PDC Energy announces closing of sale of Marcellus assets

PDC Energy, Inc. has announced that it closed the sale of its 50% interest in PDC Mountaineer LLC, a Marcellus Joint Venture for US$ 250 million. PDC's net pre-tax proceeds were approximately US$ 190 million after repayment of its share of JV debt and other working capital and other adjustments and fees, and subject to customary post-closing adjustments. The net proceeds were comprised of approximately US$ 150 million cash and a US$ 40 million note from the buyer. The buyer also assumed PDC's share of the related firm transportation obligations as well as PDC's share of certain PDCM natural gas hedging positions. The assets produced approximately 26 million ft³ equivalent of natural gas per day net to PDC in the second quarter of 2014 (99% natural gas) with estimated proved reserves net to PDC of 240 billion ft³ as of December 31, 2013. Tudor Pickering Holt acted as advisor on the sale.

Increased borrowing base

In addition, PDC announced its borrowing base increased to US$ 700 million from US$ 450 million following the recently completed semi-annual redetermination of its revolving credit facility. The Company elected to maintain its commitment level at US$ 450 million at this time since it expects to be minimally drawn on its revolver at year-end 2014 in part due to the proceeds from the sale its interest in the PDCM JV.

Barton Brookman, President and Chief Operating Officer, said, "The net proceeds from the PDCM sale and the increase in our borrowing base are expected to both further strengthen our balance sheet and provide PDC with excellent liquidity. This liquidity gives us tremendous flexibility to execute our capital programs while our strong oil and natural gas hedging positions protect the company's cash flow."

Adapted from a press release by David Bizley

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