basis swaps	1.4			(1.0		)	0.7			(2.4		)
Natural gas collars	0.7			6.2			(2.4		)	10.3
Net change in fair value of unsettled derivatives	(28.3		)	55.5			(230.2		)	(21.3		)
Total commodity price risk management gain (loss), net	$	19.4		$	123.5		$	(62.3	)	$	141.2

Impairment of Properties and Equipment

The following table sets forth the major components of our impairment of properties and equipment expense:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
	(in millions)
Impairment of proved and unproved properties	$	0.3	$	150.8	$	2.4	$	152.8
Amortization of individually insignificant unproved properties	0.6		3.2		0.7		8.4
Impairment of crude oil and natural gas properties	0.9		154.0		3.1		161.2
Land and buildings	—		—		3.0		—
Impairment of properties and equipment	$	0.9	$	154.0	$	6.1	$	161.2

Impairment of proved and unproved properties. Due to a significant decline in commodity prices and a decrease in net-back realizations in the third quarter of 2015, we experienced a triggering event that required us to assess our crude oil and natural gas properties for possible impairment. As a result of our assessment, we recorded an impairment charge during the three months ended September 30, 2015 of $150.3 million to write-down our Utica Shale proved and unproved properties. Of this impairment charge, $24.7 million was recorded to write-down certain capitalized well costs on our Utica Shale proved producing properties. Additionally, as a result of the outlook for future commodity prices at that time, we recorded an impairment charge of $125.6 million to write-down all of our Utica Shale lease acquisition costs and pad development costs for pads not in production. Future deterioration of commodity prices could result in additional impairment charges to our crude oil and natural gas properties.

Amortization of individually insignificant unproved properties. Amounts relate to insignificant leases that were subject to amortization. The decreases in amortization during the three and nine months ended September 30, 2016 compared to the three and nine months ended September 30, 2015 were due to an impairment in the third quarter of 2015 that significantly reduced the carrying value of our Utica Shale leases.

Land and buildings. The impairment charge for the nine months ended September 30, 2016 represents the excess of the carrying value over the estimated fair value, less the cost to sell, of a field operating facility in Greeley, Colorado, and 12 acres of land located adjacent to our Bridgeport, West Virginia, regional headquarters. The fair values of these assets were determined based upon estimated future cash flows from unrelated third-party bids, a Level 3 input.

33

PDC ENERGY, INC.

General and Administrative Expense

General and administrative expense increased $12.2 million to $32.5 million for the three months ended September 30, 2016 compared to $20.3 million for the three months ended September 30, 2015. The increase was primarily attributable to $11.3 million of fees and expenses related to the Delaware Basin Acquisition and a $1.2 million increase in payroll and employee benefits.

General and administrative expense increased $16.8 million to $78.9 million for the nine months ended September 30, 2016 compared to $62.1 million for the nine months ended September 30, 2015. The increase was primarily attributable to $11.3 million of fees and expenses related to the Delaware Basin Acquisition, a $4.5 million increase in payroll and employee benefits and a $0.6 million increase in costs for consulting and other professional services.

Depreciation, Depletion and Amortization Expense

Crude oil and natural gas properties. DD&A expense related to crude oil and natural gas properties is directly related to proved reserves and production volumes. DD&A expense related to crude oil and natural gas properties was $112.1 million and $314.4 million for the three and nine months ended September 30, 2016 compared to $79.8 million and $203.5 million for the three and nine months ended September 30, 2015. The period-over-period change in DD&A expense related to crude oil and natural gas properties was primarily due to the following:

	September 30, 2016
	Three Months Ended		Nine Months Ended
	(in millions)
Increase in production	$	32.0	$	104.1
Increase in weighted-average depreciation, depletion and amortization rates	0.3		6.8
Total increase in DD&A expense related to crude oil and natural gas properties	$	32.3	$	110.9

The following table presents our DD&A expense rates for crude oil and natural gas properties:

	Three Months Ended September 30,				Nine Months Ended September 30,
Operating Region/Area	2016		2015		2016		2015
	(per Boe)
Wattenberg Field	$	19.17	$	19.10	$	20.42	$	19.92
Utica Shale	9.59		10.08		10.52		11.49
Total weighted-average	18.66		18.44		19.94		19.22

Non-crude oil and natural gas properties. Depreciation expense for non-crude oil and natural gas properties was $0.9 million and $2.9 million for the three and nine months ended September 30, 2016, respectively, compared to $1.2 million and $3.4 million for the three and nine months ended September 30, 2015, respectively.

Provision for Uncollectible Notes Receivable

During the first quarter of 2016, we recorded a provision for uncollectible notes receivable of $44.7 million to impair two third-party notes receivable whose collection was not reasonably assured. During the three months ended September 30, 2016, we subsequently collected a $0.7 million promissory note and reversed the related provision and allowance for uncollectible notes receivable. See Note 3, Fair Value of Financial Instruments - Notes Receivable, to our condensed consolidated financial statements included elsewhere in this report for additional information.

34

PDC ENERGY, INC.

Interest Expense

Interest expense increased $8.1 million and $7.4 million during the three and nine months ended September 30, 2016 compared to the three and nine months ended September 30, 2015. The increases were primarily attributable to a $9 million charge for the bridge loan commitment related to the Delaware Basin Acquisition, partially offset by decreases in interest expense on the 2016 Convertible Notes as they matured in May 2016.

Interest Income

Interest income decreased $1.2 million and $1.8 million during the three and nine months ended September 30, 2016 compared to the three and nine months ended September 30, 2015, as we ceased recognizing non-cash interest income on two third-party notes receivable.

Provision for Income Taxes

See Note 7, Income Taxes, to the accompanying condensed consolidated financial statements included elsewhere in this report for a discussion of the changes in our effective tax rate for the three and nine months ended September 30, 2016 compared to the three and nine months ended September 30, 2015. The effective tax rate of 34.0% and 37.1% benefit on loss for the three and nine months ended September 30, 2016, respectively, is based on forecasted pre-tax loss for the year adjusted for state tax, permanent differences and discrete items of tax. The forecasted full year effective tax rate has been applied to the quarter-to-date pre-tax loss resulting in a tax benefit for the period. Because the estimate of full-year income or loss may change from quarter to quarter, the effective tax rate for any particular quarter may not have a meaningful relationship to pre-tax income or loss for the quarter or the actual annual effective tax rate that is determined at the end of the year.

Our deferred income tax liability at September 30, 2016 decreased $99.1 million compared to December 31, 2015. This decrease is primarily attributable to the significant positive net settlements from derivatives during the nine months ended September 30, 2016 and the significant reduction in fair value of unsettled derivatives held at September 30, 2016, partially offset by the $15 million deferred tax liability for the equity component of the 2021 Convertible Notes issued in September 2016.

Net Loss/Adjusted Net Income (Loss)

Net loss for the three and nine months ended September 30, 2016 was $23.3 million and $190.3 million compared to net loss of $41.5 million and $71.3 million for the three and nine months ended September 30, 2015. Adjusted net loss, a non-U.S. GAAP financial measure, was $5.8 million and $47.7 million for the three and nine months ended September 30, 2016 compared to adjusted net loss of $75.9 million and $58.1 million for the same prior year periods. The components of the quarter-over-quarter and year-over-year changes in net loss are discussed above. These changes similarly impacted adjusted net loss, with the exception of the tax affected net change in fair value of unsettled derivatives. See Reconciliation of Non-U.S. GAAP Financial Measures, below, for a more detailed discussion of this non-U.S. GAAP financial measure.

Financial Condition, Liquidity and Capital Resources

Historically, our primary sources of liquidity have been cash flows from operating activities, our revolving credit facility, proceeds raised in debt and equity capital market transactions and asset sales. For the nine months ended September 30, 2016, our primary sources of liquidity were the net proceeds received from the March 2016 public offering of our common stock of $296.6 million, net proceeds from the Securities Issuances of approximately $1.1 billion, and net cash flows from operating activities of $360.8 million. We used a portion of the net proceeds of the March 2016 common stock offering to repay all amounts then outstanding on our revolving credit facility and the principal amount owed upon the maturity of the 2016 Convertible Notes in May 2016 and retained the remainder for general corporate purposes. The net proceeds from the Securities Issuances are expected to be used to fund a portion of the purchase price of the Delaware Basin Acquisition (see Note 6, Pending Acquisition), to pay related fees and expenses and for general corporate purposes.

Our primary source of cash flows from operating activities is the sale of crude oil, natural gas and NGLs. Fluctuations in our operating cash flows are substantially driven by commodity prices and changes in our production volumes. Commodity prices have historically been volatile and we manage this volatility through our use of derivative instruments. We enter into commodity derivative instruments with maturities of no greater than five years from the date of the instrument. The revolving credit agreement imposes limits on the amount of our production we can hedge, and we may choose not to hedge the maximum amounts permitted. Therefore, we may still have significant fluctuations in our cash flows from operating activities due to the remaining non-hedged portion of our future production. Given current commodity prices and our hedge position, we expect that positive net settlements on our derivative positions will continue to be a significant positive component of our 2016 cash flows from operations. As of September 30, 2016, the fair value of our derivatives was a net asset of $33.5 million. Based on the forward pricing strip at September 30, 2016, we would expect positive net settlements totaling approximately $39.3 million during the fourth quarter of 2016. However, based upon our current hedge position and assuming current strip pricing, in 2017 and thereafter our derivatives may no longer be a significant source of cash flow, and may result in cash outflows. For the nine months ended September 30, 2016 and 2015, net settled derivatives comprised approximately 47% and 57%, respectively, of our cash flows from operating activities. See Part I, Item 3, Quantitative and Qualitative Disclosures about Market Risk, included elsewhere in this report for additional information regarding our derivatives positions by year of maturity.

Our working capital fluctuates for various reasons, including, but not limited to, changes in the fair value of our commodity derivative instruments and changes in our cash and cash equivalents due to our practice of utilizing excess cash to reduce the outstanding borrowings under

35

PDC ENERGY, INC.

our revolving credit facility. At September 30, 2016, we had working capital of $1,148.8 million compared to $30.7 million at December 31, 2015. The increase in working capital as of September 30, 2016 is primarily the result of an increase in cash and cash equivalents related to the Securities Issuances and the repayment of the 2016 Convertible Notes in May 2016, offset in part by a decrease in the fair value of unsettled derivatives.

In recent periods, including the first nine months of 2016, we have been able to access borrowings under our revolving credit facility and to obtain proceeds from the issuance of securities. We ended September 2016 with cash and cash equivalents of $1,197.7 million and availability under our revolving credit facility of $438.3 million, for a total liquidity position of $1,636 million, compared to $402.2 million at December 31, 2015. These amounts exclude an additional $250 million available under our revolving credit facility that will be available following the closing of the Delaware Basin Acquisition and may be available in other circumstances subject to certain terms and conditions of the agreement. The increase in liquidity of $1,233.8 million, or 306.8%, during the nine months ended September 30, 2016 was primarily attributable to net cash flows from operating activities of $360.8 million and net cash flows from financing activities of $1,284.8 million (including proceeds from the Securities Issuances), offset in part by cash paid for capital expenditures of $353.7 million. Our liquidity position was reduced by the cash payment of approximately $115 million upon the maturity of our 2016 Convertible Notes in May 2016. With our current derivative position, liquidity position and expected cash flows from operations, we believe that we have sufficient capital to fund the cash portion of the purchase price for the Delaware Basin Acquisition and our planned drilling operations for the next 12 months. We cannot, however, assure sources of capital available to us in the past will be available to us in the future.

In March 2015, we filed an automatic shelf registration statement on Form S-3 with the SEC. Effective upon filing, the shelf provides for the potential sale of an unspecified amount of debt securities, common stock or preferred stock, either separately or represented by depository shares, warrants or purchase contracts, as well as units that may include any of these securities or securities of other entities. The shelf registration statement is intended to allow us to be proactive in our ability to raise capital and to have the flexibility to raise such funds in one or more offerings should we perceive market conditions to be favorable. Pursuant to this shelf registration, we sold approximately four million shares of our common stock in March 2015 in an underwritten public offering at a price to us of $50.73 per share, approximately six million shares of our common stock in March 2016 in an underwritten public offering at a price to us of $50.11 per share and, in September 2016, approximately nine million shares of our common stock in an underwritten public offering at a price to us of $61.51 per share and $200 million principal amount of convertible notes in an underwritten offering at par.

In September 2016, we entered into a Third Amendment to the Third Amended and Restated Credit Agreement. The amendment, among other things, amends the revolving credit facility to permit the completion of the Delaware Basin Acquisition and, effective upon closing of the acquisition, adjusts the interest rate payable on amounts borrowed under the facility and increases the aggregate commitments under the facility from $450 million to $700 million (with the borrowing base remaining at $700 million). The maturity date of the revolving credit facility is May 2020. We had no outstanding balance on our revolving credit facility as of September 30, 2016. While we have added and expect to continue to add producing reserves through our drilling operations, the effect of any such reserve additions on our borrowing base could be offset by other factors including, among other things, a prolonged period of depressed commodity prices or regulatory pressure on lenders to reduce their exposure to exploration and production companies.

In October 2016, we entered into the Fourth Amendment to the Third Amended and Restated Credit Agreement. The amendment, among other things, reaffirmed our borrowing base at $700 million and made certain other immaterial modifications to the existing agreement, including an increase in the amount we can hedge of our future production.

Our revolving credit facility contains financial maintenance covenants. The covenants require that we maintain: (i) total debt of less than 4.25 times the trailing 12 months earnings before interest, taxes, depreciation, depletion and amortization, change in fair value of unsettled derivatives, exploration expense, gains (losses) on sales of assets and other non-cash, extraordinary or non-recurring gains (losses) ("EBITDAX") and (ii) an adjusted current ratio of at least 1.0 to 1.0. Our adjusted current ratio is adjusted by eliminating the impact on our current assets and liabilities of recording the fair value of crude oil and natural gas derivative instruments. Additionally, available borrowings under our revolving credit facility are added to the current asset calculation and the current portion of our revolving credit facility debt is eliminated from the current liabilities calculation. Effective upon closing of the Delaware Basin Acquisition, the maximum leverage ratio will be modified to a maximum of 4.00 to 1.00. At September 30, 2016, we were in compliance with all debt covenants with a 2.2 times debt to EBITDAX ratio and a 8.9 to 1.0 current ratio. We expect to remain in compliance throughout the next year.

The indentures governing our 2024 Senior Notes and 2022 Senior Notes contain customary restrictive covenants that, among other things, limit our ability and the ability of our restricted subsidiaries to: (a) incur additional debt, (b) make certain investments or pay dividends or distributions on our capital stock or purchase, redeem or retire capital stock, (c) sell assets, including capital stock of our restricted subsidiaries, (d) restrict the payment of dividends or other payments by restricted subsidiaries to us, (e) create liens that secure debt, (f) enter into transactions with affiliates and (g) merge or consolidate with another company. At September 30, 2016, we were in compliance with all covenants and expect to remain in compliance throughout the next year.

See Part I, Item 3, Quantitative and Qualitative Disclosures about Market Risk, for our discussion of credit risk.

Cash Flows

Operating Activities. Our net cash flows from operating activities are primarily impacted by commodity prices, production volumes, net settlements from our derivative positions, operating costs and general and administrative expenses. Cash flows from operating activities increased by $77.8 million for the nine months ended September 30, 2016 compared to the nine months ended September 30, 2015, primarily due to increases in natural gas and NGLs sales of $52.5 million, net settlements from our derivative positions of $5.4 million and crude oil, and

36

PDC ENERGY, INC.

the increase in changes in assets and liabilities of $45.2 million related to the timing of cash payments and receipts. These increases were offset in part by increases in general and administrative expenses of $16.8 million, transportation, gathering and processing expenses of $7 million and production taxes of $6.5 million. The key components for the changes in our cash flows provided by operating activities are described in more detail in Results of Operations above.

Adjusted cash flows from operations, a non-U.S. GAAP financial measure, increased $32.6 million during the nine months ended September 30, 2016, compared to the nine months ended September 30, 2015. The increase was primarily due to the same factors mentioned above for changes in cash flows provided by operating activities, without regard to timing of cash payments and receipts of assets and liabilities. Adjusted EBITDA, a non-U.S. GAAP financial measure, decreased by $16.6 million during the nine months ended September 30, 2016 compared to the nine months ended September 30, 2015. The decrease was primarily the result of recording a provision for uncollectible notes receivable of $44 million and the increases in transportation, gathering and processing expenses of $7 million, production taxes of $6.5 million and general and administrative expense of $16.8 million, offset in part by increases in crude oil, natural gas and NGLs sales of $52.5 million and net settlements from our derivative positions of $5.4 million. See Reconciliation of Non-U.S. GAAP Financial Measures, below, for a more detailed discussion of non-U.S. GAAP financial measures.

Investing Activities. Because crude oil and natural gas production from a well declines rapidly in the first few years of production, we need to continue to commit significant amounts of capital in order to maintain and grow our production and replace our reserves. If capital is not available or is constrained in the future, we will be limited to our cash flows from operations and liquidity under our revolving credit facility as the sources for funding our capital expenditures.

Cash flows from investing activities primarily consist of the acquisition, exploration and development of crude oil and natural gas properties, net of dispositions of crude oil and natural gas properties. Net cash used in investing activities of $448.8 million during the nine months ended September 30, 2016 was primarily related to cash utilized for our drilling operations, including completion activities of $353.7 million and a $100 million deposit toward the cash portion of the purchase price of the Delaware Basin Acquisition.

Financing Activities. Net cash from financing activities for the nine months ended September 30, 2016 increased by approximately $1,091.5 million compared to the nine months ended September 30, 2015. Net cash from financing activities of $1,284.8 million for the nine months ended September 30, 2016 was primarily related to the $855.1 million received from the issuances of our common stock, $392.3 million of proceeds from issuance of the 2024 Senior Notes and $194 million of proceeds from issuance of the 2021 Convertible Notes, partially offset by the $115 million payment of principal amounts owed upon the maturity of the 2016 Convertible Notes and net payments of approximately $37 million to pay down amounts borrowed under our revolving credit facility.

Drilling Activity

The following table presents our net developmental drilling activity for the periods shown. Productive wells consist of wells spud, turned-in-line and producing during the period. In-process wells represent wells that have been spud, drilled or are waiting to be completed and/or for gas pipeline connection during the period.

	Net Drilling Activity
	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Operating Region/Area	Productive	In-Process	Dry (1)	Productive	In-Process	Dry (1)	Productive	In-Process	Dry (1)	Productive	In-Process	Dry (1)
Development Wells
Wattenberg Field, operated wells	34.7	40.1	—	26.5	52.8	1.1	87.4	40.1	0.4	75.0	52.8	2.1
Wattenberg Field, non-operated wells	1.8	2.2	—	1.2	4.9	—	5.0	2.2	—	5.4	4.9	—
Utica Shale	—	1.7	—	—	—	—	2.8	1.7	—	3.0	—	—
Total drilling activity	36.5	44.0	—	27.7	57.7	1.1	95.2	44.0	0.4	83.4	57.7	2.1

______________

(1) Represents mechanical failures that resulted in the plugging and abandonment of the respective wells.

Off-Balance Sheet Arrangements

At September 30, 2016, we had no off-balance sheet arrangements, as defined under SEC rules, that have or are reasonably likely to have a material current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

37

Commitments and Contingencies

See Note 11, Commitments and Contingencies, to the accompanying condensed consolidated financial statements included elsewhere in this report.

Recent Accounting Standards

See Note 2, Summary of Significant Accounting Policies, to the accompanying condensed consolidated financial statements included elsewhere in this report.

Critical Accounting Policies and Estimates

The preparation of the accompanying condensed consolidated financial statements in conformity with U.S. GAAP required management to use judgment in making estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses.

There have been no significant changes to our critical accounting policies and estimates or in the underlying accounting assumptions and estimates used in these critical accounting policies from those disclosed in the consolidated financial statements and accompanying notes contained in our 2015 Form 10-K filed with the SEC on February 22, 2016.

Reconciliation of Non-U.S. GAAP Financial Measures

We use "adjusted cash flows from operations," "adjusted net income (loss)" and "adjusted EBITDA," non-U.S. GAAP financial measures, for internal management reporting, when evaluating period-to-period changes and, in some cases, providing public guidance on possible future results. These measures are not measures of financial performance under U.S. GAAP and should be considered in addition to, not as a substitute for, net income (loss) or cash flows from operations, investing or financing activities, and should not be viewed as liquidity measures or indicators of cash flows reported in accordance with U.S. GAAP. The non-U.S. GAAP financial measures that we use may not be comparable to similarly titled measures reported by other companies. Also, in the future, we may disclose different non-U.S. GAAP financial measures in order to help our investors more meaningfully evaluate and compare our future results of operations to our previously reported results of operations. We strongly encourage investors to review our financial statements and publicly filed reports in their entirety and not rely on any single financial measure.

Adjusted cash flows from operations. We define adjusted cash flows from operations as the cash flows earned or incurred from operating activities, without regard to changes in operating assets and liabilities. We believe it is important to consider adjusted cash flows from operations, as well as cash flows from operations, as we believe it often provides more transparency into what drives the changes in our operating trends, such as production, prices, operating costs and related operational factors, without regard to whether the related asset or liability was received or paid during the same period. We also use this measure because the timing of cash received from our assets, cash paid to obtain an asset or payment of our obligations has been only a timing issue from one period to the next as we have not had significant accounts receivable collection problems, nor been unable to purchase assets or pay our obligations. See the condensed consolidated statements of cash flows in the accompanying condensed consolidated financial statements included elsewhere in this report.

Adjusted net income (loss). We define adjusted net income (loss) as net income (loss), plus loss on commodity derivatives, less gain on commodity derivatives and net settlements on commodity derivatives, each adjusted for tax effect. We believe it is important to consider adjusted net income (loss), as well as net income (loss). We believe this measure often provides more transparency into our operating trends, such as production, prices, operating costs, net settlements from derivatives and related factors, without regard to changes in our net income (loss) from our mark-to-market adjustments resulting from net changes in the fair value of unsettled derivatives. Additionally, other items which are not indicative of future results may be excluded to clearly identify operating trends.

Adjusted EBITDA. We define adjusted EBITDA as net income (loss), plus loss on commodity derivatives, interest expense, net of interest income, income taxes, impairment of properties and equipment, depreciation, depletion and amortization expense and accretion of asset retirement obligations, less gain on commodity derivatives and net settlements on commodity derivatives. Adjusted EBITDA is not a measure of financial performance or liquidity under U.S. GAAP and should be considered in addition to, not as a substitute for, net income (loss), and should not be considered an indicator of cash flows reported in accordance with U.S. GAAP. Adjusted EBITDA includes certain non-cash costs incurred by the Company and does not take into account changes in operating assets and liabilities. Other companies in our industry may calculate adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure. We believe adjusted EBITDA is relevant because it is a measure of our operational and financial performance, as well as a measure of our liquidity, and is used by our management, investors, commercial banks, research analysts and others to analyze such things as:

• operating performance and return on capital as compared to our peers;

• financial performance of our assets and our valuation without regard to financing methods, capital structure or historical cost basis;

• our ability to generate sufficient cash to service our debt obligations; and

• the viability of acquisition opportunities and capital expenditure projects, including the related rate of return.

38

PDC ENERGY, INC.

The following table presents a reconciliation of each of our non-U.S. GAAP financial measures to its most comparable U.S. GAAP measure:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
	(in millions)
Adjusted cash flows from operations:
Adjusted cash flows from operations	$	122.6		$	122.7		$	326.2		$	293.6
Changes in assets and liabilities	40.4			13.8			34.6			(10.6		)
Net cash from operating activities	$	163.0		$	136.5		$	360.8		$	283.0
Adjusted net loss:
Adjusted net loss	$	(5.8	)	$	(75.9	)	$	(47.7	)	$	(58.1	)
Gain (loss) on commodity derivative instruments	19.4			123.5			(62.3		)	141.2
Net settlements on commodity derivative instruments	(47.7		)	(68.0		)	(167.9		)	(162.5		)
Tax effect of above adjustments	10.8			(21.1		)	87.6			8.1
Net loss	$	(23.3	)	$	(41.5	)	$	(190.3	)	$	(71.3	)
Adjusted EBITDA to net loss:
Adjusted EBITDA	$	128.7		$	129.1		$	297.4		$	314.0
Gain (loss) on commodity derivative instruments	19.4			123.5			(62.3		)	141.2
Net settlements on commodity derivative instruments	(47.7		)	(68.0		)	(167.9		)	(162.5		)
Interest expense, net	(20.1		)	(10.7		)	(40.9		)	(31.8		)
Income tax provision	12.0			21.2			112.2			40.6
Impairment of properties and equipment	(0.9		)	(154.0		)	(6.1		)	(161.2		)
Depreciation, depletion and amortization	(112.9		)	(81.0		)	(317.3		)	(206.9		)
Accretion of asset retirement obligations	(1.8		)	(1.6		)	(5.4		)	(4.7		)
Net loss	$	(23.3	)	$	(41.5	)	$	(190.3	)	$	(71.3	)
Adjusted EBITDA to net cash from operating activities:
Adjusted EBITDA	$	128.7		$	129.1		$	297.4		$	314.0
Interest expense, net	(20.1		)	(10.7		)	(40.9		)	(31.8		)
Stock-based compensation	4.1			4.8			15.2			14.3
Amortization of debt discount and issuance costs	9.9			1.8			12.9			5.3
Gain on sale of properties and equipment	(0.2		)	(0.1		)	—			(0.3		)
Other	0.2			(2.2		)	41.6			(7.9		)
Changes in assets and liabilities	40.4			13.8			34.6			(10.6		)
Net cash from operating activities	$	163.0		$	136.5		$	360.8		$	283.0

39

PDC ENERGY, INC.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market-Sensitive Instruments and Risk Management

We are exposed to market risks associated with interest rate risks, commodity price risk and credit risk. We have established risk management processes to monitor and manage these market risks.

