SUBSIDIARY GUARANTOR

PDC Permian, Inc., our wholly-owned subsidiary, guarantees our obligations under our publicly-registered senior notes. The following presents the condensed consolidating financial information separately for:



(i)	PDC Energy, Inc. ("Parent"), the issuer of the guaranteed obligations, including non-material subsidiaries;
(ii)	PDC Permian, Inc., the guarantor subsidiary ("Guarantor"), as specified in the indentures related to our senior notes;
(iii)	Eliminations representing adjustments to (a) eliminate intercompany transactions between or among Parent, Guarantor, and our other subsidiaries and (b) eliminate the investments in our subsidiaries; and
(iv)	Parent and subsidiaries on a consolidated basis ("Consolidated").

The Guarantor is 100 percent owned by the Parent. The senior notes are fully and unconditionally guaranteed on a joint and several basis by the Guarantor. The guarantee is subject to release in limited circumstances only upon the occurrence of certain customary conditions. Each entity in the condensed consolidating financial information follows the same accounting policies as described in the notes to the condensed consolidated financial statements.

The following condensed consolidating financial statements have been prepared on the same basis of accounting as our condensed consolidated financial statements. Investments in subsidiaries are accounted for under the equity method. Accordingly, the entries necessary to consolidate the Parent and Guarantor are reflected in the eliminations column.



	Condensed Consolidating Balance Sheets
	March 31, 2018
	Parent			Guarantor			Eliminations			Consolidated
	(in thousands)

Current assets:
Cash and cash equivalents	$	45,923		$	—		$	—		$	45,923
Accounts receivable, net	143,250			37,775			—			181,025
Fair value of derivatives	28,610			—			—			28,610
Prepaid expenses and other current assets	7,116			1,781			—			8,897
Total current assets	224,899			39,556			—			264,455
Properties and equipment, net	2,139,471			2,091,786			—			4,231,257
Assets held-for-sale, net	1,647			—			—			1,647
Intercompany receivable	294,476			—			(294,476		)	—
Investment in subsidiaries	1,605,330			—			(1,605,330		)	—
Other assets	23,339			1,459			—			24,798
Total Assets	$	4,289,162		$	2,132,801		$	(1,899,806	)	$	4,522,157

Liabilities and Stockholders' Equity
Liabilities
Current liabilities:
Accounts payable	$	113,529		$	82,174		$	—		$	195,703
Production tax liability	35,309			1,341			—			36,650
Fair value of derivatives	110,683			—			—			110,683
Funds held for distribution	80,203			17,408			—			97,611
Accrued interest payable	13,756			4			—			13,760
Other accrued expenses	33,136			641			—			33,777
Total current liabilities	386,616			101,568			—			488,184
Intercompany payable	—			294,476			(294,476		)	—
Long-term debt	1,154,528			—			—			1,154,528
Deferred income taxes	62,088			125,095			—			187,183
Asset retirement obligations	67,922			5,983			—			73,905
Fair value of derivatives	26,426			—			—			26,426
Other liabilities	94,208			349			—			94,557
Total liabilities	1,791,788			527,471			(294,476		)	2,024,783

Commitments and contingent liabilities

Stockholders' Equity
Stockholders' equity
Common shares	660			—			—			660
Additional paid-in capital	2,504,663			1,766,777			(1,766,777		)	2,504,663
Retained earnings	(6,435		)	(161,447		)	161,447			(6,435		)
Treasury shares	(1,514		)	—			—			(1,514		)
Total stockholders' equity	2,497,374			1,605,330			(1,605,330		)	2,497,374
Total Liabilities and Stockholders' Equity	$	4,289,162		$	2,132,801		$	(1,899,806	)	$	4,522,157



	Condensed Consolidating Balance Sheets
	December 31, 2017
	Parent			Guarantor			Eliminations			Consolidated
	(in thousands)