Interest Rate Risk

Changes in interest rates affect the amount of interest we earn on our interest bearing cash, cash equivalents and restricted cash accounts and the interest we pay on borrowings under our revolving credit facility. Our 2021 Convertible Notes, 2024 Senior Notes and 2022 Senior Notes have fixed rates, and therefore near-term changes in interest rates do not expose us to risk of earnings or cash flow loss; however, near-term changes in interest rates may affect the fair value of our fixed-rate debt.

As of September 30, 2016, our interest-bearing deposit accounts included money market accounts, certificates of deposit and checking and savings accounts with various banks. The amount of our interest-bearing cash, cash equivalents and restricted cash as of September 30, 2016 was $1,167 million with a weighted-average interest rate of 0.3%. Based on a sensitivity analysis of our interest-bearing deposits as of September 30, 2016 and assuming we had $1,167 million outstanding throughout the period, we estimate that a 1% increase in interest rates would have increased interest income for the nine months ended September 30, 2016 by approximately $8.7 million.

As of September 30, 2016, we had no outstanding balance on our revolving credit facility.

Commodity Price Risk

We are exposed to the potential risk of loss from adverse changes in the market price of crude oil, natural gas and NGLs. Pursuant to established policies and procedures, we manage a portion of the risks associated with these market fluctuations using derivative instruments. These instruments help us predict with greater certainty the effective crude oil and natural gas prices we will receive for our hedged production. We believe that our derivative policies and procedures are effective in achieving our risk management objectives.

The following table presents our derivative positions related to crude oil and natural gas sales in effect as of September 30, 2016:

	Collars					Fixed-Price Swaps			Basis Protection Swaps
Commodity/ Index/ Maturity Period	Quantity (Gas - BBtu (1) Oil - MBbls)	Weighted-Average Contract Price				Quantity (Gas - BBtu (1) Oil - MBbls)	Weighted- Average Contract Price		Quantity (BBtu) (1)	Weighted- Average Contract Price			Fair Value September 30, 2016 (2) (in millions)
		Floors		Ceilings
Natural Gas
NYMEX
2016	900.0	$	3.75	$	4.04	7,805.0	$	3.67	8,403.2	$	(0.27	)	$	5.3
2017	7,920.0	3.59		4.13		27,290.0	3.55		12,000.0	(0.28		)	17.0
2018	1,230.0	3.00		3.67		45,280.0	2.94		16,200.0	(0.28		)	2.4
Total Natural Gas	10,050.0					80,375.0			36,603.2				24.7
Crude Oil
NYMEX
2016	435.0	77.59		97.55		930.0	72.21		—	—			34.0
2017	1,464.0	49.22		65.95		3,004.0	44.92		—	—			(15.1		)
2018	1,512.0	41.85		54.31		1,512.0	51.06		—	—			(10.1		)
Total Crude Oil	3,411.0					5,446.0			—				8.8
Total Natural Gas and Crude Oil													$	33.5

____________

(1) A standard unit of measurement for natural gas (one BBtu equals one MMcf).

(2) Approximately 33.1% of the fair value of our derivative assets and 19.2% of the fair value of our derivative liabilities were measured using significant unobservable inputs (Level 3). See Note 3, Fair Value Measurements, to the condensed consolidated financial statements included elsewhere in this report.

40

PDC ENERGY, INC.

The following table presents average NYMEX and CIG closing prices for crude oil and natural gas for the periods identified, as well as average sales prices we realized for our crude oil, natural gas and NGLs production:

	Three Months Ended		Nine Months Ended		Year Ended
	September 30, 2016		September 30, 2016		December 31, 2015
Average Index Closing Price:
Crude oil (per Bbl)
NYMEX	$	44.94	$	41.33	$	48.80
Natural gas (per MMBtu)
NYMEX	$	2.81	$	2.29	$	2.66
CIG	2.47		1.98		2.44
TETCO M-2 (1)	1.47		1.31		1.49
Average Sales Price Realized:
Excluding net settlements on derivatives
Crude oil (per Bbl)	$	42.11	$	37.33	$	40.14
Natural gas (per Mcf)	2.04		1.62		2.04
NGLs (per Bbl)	11.12		10.41		10.72

_____________

(1) TETCO M-2 is an index price upon which a majority of our natural gas produced in the Utica Shale is sold.

Based on a sensitivity analysis as of September 30, 2016, we estimate that a 10% increase in natural gas and crude oil prices, inclusive of basis, over the entire period for which we have derivatives in place, would have resulted in a decrease in the fair value of our derivative positions of $80.3 million, whereas a 10% decrease in prices would have resulted in an increase in fair value of $80.3 million.

See Note 3, Fair Value of Financial Instruments, and Note 4, Derivative Financial Instruments, to our condensed consolidated financial statements included elsewhere in this report for a summary of our open derivative positions, as well as a discussion of how we determine the fair value of and account for our derivative contracts.

Credit Risk

Credit risk represents the loss that we would incur if a counterparty fails to perform its contractual obligations. We attempt to reduce credit risk by diversifying our counterparty exposure and entering into transactions with high-quality counterparties. When exposed to significant credit risk, we analyze the counterparty’s financial condition prior to entering into an agreement, establish credit limits and monitor the appropriateness of those limits on an ongoing basis. We monitor the creditworthiness of significant counterparties through our credit committee, which utilizes a number of qualitative and quantitative tools to assess credit risk and takes mitigative actions if deemed necessary. While we believe that our credit risk analysis and monitoring procedures are reasonable, no amount of analysis can assure performance by our counterparties.

Our Oil and Gas Exploration and Production segment's crude oil, natural gas and NGLs sales are concentrated with a few predominately large customers. This concentrates our credit risk exposure with a small number of large customers. Amounts due to our Gas Marketing segment are from a diverse group of entities, including major upstream and midstream energy companies, financial institutions and end-users in various industries. As natural gas prices continue to remain depressed, certain third-party producers under our Gas Marketing segment have begun and continue to experience financial distress, which has led to certain contractual defaults and litigation; however, to date, we have had no material counterparty default losses. We have initiated several legal actions for breach of contract, collection and related claims against certain third-party producers that are delinquent in their payment obligations, which have to date resulted in one default judgment. We expect this trend to continue for this segment.

A group of 42 independent West Virginia natural gas producers has filed a lawsuit in Marshall County, West Virginia, naming Dominion, certain entities affiliated with Dominion, and RNG as defendants, alleging various contractual, fiduciary and related claims against the defendants, all of which are associated with firm transportation contracts entered into by plaintiffs and relating to pipelines owned and operated by Dominion and its affiliates. RNG and Dominion have removed the case to the U.S. District Court for the Northern District of West Virginia and are preparing pre-trial pleadings, including an answer to the compliant and a motion to dismiss the case. At this time, RNG is unable to estimate any potential damages associated with the claims, but believes the complaint is without merit and intends to vigorously pursue its defense.

We primarily use financial institutions which are lenders in our revolving credit facility as counterparties for our derivative financial instruments. Disruption in the credit markets, changes in commodity prices and other factors may have a significant adverse impact on a number of financial institutions. To date, we have had no material counterparty default losses from our derivative financial instruments. See Note 4, Derivative Financial Instruments, to our condensed consolidated financial statements included elsewhere in this report for more detail on our derivative financial instruments.

41

PDC ENERGY, INC.

Disclosure of Limitations

Because the information above included only those exposures that existed at September 30, 2016, it does not consider those exposures or positions which could arise after that date. As a result, our ultimate realized gain or loss with respect to interest rate and commodity price fluctuations will depend on the exposures that arise during the period, our commodity price risk management strategies at the time, and interest rates and commodity prices at the time.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of September 30, 2016, we carried out an evaluation under the supervision and with the participation of management, including the Chief Executive Officer and the Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e).

Based on the results of this evaluation, the Chief Executive Officer and the Principal Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2016.

Changes in Internal Control over Financial Reporting

During the three months ended September 30, 2016, we made no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II

ITEM 1. LEGAL PROCEEDINGS

Information regarding our legal proceedings can be found in Note 10, Commitments and Contingencies – Litigation, to our condensed consolidated financial statements included elsewhere in this report.

ITEM 1A. RISK FACTORS

We face many risks. Factors that could materially adversely affect our business, financial condition, operating results or liquidity and the trading price of our common stock are described under Item 1A, Risk Factors, of our 2015 Form 10-K. This information should be considered carefully, together with other information in this report and other reports and materials we file with the SEC.

There have been no material changes from the risk factors previously disclosed in our 2015 Form 10-K, except for the following:

If completed, the Delaware Basin Acquisition may not achieve its intended results and may result in us assuming unanticipated liabilities. To date, we have conducted only limited diligence regarding the assets and liabilities we would assume in the transaction.

We entered into the Delaware Basin Acquisition agreements with the expectation that the acquisition would result in various benefits, growth opportunities and synergies. Achieving the anticipated benefits of the transaction is subject to a number of risks and uncertainties. For example, under the acquisition agreements, we have the opportunity to conduct customary environmental and title due diligence following the execution of the agreements, but our diligence efforts to date have been limited. As a result, we may discover title defects or adverse environmental or other conditions of which we are currently unaware. Environmental, title and other problems could reduce the value of the properties to us, and, depending on the circumstances, we could have limited or no recourse to the sellers with respect to those problems. We would assume substantially all of the liabilities associated with the acquired properties and would be entitled to indemnification in connection with those liabilities in only limited circumstances and in limited amounts. We cannot assure you that such potential remedies will be adequate for any liabilities we incur, and such liabilities could be significant. In addition, certain of the properties to be acquired are subject to consents to assign and preference rights. If all applicable waivers cannot be obtained, we may not be able to acquire certain properties as originally contemplated and our expected benefits of the acquisition may be adversely affected. Further, the acquisition agreements allow the sellers to include a specified amount of additional leases in the transaction, which would increase the purchase price. Also, it is uncertain whether our existing operations and the acquired properties and assets can be integrated in an efficient and effective manner.

As with other acquisitions, the success of the Delaware Basin Acquisition depends on, among other things, the accuracy of our assessment of the reserves and drilling locations associated with the acquired properties, future oil, NGL and natural gas prices and operating costs and various other factors. These assessments are necessarily inexact. As a result, we may not recover the purchase price for the acquisition from the sale of production from the property or recognize an acceptable return from such sales. See "-Risks Related to Our Business and the Industry-Acquisitions of properties are subject to the uncertainties of evaluating recoverable reserves and potential liabilities, including environmental uncertainties" in our 2015 Form 10-K. Although the properties to be acquired are subject to many of the risks and uncertainties to which our business and operations are subject, risks associated with the Delaware Basin Acquisition in particular include those associated with our ability to operate efficiently in an area where we have no current operations, the significant size of the transaction relative to our existing operations, the fact that a substantial majority of the properties to be acquired are undeveloped and the additional indebtedness we have incurred in connection with the acquisition. We also expect that pursuing our future development plans for the properties to be acquired will require

42

capital in excess of our projected cash flows from operations for some period of time beginning in 2017, which may increase our need for external financing.

In addition, the integration of operations following the Delaware Basin Acquisition will require substantial attention from our management and other personnel, which may distract their attention from our day-to-day business and operations and prevent us from realizing benefits from other opportunities. Completing the integration process may be more expensive than anticipated, and we cannot assure you that we will be able to effect the integration of these operations smoothly or efficiently or that the anticipated benefits of the transaction will be achieved.

The reserves, production and drilling locations estimates with respect to the properties to be acquired in the Delaware Basin Acquisition may differ materially from the actual amounts.

The reserves, production and drilling locations estimates with respect to the properties to be acquired in the Delaware Basin Acquisition are based on our analysis of historical production data, assumptions regarding capital expenditures and anticipated production declines. Such analysis is based, in significant part, on data provided by the sellers. We cannot assure you that these estimates are accurate. After such data is further reviewed by us and our independent engineers, the actual reserves, production and number of viable drilling locations may differ materially from our expectations.

We have incurred significant transaction-related costs in connection with the Delaware Basin Acquisition and the related financing transactions.

We have incurred a number of significant transaction-related costs associated with the Delaware Basin Acquisition and the related financing transactions. We continue to assess the magnitude of these costs and additional unanticipated costs, including costs incurred in the integration of the properties to be acquired, which may be significant.

Failure to complete the Delaware Basin Acquisition could negatively affect our stock price as well as our business and financial results.

Closing of the Delaware Basin Acquisition is subject to a number of conditions. If the Delaware Basin Acquisition is not completed, we will be subject to a number of risks, including but not limited to the following:

• We must pay costs related to the acquisition including, among others, legal, accounting and financial advisory fees, whether the acquisition is completed or not.

• In some circumstances set forth in the acquisition agreements, we could be required to forfeit the $100 million aggregate deposit we made at the time the agreements were executed.

• We may experience negative reactions from the financial markets.

• We could be subject to litigation related to the failure to complete the acquisition.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Period	Total Number of Shares Purchased (1)	Average Price Paid per Share
July 1 - 31, 2016	19,261	$	54.38
August 1 - 31, 2016	440	55.48
September 1 - 30, 2016	—	—
Total third quarter purchases	19,701	54.40

__________

(1) Purchases primarily represent shares purchased from employees for the payment of their tax liabilities related to the vesting of securities issued pursuant to our stock-based compensation plans.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES - None.

ITEM 4. MINE SAFETY DISCLOSURES - Not applicable.

ITEM 5. OTHER INFORMATION - None.

43

PDC ENERGY, INC.

ITEM 6. EXHIBITS

		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	SEC File Number	Exhibit	Filing Date	Filed Herewith
31.1	Certification by Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Exchange Act Rules, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					X
31.2	Certification by Principal Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Exchange Act Rules, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.					X
32.1**	Certifications by Chief Executive Officer and Principal Financial Officer pursuant to Title 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
99.1	Fourth Amendment to Third Amendment and Restated Credit Agreement					X
101.INS	XBRL Instance Document					X
101.SCH	XBRL Taxonomy Extension Schema Document					X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document					X
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document					X
101.LAB	XBRL Taxonomy Extension Label Linkbase Document					X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document					X
*Management contract or compensatory arrangement.
** Furnished herewith.

44

PDC ENERGY, INC.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	PDC Energy, Inc.
	(Registrant)
Date: November 3, 2016	/s/ Barton R. Brookman
	Barton R. Brookman
	President and Chief Executive Officer
	(principal executive officer)
	/s/ R. Scott Meyers
	R. Scott Meyers
	Chief Accounting Officer
	(principal financial officer)

45

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Barton R. Brookman, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of PDC Energy, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	November 3, 2016
	/s/ Barton R. Brookman
	Barton R. Brookman
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, R. Scott Meyers, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of PDC Energy, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	November 3, 2016
	/s/ R. Scott Meyers
	R. Scott Meyers
	Chief Accounting Officer (Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION

In connection with the Quarterly Report of PDC Energy, Inc. (the "Company") on Form 10-Q for the period ended September 30, 2016, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned certify pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Barton R. Brookman	November 3, 2016
Barton R. Brookman
President and Chief Executive Officer
/s/ R. Scott Meyers	November 3, 2016
R. Scott Meyers
Chief Accounting Officer (Principal Financial Officer)

EX-99.1

EXHIBIT 99.1

EXECUTION VERSION

FOURTH AMENDMENT TO THIRD AMENDED AND RESTATED

CREDIT AGREEMENT

FOURTH AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”) is entered into as of October 14, 2016, by and among PDC ENERGY, INC., a Delaware corporation formerly known as Petroleum Development Corporation (the “Borrower”), CERTAIN SUBSIDIARIES OF THE BORROWER, as Guarantors (the “Guarantors”), the LENDERS party hereto and JPMORGAN CHASE BANK, N.A., as Administrative Agent (the “Administrative Agent”). Unless the context otherwise requires or unless otherwise expressly defined herein, capitalized terms used but not defined in this Amendment have the meanings assigned to such terms in the Credit Agreement (as defined below).

WITNESSETH:

WHEREAS, the Borrower, the Guarantors, the Administrative Agent and the Lenders have entered into that certain Third Amended and Restated Credit Agreement dated as of May 21, 2013 (as the same has been and may hereafter be amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”); and

WHEREAS, the Borrower and the Guarantors have requested that the Administrative Agent and the Lenders amend the Credit Agreement in certain respects and the Administrative Agent and the Lenders constituting the Required Lenders have agreed to do so on the terms and conditions hereinafter set forth.

NOW, THEREFORE, for and in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and confessed, the Borrower, the Guarantors, the Administrative Agent and the Lenders party hereto hereby agree as follows:

SECTION 1. Amendments to Credit Agreement. Subject to the satisfaction or waiver in writing of each condition precedent set forth in Section 3 of this Amendment, and in reliance on the representations, warranties, covenants and agreements contained in this Amendment, the Credit Agreement shall be amended in the manner provided in this Section 1.

1.1    Amendments to Section 1.01.

(a)The following defined terms are hereby amended and restated in their entirety or added in their entirety, in each case to read as follows:

“Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to the Borrower or any of its Subsidiaries from time to time concerning or relating to bribery or corruption.

“Convertible Notes” means (i) the 3.25% Senior Convertible Notes due 2016 issued by the Borrower pursuant to and in accordance with the terms of the Convertible Notes Indenture, (ii) the New Convertible Notes and (iii) any other senior convertible notes issued by the Borrower pursuant to and in accordance with the terms of an Indenture.

“Fourth Amendment” means that certain Fourth Amendment to Third Amended and Restated Credit Agreement, dated as of October 14, 2016, between the Borrower, the Guarantors, the Administrative Agent and the Lenders party thereto.

“Fourth Amendment Effective Date” shall have the meaning assigned to such term in the Fourth Amendment.

“Indenture” means (a) the Original Senior Notes Indenture, (b) the Convertible Notes Indenture, (c) the indenture governing the New Senior Notes, as amended, restated, supplemented or otherwise modified

PDC - Fourth Amendment                    1

EXHIBIT 99.1

EXECUTION VERSION

from time to time to the extent permitted under this Agreement, (d) the indenture governing the New Convertible Notes, as amended, restated, supplemented or otherwise modified from time to time to the extent permitted under this Agreement, and (e) any indenture by and among any Credit Party, as issuer, and a trustee, pursuant to which any Senior Notes are issued, as the same may be amended, restated, supplemented or otherwise modified from time to time to the extent permitted under this Agreement.

“New Convertible Notes” means the 1.125% convertible senior notes due 2021 issued by the Borrower on September 14, 2016.

“New Senior Notes” means the 6.125% senior notes due 2024 issued by the Borrower on September 15, 2016.

“Permitted Acquisition” means an acquisition, by merger or otherwise, by the Borrower or any of its Restricted Subsidiaries of assets (including assets constituting a business unit, line of business or division) or Equity Interests, so long as (a) such acquisition and all transactions related thereto shall be consummated in all material respects in accordance with all applicable Governmental Requirements; (b) if such acquisition involves the acquisition of Equity Interests of a Person that upon such acquisition would become a Subsidiary, such acquisition shall result in the issuer of such Equity Interests becoming a Subsidiary and, to the extent required by Section 6.14, a Guarantor; (c) such acquisition shall result in the Administrative Agent, for the benefit of the Secured Parties, being granted a security interest in any Equity Interests or any assets so acquired to the extent required by Section 6.14 or 6.15; (d) after giving effect to such acquisition, no Default or Event of Default shall have occurred and be continuing; (e) after giving effect to such acquisition, the Borrower, its Restricted Subsidiaries and any Sponsored Partnerships shall be in compliance with Section 7.03; and (f) the Borrower shall be in compliance, on a pro forma basis after giving effect to such acquisition, with the financial covenants set forth in Section 7.11, as such covenants are recomputed as at the last day of the most recently ended fiscal quarter as if such acquisition had occurred on the first day of such fiscal quarter.

“Permitted Refinancing” means any Indebtedness of any Credit Party, and Indebtedness constituting Guarantees thereof by any Credit Party, incurred or issued in exchange for, or the Net Cash Proceeds of which are used solely to extend, refinance, renew, replace, defease or refund, existing Indebtedness that is permitted under this Agreement, in whole or in part, from time to time; provided that (a) the principal amount of such Permitted Refinancing (or if such Permitted Refinancing is issued at a discount, the initial issuance price of such Permitted Refinancing) does not exceed the principal amount of the Indebtedness being refinanced (plus the amount of any premiums paid and fees and expenses incurred in connection therewith), (b) such Permitted Refinancing does not provide for any scheduled repayment, mandatory redemption or payment of a sinking fund obligation prior to the maturity date of the Indebtedness being refinanced (except for any offer to redeem such Indebtedness required as a result of asset sales or the occurrence of a “Change of Control” or “Fundamental Change” under and as defined in the applicable Indenture or other agreement governing the terms of such Indebtedness), (c) the covenant, default and remedy provisions of such Permitted Refinancing are not materially more onerous to the Borrower and its Subsidiaries than those imposed by the Indebtedness being refinanced, (d) the mandatory prepayment, repurchase and redemption provisions of such Permitted Refinancing are not materially more onerous to the Borrower and its Subsidiaries than those imposed by the Indebtedness being refinanced, (e) the non-default cash interest rate on the outstanding principal balance of such Permitted Refinancing does not exceed the prevailing market rate then in effect for similarly situated credits at the time such Permitted Refinancing is incurred, (f) if the Indebtedness being refinanced is unsecured, then such Permitted Refinancing is unsecured, (g) if the Indebtedness being refinanced is secured, then such Permitted Refinancing may be secured but only with the same priority as the Indebtedness being refinanced, (h) no Subsidiary of the Borrower is required to Guarantee such Permitted Refinancing unless such Subsidiary is (or concurrently with any such Guarantee becomes) a Guarantor hereunder, and (i) to the extent such Permitted Refinancing is or is intended to be expressly subordinate to the payment in full of all

PDC - Fourth Amendment                    2

EXHIBIT 99.1

EXECUTION VERSION

of the Obligations, the subordination provisions contained therein are either (x) at least as favorable to the Secured Parties as the subordination provisions contained in the Indebtedness being refinanced or (y) reasonably satisfactory to the Administrative Agentand the Majority Lenders.

“Sanctions” means all economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by OFAC or the U.S. Department of State, or (b) the United Nations Security Council, the European Union, any European Union member state or Her Majesty’s Treasury of the United Kingdom.

“Sanctioned Country” means, at any time, a country, region or territory which is itself the subject or target of any Sanctions (at the time of this Agreement, Crimea, Cuba, Iran, North Korea, Sudan and Syria).

“Sanctioned Person” means, at any time, (a) any Personlisted in any Sanctions-related list of designated Persons maintained by OFAC, the U.S. Department of State, or by the United Nations Security Council, the European Union or any European Union member state, (b) any Person operating, organized or resident in a Sanctioned Country or (c) any Person owned or controlled by any such Person or Persons described in the foregoing clauses (a) or (b).

“Senior Notes” means (a) the Original Senior Notes, (b) the Convertible Notes, (c) the New Senior Notes, (d) the New Convertible Notes and (e) any other senior, senior subordinated or senior convertible notes issued by the Borrower pursuant to and in accordance with the terms of the Indenture; provided that (i) the terms of such Senior Notes do not provide for any scheduled repayment, mandatory redemption or payment of a sinking fund obligation prior to the date that is six months after the Maturity Date (except for any offer to redeem such Senior Notes required as a result of asset sales or the occurrence of a “Change of Control” or “Fundamental Change” under and as defined in the applicable Indenture), (ii) such Senior Notes are unsecured, (iii) the non-default interest rate on the outstanding principal balance of such Senior Notes does not exceed the prevailing market rate then in effect for similarly situated credits at the time such Senior Notes are issued, (iv) no Subsidiary of the Borrower is required to Guarantee the Indebtedness evidenced by such Senior Notes unless such Subsidiary is (or concurrently with any such Guarantee becomes) a Guarantor hereunder, (v) the covenant, default and remedy provisions of such Senior Notes are not materially more onerous to the Borrower and its Subsidiaries than those imposed by, if such Senior Notes are not convertible into common stock, the New Senior Notes and, if such Senior Notes are convertible into common stock, the New Convertible Notes, (vi) the mandatory prepayment, repurchase and redemption provisions of such Senior Notes are not materially more onerous to the Borrower and its Subsidiaries than those imposed by, if such Senior Notes are not convertible into common stock, the New Senior Notes and, if such Senior Notes are convertible into common stock, the New Convertible Notes and (vii) with respect to any senior subordinated notes, such notes are expressly subordinate to the payment in full of all of the Obligations on terms and conditions reasonably satisfactory to the Administrative Agent and the Majority Lenders.

1.2    Amendment to Section 2.11. Section 2.11 of the Credit Agreement is hereby amended by replacing the word “Borrowers” with the word “Borrower” in Subsection 2.11(e) thereof.

1.3    Amendment to Section 3.06. Section 3.06 of the Credit Agreement is hereby amended by inserting the following immediately after the first occurrence of the phrase “Senior Notes” therein: “(other than the New Senior Notes and the New Convertible Notes)”.

1.4    Amendment to Section 4.23. Section 4.23 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

Section 4.23 Anti-Corruption Laws and Sanctions. The Borrower has implemented and maintains in effect policies and procedures designed to ensure compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions, and the Borrower, its Subsidiaries and their respective officers and employees and to the knowledge of the

PDC - Fourth Amendment                    3

EXHIBIT 99.1

EXECUTION VERSION

Borrower its directors and agents, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects. None of (a) the Borrower, any Subsidiary or any of their respective directors, officers or employees, or (b) to the knowledge of the Borrower, any agent of the Borrower or any Subsidiary that will act in any capacity in connection with or benefit from the credit facility established hereby, is a Sanctioned Person. No Borrowing or Letter of Credit, use of proceeds or other transaction contemplated by this Agreement will violate any Anti-Corruption Law or applicable Sanctions.

1.5    Amendment to Section 6.01. Section 6.01 of the Credit Agreement is hereby amended by inserting the following at the end thereof:

“Notwithstanding the foregoing, documents required to be delivered pursuant to Section 6.01 or 6.02 may be delivered electronically and if so delivered, shall be deemed to have been delivered on the earliest to occur of the date on which (i) the Borrower posts such documents to EDGAR (or such other free, publicly accessible internet database that may be established and maintained by the SEC as a substitute for or successor to EDGAR) or (ii) such documents are posted on the Borrower’s behalf on Intralinks or another similar website to which each Lender and the Administrative Agent have access.”

1.6    Amendment to Section 6.08. Section 6.08 of the Credit Agreement is hereby amended by inserting the following sentence at the end thereof:

“The Borrower will maintain in effect and enforce policies and procedures designed to ensure compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions.”

1.7    Amendment to Section 6.09. Section 6.09 of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

“The proceeds of the Loans will be used for working capital and general business purposes of the Borrower and the Restricted Subsidiaries, and any other purpose not prohibited by this Agreement. No part of the proceeds of any Loan and no Letter of Credit will be used, whether directly or indirectly, for any purpose that violates any of the Regulations of the Board, including Regulations T, U and X. Letters of Credit will be issued only to support general corporate purposes of the Borrower and the Restricted Subsidiaries. The Borrower will not request any Borrowing or Letter of Credit, and the Borrower shall not use, and shall procure that its Subsidiaries and its or their respective directors, officers, employees and agents shall not use, the proceeds of any Borrowing or Letter of Credit (A) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (B) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, to the extent such activities, businesses or transaction would be prohibited by Sanctions if conducted by a corporation incorporated in the United States or in a European Union member state, or (C) in any manner that would result in the violation of any Sanctions applicable to any party hereto.”

1.8    Amendment to Section 6.18(c). Immediately upon the occurrence of the Third Amendment Effective Date, Section 6.18(c) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

(c) Notwithstanding anything to the contrary herein, including, without limitation, Sections 6.11 and 6.12, (i) prior to January 15, 2017, the Borrower shall grant and perfect Liens in Oil and Gas Interests with Mortgages representing 85% of the Engineered Value of the Direct Interests included in the Borrowing Base Properties before giving effect to the Kimmeridge Acquisition, but shall not be required to grant and perfect Liens in Oil and Gas Interests of Arris or the Target Assets, and (ii) from and after January 15, 2017, the Borrower shall grant and perfect Liens in Oil and Gas Interests with Mortgages representing 85% of the Engineered Value of the Direct Interests included in the Borrowing Base Properties after giving effect to the Kimmeridge Acquisition.

PDC - Fourth Amendment                    4

EXHIBIT 99.1

EXECUTION VERSION

1.9    Amendments to Section 7.01. Section 7.01 of the Credit Agreement is hereby amended by:

(a) replacing “$15,000,000” with “$50,000,000” in clause (ii) of the proviso of Subsection 7.01(e) thereof and (b) replacing “$15,000,000” with “$50,000,000” in the proviso of Subsection 7.01(i) thereof.

(b) (i) deleting the word “and” and the end of Subsection 7.01(m), (ii) replacing the “.” at the end of Subsection 7.01(n) with “;” and (iii) adding a new Subsection 7.01(o) to read as follows:

(o) Indebtedness of the Borrower or any Restricted Subsidiary assumed in connection with any Permitted Acquisition so long as such Indebtedness is not incurred in contemplation of such Permitted Acquisition, and any Permitted Refinancing thereof; provided that after giving pro forma effect to such Permitted Acquisition and the assumption of such Indebtedness, the amount of Indebtedness assumed pursuant to this Section 7.01(o) does not exceed in the aggregate at any time outstanding, $50,000,000;

(c) adding a new Subsection 7.01(p) to read as follows:

(p) Indebtedness incurred by the Borrower or any Restricted Subsidiary in a Permitted Acquisition, any other Investment permitted hereunder or any Disposition, in each case, constituting indemnification obligations or obligations in respect of purchase price or other similar adjustments (including earn-outs), not to exceed $15,000,000 at any time outstanding; and

(d) adding a new Subsection 7.01(q) to read as follows:

(q) any deposits made in connection with any Investment permitted under clauses (e), (j), (n) or (p) of Section 7.04.

1.10    Amendments to Section 7.02. Section 7.02 of the Credit Agreement is hereby amended by:

(a) deleting the “.” at the end of Subsection 7.02(f) and replacing it with “;”,

(b) adding a new Subsection 7.02(g) to read as follows:

(g) Liens to secure Indebtedness permitted under Sections 7.01(o); provided that the representative of the holders of such Indebtedness becomes party to an intercreditor agreement with the Administrative Agent subordinating such Indebtedness to the Obligations on terms reasonably satisfactory to the Administrative Agent;

(c) adding a new Subsection 7.02(h) to read as follows:

(h) Liens on escrowed proceeds for the benefit of the related holders of debt securities or other Indebtedness (or the underwriters or arrangers thereof) or on cash set aside at the time of the incurrence of any Indebtedness purchased with such cash, in either case to the extent such cash prefunds the payment of interest on such Indebtedness and is held in an escrow account or similar arrangement to be applied for such purpose;

(d) adding a new Subsection 7.02(i) to read as follows:

(i) Liens on property or assets of the Borrower or any Restricted Subsidiary securing obligations in an aggregate principal amount outstanding at any time not to exceed $50,000,000; and

(e) adding a new Subsection 7.02(j) to read as follows:

PDC - Fourth Amendment                    5

EXHIBIT 99.1

EXECUTION VERSION

(j) Liens on any deposits made in connection with any Investment permitted under clauses (e), (j), (n) or (p) of Section 7.04.

1.11    Amendments to Section 7.03. Section 7.03 of the Credit Agreement is hereby amended by (a) replacing the word “and” at the end of Subsection 7.03(a)(viii) with “.”, (b) replacing the “; and” at the end of Subsection 7.03(b) with “.” and (c) replacing the word “the” at the beginning of Subsection 7.03(c) with the word “The”.

1.12    Amendments to Section 7.04. Section 7.04 of the Credit Agreement is hereby amended by (a) replacing “$10,000,000” with “$50,000,000” in clause (1) of the proviso of Subsection 7.04(j) thereof, (b) deleting the word “and” at the end of Subsection 7.04(n), (c) replacing the “.” at the end of Subsection 7.04(o) with “; and” (d) replacing the words “clauses (e), (j) or (n)” in Subsection 7.04(o) with the words “clauses (e), (j), (n) or (p)” and (e) inserting a new Subsection 7.04(p) to read as follows:

(p) Permitted Acquisitions.

1.13    Amendment to Section 7.05. Section 7.05(a) of the Credit Agreement is hereby amended and restated in its entirety to read as follows:

(a)hedge or mitigate Crude Oil, Natural Gas and Natural Gas Liquids price risks to which the Borrower, any Restricted Subsidiary or any Sponsored Partnership has actual exposure (whether or not treated as a hedge for accounting purposes under GAAP); provided that at the time the Borrower (whether on its own behalf or on behalf of any Sponsored Partnership), any Restricted Subsidiary or any Sponsored Partnership enters into any such Swap Agreement, such Swap Agreement (x) does not have a term greater than sixty (60) months from the date such Swap Agreement is entered into, and (y) when aggregated and netted with all other Swap Agreements then in effect would not cause the aggregate notional volume per month for each of Crude Oil, Natural Gas and Natural Gas Liquids, calculated separately, under all Swap Agreements then in effect (other than Excluded Hedges) to exceed, as of the date such Swap Agreement is executed, (A) for any month during the first three years of the forthcoming five year period, (i)(x) from the Fourth Amendment Effective Date to the second anniversary of the Fourth Amendment Effective Date, one hundred percent (100%) of the “forecasted production from total proved reserves” (as defined below) of the Borrower, the Restricted Subsidiaries and the Sponsored Partnerships, taken as a whole and (y) at any other time eighty-five percent (85%) of the “forecasted production from total proved reserves” of the Borrower, the Restricted Subsidiaries, and the Sponsored Partnerships, taken as a whole or (ii)(x) from the Fourth Amendment Effective Date to the second anniversary of the Fourth Amendment Effective Date, one hundred percent (100%) of the “forecasted production from total proved reserves” of the Borrower and the Restricted Subsidiaries (including the Attributed Interests) and (y) at any other time eighty-five percent (85%) of the “forecasted production from total proved reserves” of the Borrower and the Restricted Subsidiaries (including the Attributed Interests), and (B) for any month during the last two years of the forthcoming five year period, (i) eighty-five percent (85%) of the “forecasted production from proved producing reserves” (as defined below) of the Borrower, the Restricted Subsidiaries, and the Sponsored Partnerships, taken as a whole or (ii) eighty-five percent (85%) of the “forecasted production from proved producing reserves” of the Borrower and the Restricted Subsidiaries (including the Attributed Interests); provided, further, that so long as the Borrower and the Restricted Subsidiaries properly identify and consistently report such hedges on the reports delivered pursuant to Section 6.01(j), the Borrower may utilize Crude Oil hedges as a substitute for hedging Natural Gas Liquids; provided further that if, at the end of any fiscal quarter ending prior to the second anniversary of the Fourth Amendment Effective Date the Borrower determines that the notional amounts of Swap Agreements exceed 100% of the Borrower’s most recent internal projections of such consumption for future periods, then the Borrower shall, within thirty (30) days of such determination (or such longer period agreed to by the Administrative Agent in its sole discretion), terminate, create off-setting positions or otherwise unwind existing Swap Agreements in order to comply with this Section 7.05(a); and

PDC - Fourth Amendment                    6

EXHIBIT 99.1

EXECUTION VERSION

1.14    Amendments to Section 7.06. Section 7.06 of the Credit Agreement is hereby amended by replacing the “$2,000,000” in clause (d) thereof with “$20,000,000”.

1.15    Amendment to Section 7.12. Section 7.12 of the Credit Agreement is hereby amended by replacing “$5,000,000” with “$15,000,000” in the proviso of Subsection 7.12(ii)(y) thereof.

1.16    Amendment to Section 7.13. Section 7.13 of the Credit Agreement is hereby amended by:

(a) inserting the following immediately after the phrase “Equity Interests of the Borrower” in clause (a) thereof: “(or the payment of cash in lieu of fractional shares upon such conversion)”,

(b) replacing the phrase “permitted pursuant to Section 7.01(h)” in clause (a)(i) thereof with “thereof”,

(c)replacing the phrase “at least the greater of (1) $115,000,000 or (2) an amount equal to or greater than 30% of the Aggregate Commitment” in clause (a)(ii) thereof with “at least an amount equal to or greater than 20% of the Aggregate Commitment”, and

(d) inserting the phrase “pursuant to the Senior Notes Documents” immediately after the phrase “grant any Liens in any assets of the Borrower or any of its Subsidiaries” appearing in clause (b) thereof.

1.17    Amendment to Article IX. Subsection (g) of Article IX is hereby amended by (a) replacing the “and” at the end of clause (ii) thereof with “,” and (b) adding the following after clause (iii) thereof: “, (iv) any Special Mandatory Redemption Event (as defined in the Indenture governing the New Senior Notes) and (v) any Fundamental Change (as defined in the Indenture governing the New Convertible Notes)”.

1.18    Amendments to Section 11.02. Section 11.02 of the Credit Agreement is hereby amended by deleting the word “or” at the end of Subsection 11.02(b)(vii) thereof, (b) inserting the word “or” immediately following the “;” at the end of Subsection 11.02(b)(viii) thereof and (c) inserting a new Subsection 11.02(b)(ix) to read as follows:

“(ix) cause an obligation under any outstanding Swap Agreement owing to a Lender Counterparty that, prior to such agreement, constituted a “Lender Hedging Obligation” to cease to be a “Lender Hedging Obligation” or amend or modify the priority of the Lien securing such obligation or the priority of payment with respect to such obligation in connection with an exercise of remedies under the Loan Documents without the written consent of each affected Lender Counterparty;”

1.19    Amendments to Section 11.04. Section 11.04 of the Credit Agreement is hereby amended by (a) inserting the words “or delayed” immediately following the word “withheld” in Subsection 11.04(b)(i) and (b) inserting the words “absent manifest error” immediately following the words “shall be conclusive” in Subsection 11.04(b)(iv)

SECTION 2.Borrowing Base. On the Fourth Amendment Effective Date, the Borrowing Base shall be equal to $700,000,000, which Borrowing Base shall remain in effect until the next Scheduled Redetermination Date, the next Interim Redetermination Date or the next adjustment to the Borrowing Base under the Credit Agreement, whichever occurs first. This Section 2 constitutes (a) notice of the redetermined Borrowing Base in accordance with Section 3.04 of the Credit Agreement and (b) acknowledgment by the Required Lenders that they have approved the redetermined Borrowing Base consistent with each Lender’s usual and customary oil and gas lending criteria as they currently exist as provided in Section 3.03(c) of the Credit Agreement. For the avoidance of doubt, the redetermination of the Borrowing Base contained in this Section 2 constitutes the Scheduled Redetermination which otherwise would have occurred on or about November 1, 2016 pursuant to Section 3.02 of the Credit Agreement.

SECTION 3.Conditions. The amendments to the Credit Agreement contained in Section 1 of this Amendment and the redetermined Borrowing Base set forth in Section 2 of this Amendment shall be effective upon the satisfaction or waiver in writing of each of the conditions set forth in this Section 3 (the date on which each such condition has been satisfied or waived in writing is referred to herein as the "Fourth

PDC - Fourth Amendment                    7

EXHIBIT 99.1

EXECUTION VERSION

Amendment Effective Date").

3.1    Execution and Delivery. Each Credit Party, the Lenders constituting the Required Lenders, and the Administrative Agent shall have executed and delivered this Amendment and each other required document, all in form and substance satisfactory to the Administrative Agent.

3.2    No Default. No Default or Event of Default shall have occurred and be continuing or shall result from the effectiveness of this Amendment.

3.3    Representations and Warranties. After giving effect to the amendments contained herein, each representation and warranty of the Credit Parties contained in the Credit Agreement and in each of the other Loan Documents is true and correct in all material respects on the Fourth Amendment Effective Date (except to the extent such representations and warranties relate solely to an earlier date, in which case they are true and correct in all material respects as of such earlier date).

3.4    Officer’s Certificate. The Administrative Agent shall have received (a) a certificate from the principal financial officer of the Borrower, in form and substance reasonably satisfactory to the Administrative Agent, certifying that the Borrower and its Restricted Subsidiaries, taken as a whole, after giving effect to the transactions contemplated hereby, are Solvent and (b) a customary closing certificate from a Responsible Officer of the Borrower in form and substance reasonably satisfactory to the Administrative Agent.

3.5    Fees. The Administrative Agent shall have received, for its own account and for the account of the Lenders, all fees and other amounts due and payable on or prior to the Fourth Amendment Effective Date, including all reasonable out-of-pocket expenses required to be reimbursed or paid by the Borrower under the Credit Agreement.

SECTION 4.Representations and Warranties of Credit Parties. To induce the Lenders to enter into this Amendment, each Credit Party hereby represents and warrants to the Lenders as follows:

4.1    Corporate Authority; No Conflicts. The execution, delivery and performance by such Credit Party of this Amendment and all documents, instruments and agreements contemplated herein are within such Credit Party’s corporate or other organizational powers, have been duly authorized by all necessary action, require no action by or in respect of, or filing with, any court or agency of government and do not violate or constitute a default under any provision of any applicable law or other agreements binding upon such Credit Party or result in the creation or imposition of any Lien upon any of the assets of such Credit Party.

4.2    Enforceability. This Amendment constitutes the valid and binding obligation of such Credit Party enforceable in accordance with its terms, except as (i) the enforceability thereof may be limited by bankruptcy, insolvency or similar laws affecting creditor’s rights generally, and (ii) the availability of equitable remedies may be limited by equitable principles of general application.

4.3    No Default. As of the date hereof, both before and immediately after giving effect to this Amendment, no Default or Event of Default has occurred and is continuing.

SECTION 5.Miscellaneous.

5.1    Reaffirmation of Loan Documents and Liens. Any and all of the terms and provisions of the Credit Agreement and the other Loan Documents shall, except as amended and modified hereby, remain in full force and effect and are hereby in all respects ratified and confirmed by each Credit Party. Each Credit Party hereby agrees that the amendments and modifications herein contained shall in no manner affect or impair the liabilities, duties and obligations of any Credit Party under the Credit Agreement and the other Loan Documents or the Liens securing the payment and performance thereof.

5.2    Parties in Interest. All of the terms and provisions of this Amendment shall bind and inure to the benefit of the parties hereto and their respective successors and assigns.

5.3    Legal Expenses. Each Credit Party hereby agrees to pay all reasonable fees and expenses of counsel to the Administrative Agent incurred by the Administrative Agent in connection with the preparation, negotiation and execution of this Amendment and all related documents.

PDC - Fourth Amendment                    8

EXHIBIT 99.1

EXECUTION VERSION

5.4    Counterparts. This Amendment may be executed in one or more counterparts and by different parties hereto in separate counterparts each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document. Delivery of photocopies of the signature pages to this Amendment by facsimile or electronic mail shall be effective as delivery of manually executed counterparts of this Amendment.

5.5    Complete Agreement. THIS AMENDMENT, THE CREDIT AGREEMENT, AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

5.6    Headings. The headings, captions and arrangements used in this Amendment are, unless specified otherwise, for convenience only and shall not be deemed to limit, amplify or modify the terms of this Amendment, nor affect the meaning thereof.

5.7    Governing Law. This Amendment shall be construed in accordance with and governed by the law of the State of New York without regard to conflicts of law .

[Remainder of Page Intentionally Blank. Signature Pages Follow.]

PDC - Fourth Amendment                    9

EXHIBIT 99.1

EXECUTION VERSION

PDC - Fourth Amendment                    10

EXHIBIT 99.1

EXECUTION VERSION

PDC - Fourth Amendment                    11

EXHIBIT 99.1

EXECUTION VERSION

PDC - Fourth Amendment                    12

EXHIBIT 99.1

EXECUTION VERSION

PDC - Fourth Amendment                    13

EXHIBIT 99.1

EXECUTION VERSION

PDC - Fourth Amendment                    14

EXHIBIT 99.1

EXECUTION VERSION

PDC - Fourth Amendment                    15

EXHIBIT 99.1

EXECUTION VERSION

PDC - Fourth Amendment                    16

EXHIBIT 99.1

EXECUTION VERSION

PDC - Fourth Amendment                    17

EXHIBIT 99.1

EXECUTION VERSION

PDC - Fourth Amendment                    18

EXHIBIT 99.1

EXECUTION VERSION

PDC - Fourth Amendment                    19

EXHIBIT 99.1

EXECUTION VERSION

PDC - Fourth Amendment                    20

EXHIBIT 99.1

EXECUTION VERSION

PDC - Fourth Amendment                    21

EXHIBIT 99.1

EXECUTION VERSION

PDC - Fourth Amendment                    22

EXHIBIT 99.1

EXECUTION VERSION

PDC - Fourth Amendment                    23

EXHIBIT 99.1

EXECUTION VERSION

PDC - Fourth Amendment                    24

EXHIBIT 99.1

EXECUTION VERSION

PDC - Fourth Amendment                    25

EXHIBIT 99.1

EXECUTION VERSION

PDC - Fourth Amendment                    26

EXHIBIT 99.1

EXECUTION VERSION

PDC - Fourth Amendment                    27

EXHIBIT 99.1

EXECUTION VERSION

PDC - Fourth Amendment                    28

XML

Document and Entity Information Document Document - shares	9 Months Ended
	Sep. 30, 2016	Oct. 17, 2016
Entity Information [Line Items]
Entity Registrant Name	PDC ENERGY, INC.
Entity Central Index Key	0000077877
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock, Shares Outstanding		56,266,147

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Current assets:
Cash	$ 1,197,692	$ 850
Cash and Cash Equivalents, at Carrying Value	1,197,692	850
Accounts receivable, net	99,895	104,274
Fair value of derivatives	65,604	221,659
Prepaid expenses and other current assets	4,854	5,266
Total current assets	1,368,045	332,049
Properties and equipment, net	1,932,274	1,940,552
Fair value of derivatives	8,423	44,387
Other assets	108,538	53,555
Total Assets	3,417,280	2,370,543
Current liabilities:
Accounts payable	62,350	92,613
Production tax liability	22,141	26,524
Fair value of derivatives	22,563	1,595
Funds held for distribution	51,107	29,894
Current portion of long-term debt	0	112,940
Accrued interest payable	19,364	9,057
Other accrued expenses	41,756	28,709
Total current liabilities	219,281	301,332
Long-term debt	1,041,575	529,437
Deferred income taxes	44,340	143,452
Asset retirement obligation	82,509	84,032
Fair value of derivatives	17,885	695
Other liabilities	25,630	24,398
Total liabilities	1,431,220	1,083,346
Commitments and contingent liabilities
Shareholders' Equity:
Preferred shares - par value $0.01 per share, 50,000,000 shares authorized,none issued	0	0
Common shares - par value $0.01 per share, 150,000,000 authorized, 46,210,022 and 40,174,776 issued as of March 31, 2016 and December 31, 2015, respectively	563	402
Additional paid-in capital	1,796,664	907,382
Retained earnings	190,133	380,422
Treasury shares - at cost, 20,836 and 20,220 as of March 31, 2016 and December 31, 2015, respectively	(1,300)	(1,009)
Total shareholders' equity	1,986,060	1,287,197
Total Liabilities and Shareholders' Equity	$ 3,417,280	$ 2,370,543

XML

Balance Sheet Parenthetical (Parentheticals) - $ / shares	Sep. 30, 2016	Dec. 31, 2015
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares issued	56,280,544	40,174,776
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	50,000,000	50,000,000
Preferred stock, shares issued	0	0
Treasury shares, at cost	25,854	20,220