Current assets:
Cash and cash equivalents	$	180,675		$	—		$	—		$	180,675
Accounts receivable, net	160,490			37,108			—			197,598
Fair value of derivatives	14,338			—			—			14,338
Prepaid expenses and other current assets	8,284			329			—			8,613
Total current assets	363,787			37,437			—			401,224
Properties and equipment, net	1,891,314			2,042,153			—			3,933,467
Assets held-for-sale, net	40,084			—			—			40,084
Intercompany receivable	250,279			—			(250,279		)	—
Investment in subsidiaries	1,617,537			—			(1,617,537		)	—
Other assets	42,547			2,569			—			45,116
Total Assets	$	4,205,548		$	2,082,159		$	(1,867,816	)	$	4,419,891

Liabilities and Stockholders' Equity
Liabilities
Current liabilities:
Accounts payable	$	85,000		$	65,067		$	—		$	150,067
Production tax liability	35,902			1,752			—			37,654
Fair value of derivatives	79,302			—			—			79,302
Funds held for distribution	83,898			11,913			—			95,811
Accrued interest payable	11,812			3			—			11,815
Other accrued expenses	42,543			444			—			42,987
Total current liabilities	338,457			79,179			—			417,636
Intercompany payable	—			250,279			(250,279		)	—
Long-term debt	1,151,932			—			—			1,151,932
Deferred income taxes	62,857			129,135			—			191,992
Asset retirement obligations	65,301			5,705			—			71,006
Fair value of derivatives	22,343			—			—			22,343
Other liabilities	57,009			324			—			57,333
Total liabilities	1,697,899			464,622			(250,279		)	1,912,242

Commitments and contingent liabilities

Stockholders' Equity
Stockholders' equity
Common shares	659			—			—			659
Additional paid-in capital	2,503,294			1,766,775			(1,766,775		)	2,503,294
Retained earnings	6,704			(149,238		)	149,238			6,704
Treasury shares	(3,008		)	—			—			(3,008		)
Total stockholders' equity	2,507,649			1,617,537			(1,617,537		)	2,507,649
Total Liabilities and Stockholders' Equity	$	4,205,548		$	2,082,159		$	(1,867,816	)	$	4,419,891



	Condensed Consolidating Statements of Operations
	Three Months Ended March 31, 2018
	Parent			Guarantor			Eliminations		Consolidated
	(in thousands)

Revenues
Crude oil, natural gas, and NGLs sales	$	233,494		$	71,731		$	—	$	305,225
Commodity price risk management loss, net	(47,240		)	—			—		(47,240		)
Other income	2,516			99			—		2,615
Total revenues	188,770			71,830			—		260,600
Costs, expenses and other
Lease operating expenses	21,362			8,274			—		29,636
Production taxes	16,081			4,088			—		20,169
Transportation, gathering, and processing expenses	3,231			4,082			—		7,313
Exploration, geologic, and geophysical expense	313			2,333			—		2,646
Impairment of properties and equipment	6			33,182			—		33,188
General and administrative expense	31,559			4,137			—		35,696
Depreciation, depletion and amortization	94,376			32,412			—		126,788
Accretion of asset retirement obligations	1,200			88			—		1,288
Loss on sale of properties and equipment	1,432			—			—		1,432
Other expenses	2,768			—			—		2,768
Total costs, expenses and other	172,328			88,596			—		260,924
Income (loss) from operations	16,442			(16,766		)	—		(324		)
Interest expense	(18,097		)	568			—		(17,529		)
Interest income	148			—			—		148
Loss before income taxes	(1,507		)	(16,198		)	—		(17,705		)
Income tax benefit	577			3,989			—		4,566
Equity in loss of subsidiary	(12,209		)	—			12,209		—
Net loss	$	(13,139	)	$	(12,209	)	$	12,209	$	(13,139	)



	Condensed Consolidating Statements of Operations
	Three Months Ended March 31, 2017
	Parent			Guarantor			Eliminations			Consolidated
	(in thousands)