XML

Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Revenues:
Crude oil, natural gas and NGL sales	$ 141,805	$ 104,483	$ 328,013	$ 275,520
Sales from natural gas marketing	2,678	2,580	6,728	8,336
Commodity price risk management gain (loss), net	19,397	123,549	(62,348)	141,170
Well operations, pipeline income and other	10	488	2,425	1,666
Total revenues	163,890	231,100	274,818	426,692
Costs, expenses and other:
Production costs	14,001	13,825	43,006	42,749
Production taxes	9,568	5,476	19,682	13,206
Transportation, gathering and processing expenses	5,048	3,938	13,554	6,584
Cost of natural gas marketing	3,092	2,781	7,795	8,875
Exploration expense	241	252	688	812
Impairment of crude oil and natural gas properties	933	154,031	6,104	161,207
General and administrative expense	32,510	20,277	78,868	62,050
Depreciation, depletion and amortization	112,927	80,947	317,329	206,873
Allowance for uncollectible notes receivable	(700)	0	44,038	0
Accretion of asset retirement obligation	1,777	1,594	5,400	4,742
(Gain) loss on sale of properties and equipment	(219)	(74)	(43)	(302)
Total cost, expenses and other	179,178	283,047	536,421	506,796
Income (loss) from operations	(15,288)	(51,947)	(261,603)	(80,104)
Interest expense	(20,193)	(12,092)	(42,759)	(35,384)
Interest income	140	1,378	1,875	3,626
Income (loss) before income taxes	(35,341)	(62,661)	(302,487)	(111,862)
Provision for income taxes	12,032	21,167	112,198	40,560
Net income (loss)	$ (23,309)	$ (41,494)	$ (190,289)	$ (71,302)
Earnings per share:
Basic	$ (0.48)	$ (1.04)	$ (4.16)	$ (1.84)
Diluted	$ (0.48)	$ (1.04)	$ (4.16)	$ (1.84)
Weighted-average common shares outstanding
Basic	48,839	40,085	45,741	38,837
Diluted	48,839	40,085	45,741	38,837

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Net income (loss)	$ (190,289)	$ (71,302)
Net loss	(190,289)	(71,302)
Adjustments to net income (loss) to reconcile to net cash provided by operating activities:
Net change in fair value of unsettled derivatives	230,177	21,322
Depreciation, depletion and amortization	317,329	206,873
Allowance for uncollectible notes receivable	44,038	0
Impairment of crude oil and natural gas properties	6,104	161,207
Accretion of asset retirement obligation	5,400	4,742
Stock-based compensation	15,205	14,278
Gain (loss) on sale of properties and equipment	(43)	(302)
Amortization of debt discount and issuance costs	12,951	5,308
Deferred income taxes	(114,136)	(44,770)
Non-cash interest income	(1,194)	(3,624)
Other	668	(174)
Changes in assets and liabilities	34,621	(10,552)
Net cash from operating activities	360,831	283,006
Cash flows from investing activities:
Capital expenditures	(353,722)	(489,036)
Acquisition of crude oil and natural gas properties	(100,000)	0
Proceeds from sale of properties and equipment	4,945	319
Net cash from investing activities	(448,777)	(488,717)
Cash flows from financing activities:
Proceeds from revolving credit facility	85,000	325,000
Repayment of revolving credit facility	(122,000)	(331,000)
Redemption of convertible notes	(115,000)	0
Proceeds from sale of common stock, net of issuance costs	855,072	202,851
Proceeds from Issuance of Senior Long-term Debt	392,250	0
Proceeds from Convertible Debt	193,979	0
Other	(4,513)	(3,516)
Net cash from financing activities	1,284,788	193,335
Net change in cash and cash equivalents	1,196,842	(12,376)
Cash and cash equivalents, beginning of period	850	16,066
Cash and cash equivalents, end of period	1,197,692	3,690
Cash payments (receipts) for:
Interest, net of capitalized interest	22,975	23,467
Income taxes	167	9,936
Non-cash investing and financing activities:
Change in accounts payable related to purchases of properties and equipment	(31,497)	(68,529)
Change in asset retirement obligation, with a corresponding change to natural gas and crude oil properties, net of disposals	1,137	1,642
Purchase of properties and equipment under capital leases	$ 1,231	$ 1,479

XML

Condensed Consolidated Statements of Equity Statement - USD ($) $ in Thousands	Total	Parent [Member]	Common Stock [Member]	Preferred Stock [Member]	Treasury Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest [Abstract]
Shares, Issued			35,927,985		21,643
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest			$ 359	$ 0	$ (911)	$ 689,209	$ 448,702
Shares issued pursuant to sale of equity			4,002,000
Exercise of stock options			0
Issuance of stock awards, net of forfeitures			191,623
Treasury Stock, Shares, Acquired					93,898
Stock Issued During Period, Shares, Treasury Stock Reissued					(97,995)
Deferred Compensation Plan, Shares, Change During the Period					4,872
Sale of Stock, Consideration Received on Transaction			$ 40			202,811
Stock Issued During Period, Value, Share-based Compensation, Net of Forfeitures			$ 2
Adjustments to Additional Paid in Capital, Convertible Debt with Conversion Feature						0
Share-based Compensation	$ 14,278					14,419
Stock Issued During Period, Value, Treasury Stock Reissued					$ 4,632	(4,633)
DeferredCompensationPlan,Value,ChangeDuringthePeriod					(249)
Adjustments to Additional Paid in Capital, Income Tax Benefit from Share-based Compensation						1,232
Net Income (Loss) Attributable to Parent	(71,302)						(71,302)
Treasury Stock, Value, Acquired, Cost Method					$ (4,575)
Shares, Issued			40,121,608		22,418
Shares, Outstanding			40,099,190
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest		$ 1,279,736	$ 401		$ (1,103)	903,038	377,400
Shares, Issued			40,174,776		20,220
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest			$ 402	$ 0	$ (1,009)	907,383	380,422
Shares issued pursuant to sale of equity			15,799,906
Exercise of stock options			46,084
Issuance of stock awards, net of forfeitures			259,778
Treasury Stock, Shares, Acquired					90,695
Stock Issued During Period, Shares, Treasury Stock Reissued					(91,895)
Deferred Compensation Plan, Shares, Change During the Period					6,834
Sale of Stock, Consideration Received on Transaction			$ 158			854,932
Stock Issued During Period, Value, Share-based Compensation, Net of Forfeitures			$ 3
Adjustments to Additional Paid in Capital, Convertible Debt with Conversion Feature						23,264
Share-based Compensation	15,205					15,202
Stock Issued During Period, Value, Treasury Stock Reissued					$ 5,179	(5,180)
DeferredCompensationPlan,Value,ChangeDuringthePeriod					(364)
Adjustments to Additional Paid in Capital, Income Tax Benefit from Share-based Compensation						1,063
Net Income (Loss) Attributable to Parent	$ (190,289)						(190,289)
Treasury Stock, Value, Acquired, Cost Method					$ (5,106)
Shares, Issued			56,280,544		25,854
Shares, Outstanding			56,254,690
Stockholders' Equity, Including Portion Attributable to Noncontrolling Interest		$ 1,986,060	$ 563		$ (1,300)	$ 1,796,664	$ 190,133

XML

NATURE OF OPERATIONS AND BASIS OF PRESENTATION

9 Months Ended

Sep. 30, 2016

NATURE OF OPERATIONS AND BASIS OF PRESENTATION [Abstract]

Nature of Operations

NATURE OF OPERATIONS AND BASIS OF PRESENTATION

PDC Energy, Inc. (the "Company," "we," "us," or "our") is a domestic independent exploration and production company that produces, develops, acquires and explores for crude oil, natural gas and NGLs, with primary operations in the Wattenberg Field in Colorado and the Utica Shale in southeastern Ohio. Our operations in the Wattenberg Field are focused in the horizontal Niobrara and Codell plays and our Ohio operations are focused in the Utica Shale play. In addition, we currently have a pending acquisition in the Delaware Basin in Texas. See Note 6, Pending Acquisition. As of September 30, 2016, we owned an interest in approximately 3,000 gross wells. We are engaged in two business segments: Oil and Gas Exploration and Production and Gas Marketing.

The accompanying unaudited condensed consolidated financial statements include the accounts of PDC, our wholly-owned subsidiary Riley Natural Gas ("RNG") and our proportionate share of our four affiliated partnerships. Pursuant to the proportionate consolidation method, our accompanying condensed consolidated financial statements include our pro rata share of assets, liabilities, revenues and expenses of the entities which we proportionately consolidate. All material intercompany accounts and transactions have been eliminated in consolidation.

In our opinion, the accompanying condensed consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary for a fair statement of our financial statements for interim periods in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the SEC. Accordingly, pursuant to such rules and regulations, certain notes and other financial information included in audited financial statements have been condensed or omitted. The December 31, 2015 condensed consolidated balance sheet data was derived from audited statements, but does not include all disclosures required by U.S. GAAP. The information presented in this Quarterly Report on Form 10-Q should be read in conjunction with our audited consolidated financial statements and notes thereto included in our 2015 Form 10-K. Our results of operations and cash flows for the three and nine months ended September 30, 2016 are not necessarily indicative of the results to be expected for the full year or any other future period.

XML

Recent Accounting Standards

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

Significant Accounting Policies

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Recently Issued Accounting Standards

In May 2014, the Financial Accounting Standards Board ("FASB") and the International Accounting Standards Board issued their converged standard on revenue recognition that provides a single, comprehensive model that entities will apply to determine the measurement of revenue and timing of when it is recognized. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. The standard outlines a five-step approach to apply the underlying principle: (1) identify the contract with the customer, (2) identify the separate performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to separate performance obligations and (5) recognize revenue when (or as) each performance obligation is satisfied. In March 2016, the FASB issued an update to the standard intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations when recognizing revenue. The revenue standard is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The revenue standard can be adopted under the full retrospective method or simplified transition method. Entities are permitted to adopt the revenue standard early, beginning with annual reporting periods after December 15, 2016. We are currently evaluating the impact these changes may have on our condensed consolidated financial statements.

In August 2014, the FASB issued a new standard related to the disclosure of uncertainties about an entity's ability to continue as a going concern. The new standard requires management to assess an entity's ability to continue as a going concern at the end of every reporting period and to provide related footnote disclosures in certain circumstances. The new standard will be effective for all entities in the first annual period ending after December 15, 2016, with early adoption permitted. We expect to adopt this standard in the fourth quarter of 2016. Adoption of this standard is not expected to have a significant impact on our condensed consolidated financial statements.

In February 2016, the FASB issued an accounting update aimed at increasing the transparency and comparability among organizations by recognizing lease assets and liabilities on the balance sheet and disclosing key information about related leasing arrangements. For leases with terms of more than 12 months, the accounting update requires lessees to recognize an asset for its right to use the underlying asset and a lease liability for the corresponding lease obligation. Both the lease asset and liability will initially be measured at the present value of the future minimum lease payments over the lease term. Subsequent measurement, including the presentation of expenses and cash flows, will depend upon the classification of the lease as either a finance or operating lease. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those years, with early adoption permitted, and is to be applied as of the beginning of the earliest period presented using a modified retrospective approach. We are currently evaluating the impact these changes may have on our condensed consolidated financial statements.

In March 2016, the FASB issued an accounting update on stock-based compensation intended to simplify several aspects of the accounting for employee share-based payment award transactions. Areas of simplification include income tax consequences, classification of the awards as either equity or liabilities and the classification on the statement of cash flows. The guidance is effective for fiscal years beginning after December 15, 2016, and interim periods within those years, with early adoption permitted. We expect to adopt this standard in the fourth quarter of 2016. Adoption of this standard is not expected to have a significant impact on our condensed consolidated financial statements.

In August 2016, the FASB issued an accounting update on statements of cash flows to address diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. We are currently evaluating the impact these changes may have on our condensed consolidated financial statements.

XML

Fair Value Measurements and Disclosures

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value, Measurement Inputs, Disclosure

FAIR VALUE OF FINANCIAL INSTRUMENTS

Determination of Fair Value

Our fair value measurements are estimated pursuant to a fair value hierarchy that requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date, giving the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable data (Level 3). In some cases, the inputs used to measure fair value might fall in different levels of the fair value hierarchy. The lowest level input that is significant to a fair value measurement in its entirety determines the applicable level in the fair value hierarchy. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgment, considering factors specific to the asset or liability, and may affect the valuation of the assets and liabilities and their placement within the fair value hierarchy levels. The three levels of inputs that may be used to measure fair value are defined as:

Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 – Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable for the asset or liability, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability and inputs that are derived from observable market data by correlation or other means.

Level 3 – Unobservable inputs for the asset or liability, including situations where there is little, if any, market activity.

Derivative Financial Instruments

We measure the fair value of our derivative instruments based upon a pricing model that utilizes market-based inputs, including, but not limited to, the contractual price of the underlying position, current market prices, crude oil and natural gas forward curves, discount rates such as the LIBOR curve for a similar duration of each outstanding position, volatility factors and nonperformance risk. Nonperformance risk considers the effect of our credit standing on the fair value of derivative liabilities and the effect of our counterparties' credit standings on the fair value of derivative assets. Both inputs to the model are based on published credit default swap rates and the duration of each outstanding derivative position.

We validate our fair value measurement through the review of counterparty statements and other supporting documentation, the determination that the source of the inputs is valid, the corroboration of the original source of inputs through access to multiple quotes, if available, or other information and monitoring changes in valuation methods and assumptions. While we use common industry practices to develop our valuation techniques and believe our valuation method is appropriate and consistent with those used by other market participants, changes in our pricing methodologies or the underlying assumptions could result in significantly different fair values.

Our fixed-price swaps, basis swaps and physical purchases are included in Level 2 and our collars and physical sales are included in Level 3. The following table presents, for each applicable level within the fair value hierarchy, our derivative assets and liabilities, including both current and non-current portions, measured at fair value on a recurring basis:

	September 30, 2016						December 31, 2015
	Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(in thousands)
Assets:
Commodity-based derivative contracts	$	49,021	$	24,582	$	73,603	$	174,657	$	91,288	$	265,945
Basis protection derivative contracts	424		—		424		101		—		101
Total assets	49,445		24,582		74,027		174,758		91,288		266,046
Liabilities:
Commodity-based derivative contracts	30,917		8,650		39,567		738		—		738
Basis protection derivative contracts	881		—		881		1,552		—		1,552
Total liabilities	31,798		8,650		40,448		2,290		—		2,290
Net asset	$	17,647	$	15,932	$	33,579	$	172,468	$	91,288	$	263,756

The following table presents a reconciliation of our Level 3 assets measured at fair value:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
	(in thousands)
Fair value, net asset beginning of period	$	27,285		$	58,256		$	91,288		$	62,356
Changes in fair value included in condensed consolidated statement of operations line item:
Commodity price risk management gain (loss), net	4,234			38,085			(16,023		)	42,525
Sales from natural gas marketing	—			51			(20		)	51
Settlements included in statement of operations line items:
Commodity price risk management gain (loss), net	(15,587		)	(12,530		)	(59,243		)	(21,063		)
Sales from natural gas marketing	—			—			(70		)	(7		)
Fair value, net asset end of period	$	15,932		$	83,862		$	15,932		$	83,862
Net change in fair value of unsettled derivatives included in condensed consolidated statement of operations line item:
Commodity price risk management gain (loss), net	$	(2,240	)	$	34,564		$	(8,273	)	$	31,794

The significant unobservable input used in the fair value measurement of our derivative contracts is the implied volatility curve, which is provided by a third-party vendor. A significant increase or decrease in the implied volatility, in isolation, would have a directionally similar effect resulting in a significantly higher or lower fair value measurement of our Level 3 derivative contracts. There has been no change in the methodology we apply to measure the fair value of our Level 3 derivative contracts during the periods covered by this report.

Non-Derivative Financial Assets and Liabilities

The carrying value of the financial instruments included in current assets and current liabilities approximate fair value due to the short-term maturities of these instruments.

We utilize fair value on a nonrecurring basis to review our crude oil and natural gas properties for possible impairment when events and circumstances indicate a possible decline in the recoverability of the carrying value of such properties. The fair value of the properties is determined based upon estimated future discounted cash flow, a Level 3 input, using estimated production and prices at which we reasonably expect the crude oil and natural gas will be sold.

The liability associated with our non-qualified deferred compensation plan for non-employee directors may be settled in cash or shares of our common stock. The carrying value of this obligation is based on the quoted market price of our common stock, which is a Level 1 input. The liability related to this plan, which was included in other liabilities on the condensed consolidated balance sheets, was immaterial as of September 30, 2016 and December 31, 2015.

The portion of our long-term debt related to our revolving credit facility approximates fair value due to the variable nature of related interest rates. We have not elected to account for the portion of our debt related to our senior notes under the fair value option; however, as of September 30, 2016, we estimate the fair value of the portion of our long-term debt related to our 1.125% senior notes due 2021 to be $214.8 million, or 107.4% of par value, 6.125% senior notes due 2024 to be $415.6 million, or 103.9% of par value, and 7.75% senior notes due 2022 to be $530.3 million, or 106.1% of par value. We determined these valuations based upon measurements of trading activity and broker and/or dealer quotes, respectively, which are published market prices, and therefore are Level 2 inputs.

The carrying value of our capital lease obligations approximates fair value due to the variable nature of the imputed interest rates and the duration of the related vehicle lease.

Concentration of Risk

Derivative Counterparties. Our derivative arrangements expose us to credit risk of nonperformance by our counterparties. We primarily use financial institutions who are also lenders under our revolving credit facility as counterparties to our derivative contracts. To date, we have had no counterparty default losses relating to our derivative arrangements. We have evaluated the credit risk of our derivative assets from our counterparties using relevant credit market default rates, giving consideration to amounts outstanding for each counterparty and the duration of each outstanding derivative position. Based on our evaluation, we have determined that the potential impact of nonperformance of our counterparties on the fair value of our derivative instruments was not significant at September 30, 2016, taking into account the estimated likelihood of nonperformance.

The following table presents the counterparties that expose us to credit risk as of September 30, 2016 with regard to our derivative assets:

Counterparty Name	Fair Value of Derivative Assets
	(in thousands)
Canadian Imperial Bank of Commerce (1)	$	21,343
JP Morgan Chase Bank, N.A (1)	17,929
Bank of Nova Scotia (1)	15,166
Wells Fargo Bank, N.A. (1)	9,891
NATIXIS (1)	7,171
Other lenders in our revolving credit facility	2,491
Various (2)	36
Total	$	74,027

__________

(1)Major lender in our revolving credit facility. See Note 8, Long-Term Debt.

(2)Represents a total of two counterparties.

Cash and Cash Equivalents.We consider all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents potentially subject us to a concentration of credit risk as substantially all of our deposits held in financial institutions were in excess of the FDIC insurance limits at September 30, 2016. We maintain our cash and cash equivalents in the form of money market and checking accounts with financial institutions that we believe are creditworthy.

Notes Receivable. The following table presents information regarding a note receivable outstanding as of September 30, 2016:

	Amount
	(in thousands)
Note receivable:
Principal outstanding, December 31, 2015	$	43,069
Paid-in-kind interest	969
Principal outstanding, September 30, 2016	44,038
Allowance for uncollectible notes receivable	(44,038		)
Note receivable, net	$	—

In October 2014, we sold our entire 50% ownership interest in PDCM to an unrelated third-party. As part of the consideration, we received a promissory note (the “Note”) for a principal sum of $39 million, bearing interest at varying rates beginning at 8%, and increasing annually. Pursuant to the Note agreement, interest is payable quarterly, in arrears, commencing in December 2014 and continuing on the last business day of each fiscal quarter thereafter. At the option of the issuer of the Note, an unrelated third-party, interest can be paid-in-kind (the “PIK Interest”) and any such PIK Interest will be added to the outstanding principal amount of the Note. As of September 30, 2016, the issuer of the Note had elected the PIK Interest option. The principal and any unpaid interest is due and payable in full in September 2020 and can be prepaid in whole or in part at any time without premium or penalty. If an event of default occurs under the Note agreement, the Note must be repaid prior to maturity. Legally, the Note is secured by a pledge of stock in certain subsidiaries of the unrelated third-party, debt securities and other assets; however, we believe that collection of the Note is not reasonably assured.

On a quarterly basis, we examine the Note for evidence of impairment, evaluating factors such as the creditworthiness of the issuer of the Note and the value of the underlying assets that secure the Note. We performed our quarterly evaluation and cash flow analysis as of March 31, 2016 and, based upon the unaudited year-end financial statements and reserve report of the issuer of the Note received by us in late March 2016 and existing market conditions, determined that collection of the Note and PIK Interest was not reasonably assured. As a result, we recognized a provision and recorded an allowance for uncollectible notes receivable for the $44 million outstanding balance as of March 31, 2016, which was included in the condensed consolidated balance sheet line item other assets. As of September 30, 2016, there has been no change to our assessment of the collectibility of the note or related interest since March 31, 2016. Commencing in the second quarter of 2016, we ceased recognizing interest income on the Note and are accounting for the Note under the cash basis method.

Under the effective interest method, we recognized $1.2 million of interest income related to the Note for the three months ended March 31, 2016, of which $1 million was PIK Interest, and we recognized $1.1 million and $3.4 million of interest income related to the Note for the three and nine months ended September 30, 2015, respectively, of which $0.8 million and $2.4 million, respectively, was PIK Interest.

Additionally, during the three months ended March 31, 2016, we recorded a $0.7 million provision and allowance for uncollectible notes receivable to impair a promissory note related to a previous divestiture as collection of the promissory note was not reasonably assured based on the analysis we performed as of March 31, 2016. In August 2016, we collected the $0.7 million promissory note and reversed the related provision and allowance for uncollectible notes receivable during the three months ended September 30, 2016.

XML

Derivative Financial Instruments

9 Months Ended

Sep. 30, 2016

Derivative Instruments Not Designated as Hedging Instruments [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

DERIVATIVE FINANCIAL INSTRUMENTS

Our results of operations and operating cash flows are affected by changes in market prices for crude oil, natural gas and NGLs. To manage a portion of our exposure to price volatility from producing crude oil and natural gas, we utilize the following economic hedging strategies for each of our business segments.

• For crude oil and natural gas sales, we enter into derivative contracts to protect against price declines in future periods. While we structure these derivatives to reduce our exposure to changes in price associated with the derivative commodity, they also limit the benefit we might otherwise have received from price increases in the physical market; and

• For natural gas marketing, we enter into fixed-price physical purchase and sale agreements that qualify as derivative contracts. In order to offset the fixed-price physical derivatives in our natural gas marketing, we enter into financial derivative instruments that have the effect of locking in the prices we will receive or pay for the same volumes and period, offsetting the physical derivative.

We believe our derivative instruments continue to be effective in achieving the risk management objectives for which they were intended. As of September 30, 2016, we had derivative instruments, which were comprised of collars, fixed-price swaps, basis protection swaps and physical sales and purchases, in place for a portion of our anticipated production through 2018 for a total of 90,425 BBtu of natural gas and 8,857 MBbls of crude oil. The majority of our derivative contracts are entered into at no cost to us as we hedge our anticipated production at the then-prevailing commodity market prices.

We have not elected to designate any of our derivative instruments as hedges, and therefore do not qualify for use of hedge accounting. Accordingly, changes in the fair value of our derivative instruments are recorded in the statements of operations. Changes in the fair value of derivative instruments related to our Oil and Gas Exploration and Production segment are recorded in commodity price risk management, net. Changes in the fair value of derivative instruments related to our Gas Marketing segment are recorded in sales from and cost of natural gas marketing.

The following table presents the balance sheet location and fair value amounts of our derivative instruments on the condensed consolidated balance sheets:

			Fair Value
Derivative instruments:		Condensed Consolidated Balance sheet line item	September 30, 2016		December 31, 2015
			(in thousands)
Derivative assets:	Current
	Commodity contracts
	Related to crude oil and natural gas sales	Fair value of derivatives	$	65,191	$	221,161
	Related to natural gas marketing	Fair value of derivatives	270		441
	Basis protection contracts
	Related to crude oil and natural gas sales	Fair value of derivatives	143		57
			65,604		221,659
	Non-current
	Commodity contracts
	Related to crude oil and natural gas sales	Fair value of derivatives	8,122		44,292
	Related to natural gas marketing	Fair value of derivatives	20		51
	Basis protection contracts
	Related to crude oil and natural gas sales	Fair value of derivatives	281		44
			8,423		44,387
Total derivative assets			$	74,027	$	266,046
Derivative liabilities:	Current
	Commodity contracts
	Related to crude oil and natural gas sales	Fair value of derivatives	$	21,639	$	—
	Related to natural gas marketing	Fair value of derivatives	221		417
	Basis protection contracts
	Related to crude oil and natural gas sales	Fair value of derivatives	703		1,178
			22,563		1,595
	Non-current
	Commodity contracts
	Related to crude oil and natural gas sales	Fair value of derivatives	17,698		275
	Related to natural gas marketing	Fair value of derivatives	9		46
	Basis protection contracts
	Related to crude oil and natural gas sales	Fair value of derivatives	178		374
			17,885		695
Total derivative liabilities			$	40,448	$	2,290

The following table presents the impact of our derivative instruments on our condensed consolidated statements of operations:

	Three Months Ended September 30,						Nine Months Ended September 30,
Condensed consolidated statement of operations line item	2016			2015			2016			2015
	(in thousands)
Commodity price risk management gain (loss), net
Net settlements	$	47,728		$	67,993		$	167,859		$	162,454
Net change in fair value of unsettled derivatives	(28,331		)	55,556			(230,207		)	(21,284		)
Total commodity price risk management gain (loss), net	$	19,397		$	123,549		$	(62,348	)	$	141,170
Sales from natural gas marketing
Net settlements	$	122		$	165		$	420		$	561
Net change in fair value of unsettled derivatives	255			(5		)	(263		)	(298		)
Total sales from natural gas marketing	$	377		$	160		$	157		$	263
Cost of natural gas marketing
Net settlements	$	(103	)	$	(157	)	$	(380	)	$	(531	)
Net change in fair value of unsettled derivatives	(277		)	(5		)	293			260
Total cost of natural gas marketing	$	(380	)	$	(162	)	$	(87	)	$	(271	)

All of our financial derivative agreements contain master netting provisions that provide for the net settlement of all contracts through a single payment in the event of early termination. Our fixed-price physical purchase and sale agreements that qualify as derivative contracts are not subject to master netting provisions and are not significant. We have elected not to offset the fair value positions recorded on our condensed consolidated balance sheets.

The following table reflects the impact of netting agreements on gross derivative assets and liabilities:

As of September 30, 2016	Derivative instruments, recorded in condensed consolidated balance sheet, gross		Effect of master netting agreements			Derivative instruments, net
	(in thousands)
Asset derivatives:
Derivative instruments, at fair value	$	74,027	$	(22,520	)	$	51,507
Liability derivatives:
Derivative instruments, at fair value	$	40,448	$	(22,520	)	$	17,928

As of December 31, 2015	Derivative instruments, recorded in condensed consolidated balance sheet, gross		Effect of master netting agreements			Derivative instruments, net
	(in thousands)
Asset derivatives:
Derivative instruments, at fair value	$	266,046	$	(1,921	)	$	264,125
Liability derivatives:
Derivative instruments, at fair value	$	2,290	$	(1,921	)	$	369

XML

Properties and Equipment

9 Months Ended

Sep. 30, 2016

Oil and Gas Property [Abstract]

Property, Plant and Equipment Disclosure

PROPERTIES AND EQUIPMENT

The following table presents the components of properties and equipment, net of accumulated depreciation, depletion and amortization ("DD&A"):

	September 30, 2016			December 31, 2015
	(in thousands)
Properties and equipment, net:
Crude oil and natural gas properties
Proved	$	3,183,772		$	2,881,189
Unproved	61,838			60,498
Total crude oil and natural gas properties	3,245,610			2,941,687
Equipment and other	31,410			30,098
Land and buildings	10,900			12,667
Construction in progress	107,794			113,115
Properties and equipment, at cost	3,395,714			3,097,567
Accumulated DD&A	(1,463,440		)	(1,157,015		)
Properties and equipment, net	$	1,932,274		$	1,940,552

In September 2016, we closed on an acreage exchange transaction with Noble Energy, Inc. and certain of its subsidiaries ("Noble") to consolidate certain acreage positions in the core area of the Wattenberg Field. Pursuant to the transaction, we exchanged leasehold acreage and, to a lesser extent, interests in certain development wells. Upon closing, we received approximately 13,500 net acres in exchange for approximately 11,700 net acres, with no cash exchanged between the parties.

The following table presents impairment charges recorded for crude oil and natural gas properties:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
	(in thousands)
Impairment of proved and unproved properties	$	338	$	150,840	$	2,391	$	152,764
Amortization of individually insignificant unproved properties	595		3,191		681		8,443
Impairment of crude oil and natural gas properties	933		154,031		3,072		161,207
Land and buildings	—		—		3,032		—
Impairment of properties and equipment	$	933	$	154,031	$	6,104	$	161,207

XML

Pending Acquisition Pending Acquisition (Notes)

9 Months Ended

Sep. 30, 2016

Business Combinations [Abstract]

Mergers, Acquisitions and Dispositions Disclosures [Text Block]

PENDING ACQUISITION

In August 2016, we entered into acquisition agreements to purchase Arris Petroleum Corporation (“Arris”) and the assets of 299 Resources, LLC, 299 Production, LLC and 299 Pipeline, LLC (collectively, “299 Sellers”) pursuant to which, and subject to the terms and conditions of those agreements, we have agreed to acquire an aggregate of approximately 57,000 net acres, approximately 30 wells and other related midstream infrastructure in Reeves and Culberson Counties, Texas, for an aggregate consideration to Arris and 299 Sellers of approximately $915 million in cash and approximately 9.4 million shares of our common stock (valued at approximately $590 million at the time the acquisition agreements were executed), subject to certain adjustments, and ongoing due diligence (the "Delaware Basin Acquisition"). The acquisition agreements allow the sellers to include a specified amount of additional leases in the transaction, which would increase the purchase price. Upon executing the acquisition agreements, we paid a $100 million deposit toward the cash portion of the purchase price into an escrow account, which is included in other assets in our September 30, 2016 condensed consolidated balance sheet. In some circumstances set forth in the acquisition agreements, we could be required to forfeit the $100 million deposit. The acquisition is expected to close in December 2016; however, there can be no assurance that conditions to closing will be satisfied.

In order to fund the cash portion of the Delaware Basin Acquisition, we completed a public offering of shares of our common stock, a public offering of convertible senior notes and a private offering of senior notes in September 2016. See Note 8, Long-Term Debt, and Note 12, Common Stock, for further information. Prior to the September 2016 issuances of common stock, convertible senior notes and senior notes, we entered into a commitment letter with JPMorgan Chase Bank, N.A. (“JPMorgan”), for short-term bridge financing of the Delaware Basin Acquisition. The commitment letter contemplated, among other things, (i) a senior unsecured bridge loan to us in an aggregate principal amount not to exceed $600 million, to be drawn, if at all, at the closing of the Delaware Basin Acquisition, (ii) a $250 million increase in the commitments under our existing revolving credit facility and (iii) certain related proposed amendments and waivers to our existing credit facility agreement. Upon issuance of the common stock, convertible senior notes and senior notes, the bridge loan commitment was terminated. Upon closing of the Delaware Basin Acquisition, we will be required to pay approximately $9 million in fees related to the bridge loan commitment, approximately $6 million in fees related to the increase in commitments under the revolving credit facility and approximately $10 million in other direct acquisition-related costs. During the three months ended September 30, 2016, we recorded charges for the bridge loan fees and the other direct acquisition-related costs. The $9 million charge for fees related to the bridge loan commitment is included in interest expense and the $10 million charge for other direct acquisition-related costs is included in general and administrative expenses. The liabilities associated with both amounts are included in other accrued expenses on our condensed consolidated balance sheet as of September 30, 2016.

XML

Income Taxes

9 Months Ended

Sep. 30, 2016

Income Tax Disclosure [Abstract]

Income Tax Disclosure

INCOME TAXES

We evaluate and update our estimated annual effective income tax rate on a quarterly basis based on current and forecasted operating results and tax laws. Consequently, based upon the mix and timing of our actual earnings compared to annual projections, our effective tax rate may vary quarterly and may make quarterly comparisons not meaningful. A tax expense or benefit unrelated to the current year income or loss is recognized in its entirety as a discrete item of tax in the period identified. The quarterly income tax provision is generally comprised of tax expense on income or benefit on loss at the most recent estimated annual effective tax rate, adjusted for the effect of discrete items.

The effective tax rate for the three and nine months ended September 30, 2016 was a 34.0% and 37.1% benefit on loss compared to a 33.8% and 36.3% benefit on loss for the three and nine months ended September 30, 2015. The effective tax rate for the three and nine months ended September 30, 2016 is based upon a full year forecasted tax benefit on loss and is greater than the statutory federal tax rate, primarily due to state taxes, partially offset by nondeductible officers’ compensation and nondeductible lobbying expenses. The effective tax rate for the three and nine months ended September 30, 2015 differs from the statutory rate primarily due to state taxes and percentage depletion, partially offset by nondeductible officers' compensation. There were no significant discrete tax items recorded during the three and nine months ended September 30, 2016 or September 30, 2015.

As of September 30, 2016, there is no liability for unrecognized tax benefits. As of the date of this report, we are current with our income tax filings in all applicable state jurisdictions and are not currently under any state income tax examinations. We continue to voluntarily participate in the Internal Revenue Service's ("IRS") Compliance Assurance Program ("CAP") for the 2015 and 2016 tax years. With respect to the 2014 tax year, we have agreed to a post filing adjustment with the IRS which resulted in an immaterial tax payment for the 2014 tax year. The IRS has fully accepted the 2014 federal return, as adjusted. The IRS has partially accepted our recently filed 2015 return that is now going through the IRS CAP post-filing review process.

XML

Long-Term Debt

9 Months Ended

Sep. 30, 2016

Debt Disclosure [Abstract]

Long-term Debt

LONG-TERM DEBT

Long-term debt consisted of the following as of:

	September 30, 2016			December 31, 2015
	(in thousands)
Senior notes:
1.125% Convertible senior notes due 2021:
Principal amount	$	200,000		$	—
Unamortized discount	(39,199		)	—
Unamortized debt issuance costs	(4,793		)	—
1.125% Convertible senior notes due 2021, net of unamortized discount and debt issuance costs	156,008			—
6.125% Senior notes due 2024:
Principal amount	400,000			—
Unamortized debt issuance costs	(7,710		)	—
6.125% Senior notes due 2024, net of unamortized debt issuance costs	392,290			—
7.75% Senior notes due 2022:
Principal amount	500,000			500,000
Unamortized debt issuance costs	(6,723		)	(7,563		)
7.75% Senior notes due 2022, net of unamortized debt issuance costs	493,277			492,437
3.25% Convertible senior notes due 2016:
Principal amount	—			115,000
Unamortized discount	—			(1,852		)
Unamortized debt issuance costs	—			(208		)
3.25% Convertible senior notes due 2016, net of unamortized discount and debt issuance costs	—			112,940
Total senior notes	1,041,575			605,377
Revolving credit facility	—			37,000
Total debt, net of unamortized discount and debt issuance costs	1,041,575			642,377
Less current portion of long-term debt	—			112,940
Long-term debt	$	1,041,575		$	529,437

Senior Notes

1.125% Convertible Senior Notes Due 2021. In September 2016, we issued $200 million of 1.125% convertible senior notes due 2021 (the "2021 Convertible Notes") in a public offering. The 2021 Convertible Notes are governed by an indenture dated September 14, 2016 between us and the U.S. Bank National Association, as trustee. The maturity for the payment of principal is September 15, 2021. Interest at the rate of 1.125% per year is payable in cash semiannually in arrears on each March 15 and September 15, commencing on March 15, 2017. The 2021 Convertible Notes are senior unsecured obligations and rank senior in right of payment to our future indebtedness that is expressly subordinated to the 2021 Convertible Notes; equal in right of payment to our existing and future indebtedness that is not so subordinated; effectively junior in right of payment to all of our secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all existing and future indebtedness (including trade payables) incurred by our non-guarantor subsidiaries. The proceeds from the issuance of the 2021 Convertible Notes, after deducting offering expenses and underwriting discounts, are expected to be used to fund a portion of the purchase price of the Delaware Basin Acquisition (see Note 6, Pending Acquisition), to pay related fees and expenses and for general corporate purposes.

The 2021 Convertible Notes are convertible prior to March 15, 2021 only upon specified events and during specified periods and, thereafter, at any time, in each case at an initial conversion rate of 11.7113 per $1,000 principal amount of the 2021 Convertible Notes, which is equal to an initial conversion price of approximately $85.39 per share. The conversion rate is subject to adjustment upon certain events. Upon conversion, the 2021 Convertible Notes may be settled, at our election, in shares of our common stock, cash or a combination of cash and shares of our common stock. We have initially elected a combination settlement method to satisfy our conversion obligation, which allows us to settle the principal amount of the 2021 Convertible Notes in cash and to settle the excess conversion value, if any, in shares, as well as cash in lieu of fractional shares.

We may not redeem the 2021 Convertible Notes prior to their maturity date. If we undergo a fundamental change, as defined in the indenture for the 2021 Convertible Notes, subject to certain conditions, holders of the 2021 Convertible Notes may require us to repurchase all or part of the 2021 Convertible Notes for cash at a price equal to 100% of the principal amount of the 2021 Convertible Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The occurrence of a fundamental change will also result in the 2021 Convertible Notes becoming convertible.

We allocated the gross proceeds of the 2021 Convertible Notes between the liability and equity components of the debt. The initial $160.5 million million liability component was determined based on the fair value of similar debt instruments excluding the conversion feature for similar terms and priced on the same day we issued the 2021 Convertible Notes. The initial $39.5 million equity component represents the debt discount and was calculated as the difference between the fair value of the debt and the gross proceeds of the 2021 Convertible Notes. Approximately $4.8 million in costs associated with the issuance of the 2021 Convertible Notes have been capitalized as debt issuance costs and are being amortized as interest expense over the life of the notes using the effective interest method. As of September 30, 2016, the unamortized debt discount will be amortized over the remaining contractual term to maturity of the 2021 Convertible Notes using an effective interest rate of 5.8%. Based upon a September 30, 2016 stock price of $67.06 per share, the “if-converted” value of the 2021 Convertible Notes did not exceed the principal amount.

6.125% Senior Notes Due 2024. In September 2016, we issued $400 million aggregate principal amount of 6.125% senior notes due September 15, 2024 (the “2024 Senior Notes”) in a private placement. The proceeds from the issuance of the 2024 Senior Notes, after deducting offering expenses and underwriting discounts, are expected to be used to fund a portion of the purchase price of the Delaware Basin Acquisition (see Note 6, Pending Acquisition), to pay related fees and expenses and for general corporate purposes. If the acquisition is not completed on or prior to December 31, 2016 (or in some circumstances by or on January 15, 2017), the 2024 Senior Notes will be redeemed in whole at a special mandatory redemption price equal to 100% of the aggregate principal amount of the 2024 notes, plus accrued and unpaid interest.

The 2024 Senior Notes accrue interest from the date of issuance and interest is payable semi-annually in arrears on March 15 and September 15, commencing on March 15, 2017. Approximately $7.8 million in costs associated with the issuance of the 2024 Senior Notes have been capitalized as debt issuance costs and are being amortized as interest expense over the life of the notes using the effective interest method. The 2024 Senior Notes are senior unsecured obligations and rank senior in right of payment to our future indebtedness that is expressly subordinated to the notes; equal in right of payment to all our existing and future indebtedness that is not so subordinated; effectively junior in right of payment to all of our secured indebtedness to the extent of the value of the collateral securing such indebtedness, including borrowings under our revolving credit facility; and structurally junior to all existing and future indebtedness (including trade payables) incurred by our non-guarantor subsidiaries.

In connection with the issuance of the 2024 Senior Notes, we entered into a registration rights agreement with the initial purchasers in which we agreed to file a registration statement with the SEC relating to an offer to exchange the 2024 Senior Notes for registered notes with substantially identical terms. In addition, we have agreed, in certain circumstances, to file a shelf registration statement covering the resale of the 2024 Senior Notes by holders.

At any time prior to September 15, 2019, we may redeem up to 35% of the outstanding 2024 Senior Notes with proceeds from certain equity offerings at a redemption price of 106.125% of the principal amount of the notes redeemed, plus accrued and unpaid interest, if at least 65% of the aggregate principal amount of the 2024 Senior Notes remains outstanding after each such redemption and the redemption occurs within 180 days after the closing of the equity offering.

Upon the occurrence of a "change of control," as defined in the indenture for the 2024 Senior Notes, holders will have the right to require us to repurchase all or a portion of the notes at a price equal to 101% of the aggregate principal amount of the notes repurchased, together with any accrued and unpaid interest to the date of purchase. In connection with certain asset sales, we may, under certain circumstances, be required to use the net cash proceeds of such asset sale to make an offer to purchase the notes at 100% of the principal amount, together with any accrued and unpaid interest to the date of purchase.

The indenture governing the 2024 Senior Notes contains covenants that, among other things, limit our ability and the ability of our subsidiaries to incur additional indebtedness; pay dividends or make distributions on our stock; purchase or redeem stock or subordinated indebtedness; make investments; create certain liens; enter into agreements that restrict distributions or other payments by restricted subsidiaries to us; enter into transactions with affiliates; sell assets; consolidate or merge with or into other companies or transfer all or substantially of our assets; and create unrestricted subsidiaries.

7.75% Senior Notes Due 2022. In October 2012, we issued $500 million aggregate principal amount of 7.75% senior notes due October 15, 2022 (the “2022 Senior Notes”) in a private placement. The 2022 Senior Notes accrue interest from the date of issuance and interest is payable semi-annually in arrears on April 15 and October 15. The indenture governing the 2022 Senior Notes contains customary restrictive incurrence covenants, and customary repurchase and redemption provisions, generally similar to those in the indenture governing the 2024 Senior Notes. Capitalized debt issuance costs are being amortized as interest expense over the life of the 2022 Senior Notes using the effective interest method.

3.25% Convertible Senior Notes Due 2016. In November 2010, we issued $115 million aggregate principal amount of 3.25% convertible senior notes due 2016 (the "2016 Convertible Notes") in a private placement. The maturity for the payment of principal was May 15, 2016. At December 31, 2015, our indebtedness included the 2016 Convertible Notes. Upon settlement in May 2016, we paid the aggregate principal amount of the 2016 Convertible Notes, plus cash for fractional shares, totaling approximately 115 million, utilizing proceeds from our March 2016 equity offering. Additionally, we issued 792,406 shares of common stock for the $47.9 million excess conversion value. See Note 12, Common Stock, for more information.

As of September 30, 2016, we were in compliance with all covenants related to the 2021 Convertible Notes, 2024 Senior Notes and 2022 Senior Notes and expect to remain in compliance throughout the next 12-month period.

Credit Facility

Revolving Credit Facility. We are party to a Third Amended and Restated Credit Agreement with JPMorgan Chase Bank, N.A. as administrative agent, and other lenders party thereto (sometimes referred to as the "revolving credit facility"). The revolving credit facility matures in May 2020 and is available for working capital requirements, capital expenditures, acquisitions, general corporate purposes and to support letters of credit. The revolving credit facility provides for a maximum of $1 billion in allowable borrowing capacity, subject to the borrowing base, which is currently $700 million, and the aggregate commitments, which are currently $450 million. The borrowing base is based on, among other things, the loan value assigned to the proved reserves attributable to our crude oil and natural gas interests, excluding proved reserves attributable to our affiliated partnerships. The borrowing base is subject to a semi-annual size redetermination based upon quantification of our reserves at June 30 and December 31, and is also subject to a redetermination upon the occurrence of certain events. The revolving credit facility is secured by substantially all of our assets, including mortgages of producing crude oil and natural gas properties. Our affiliated partnerships are not guarantors of our obligations under the revolving credit facility.

In September 2016, we entered into a Third Amendment to the Third Amended and Restated Credit Agreement. The amendment, among other things, amends the revolving credit facility to permit the completion of the Delaware Basin Acquisition (see Note 6, Pending Acquisition) and, effective upon closing of the acquisition, adjusts the interest rate payable on amounts borrowed under the facility and increases the aggregate commitments under the facility from $450 million to $700 million (with the borrowing base remaining at $700 million).

In October 2016, we entered into a Fourth Amendment to the Third Amended and Restated Credit Agreement. The amendment, among other things, reaffirmed of our borrowing base at $700 million and made certain other immaterial modifications to the existing agreement, including an increase in the amount of our future production that we are permitted to hedge.

We had no outstanding balance on our revolving credit facility as of September 30, 2016, compared to $37 million outstanding as of December 31, 2015. The weighted-average interest rate on the outstanding balance on our revolving credit facility, exclusive of fees on the unused commitment and the letter of credit noted below, was 2.6% per annum as of December 31, 2015.

As of September 30, 2016, RNG had an irrevocable standby letter of credit of approximately $11.7 million in favor of a third-party transportation service provider to secure firm transportation of the natural gas produced by third-party producers for whom we market production in the Appalachian Basin. The letter of credit is currently scheduled to expire in September 2017 but is expected to be automatically extended annually in accordance with the letter of credit's terms and conditions. The letter of credit reduces the amount of available funds under our revolving credit facility by an amount equal to the letter of credit. As of September 30, 2016, the available funds under our revolving credit facility, including the reduction for the $11.7 million letter of credit, was $438.3 million.

The revolving credit facility contains covenants customary for agreements of this type, with the most restrictive being certain financial tests on a quarterly basis. The financial tests, as defined per the revolving credit facility as of September 30, 2016, include requirements to: (a) maintain a minimum current ratio of 1.00 to 1.00 and (b) not exceed a maximum leverage ratio of 4.25 to 1.00. As of September 30, 2016, we were in compliance with all of the revolving credit facility covenants and expect to remain in compliance throughout the next 12-month period. Effective upon closing of the Delaware Basin Acquisition, the maximum permitted leverage ratio will be reduced to 4.00 to 1.00.

XML

Capital Leases (Notes)

9 Months Ended

Sep. 30, 2016

Capital Leased Assets [Line Items]

Capital Leases in Financial Statements of Lessee Disclosure [Text Block]

CAPITAL LEASES

We periodically enter into non-cancelable lease agreements for vehicles utilized by our operations and field personnel. These leases are being accounted for as capital leases, as the present value of minimum monthly lease payments, including the residual value guarantee, exceeds 90% of the fair value of the leased vehicles at inception of the lease.

The following table presents leased vehicles under capital leases as of September 30, 2016:

	Amount
	(in thousands)
Vehicles	$	2,801
Accumulated depreciation	(613		)
	$	2,188

Future minimum lease payments by year and in the aggregate, under non-cancelable capital leases with terms of one year or more, consist of the following:

For the Twelve Months Ending September 30,	Amount
	(in thousands)
2017	$	860
2018	1,167
2019	553
	2,580
Less executory cost	(101		)
Less amount representing interest	(280		)
Present value of minimum lease payments	$	2,199
Short-term capital lease obligations	$	646
Long-term capital lease obligations	1,553
	$	2,199

Short-term capital lease obligations are included in other accrued expenses on the condensed consolidated balance sheets. Long-term capital lease obligations are included in other liabilities on the condensed consolidated balance sheets.

XML

Asset Retirement Obligations

9 Months Ended

Sep. 30, 2016

Asset Retirement Obligation Disclosure [Abstract]

Asset Retirement Obligation Disclosure

ASSET RETIREMENT OBLIGATIONS

The following table presents the changes in carrying amounts of the asset retirement obligations associated with our working interests in crude oil and natural gas properties:

	Amount
	(in thousands)
Balance at beginning of period, January 1, 2016	$	89,492
Obligations incurred with development activities	1,137
Accretion expense	5,400
Obligations discharged with disposal of properties and asset retirements	(6,620		)
Balance end of period, September 30, 2016	89,409
Less current portion	(6,900		)
Long-term portion	$	82,509

Our estimated asset retirement obligation liability is based on historical experience in plugging and abandoning wells, estimated economic lives and estimated plugging and abandonment cost considering federal and state regulatory requirements in effect. The liability is discounted using the credit-adjusted risk-free rate estimated at the time the liability is incurred or revised. In 2016, the credit-adjusted risk-free rates used to discount our plugging and abandonment liabilities ranged from 7.6% to 8.0%. In periods subsequent to initial measurement of the liability, we must recognize period-to-period changes in the liability resulting from the passage of time, revisions to either the amount of the original estimate of undiscounted cash flows or changes in inflation factors and changes to our credit-adjusted risk-free rate as market conditions warrant. Short-term asset retirement obligations are included in other accrued expenses on the condensed consolidated balance sheets.

XML

Commitments and Contingencies

9 Months Ended

Sep. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure

COMMITMENTS AND CONTINGENCIES

Firm Transportation, Processing and Sales Agreements. We enter into contracts that provide firm transportation, sales and processing agreements on pipeline systems through which we transport or sell crude oil and natural gas. Satisfaction of the volume requirements includes volumes produced by us, purchased from third parties and produced by our affiliated partnerships and other third-party working interest owners. We record in our financial statements only our share of costs based upon our working interest in the wells. These contracts require us to pay these transportation and processing charges whether or not the required volumes are delivered. As natural gas prices continue to remain depressed, certain third-party producers under our Gas Marketing segment have begun and continue to experience financial distress, which has led to certain contractual defaults and litigation; however, to date, we have had no material counterparty default losses. As of September 30, 2016, we have recorded an allowance for doubtful accounts of approximately $1.1 million. We have initiated several legal actions for breach of contract, collection, and related claims against certain third-party producers that are delinquent in their payment obligations, which have to date resulted in one default judgment.