Revenues
Crude oil, natural gas, and NGLs sales	$	170,739		$	18,953		$	—		$	189,692
Commodity price risk management gain, net	80,704			—			—			80,704
Other income	3,297			14			—			3,311
Total revenues	254,740			18,967			—			273,707
Costs, expenses and other
Lease operating expenses	15,816			3,973			—			19,789
Production taxes	11,144			1,255			—			12,399
Transportation, gathering, and processing expenses	5,215			687			—			5,902
Exploration, geologic, and geophysical expense	271			683			—			954
Impairment of properties and equipment	604			1,589			—			2,193
General and administrative expense	23,529			2,786			—			26,315
Depreciation, depletion and amortization	101,738			7,578			—			109,316
Accretion of asset retirement obligations	1,685			83			—			1,768
Gain on sale of properties and equipment	(160		)	—			—			(160		)
Other expenses	3,528			—			—			3,528
Total costs, expenses and other	163,370			18,634			—			182,004
Income from operations	91,370			333			—			91,703
Interest expense	(19,597		)	130			—			(19,467		)
Interest income	240			—			—			240
Income before income taxes	72,013			463			—			72,476
Income tax expense	(26,162		)	(168		)	—			(26,330		)
Equity in income of subsidiary	295			—			(295		)	—
Net income	$	46,146		$	295		$	(295	)	$	46,146



	Condensed Consolidating Statements of Cash Flows
	Three Months Ended March 31, 2018
	Parent			Guarantor			Eliminations			Consolidated
	(in thousands)

Cash flows from operating activities	$	149,009		$	56,140		$	—		$	205,149
Cash flows from investing activities:
Capital expenditures for development of crude oil and natural gas properties	(97,286		)	(99,631		)	—			(196,917		)
Capital expenditures for other properties and equipment	(701		)	(365		)	—			(1,066		)
Acquisition of crude oil and natural gas properties, including settlement adjustments	(180,825		)	—			—			(180,825		)
Proceeds from sale of properties and equipment	20			—			—			20
Proceeds from divestiture	39,023			—			—			39,023
Restricted cash	1,249			—			—			1,249
Intercompany transfers	(43,891		)	—			43,891			—
Net cash from investing activities	(282,411		)	(99,996		)	43,891			(338,516		)
Cash flows from financing activities:
Proceeds from revolving credit facility	35,000			—			—			35,000
Repayment of revolving credit facility	(35,000		)	—			—			(35,000		)
Purchase of treasury stock	(2,255		)	—			—			(2,255		)
Other	(344		)	(35		)	—			(379		)
Intercompany transfers	—			43,891			(43,891		)	—
Net cash from financing activities	(2,599		)	43,856			(43,891		)	(2,634		)
Net change in cash, cash equivalents, and restricted cash	(136,001		)	—			—			(136,001		)
Cash, cash equivalents, and restricted cash, beginning of period	189,925			—			—			189,925
Cash, cash equivalents, and restricted cash, end of period	$	53,924		$	—		$	—		$	53,924



	Condensed Consolidating Statements of Cash Flows
	Three Months Ended March 31, 2017
	Parent			Guarantor			Eliminations			Consolidated
	(in thousands)

Cash flows from operating activities	$	131,661		$	7,839		$	—		$	139,500
Cash flows from investing activities:
Capital expenditures for development of crude oil and natural gas properties	(82,489		)	(47,337		)	—			(129,826		)
Capital expenditures for other properties and equipment	(890		)	69			—			(821		)
Acquisition of crude oil and natural gas properties, including settlement adjustments	—			6,181			—			6,181
Proceeds from sale of properties and equipment	737			—			—			737
Purchase of short-term investments	(49,890		)	—			—			(49,890		)
Intercompany transfers	(33,795		)	—			33,795			—
Net cash from investing activities	(166,327		)	(41,087		)	33,795			(173,619		)
Cash flows from financing activities:
Purchase of treasury stock	(2,017		)	—			—			(2,017		)
Other	(330		)	(10		)	—			(340		)
Intercompany transfers	—			33,795			(33,795		)	—
Net cash from financing activities	(2,347		)	33,785			(33,795		)	(2,357		)
Net change in cash, cash equivalents, and restricted cash	(37,013		)	537			—			(36,476		)
Cash, cash equivalents, and restricted cash, beginning of period	240,487			3,613			—			244,100
Cash, cash equivalents, and restricted cash, end of period	$	203,474		$	4,150		$	—		$	207,624