The following table presents gross volume information related to our long-term firm transportation, sales and processing agreements for pipeline capacity:

	For the Twelve Months Ending September 30,
Area	2017		2018		2019		2020		2021 and Through Expiration		Total		Expiration Date
Natural gas (MMcf)
Gas Marketing segment	7,117		7,117		7,117		7,136		13,344		41,831		August 31, 2022
Utica Shale	2,738		2,738		2,738		2,745		7,754		18,713		July 22, 2023
Total	9,855		9,855		9,855		9,881		21,098		60,544
Crude oil (MBbls)
Wattenberg Field	2,413		2,413		2,413		1,813		—		9,052		June 30, 2020
Dollar commitment (in thousands)	$	17,470	$	16,324	$	16,324	$	13,205	$	8,102	$	71,425

Litigation. We are involved in various legal proceedings that we consider normal to our business. We review the status of these proceedings on an ongoing basis and, from time to time, may settle or otherwise resolve these matters on terms and conditions that management believes are in our best interests. There is no assurance that settlements can be reached on acceptable terms or that adverse judgments, if any, in the remaining litigation will not exceed the amounts reserved. Although the results cannot be known with certainty, we currently believe that the ultimate results of such proceedings will not have a material adverse effect on our financial position, results of operations or liquidity.

A group of 42 independent West Virginia natural gas producers has filed a lawsuit in Marshall County, West Virginia, naming Dominion Transmission, Inc. (“Dominion”), certain entities affiliated with Dominion, and RNG as defendants, alleging various contractual, fiduciary and related claims against the defendants, all of which are associated with firm transportation contracts entered into by plaintiffs and relating to pipelines owned and operated by Dominion and its affiliates. RNG and Dominion have removed the case to the U.S. District Court for the Northern District of West Virginia and are preparing pre-trial pleadings, including an answer to the complaint and a motion to dismiss the case. At this time, RNG is unable to estimate any potential damages associated with the claims, but believes the complaint is without merit and intends to vigorously pursue its defenses.

Environmental. Due to the nature of the natural gas and oil industry, we are exposed to environmental risks. We have various policies and procedures to minimize and mitigate the risks from environmental contamination. We conduct regular reviews to identify changes in our environmental risk profile. Liabilities are recorded when environmental damages resulting from past events that require remediation are probable and the costs can be reasonably estimated. As of September 30, 2016 and December 31, 2015, we had accrued environmental liabilities in the amount of $3.2 million and $4.1 million, respectively, included in other accrued expenses on the condensed consolidated balance sheets. We are not aware of any environmental claims existing as of September 30, 2016 which have not been provided for or would otherwise have a material impact on our financial statements; however, there can be no assurance that current regulatory requirements will not change or that unknown past non-compliance with environmental laws will not be discovered on our properties.

In August 2015, we received a Clean Air Act Section 114 Information Request (the "Information Request") from the U.S. Environmental Protection Agency ("EPA"). The Information Request sought, among other things, information related to the design, operation, and maintenance of our production facilities in the Denver-Julesburg Basin of Colorado. The Information Request focused on historical operation and design information for 46 of our production facilities and asks that we conduct sampling and analyses at the identified 46 facilities. We responded to the Information Request in January 2016. We continue to meet with the EPA and provide additional information, but cannot predict the outcome of this matter at this time.

In addition, in December 2015, we received a Compliance Advisory pursuant to C.R.S. § 25-7-115(2) from the Colorado Department of Public Health and Environment's Air Quality Control Commission's Air Pollution Control Division alleging that we failed to design, operate, and maintain certain condensate collection, storage, processing and handling operations to minimize leakage of volatile organic compounds to the maximum extent possible at 65 facilities consistent with applicable standards under Colorado law. We are working with the agency to address the allegations, but cannot predict the outcome of this matter at this time.

Employment Agreements with Executive Officers. Each of our senior executive officers may be entitled to a severance payment and certain other benefits upon the termination of the officer's employment pursuant to the officer's employment agreement and/or the Company's executive severance compensation plan. The nature and amount of such benefits would vary based upon, among other things, whether the termination followed a change of control of the Company.

XML

Common Stock

9 Months Ended

Sep. 30, 2016

Equity [Abstract]

Disclosure of Share-based Compensation Arrangements by Share-based Payment Award

COMMON STOCK

Sale of Equity Securities

In September 2016, we completed a public offering of 9,085,000 shares of our common stock at a price to us of $61.51 per share. Net proceeds of the offering were $558.5 million, after deducting offering expenses and underwriting discounts, of which $90,850 is included in common shares-par value and $558.4 million is included in additional paid-in capital ("APIC") on the September 30, 2016 condensed consolidated balance sheet. The shares were issued pursuant to an effective shelf registration statement on Form S-3 filed with the SEC in March 2015.

In March 2016, we completed a public offering of 5,922,500 shares of our common stock at a price to us of $50.11 per share. Net proceeds of the offering were $296.6 million, after deducting offering expenses and underwriting discounts, of which $59,225 is included in common shares-par value and $296.5 million is included in APIC on the September 30, 2016 condensed consolidated balance sheet. The shares were issued pursuant to the effective shelf registration statement on Form S-3 filed with the SEC in March 2015.

In March 2015, we completed a public offering of 4,002,000 shares of our common stock at a price to us of $50.73 per share. Net proceeds of the offering were $202.9 million, after deducting offering expenses and underwriting discounts, of which $40,020 is included in common shares-par value and $202.8 million is included in APIC on the condensed consolidated balance sheets. The shares were issued pursuant to the effective shelf registration statement on Form S-3 filed with the SEC in March 2015.

Stock-Based Compensation Plans

The following table provides a summary of the impact of our outstanding stock-based compensation plans on the results of operations for the periods presented:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
	(in thousands)
Stock-based compensation expense	$	4,079		$	4,813		$	15,205		$	14,278
Income tax benefit	(1,552		)	(1,828		)	(5,786		)	(5,423		)
Net stock-based compensation expense	$	2,527		$	2,985		$	9,419		$	8,855

Stock Appreciation Rights ("SARs")

The SARs vest ratably over a three-year period and may be exercised at any point after vesting through ten years from the date of issuance. Pursuant to the terms of the awards, upon exercise, the executive officers will receive, in shares of common stock, the excess of the market price of the award on the date of exercise over the market price of the award on the date of issuance.

In January 2016, the Compensation Committee awarded 58,709 SARs to our executive officers. The fair value of each SAR award was estimated on the date of grant using a Black-Scholes pricing model using the following assumptions:

	Nine Months Ended September 30,
	2016			2015
Expected term of award	6.0 years			5.2 years
Risk-free interest rate	1.8		%	1.4		%
Expected volatility	54.5		%	58.0		%
Weighted-average grant date fair value per share	$	26.96		$	22.23

The expected term of the award was estimated using historical stock option exercise behavior data. The risk-free interest rate was based on the U.S. Treasury yields approximating the expected life of the award in effect at the time of grant. Expected volatilities were based on our historical volatility. We do not expect to pay or declare dividends in the foreseeable future.

The following table presents the changes in our SARs for all periods presented:

	Nine Months Ended September 30,
	2016							2015
	Number of SARs		Weighted-Average Exercise Price		Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)		Number of SARs	Weighted-Average Exercise Price		Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding beginning of year, January 1,	326,453		$	38.99				279,011	$	38.77
Awarded	58,709		51.63					68,274	39.63
Exercised	(141,084	)	40.16			$	2,770	—	—
Outstanding at September 30,	244,078		41.36		7.1	6,273		347,285	38.94		7.5	$	4,888
Vested and expected to vest at September 30,	238,671		41.20		7.1	6,171		341,423	38.89		7.5	4,821
Exercisable at September 30,	136,644		36.74		5.9	4,143		191,149	35.68		6.6	3,312

Total compensation cost related to SARs granted, net of estimated forfeitures, and not yet recognized in our condensed consolidated statement of operations as of September 30, 2016 was $1.7 million. The cost is expected to be recognized over a weighted-average period of 1.9 years.

Restricted Stock Awards

Time-Based Awards.The fair value of the time-based restricted shares is amortized ratably over the requisite service period, primarily three years. The time-based shares generally vest ratably on each anniversary following the grant date provided that a participant is continuously employed.

In January 2016, the Compensation Committee awarded to our executive officers a total of 61,634 time-based restricted shares that vest ratably over a three-year period ending in January 2019.

The following table presents the changes in non-vested time-based awards to all employees, including executive officers, for the nine months ended September 30, 2016:

	Shares		Weighted-Average Grant Date Fair Value
Non-vested at December 31, 2015	525,081		$	50.23
Granted	269,709		57.12
Vested	(256,976	)	48.60
Forfeited	(14,716	)	55.70
Non-vested at September 30, 2016	523,098		54.43

The following table presents the weighted-average grant date fair value per share and related information as of/for the periods presented:

	As of/for the Nine Months Ended September 30,
	2016		2015
	(in thousands, except per share data)
Total intrinsic value of time-based awards vested	$	14,675	$	13,061
Total intrinsic value of time-based awards non-vested	35,079		30,959
Market price per common share as of September 30,	67.06		53.01
Weighted-average grant date fair value per share	57.12		48.58

Total compensation cost related to non-vested time-based awards, net of estimated forfeitures, and not yet recognized in our condensed consolidated statements of operations as of September 30, 2016 was $18.7 million. This cost is expected to be recognized over a weighted-average period of 1.9 years.

Market-Based Awards.The fair value of the market-based restricted shares is amortized ratably over the requisite service period, primarily three years. The market-based shares vest if the participant is continuously employed throughout the performance period and the market-based performance measure is achieved, with a maximum vesting period of three years. All compensation cost related to the market-based awards will be recognized if the requisite service period is fulfilled, even if the market condition is not achieved.

In January 2016, the Compensation Committee awarded a total of 24,280 market-basedrestricted shares to our executive officers. In addition to continuous employment, the vesting of these shares is contingent on the Company's total shareholder return ("TSR"), which is essentially the Company’s stock price change including any dividends, as compared to the TSR of a group of peer companies. The shares are measured over a three-year period ending on December 31, 2018 and can result in a payout between 0% and 200% of the total shares awarded. The weighted-average grant date fair value per market-based share for these awards was computed using the Monte Carlo pricing model using the following assumptions:

	Nine Months Ended September 30,
	2016			2015
Expected term of award	3 years			3 years
Risk-free interest rate	1.2		%	0.9		%
Expected volatility	52.3		%	53.0		%
Weighted-average grant date fair value per share	$	72.54		$	66.16

The expected term of the awards was based on the requisite service period. The risk-free interest rate was based on the U.S. Treasury yields in effect at the time of grant and extrapolated to approximate the life of the award. The expected volatility was based on our historical volatility.

The following table presents the change in non-vested market-based awards during the nine months ended September 30, 2016:

	Shares		Weighted-Average Grant Date Fair Value per Share
Non-vested at December 31, 2015	71,549		$	63.60
Granted	24,280		72.54
Vested (1)	(11,283	)	98.50
Non-vested at September 30, 2016	84,546		61.51

__________

(1)Vested shares were issued at 200% based on our relative total shareholder return as ranked among the Company's peer group.

The following table presents the weighted-average grant date fair value per share and related information as of/for the periods presented:

	As of/for the Nine Months Ended September 30,
	2016		2015
	(in thousands, except per share data)
Total intrinsic value of market-based awards vested	$	1,174	$	—
Total intrinsic value of market-based awards non-vested	5,670		5,996
Market price per common share as of September 30,	67.06		53.01
Weighted-average grant date fair value per share	72.54		66.16

Total compensation cost related to non-vested market-based awards, net of estimated forfeitures, and not yet recognized in our condensed consolidated statements of operations as of September 30, 2016 was $1.9 million. This cost is expected to be recognized over a weighted-average period of 1.9 years.

XML

Earnings per share

9 Months Ended

Sep. 30, 2016

Earnings Per Share [Abstract]

Earnings Per Share

EARNINGS PER SHARE

Basic earnings per share is computed by dividing net earnings by the weighted-average number of common shares outstanding for the period. Diluted earnings per share is similarly computed, except that the denominator includes the effect, using the treasury stock method, of unvested restricted stock, outstanding SARs, stock options, convertible notes and shares held pursuant to our non-employee director deferred compensation plan, if including such potential shares of common stock is dilutive.

The following table presents a reconciliation of the weighted-average diluted shares outstanding:

	Three Months Ended September 30,		Nine Months Ended September 30,
	2016	2015	2016	2015
	(in thousands)
Weighted-average common shares outstanding - basic	48,839	40,085	45,741	38,837
Weighted-average common shares and equivalents outstanding - diluted	48,839	40,085	45,741	38,837

We reported a net loss for the three and nine months ended September 30, 2016 and 2015, respectively. As a result, our basic and diluted weighted-average common shares outstanding were the same because the effect of the common share equivalents was anti-dilutive.

The following table presents the weighted-average common share equivalents excluded from the calculation of diluted earnings per share due to their anti-dilutive effect:

	Three Months Ended September 30,		Nine Months Ended September 30,
	2016	2015	2016	2015
	(in thousands)
Weighted-average common share equivalents excluded from diluted earnings
per share due to their anti-dilutive effect:
Restricted stock	660	816	705	836
Convertible notes	—	468	345	505
Other equity-based awards	97	95	103	97
Total anti-dilutive common share equivalents	757	1,379	1,153	1,438

In September 2016, we issued the 2021 Convertible Notes, which give the holders the right to convert the aggregate principal amount into 2.3 million shares of our common stock at a conversion price of $85.39 per share. The 2021 Convertible Notes could be included in the diluted earnings per share calculation using the treasury stock method if the average market share price exceeds the $85.39 conversion price during the periods presented.

In November 2010, we issued the 2016 Convertible Notes, which gave the holders the right to convert the aggregate principal amount into 2.7 million shares of our common stock at a conversion price of $42.40 per share. The 2016 Convertible Notes matured in May 2016. See Note 8, Long-Term Debt, for additional information. Prior to maturity, the 2016 Convertible Notes were included in the diluted earnings per share calculation using the treasury stock method if the average market share price exceeded the $42.40 conversion price during the period presented.

Shares issuable upon conversion of the 2021 Convertible Notes and 2016 Convertible Notes were excluded from the diluted earnings per share calculation for the applicable periods as the effect would be anti-dilutive to our earnings per share.

XML

Business Segments

9 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

Segment Reporting Disclosure

BUSINESS SEGMENTS

We separate our operating activities into two segments: Oil and Gas Exploration and Production and Gas Marketing. All material inter-company accounts and transactions between segments have been eliminated.

Oil and Gas Exploration and Production. Our Oil and Gas Exploration and Production segment includes all of our crude oil and natural gas properties. The segment represents revenues and expenses from the production and sale of crude oil, natural gas and NGLs. Segment revenue includes crude oil, natural gas and NGLs sales, commodity price risk management, net and well operation and pipeline income. Segment income (loss) consists of segment revenue less production cost, exploration expense, impairment of properties and equipment, direct general and administrative expense and depreciation, depletion and amortization expense.

Gas Marketing. Our Gas Marketing segment purchases, aggregates and resells natural gas produced by unrelated third-parties. Segment income (loss) primarily represents sales from natural gas marketing and direct interest income, less costs of natural gas marketing and direct general and administrative expense.

Unallocated Amounts. Unallocated income includes unallocated other revenue, less corporate general and administrative expense, corporate DD&A expense, interest income and interest expense. Unallocated assets include assets utilized for corporate general and administrative purposes, as well as assets not specifically included in our two business segments.

The following tables present our segment information:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
	(in thousands)
Segment revenues:
Oil and gas exploration and production	$	161,212		$	228,520		$	268,090		$	418,356
Gas marketing	2,678			2,580			6,728			8,336
Total revenues	$	163,890		$	231,100		$	274,818		$	426,692
Segment income (loss) before income taxes:
Oil and gas exploration and production	$	17,809		$	(30,296	)	$	(134,731	)	$	(14,134	)
Gas marketing	(414		)	(201		)	(1,067		)	(539		)
Unallocated	(52,736		)	(32,164		)	(166,689		)	(97,189		)
Loss before income taxes	$	(35,341	)	$	(62,661	)	$	(302,487	)	$	(111,862	)

	September 30, 2016		December 31, 2015
	(in thousands)
Segment assets:
Oil and gas exploration and production	$	3,390,005	$	2,294,288
Gas marketing	3,735		4,217
Unallocated	23,540		72,038
Total assets	$	3,417,280	$	2,370,543

XML

Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2016

Accounting Policies [Abstract]

Consolidation, Policy

The accompanying unaudited condensed consolidated financial statements include the accounts of PDC, our wholly-owned subsidiary Riley Natural Gas ("RNG") and our proportionate share of our four affiliated partnerships. Pursuant to the proportionate consolidation method, our accompanying condensed consolidated financial statements include our pro rata share of assets, liabilities, revenues and expenses of the entities which we proportionately consolidate. All material intercompany accounts and transactions have been eliminated in consolidation.

Basis of Accounting, Policy

In our opinion, the accompanying condensed consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary for a fair statement of our financial statements for interim periods in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the SEC. Accordingly, pursuant to such rules and regulations, certain notes and other financial information included in audited financial statements have been condensed or omitted. The December 31, 2015 condensed consolidated balance sheet data was derived from audited statements, but does not include all disclosures required by U.S. GAAP. The information presented in this Quarterly Report on Form 10-Q should be read in conjunction with our audited consolidated financial statements and notes thereto included in our 2015 Form 10-K. Our results of operations and cash flows for the three and nine months ended September 30, 2016 are not necessarily indicative of the results to be expected for the full year or any other future period

Reclassification, Policy

.

Recently Issued Accounting Policy [Policy Text Block]

Recently Issued Accounting Standards

In May 2014, the Financial Accounting Standards Board ("FASB") and the International Accounting Standards Board issued their converged standard on revenue recognition that provides a single, comprehensive model that entities will apply to determine the measurement of revenue and timing of when it is recognized. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. The standard outlines a five-step approach to apply the underlying principle: (1) identify the contract with the customer, (2) identify the separate performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to separate performance obligations and (5) recognize revenue when (or as) each performance obligation is satisfied. In March 2016, the FASB issued an update to the standard intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations when recognizing revenue. The revenue standard is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The revenue standard can be adopted under the full retrospective method or simplified transition method. Entities are permitted to adopt the revenue standard early, beginning with annual reporting periods after December 15, 2016. We are currently evaluating the impact these changes may have on our condensed consolidated financial statements.

In August 2014, the FASB issued a new standard related to the disclosure of uncertainties about an entity's ability to continue as a going concern. The new standard requires management to assess an entity's ability to continue as a going concern at the end of every reporting period and to provide related footnote disclosures in certain circumstances. The new standard will be effective for all entities in the first annual period ending after December 15, 2016, with early adoption permitted. We expect to adopt this standard in the fourth quarter of 2016. Adoption of this standard is not expected to have a significant impact on our condensed consolidated financial statements.

In February 2016, the FASB issued an accounting update aimed at increasing the transparency and comparability among organizations by recognizing lease assets and liabilities on the balance sheet and disclosing key information about related leasing arrangements. For leases with terms of more than 12 months, the accounting update requires lessees to recognize an asset for its right to use the underlying asset and a lease liability for the corresponding lease obligation. Both the lease asset and liability will initially be measured at the present value of the future minimum lease payments over the lease term. Subsequent measurement, including the presentation of expenses and cash flows, will depend upon the classification of the lease as either a finance or operating lease. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those years, with early adoption permitted, and is to be applied as of the beginning of the earliest period presented using a modified retrospective approach. We are currently evaluating the impact these changes may have on our condensed consolidated financial statements.

In March 2016, the FASB issued an accounting update on stock-based compensation intended to simplify several aspects of the accounting for employee share-based payment award transactions. Areas of simplification include income tax consequences, classification of the awards as either equity or liabilities and the classification on the statement of cash flows. The guidance is effective for fiscal years beginning after December 15, 2016, and interim periods within those years, with early adoption permitted. We expect to adopt this standard in the fourth quarter of 2016. Adoption of this standard is not expected to have a significant impact on our condensed consolidated financial statements.

In August 2016, the FASB issued an accounting update on statements of cash flows to address diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The guidance is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. We are currently evaluating the impact these changes may have on our condensed consolidated financial statements.

Earnings Per Share, Policy

Basic earnings per share is computed by dividing net earnings by the weighted-average number of common shares outstanding for the period. Diluted earnings per share is similarly computed, except that the denominator includes the effect, using the treasury stock method, of unvested restricted stock, outstanding SARs, stock options, convertible notes and shares held pursuant to our non-employee director deferred compensation plan, if including such potential shares of common stock is dilutive.

XML

Fair Value Measurements and Disclosures (Tables)

9 Months Ended

Sep. 30, 2016

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

Our fixed-price swaps, basis swaps and physical purchases are included in Level 2 and our collars and physical sales are included in Level 3. The following table presents, for each applicable level within the fair value hierarchy, our derivative assets and liabilities, including both current and non-current portions, measured at fair value on a recurring basis:

	September 30, 2016						December 31, 2015
	Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(in thousands)
Assets:
Commodity-based derivative contracts	$	49,021	$	24,582	$	73,603	$	174,657	$	91,288	$	265,945
Basis protection derivative contracts	424		—		424		101		—		101
Total assets	49,445		24,582		74,027		174,758		91,288		266,046
Liabilities:
Commodity-based derivative contracts	30,917		8,650		39,567		738		—		738
Basis protection derivative contracts	881		—		881		1,552		—		1,552
Total liabilities	31,798		8,650		40,448		2,290		—		2,290
Net asset	$	17,647	$	15,932	$	33,579	$	172,468	$	91,288	$	263,756

Fair Value Assets and Liabilities Unobservable Input Reconciliation

The following table presents a reconciliation of our Level 3 assets measured at fair value:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
	(in thousands)
Fair value, net asset beginning of period	$	27,285		$	58,256		$	91,288		$	62,356
Changes in fair value included in condensed consolidated statement of operations line item:
Commodity price risk management gain (loss), net	4,234			38,085			(16,023		)	42,525
Sales from natural gas marketing	—			51			(20		)	51
Settlements included in statement of operations line items:
Commodity price risk management gain (loss), net	(15,587		)	(12,530		)	(59,243		)	(21,063		)
Sales from natural gas marketing	—			—			(70		)	(7		)
Fair value, net asset end of period	$	15,932		$	83,862		$	15,932		$	83,862
Net change in fair value of unsettled derivatives included in condensed consolidated statement of operations line item:
Commodity price risk management gain (loss), net	$	(2,240	)	$	34,564		$	(8,273	)	$	31,794

Concentration of Risk

The following table presents the counterparties that expose us to credit risk as of September 30, 2016 with regard to our derivative assets:

Counterparty Name	Fair Value of Derivative Assets
	(in thousands)
Canadian Imperial Bank of Commerce (1)	$	21,343
JP Morgan Chase Bank, N.A (1)	17,929
Bank of Nova Scotia (1)	15,166
Wells Fargo Bank, N.A. (1)	9,891
NATIXIS (1)	7,171
Other lenders in our revolving credit facility	2,491
Various (2)	36
Total	$	74,027

__________

(1)Major lender in our revolving credit facility. See Note 8, Long-Term Debt.

(2)Represents a total of two counterparties.

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

The following table presents information regarding a note receivable outstanding as of September 30, 2016:

	Amount
	(in thousands)
Note receivable:
Principal outstanding, December 31, 2015	$	43,069
Paid-in-kind interest	969
Principal outstanding, September 30, 2016	44,038
Allowance for uncollectible notes receivable	(44,038		)
Note receivable, net	$	—

XML

Derivative Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2016

Derivative Instruments Not Designated as Hedging Instruments [Abstract]

Schedule of Other Derivatives Not Designated as Hedging Instruments, Statements of Financial Performance and Financial Position, Location [Table Text Block]

The following table presents the balance sheet location and fair value amounts of our derivative instruments on the condensed consolidated balance sheets:

			Fair Value
Derivative instruments:		Condensed Consolidated Balance sheet line item	September 30, 2016		December 31, 2015
			(in thousands)
Derivative assets:	Current
	Commodity contracts
	Related to crude oil and natural gas sales	Fair value of derivatives	$	65,191	$	221,161
	Related to natural gas marketing	Fair value of derivatives	270		441
	Basis protection contracts
	Related to crude oil and natural gas sales	Fair value of derivatives	143		57
			65,604		221,659
	Non-current
	Commodity contracts
	Related to crude oil and natural gas sales	Fair value of derivatives	8,122		44,292
	Related to natural gas marketing	Fair value of derivatives	20		51
	Basis protection contracts
	Related to crude oil and natural gas sales	Fair value of derivatives	281		44
			8,423		44,387
Total derivative assets			$	74,027	$	266,046
Derivative liabilities:	Current
	Commodity contracts
	Related to crude oil and natural gas sales	Fair value of derivatives	$	21,639	$	—
	Related to natural gas marketing	Fair value of derivatives	221		417
	Basis protection contracts
	Related to crude oil and natural gas sales	Fair value of derivatives	703		1,178
			22,563		1,595
	Non-current
	Commodity contracts
	Related to crude oil and natural gas sales	Fair value of derivatives	17,698		275
	Related to natural gas marketing	Fair value of derivatives	9		46
	Basis protection contracts
	Related to crude oil and natural gas sales	Fair value of derivatives	178		374
			17,885		695
Total derivative liabilities			$	40,448	$	2,290

The following table presents the impact of our derivative instruments on our condensed consolidated statements of operations:

	Three Months Ended September 30,						Nine Months Ended September 30,
Condensed consolidated statement of operations line item	2016			2015			2016			2015
	(in thousands)
Commodity price risk management gain (loss), net
Net settlements	$	47,728		$	67,993		$	167,859		$	162,454
Net change in fair value of unsettled derivatives	(28,331		)	55,556			(230,207		)	(21,284		)
Total commodity price risk management gain (loss), net	$	19,397		$	123,549		$	(62,348	)	$	141,170
Sales from natural gas marketing
Net settlements	$	122		$	165		$	420		$	561
Net change in fair value of unsettled derivatives	255			(5		)	(263		)	(298		)
Total sales from natural gas marketing	$	377		$	160		$	157		$	263
Cost of natural gas marketing
Net settlements	$	(103	)	$	(157	)	$	(380	)	$	(531	)
Net change in fair value of unsettled derivatives	(277		)	(5		)	293			260
Total cost of natural gas marketing	$	(380	)	$	(162	)	$	(87	)	$	(271	)

All of our financial derivative agreements contain master netting provisions that provide for the net settlement of all contracts through a single payment in the event of early termination. Our fixed-price physical purchase and sale agreements that qualify as derivative contracts are not subject to master netting provisions and are not significant. We have elected not to offset the fair value positions recorded on our condensed consolidated balance sheets.

The following table reflects the impact of netting agreements on gross derivative assets and liabilities:

As of September 30, 2016	Derivative instruments, recorded in condensed consolidated balance sheet, gross		Effect of master netting agreements			Derivative instruments, net
	(in thousands)
Asset derivatives:
Derivative instruments, at fair value	$	74,027	$	(22,520	)	$	51,507
Liability derivatives:
Derivative instruments, at fair value	$	40,448	$	(22,520	)	$	17,928

As of December 31, 2015	Derivative instruments, recorded in condensed consolidated balance sheet, gross		Effect of master netting agreements			Derivative instruments, net
	(in thousands)
Asset derivatives:
Derivative instruments, at fair value	$	266,046	$	(1,921	)	$	264,125
Liability derivatives:
Derivative instruments, at fair value	$	2,290	$	(1,921	)	$	369

XML

Properties and Equipment (Tables)

9 Months Ended

Sep. 30, 2016

Oil and Gas Property [Abstract]

Property, Plant and Equipment

The following table presents the components of properties and equipment, net of accumulated depreciation, depletion and amortization ("DD&A"):

	September 30, 2016			December 31, 2015
	(in thousands)
Properties and equipment, net:
Crude oil and natural gas properties
Proved	$	3,183,772		$	2,881,189
Unproved	61,838			60,498
Total crude oil and natural gas properties	3,245,610			2,941,687
Equipment and other	31,410			30,098
Land and buildings	10,900			12,667
Construction in progress	107,794			113,115
Properties and equipment, at cost	3,395,714			3,097,567
Accumulated DD&A	(1,463,440		)	(1,157,015		)
Properties and equipment, net	$	1,932,274		$	1,940,552

Impairment of natural gas and crude oil properties

The following table presents impairment charges recorded for crude oil and natural gas properties:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
	(in thousands)
Impairment of proved and unproved properties	$	338	$	150,840	$	2,391	$	152,764
Amortization of individually insignificant unproved properties	595		3,191		681		8,443
Impairment of crude oil and natural gas properties	933		154,031		3,072		161,207
Land and buildings	—		—		3,032		—
Impairment of properties and equipment	$	933	$	154,031	$	6,104	$	161,207

XML

Long-Term Debt (Tables)

9 Months Ended

Sep. 30, 2016

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments

Long-term debt consisted of the following as of:

	September 30, 2016			December 31, 2015
	(in thousands)
Senior notes:
1.125% Convertible senior notes due 2021:
Principal amount	$	200,000		$	—
Unamortized discount	(39,199		)	—
Unamortized debt issuance costs	(4,793		)	—
1.125% Convertible senior notes due 2021, net of unamortized discount and debt issuance costs	156,008			—
6.125% Senior notes due 2024:
Principal amount	400,000			—
Unamortized debt issuance costs	(7,710		)	—
6.125% Senior notes due 2024, net of unamortized debt issuance costs	392,290			—
7.75% Senior notes due 2022:
Principal amount	500,000			500,000
Unamortized debt issuance costs	(6,723		)	(7,563		)
7.75% Senior notes due 2022, net of unamortized debt issuance costs	493,277			492,437
3.25% Convertible senior notes due 2016:
Principal amount	—			115,000
Unamortized discount	—			(1,852		)
Unamortized debt issuance costs	—			(208		)
3.25% Convertible senior notes due 2016, net of unamortized discount and debt issuance costs	—			112,940
Total senior notes	1,041,575			605,377
Revolving credit facility	—			37,000
Total debt, net of unamortized discount and debt issuance costs	1,041,575			642,377
Less current portion of long-term debt	—			112,940
Long-term debt	$	1,041,575		$	529,437

XML

Capital Leases (Tables)

9 Months Ended

Sep. 30, 2016

Capital Leases [Abstract]

Schedule of Capital Leased Assets [Table Text Block]

The following table presents leased vehicles under capital leases as of September 30, 2016:

	Amount
	(in thousands)
Vehicles	$	2,801
Accumulated depreciation	(613		)
	$	2,188

Schedule of Future Minimum Lease Payments for Capital Leases [Table Text Block]

Future minimum lease payments by year and in the aggregate, under non-cancelable capital leases with terms of one year or more, consist of the following:

For the Twelve Months Ending September 30,	Amount
	(in thousands)
2017	$	860
2018	1,167
2019	553
	2,580
Less executory cost	(101		)
Less amount representing interest	(280		)
Present value of minimum lease payments	$	2,199
Short-term capital lease obligations	$	646
Long-term capital lease obligations	1,553
	$	2,199

XML

Asset Retirement Obligations (Tables)

9 Months Ended

Sep. 30, 2016

Asset Retirement Obligation Disclosure [Abstract]

Schedule of Change in Asset Retirement Obligation

The following table presents the changes in carrying amounts of the asset retirement obligations associated with our working interests in crude oil and natural gas properties:

	Amount
	(in thousands)
Balance at beginning of period, January 1, 2016	$	89,492
Obligations incurred with development activities	1,137
Accretion expense	5,400
Obligations discharged with disposal of properties and asset retirements	(6,620		)
Balance end of period, September 30, 2016	89,409
Less current portion	(6,900		)
Long-term portion	$	82,509

XML

Commitments and Contingencies Commitments and Contigencies (Tables)

9 Months Ended

Sep. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Supply Commitment

:

	For the Twelve Months Ending September 30,
Area	2017		2018		2019		2020		2021 and Through Expiration		Total		Expiration Date
Natural gas (MMcf)
Gas Marketing segment	7,117		7,117		7,117		7,136		13,344		41,831		August 31, 2022
Utica Shale	2,738		2,738		2,738		2,745		7,754		18,713		July 22, 2023
Total	9,855		9,855		9,855		9,881		21,098		60,544
Crude oil (MBbls)
Wattenberg Field	2,413		2,413		2,413		1,813		—		9,052		June 30, 2020
Dollar commitment (in thousands)	$	17,470	$	16,324	$	16,324	$	13,205	$	8,102	$	71,425

XML

Common Stock (Tables)

9 Months Ended

Sep. 30, 2016

Equity [Abstract]

Schedule of Compensation Cost for Share-based Payment Arrangements, Allocation of Share-based Compensation Costs by Plan

The following table provides a summary of the impact of our outstanding stock-based compensation plans on the results of operations for the periods presented:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
	(in thousands)
Stock-based compensation expense	$	4,079		$	4,813		$	15,205		$	14,278
Income tax benefit	(1,552		)	(1,828		)	(5,786		)	(5,423		)
Net stock-based compensation expense	$	2,527		$	2,985		$	9,419		$	8,855

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

In January 2016, the Compensation Committee awarded 58,709 SARs to our executive officers. The fair value of each SAR award was estimated on the date of grant using a Black-Scholes pricing model using the following assumptions:

	Nine Months Ended September 30,
	2016			2015
Expected term of award	6.0 years			5.2 years
Risk-free interest rate	1.8		%	1.4		%
Expected volatility	54.5		%	58.0		%
Weighted-average grant date fair value per share	$	26.96		$	22.23

Schedule of Share-based Compensation, Stock Appreciation Rights Award Activity

The following table presents the changes in our SARs for all periods presented:

	Nine Months Ended September 30,
	2016							2015
	Number of SARs		Weighted-Average Exercise Price		Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)		Number of SARs	Weighted-Average Exercise Price		Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Outstanding beginning of year, January 1,	326,453		$	38.99				279,011	$	38.77
Awarded	58,709		51.63					68,274	39.63
Exercised	(141,084	)	40.16			$	2,770	—	—
Outstanding at September 30,	244,078		41.36		7.1	6,273		347,285	38.94		7.5	$	4,888
Vested and expected to vest at September 30,	238,671		41.20		7.1	6,171		341,423	38.89		7.5	4,821
Exercisable at September 30,	136,644		36.74		5.9	4,143		191,149	35.68		6.6	3,312

Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity

The following table presents the changes in non-vested time-based awards to all employees, including executive officers, for the nine months ended September 30, 2016:

	Shares		Weighted-Average Grant Date Fair Value
Non-vested at December 31, 2015	525,081		$	50.23
Granted	269,709		57.12
Vested	(256,976	)	48.60
Forfeited	(14,716	)	55.70
Non-vested at September 30, 2016	523,098		54.43

The following table presents the weighted-average grant date fair value per share and related information as of/for the periods presented:

	As of/for the Nine Months Ended September 30,
	2016		2015
	(in thousands, except per share data)
Total intrinsic value of time-based awards vested	$	14,675	$	13,061
Total intrinsic value of time-based awards non-vested	35,079		30,959
Market price per common share as of September 30,	67.06		53.01
Weighted-average grant date fair value per share	57.12		48.58

Restricted Stock Awards, Market-Based, Valuation assumptions

In January 2016, the Compensation Committee awarded a total of 24,280 market-basedrestricted shares to our executive officers. In addition to continuous employment, the vesting of these shares is contingent on the Company's total shareholder return ("TSR"), which is essentially the Company’s stock price change including any dividends, as compared to the TSR of a group of peer companies. The shares are measured over a three-year period ending on December 31, 2018 and can result in a payout between 0% and 200% of the total shares awarded. The weighted-average grant date fair value per market-based share for these awards was computed using the Monte Carlo pricing model using the following assumptions:

	Nine Months Ended September 30,
	2016			2015
Expected term of award	3 years			3 years
Risk-free interest rate	1.2		%	0.9		%
Expected volatility	52.3		%	53.0		%
Weighted-average grant date fair value per share	$	72.54		$	66.16

Schedule of Nonvested Performance-based Units Activity

The following table presents the change in non-vested market-based awards during the nine months ended September 30, 2016:

	Shares		Weighted-Average Grant Date Fair Value per Share
Non-vested at December 31, 2015	71,549		$	63.60
Granted	24,280		72.54
Vested (1)	(11,283	)	98.50
Non-vested at September 30, 2016	84,546		61.51

__________

(1)Vested shares were issued at 200% based on our relative total shareholder return as ranked among the Company's peer group.

The following table presents the weighted-average grant date fair value per share and related information as of/for the periods presented:

	As of/for the Nine Months Ended September 30,
	2016		2015
	(in thousands, except per share data)
Total intrinsic value of market-based awards vested	$	1,174	$	—
Total intrinsic value of market-based awards non-vested	5,670		5,996
Market price per common share as of September 30,	67.06		53.01
Weighted-average grant date fair value per share	72.54		66.16

XML

Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2016

Earnings Per Share [Abstract]

Schedule of Earnings Per Share Reconciliation

The following table presents a reconciliation of the weighted-average diluted shares outstanding:

	Three Months Ended September 30,		Nine Months Ended September 30,
	2016	2015	2016	2015
	(in thousands)
Weighted-average common shares outstanding - basic	48,839	40,085	45,741	38,837
Weighted-average common shares and equivalents outstanding - diluted	48,839	40,085	45,741	38,837

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

The following table presents the weighted-average common share equivalents excluded from the calculation of diluted earnings per share due to their anti-dilutive effect:

	Three Months Ended September 30,		Nine Months Ended September 30,
	2016	2015	2016	2015
	(in thousands)
Weighted-average common share equivalents excluded from diluted earnings
per share due to their anti-dilutive effect:
Restricted stock	660	816	705	836
Convertible notes	—	468	345	505
Other equity-based awards	97	95	103	97
Total anti-dilutive common share equivalents	757	1,379	1,153	1,438

XML

Business Segments (Tables)

9 Months Ended

Sep. 30, 2016

Segment Reporting [Abstract]

Schedule of Segment Reporting Information

The following tables present our segment information:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
	(in thousands)
Segment revenues:
Oil and gas exploration and production	$	161,212		$	228,520		$	268,090		$	418,356
Gas marketing	2,678			2,580			6,728			8,336
Total revenues	$	163,890		$	231,100		$	274,818		$	426,692
Segment income (loss) before income taxes:
Oil and gas exploration and production	$	17,809		$	(30,296	)	$	(134,731	)	$	(14,134	)
Gas marketing	(414		)	(201		)	(1,067		)	(539		)
Unallocated	(52,736		)	(32,164		)	(166,689		)	(97,189		)
Loss before income taxes	$	(35,341	)	$	(62,661	)	$	(302,487	)	$	(111,862	)

	September 30, 2016		December 31, 2015
	(in thousands)
Segment assets:
Oil and gas exploration and production	$	3,390,005	$	2,294,288
Gas marketing	3,735		4,217
Unallocated	23,540		72,038
Total assets	$	3,417,280	$	2,370,543

XML

Nature of Operations and Basis of Presentation Additional Information (Details) - 9 months ended Sep. 30, 2016	Total	a
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Oil and gas producing wells, gross	3,000	30
Number of Operating Segments	2

XML

Fair Value Measurements and Disclosures (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Fair Value | Significant Other Observable Inputs (Level 2)
Assets and Liabilities at Fair Value
Commodity-based derivative - assets	$ 49,021	$ 174,657
Basis protection derivative - assets	424	101
Total assets	49,445	174,758
Commodity-based derivative - liabilities	30,917	738
Basis protection derivative - liabilities	881	1,552
Total liabilities	31,798	2,290
Net asset (fair value)	17,647	172,468
Fair Value | Significant Unobservable Inputs (Level 3)
Assets and Liabilities at Fair Value
Commodity-based derivative - assets	24,582	91,288
Basis protection derivative - assets	0	0
Total assets	24,582	91,288
Commodity-based derivative - liabilities	8,650	0
Basis protection derivative - liabilities	0	0
Total liabilities	8,650	0
Net asset (fair value)	15,932	91,288
Fair Value | Total
Assets and Liabilities at Fair Value
Commodity-based derivative - assets	73,603	265,945
Basis protection derivative - assets	424	101
Total assets	74,027	266,046
Commodity-based derivative - liabilities	39,567	738
Basis protection derivative - liabilities	881	1,552
Total liabilities	40,448	2,290
Net asset (fair value)	$ 33,579	$ 263,756
1.125% Convertible Senior Notes due 2021 [Member]
Assets and Liabilities at Fair Value
Debt Instrument, Interest Rate, Stated Percentage	1.13%
7.75% senior notes fair value	$ 214,800
7.75% senior notes fair value as percentage of par	107.40%
6.125% Senior Notes due 2024 [Member]
Assets and Liabilities at Fair Value
Debt Instrument, Interest Rate, Stated Percentage	6.125%
7.75% senior notes fair value	$ 415,600
7.75% senior notes fair value as percentage of par	103.90%
7.75% Senior Notes due 2022 [Member]
Assets and Liabilities at Fair Value
Debt Instrument, Interest Rate, Stated Percentage	7.75%
7.75% senior notes fair value	$ 530,300
7.75% senior notes fair value as percentage of par	106.10%

XML

Reconciliation of Level 3 Fair Value Measurements (Details) - Derivative Financial Instrument Net Assets - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Roll-forward of Level 3 Assets
Fair Value, net assets, beginning of period	$ 27,285	$ 58,256	$ 91,288	$ 62,356
Fair Value, net assets, end of period	15,932	83,862	15,932	83,862
Commodity Price Risk Management (loss), net
Roll-forward of Level 3 Assets
Changes in fair value included in statement of operations line item:	4,234	38,085	(16,023)	42,525
Settlements included in statement of operations line items:	(15,587)	(12,530)	(59,243)	(21,063)
Net change in fair value of unsettled derivatives included in statement of operations line item	(2,240)	34,564	(8,273)	31,794
Sales From Natural Gas Marketing
Roll-forward of Level 3 Assets
Changes in fair value included in statement of operations line item:	0	51	(20)	51
Settlements included in statement of operations line items:	$ 0	$ 0	$ (70)	$ (7)

XML

Fair Value Measurements and Disclosures Concentration of Risk (Details) $ in Thousands	Sep. 30, 2016 USD ($)
Concentration Risk [Line Items]
Fair Value of Derivative Assets	$ 74,027
Canadian Imperial Bank of Commerce [Member]
Concentration Risk [Line Items]
Fair Value of Derivative Assets	21,343	[1]
JPMorgan Chase Bank [Member]
Concentration Risk [Line Items]
Fair Value of Derivative Assets	17,929	[1]
Bank of Nova Scotia [Member]
Concentration Risk [Line Items]
Fair Value of Derivative Assets	15,166	[1]
Wells Fargo Bank [Member]
Concentration Risk [Line Items]
Fair Value of Derivative Assets	9,891	[1]
Natixis [Member]
Concentration Risk [Line Items]
Fair Value of Derivative Assets	7,171	[1]
Other Lenders in Our Credit Facility [Member]
Concentration Risk [Line Items]
Fair Value of Derivative Assets	2,491
Various [Member]
Concentration Risk [Line Items]
Fair Value of Derivative Assets	$ 36	[2]

[1] Major lender in our revolving credit facility. See Note 8, Long-Term Debt.

[2] Represents a total of two counterparties.

XML

Fair Value Measurements and Disclosures Notes Receivable (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015	Oct. 14, 2014
Accounts, Notes, Loans and Financing Receivable [Line Items]
Paid-in-kind interest income		$ (1,194)	$ (3,624)
Allowance for Doubtful Accounts Receivable		700
Notes Receivable
Accounts, Notes, Loans and Financing Receivable [Line Items]
Note Receivable - Principal Outstanding		44,038		$ 43,069	$ 39,000
Allowance for Uncollectible Notes Receivable		(44,038)
Note Receivable, net		0
Note receivable interest income	$ 1,100	1,200	3,400
Paid-in-kind interest income	$ 800	$ 969	$ 2,400

XML

Derivative Financial Instruments Additional Information (Details) MMBTU in Thousands	Sep. 30, 2016 MMBTU MBbls
Derivatives in Place for Anticipated Production
Anticipated natural gas production hedged (MMBtu) | MMBTU	90,425
Anticipated crude oil production hedged (MBbls) | MBbls	8,857

XML

Fair Value of Derivative and Balance Sheet Location (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Derivatives, Fair Value
Derivative Asset, Fair Value, Gross Asset	$ 74,027	$ 266,046
Derivative Liability, Fair Value, Gross Liability	40,448	2,290
Current Assets
Derivatives, Fair Value
Derivative Asset, Fair Value, Gross Asset	65,604	221,659
Non Current Assets
Derivatives, Fair Value
Derivative Asset, Fair Value, Gross Asset	8,423	44,387
Current Liabilities
Derivatives, Fair Value
Derivative Liability, Fair Value, Gross Liability	22,563	1,595
Non Current Liabilities
Derivatives, Fair Value
Derivative Liability, Fair Value, Gross Liability	17,885	695
Commodity Contracts Related to Natural Gas and Crude Oil Sales | Current Assets
Derivatives, Fair Value
Fair Value of Derivatives	65,191	221,161
Commodity Contracts Related to Natural Gas and Crude Oil Sales | Non Current Assets
Derivatives, Fair Value
Fair Value of Derivatives	8,122	44,292
Commodity Contracts Related to Natural Gas and Crude Oil Sales | Current Liabilities
Derivatives, Fair Value
Fair Value of Derivatives	21,639	0
Commodity Contracts Related to Natural Gas and Crude Oil Sales | Non Current Liabilities
Derivatives, Fair Value
Fair Value of Derivatives	17,698	275
Commodity Contracts Related to Natural Gas Marketing | Current Assets
Derivatives, Fair Value
Fair Value of Derivatives	270	441
Commodity Contracts Related to Natural Gas Marketing | Non Current Assets
Derivatives, Fair Value
Fair Value of Derivatives	20	51
Commodity Contracts Related to Natural Gas Marketing | Current Liabilities
Derivatives, Fair Value
Fair Value of Derivatives	221	417
Commodity Contracts Related to Natural Gas Marketing | Non Current Liabilities
Derivatives, Fair Value
Fair Value of Derivatives	9	46
Basis Protection Contracts Related to Natural Gas and Crude Oil Sales | Current Assets
Derivatives, Fair Value
Fair Value of Derivatives	143	57
Basis Protection Contracts Related to Natural Gas and Crude Oil Sales | Non Current Assets
Derivatives, Fair Value
Fair Value of Derivatives	281	44
Basis Protection Contracts Related to Natural Gas and Crude Oil Sales | Current Liabilities
Derivatives, Fair Value
Fair Value of Derivatives	703	1,178
Basis Protection Contracts Related to Natural Gas and Crude Oil Sales | Non Current Liabilities
Derivatives, Fair Value
Fair Value of Derivatives	$ 178	$ 374

XML

Impact of Derivative Instruments on Statement of Operations (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Commodity Price Risk Management (loss), net
Derivative [Line Items]
Net settlements	$ 47,728	$ 67,993	$ 167,859	$ 162,454
Net change in fair value of unsettled derivatives	(28,331)	55,556	(230,207)	(21,284)
Total commodity price risk management gain (loss), net	19,397	123,549	(62,348)	141,170
Sales From Natural Gas Marketing
Derivative [Line Items]
Net settlements	122	165	420	561
Net change in fair value of unsettled derivatives	255	(5)	(263)	(298)
Total commodity price risk management gain (loss), net	377	160	157	263
Cost of Natural Gas Marketing
Derivative [Line Items]
Net settlements	(103)	(157)	(380)	(531)
Net change in fair value of unsettled derivatives	(277)	(5)	293	260
Total commodity price risk management gain (loss), net	$ (380)	$ (162)	$ (87)	$ (271)

XML

Derivative Financial Instruments Impact of Netting Agreements (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Derivative Asset:
Derivative assets, gross	$ 74,027	$ 266,046
Effect of master netting agreements	(22,520)	(1,921)
Derivative asset, net	51,507	264,125
Derivative Liability:
Derivative liability, gross	40,448	2,290
Effect of master netting agreements	(22,520)	(1,921)
Derivative liability, net	$ 17,928	$ 369

XML

Properties and Equipment (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Dec. 31, 2015
Property, Plant and Equipment
Proved Natural Gas and Crude Oil Properties	$ 3,183,772	$ 2,881,189
Unproved Natural Gas and Crude Oil Properties	61,838	60,498
Total Natural Gas and Crude Oil Properties	3,245,610	2,941,687
Equipment and other	31,410	30,098
Land and Buildings	10,900	12,667
Construction in Progress	107,794	113,115
Properties and equipment, at cost	3,395,714	3,097,567
Accumulated DD&A	(1,463,440)	(1,157,015)
Property, Plant and Equipment, Net	$ 1,932,274	$ 1,940,552

XML

Impairment of Natural Gas and Crude Oil Properties (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Impairment of natural gas and crude oil properties [Line Items]
Impairment of proved properties	$ 338	$ 150,840	$ 2,391	$ 152,764
Amortization of Individually Insignificant Unproved Properties	595	3,191	681	8,443
Impairment of Oil and Gas Properties	933	154,031	3,072	161,207
Land and buildings	0	0	3,032	0
Impairment of properties and equipment	$ 933	$ 154,031	$ 6,104	$ 161,207

XML

Properties and Equipment Acreage exchange (Details)	Sep. 30, 2016 a
PDC acres transferred to Noble [Member]
Gas and Oil Acreage [Line Items]
Gas and Oil Area, Developed, Gross	11,700
Noble acres transferred to PDC [Member]
Gas and Oil Acreage [Line Items]
Gas and Oil Area, Developed, Gross	13,500
Oil and Gas Properties [Member]
Gas and Oil Acreage [Line Items]
Gas and Oil Area, Developed, Gross	57,000

XML

Pending Acquisition Pending Acquisition (Details) - 3 months ended Sep. 30, 2016 shares in Millions, $ in Millions	USD ($) shares	a	USD ($)
Business Acquisition [Line Items]
Oil and gas producing wells, gross	3,000	30
Payments to Acquire Businesses, Gross	$ 915
Stock Issued During Period, Shares, Acquisitions | shares	9.4
Stock Issued During Period, Value, Acquisitions	$ 590
Other Payments to Acquire Businesses	100
Bridge Loan			$ 600
Loan Processing Fee	9
Line of Credit Facility, Commitment Fee Amount	$ 6
Business Acquisition, Transaction Costs			10
Oil and Gas Properties [Member]
Business Acquisition [Line Items]
Gas and Oil Area, Developed, Gross | a		57,000
Noble acres transferred to PDC [Member]
Business Acquisition [Line Items]
Gas and Oil Area, Developed, Gross | a		13,500
PDC acres transferred to Noble [Member]
Business Acquisition [Line Items]
Gas and Oil Area, Developed, Gross | a		11,700
Revolving Credit Facility
Business Acquisition [Line Items]
Line of credit facility, increase in commitments			$ 250

XML

Income Taxes (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Income Tax Disclosure [Abstract]
Effective Income Tax Rate, Continuing Operations	34.00%	33.80%	37.10%	36.30%

XML

Schedule of Long-Term Debt (Details) - USD ($) $ in Thousands	Sep. 30, 2016	Sep. 14, 2016	Dec. 31, 2015
Debt Instrument
Total senior notes	$ 1,041,575		$ 605,377
Total debt, net of discount and unamortized debt issuance costs	1,041,575		642,377
Less current portion of long-term debt	0		112,940
Long-term debt	1,041,575		529,437
3.25% Convertible Senior Notes due 2016 [Member]
Debt Instrument
Principal amount	0		115,000
Unamortized Discount	0		(1,852)
Unamortized Debt Issuance Expense	0		(208)
3.25% Convertible senior notes due 2016, net of discount	0		112,940
1.125% Convertible Senior Notes due 2021 [Member]
Debt Instrument
Principal amount	200,000		0
Unamortized Discount	(39,199)		0
Unamortized Debt Issuance Expense	(4,793)	$ 4,800	0
3.25% Convertible senior notes due 2016, net of discount	156,008		0
7.75% Senior Notes due 2022 [Member]
Debt Instrument
Unamortized Debt Issuance Expense	(6,723)		(7,563)
Principal amount	500,000		500,000
7.75% Senior notes due 2022, net of unamortized debt issuance costs	493,277		492,437
6.125% Senior Notes due 2024 [Member]
Debt Instrument
Unamortized Debt Issuance Expense	(7,710)	$ 7,800	0
Principal amount	400,000		0
7.75% Senior notes due 2022, net of unamortized debt issuance costs	392,290		0
Revolving Credit Facility
Debt Instrument
Revolving credit facility	$ 0		$ 37,000

XML

Long-Term Debt Additional Information (Details)											9 Months Ended
	Oct. 15, 2022	Sep. 15, 2021	Mar. 15, 2021 USD ($) $ / shares	May 21, 2020	Sep. 15, 2019 Rate	Sep. 12, 2016	May 16, 2016 USD ($) shares	May 15, 2016	Oct. 03, 2012	Nov. 15, 2010 $ / shares	Sep. 30, 2016 USD ($) $ / shares Rate	Sep. 30, 2015 USD ($)	Sep. 14, 2016 USD ($)	Dec. 31, 2015 USD ($) Rate
Debt Instrument
Cash repayment of convertible notes											$ 115,000,000	$ 0
3.25% Convertible Senior Notes due 2016 [Member]
Debt Instrument
Debt Instrument, Interest Rate, Stated Percentage | Rate											3.25%
3.25% Convertible Note, Conversion Price | $ / shares										$ 42.40
Debt Instrument, Issuance Date										Nov. 15, 2010
Debt Instrument, Maturity Date								May 15, 2016
1.125% Convertible Senior Notes due 2021 [Member]
Debt Instrument
Debt Instrument, Interest Rate, Stated Percentage | Rate											1.13%
3.25% Convertible Note, Conversion Price | $ / shares			$ 85.39
Debt Instrument, Issuance Date						Sep. 12, 2016
Debt Instrument, Maturity Date		Sep. 15, 2021
Convertible Senior Note, Shares Issued Upon Conversion											11.7113
Convertible Note Principal Amount			$ 1,000
6.125% Senior Notes due 2024 [Member]
Debt Instrument
Debt Instrument, Interest Rate, Stated Percentage | Rate											6.125%
Debt Instrument, Issuance Date						Sep. 12, 2016
Debt Instrument, Redemption Period, End Date					Sep. 15, 2019
Debt Instrument, Redemption Price, Percentage | Rate					106.125%
3.25% Convertible Senior Notes due 2016
Debt Instrument
Debt Instrument, Call Date, Latest			Mar. 15, 2021
7.75% Senior Notes due 2022 [Member]
Debt Instrument
Debt Instrument, Interest Rate, Stated Percentage | Rate											7.75%
Debt Instrument, Issuance Date									Oct. 03, 2012
Debt Instrument, Maturity Date	Oct. 15, 2022
Revolving Credit Facility
Debt Instrument
Line of Credit Facility, Maximum Borrowing Capacity ($)											$ 1,000,000,000
Line of Credit Facility, Expiration Date				May 21, 2020
Line of Credit Facility, Remaining Borrowing Capacity											438,300,000
RNG Credit Facility [Member]
Debt Instrument
PDC Irrevocable Standby Letter of Credit ($)											$ 11,700,000
First Payment | 1.125% Convertible Senior Notes due 2021 [Member]
Debt Instrument
Debt Instrument, Frequency of Periodic Payment											March 15
First Payment | 6.125% Senior Notes due 2024 [Member]
Debt Instrument
Debt Instrument, Frequency of Periodic Payment											March 15
First Payment | 7.75% Senior Notes due 2022 [Member]
Debt Instrument
Debt Instrument, Frequency of Periodic Payment											April 15
Second Payment | 1.125% Convertible Senior Notes due 2021 [Member]
Debt Instrument
Debt Instrument, Frequency of Periodic Payment											September 15
Second Payment | 6.125% Senior Notes due 2024 [Member]
Debt Instrument
Debt Instrument, Frequency of Periodic Payment											September 15
Second Payment | 7.75% Senior Notes due 2022 [Member]
Debt Instrument
Debt Instrument, Frequency of Periodic Payment											October 15
Revolving Credit Facility
Debt Instrument
Long-term Line of Credit											$ 0			$ 37,000,000
Weighted Average Interest Rate | Rate														2.60%
Maximum Borrowing Base [Member] | Revolving Credit Facility
Debt Instrument
Line of Credit Facility, Maximum Borrowing Capacity ($)											700,000,000
Line of Credit Facility, Current Borrowing Capacity ($)											450,000,000
1.125% Convertible Senior Notes due 2021 [Member]
Debt Instrument
3.25% convertible senior notes fair value											200,000,000			$ 0
Liability component of gross proceeds of Convertible Notes											160,500,000
Debt Instrument, Unamortized Discount											(39,500,000)
Unamortized Debt Issuance Expense											$ (4,793,000)		$ 4,800,000	$ 0
Debt Instrument, Interest Rate, Effective Percentage | Rate											5.80%
PDC Energy Stock Price | $ / shares											$ (67.060)
3.25% Convertible Senior Notes due 2016 [Member]
Debt Instrument
Cash repayment of convertible notes							$ 115,000,000
Shares issued upon maturity of convertible notes | shares							792,406
Debt Conversion, Converted Instrument, Amount							$ 47,900,000

XML

Capital Leases (Details) $ in Thousands	Sep. 30, 2016 USD ($)
Capital Leased Assets [Line Items]
Vehicles	$ 2,801
Accumulated Depreciation	(613)
Capital Leased Assets, Net	$ 2,188

XML

Capital Leases Minimum Lease Payments (Details) $ in Thousands	Sep. 30, 2016 USD ($)
Capital Leased Assets [Line Items]
Future Minimum Payments	$ 2,580
Executory Costs	(101)
Amount representing interest	(280)
Present Value of Net Minimum Payments	2,199
Short-term Capital Lease Obligations	646
Long-Term Capital Lease Obligations	1,553
Total Capital Lease Obligations	2,199
2017
Capital Leased Assets [Line Items]
Future Minimum Payments	860
2018
Capital Leased Assets [Line Items]
Future Minimum Payments	1,167
2019
Capital Leased Assets [Line Items]
Future Minimum Payments	$ 553

XML

Asset Retirement Obligations (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Asset Retirement Obligation, Roll Forward Analysis
Balance at beginning of period, January 1, 2016			$ 89,492
Obligations incurred with development activities			1,137
Accretion expense	$ 1,777	$ 1,594	5,400	$ 4,742
Obligations discharged asset retirements			(6,620)
Balance end of period, June 30, 2016	89,409		89,409
Less current portion	6,900		6,900
Long-term portion	$ 82,509		$ 82,509		$ 84,032

XML

Commitments and Contingencies Commitments and Contigencies (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2016 USD ($) MMcf MBbls
Supply Commitment
Oil and Gas Delivery Commitments Volumes (MMcf)	60,544
Dollar Commitment ($ in thousands) | $	$ 71,425
Appalachiain Basin
Supply Commitment
Oil and Gas Delivery Commitments Volumes (MMcf)	41,831
Utica Shale
Supply Commitment
Oil and Gas Delivery Commitments Volumes (MMcf)	18,713
Wattenberg Field
Supply Commitment
Oil and Gas Delivery Commitments Volumes (MMcf) | MBbls	9,052
First Year Commitment [Member]
Supply Commitment
Oil and Gas Delivery Commitments Volumes (MMcf)	9,855
Dollar Commitment ($ in thousands) | $	$ 17,470
First Year Commitment [Member] | Appalachiain Basin
Supply Commitment
Oil and Gas Delivery Commitments Volumes (MMcf)	7,117
First Year Commitment [Member] | Utica Shale
Supply Commitment
Oil and Gas Delivery Commitments Volumes (MMcf)	2,738
First Year Commitment [Member] | Wattenberg Field
Supply Commitment
Oil and Gas Delivery Commitments Volumes (MMcf) | MBbls	2,413
Second Year Commitment [Member]
Supply Commitment
Oil and Gas Delivery Commitments Volumes (MMcf)	9,855
Dollar Commitment ($ in thousands) | $	$ 16,324
Second Year Commitment [Member] | Appalachiain Basin
Supply Commitment
Oil and Gas Delivery Commitments Volumes (MMcf)	7,117
Second Year Commitment [Member] | Utica Shale
Supply Commitment
Oil and Gas Delivery Commitments Volumes (MMcf)	2,738
Second Year Commitment [Member] | Wattenberg Field
Supply Commitment
Oil and Gas Delivery Commitments Volumes (MMcf) | MBbls	2,413
Third Year Commitment [Member]
Supply Commitment
Oil and Gas Delivery Commitments Volumes (MMcf)	9,855
Dollar Commitment ($ in thousands) | $	$ 16,324
Third Year Commitment [Member] | Appalachiain Basin
Supply Commitment
Oil and Gas Delivery Commitments Volumes (MMcf)	7,117
Third Year Commitment [Member] | Utica Shale
Supply Commitment
Oil and Gas Delivery Commitments Volumes (MMcf)	2,738
Third Year Commitment [Member] | Wattenberg Field
Supply Commitment
Oil and Gas Delivery Commitments Volumes (MMcf) | MBbls	2,413
Fourth Year Commitment [Member]
Supply Commitment
Oil and Gas Delivery Commitments Volumes (MMcf)	9,881
Dollar Commitment ($ in thousands) | $	$ 13,205
Fourth Year Commitment [Member] | Appalachiain Basin
Supply Commitment
Oil and Gas Delivery Commitments Volumes (MMcf)	7,136
Fourth Year Commitment [Member] | Utica Shale
Supply Commitment
Oil and Gas Delivery Commitments Volumes (MMcf)	2,745
Fourth Year Commitment [Member] | Wattenberg Field
Supply Commitment
Oil and Gas Delivery Commitments Volumes (MMcf) | MBbls	1,813
commitments 5 years and beyond [Member]
Supply Commitment
Oil and Gas Delivery Commitments Volumes (MMcf)	21,098
Dollar Commitment ($ in thousands) | $	$ 8,102
commitments 5 years and beyond [Member] | Appalachiain Basin
Supply Commitment
Oil and Gas Delivery Commitments Volumes (MMcf)	13,344
commitments 5 years and beyond [Member] | Utica Shale
Supply Commitment
Oil and Gas Delivery Commitments Volumes (MMcf)	7,754
commitments 5 years and beyond [Member] | Wattenberg Field
Supply Commitment
Oil and Gas Delivery Commitments Volumes (MMcf) | MBbls	0
Supply Contract Expiration Date [Member] | Appalachiain Basin
Supply Commitment
Supply Commitments Contract Expiration Date	Aug. 31, 2022
Supply Contract Expiration Date [Member] | Utica Shale
Supply Commitment
Supply Commitments Contract Expiration Date	Jul. 22, 2023
Supply Contract Expiration Date [Member] | Wattenberg Field
Supply Commitment
Supply Commitments Contract Expiration Date	Jun. 30, 2020

XML

Commitments and Contingencies Additional information (Details) - USD ($) $ in Millions	Sep. 30, 2016	Dec. 31, 2015
Loss Contingencies [Line Items]
Allowance for Doubtful Accounts Receivable	$ 0.7
Accrued Environmental Liabilities	3.2	$ 4.1
Gas Marketing Segment [Member]
Loss Contingencies [Line Items]
Allowance for Doubtful Accounts Receivable	$ 1.1

XML

Common Stock Sale of Common Stock (Details) - USD ($)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015	Mar. 31, 2015
Class of Stock [Line Items]
Common stock, par value	$ 0.01		$ 0.01
Proceeds from Issuance of Common Stock	$ 855,072,000	$ 202,851,000
Common shares - par value	563,000		$ 402,000
Additional paid-in capital	1,796,664,000		$ 907,382,000
Repayments of Convertible Debt	$ 115,000,000	$ 0
September 2016 Common Stock Issuance [Member]
Class of Stock [Line Items]
Stock Issued During Period, Shares, New Issues	9,085,000
Sale of Stock, Price Per Share	$ 61.51
Proceeds from Issuance of Common Stock	$ 558,500,000
Common shares - par value	90,850
Additional paid-in capital	$ 558,400,000
March 2016 Common Stock Issuance
Class of Stock [Line Items]
Stock Issued During Period, Shares, New Issues	5,922,500
Sale of Stock, Price Per Share	$ 50.11
Proceeds from Issuance of Common Stock	$ 296,600,000
Common shares - par value	59,225
Additional paid-in capital	$ 296,500,000
March 2015 Common Stock Issuance
Class of Stock [Line Items]
Stock Issued During Period, Shares, New Issues		4,002,000
Sale of Stock, Price Per Share				$ 50.73
Proceeds from Issuance of Common Stock		$ 202,900,000
Common shares - par value				$ 40,020
Additional paid-in capital				$ 202,800,000

XML

Share Based Compensation Summary (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Employee Service Share-based Compensation, Allocation of Recognized Period Costs
Stock-based compensation expense	$ 4,079	$ 4,813	$ 15,205	$ 14,278
Income tax benefit	(1,552)	(1,828)	(5,786)	(5,423)
Net stock-based compensation expense	$ 2,527	$ 2,985	$ 9,419	$ 8,855

XML

SARs Fair Value Assumptions (Details) - Stock Appreciation Rights (SARs) - $ / shares	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award
Expected term of award	6 years	5 years 2 months 14 days
Risk-free interest rate	1.80%	1.40%
Expected Volatility	54.50%	58.00%
Granted	$ 26.96	$ 22.23

XML

Schedule of Changes in SARs (Details) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award
Share-based Compensation Arrangement by Share-based Payment Award, Terms of Award	The SARs vest ratably over a three-year period and may be exercised at any point after vesting through ten years from the date of issuance. Pursuant to the terms of the awards, upon exercise, the executive officers will receive, in shares of common stock, the excess of the market price of the award on the date of exercise over the market price of the award on the date of issuance.
Stock Appreciation Rights (SARs)
Number of SARs
Outstanding beginning of year, January 1,	326,453	279,011
Awarded	58,709	68,274
Outstanding at June 30,	244,078	347,285
Vested and expected to vest at June 30,			238,671	341,423
Exercisable at June 30,			136,644	191,149
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price
Outstanding beginning of year, January 1,	$ 38.99	$ 38.77
Awarded	51.63	39.63
Outstanding at June 30,	$ 41.36	$ 38.94
Vested and expected to vest at June 30,			$ 41.20	$ 38.89
Exercisable at June 30,			$ 36.74	$ 35.68
Weighted-Average Remaining Contractual Term (in years)
Outstanding at June 30,	7 years 1 month 19 days	7 years 6 months
Vested and expected to vest at June 30,	7 years 1 month 7 days	7 years 6 months
Exercisable at June 30,	5 years 10 months 23 days	6 years 7 months
Share based compesation aggregate intrinsic value
Outstanding beginning of year, January 1,	$ 6,273	$ 4,888	$ 6,273	$ 4,888
Outstanding at June 30,	$ 6,273	$ 4,888
Vested and expected to vest at June 30,			6,171	4,821
Exercisable at June 30,			4,143	$ 3,312
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized			$ 1,700
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Period for Recognition	1 year 10 months 19 days
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Exercised	(141,084)	0
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price	$ 40.16	$ 0.00
Share based exercised awards intrinsic value	$ 2,770

XML

Schedule of Changes in Restricted Stock - TIme Based Awards (Details) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award
Share-based Compensation Arrangement by Share-based Payment Award, Terms of Award	The SARs vest ratably over a three-year period and may be exercised at any point after vesting through ten years from the date of issuance. Pursuant to the terms of the awards, upon exercise, the executive officers will receive, in shares of common stock, the excess of the market price of the award on the date of exercise over the market price of the award on the date of issuance.
Restricted stock
Share-based Compensation Arrangement by Share-based Payment Award
Share-based Compensation Arrangement by Share-based Payment Award, Terms of Award	The fair value of the time-based restricted shares is amortized ratably over the requisite service period, primarily three years. The time-based shares generally vest ratably on each anniversary following the grant date provided that a participant is continuously employed.
Time based shares granted to executives	61,634
Number of Shares
Outstanding beginning of year, January 1,	525,081
Granted	269,709
Vested	(256,976)
Outstanding at June 30,	523,098
Weighted-Average Grant-Date Fair Value
Outstanding at beginning of year, January 1,	$ 50.23
Granted	57.12	$ 48.58
Vested	48.60
Outstanding at June 30,	$ 54.43
Total intrinsic value of time based awards vested	$ 14,675	$ 13,061
Total intrinsic value of time-based awards non-vested	$ 35,079	$ 30,959
Market price per common share as of June 30,	$ 67.06	$ 53.01
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized	$ 18,700
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Period for Recognition	1 year 11 months 4 days
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period	(14,716)
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeitures, Weighted Average Grant Date Fair Value	$ 55.70

XML

Restricted Stock - Market Based Awards Fair Value Assumptions (Details) - Restricted Stock - Market Based Awards - $ / shares	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award
Expected term of award	3 years	3 years
Risk-free interest rate	1.20%	0.90%
Expected Volatility	52.30%	53.00%
Granted	$ 72.54	$ 66.16

XML

Schedule of Changes in Restricted Stock - Market Based Awards (Details) - USD ($) $ / shares in Units, $ in Thousands		9 Months Ended
		Sep. 30, 2016	Sep. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award
Share-based Compensation Arrangement by Share-based Payment Award, Terms of Award		The SARs vest ratably over a three-year period and may be exercised at any point after vesting through ten years from the date of issuance. Pursuant to the terms of the awards, upon exercise, the executive officers will receive, in shares of common stock, the excess of the market price of the award on the date of exercise over the market price of the award on the date of issuance.
Restricted Stock - Market Based Awards
Share-based Compensation Arrangement by Share-based Payment Award
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Aggregate Intrinsic Value		$ 1,174	$ 0
Share-based Compensation Arrangement by Share-based Payment Award, Terms of Award		The fair value of the market-based restricted shares is amortized ratably over the requisite service period, primarily three years. The market-based shares vest if the participant is continuously employed throughout the performance period and the market-based performance measure is achieved, with a maximum vesting period of three years. All compensation cost related to the market-based awards will be recognized if the requisite service period is fulfilled, even if the market condition is not achieved.
Time based shares granted to executives		24,280
Number of Shares
Outstanding beginning of year, January 1,		71,549
Granted		24,280
Vested	[1]	(11,283)
Outstanding at June 30,		84,546
Weighted-Average Grant-Date Fair Value
Outstanding at beginning of year, January 1,		$ 63.60
Granted		72.54	$ 66.16
Vested	[1]	98.50
Outstanding at June 30,		$ 61.51
Total intrinsic value of market-based awards non-vested		$ 5,670	$ 5,996
Market price per common share as of June 30,		$ 67.06	$ 53.01
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized		$ 1,900
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized, Period for Recognition		1 year 10 months 10 days

[1] Vested shares were issued at 200% based on our relative total shareholder return as ranked among the Company's peer group.

XML

Earnings Per Share (Details) shares in Thousands			3 Months Ended		9 Months Ended
	Sep. 12, 2016 shares	Nov. 15, 2010 shares $ / shares	Sep. 30, 2016 shares	Sep. 30, 2015 shares	Sep. 30, 2016 shares	Sep. 30, 2015 shares	Mar. 15, 2021 $ / shares
Reconciliation of Weighted-Average Diluted Shares Outstanding
Weighted average common shares outstanding - basic			48,839	40,085	45,741	38,837
Weighted Average Number of Shares Outstanding - Diluted			48,839	40,085	45,741	38,837
Anti-dilutive Effect
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount			757	1,379	1,153	1,438
Restricted stock
Anti-dilutive Effect
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount			660	816	705	836
3.25% Convertible Note [Member]
Anti-dilutive Effect
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount			0	468	345	505
Other equity-based awards
Anti-dilutive Effect
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount			97	95
Stock Appreciation Rights [Member]
Anti-dilutive Effect
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount					103	97
1.125% Convertible Senior Notes due 2021 [Member]
Convertible Senior Note Due 2016
3.25% Convertible Note, Shares To Be Received Upon Conversion (in thousands)	2,300
3.25% Convertible Note, Conversion Price | $ / shares							$ 85.39
3.25% Convertible Senior Notes due 2016 [Member]
Convertible Senior Note Due 2016
3.25% Convertible Note, Shares To Be Received Upon Conversion (in thousands)		2,700
3.25% Convertible Note, Conversion Price | $ / shares		$ 42.40

XML

Business segments (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Segment Reporting Information:
Revenues	$ 163,890	$ 231,100	$ 274,818	$ 426,692
Segment income (loss) before income taxes	(35,341)	(62,661)	(302,487)	(111,862)
Total Assets	3,417,280		3,417,280		$ 2,370,543
Oil and gas exploration and production segment
Segment Reporting Information:
Revenues	161,212	228,520	268,090	418,356
Segment income (loss) before income taxes	17,809	(30,296)	(134,731)	(14,134)
Total Assets	3,390,005		3,390,005		2,294,288
Gas marketing segment
Segment Reporting Information:
Revenues	2,678	2,580	6,728	8,336
Segment income (loss) before income taxes	(414)	(201)	(1,067)	(539)
Total Assets	3,735		3,735		4,217
Corporate and other segment
Segment Reporting Information:
Segment income (loss) before income taxes	(52,736)	$ (32,164)	(166,689)	$ (97,189)
Total Assets	$ 23,540		$ 23,540		$ 72,038