PDC Energy, Inc. Completes Great Western Acquisition

Denver, CO – May 6, 2022

PDC Energy, Inc. (NASDAQ: PDCE) (“PDC” or the “Company”) today announced that it has completed its acquisition of Great Western Petroleum, LLC (“Great Western”), a privately held company based in Denver. The acquisition was previously announced on February 28, 2022. The consideration paid was $543 million (less $50 million previously placed into escrow) and approximately 4 million shares of PDC common stock. In addition, the Company paid off the Great Western secured credit facility totaling $235 million and $312 million in principal amount of Great Western’s 12% senior secured notes due 2025.

Bart Brookman, President and Chief Executive Officer of PDC, stated “We are excited to close the Great Western acquisition, which is accretive to our operating, ESG and financial metrics. We look forward to providing the market with updated guidance by early next month as we work to integrate Great Western’s operations. I want to thank the Great Western team for their strong focus and commitment to responsible Colorado development. PDC shares this commitment, and we will continue to lead the way in community-focused, environmentally-sound, and efficient operations as we move forward.”

About PDC Energy, Inc.

PDC Energy, Inc. is a domestic independent exploration and production company that acquires, produces, develops, and explores for crude oil, natural gas, and NGLs, with operations in the Wattenberg Field in Colorado and in the Delaware Basin in West Texas. Its operations are focused on the liquid-rich horizontal Niobrara and Codell plays in the Wattenberg Field and the liquid-rich Wolfcamp zones in the Delaware Basin.

Cautionary Statement Regarding Forward-Looking Information

This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than historical facts, that address activities or results that PDC assumes, plans, expects, believes, intends or anticipates (and other similar expressions) will, should or may occur in the future are forward-looking statements. The forward-looking statements are based on management’s current beliefs, based on currently available information, as to the outcome and timing of future events. These forward-looking statements involve certain risks and uncertainties that could cause the results to differ materially from those expected by the management of PDC. These include the risk of any unexpected costs or expenses resulting from the acquisition, the risk that problems may arise in integrating the businesses of the companies which may result in PDC not operating as effectively and efficiently as expected, the risk that PDC may be unable to achieve synergies or other anticipated benefits of the transaction or that it may take longer than expected to achieve those synergies or benefits, and other important factors that could cause actual results to differ materially from those projected. All such factors are difficult to predict and are beyond PDC’s control, and are subject to risks and uncertainties, including those detailed in PDC’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K that are available on its website at http://www.pdce.com and on the SEC’s website at http://www.sec.gov.

All forward-looking statements are based on assumptions that PDC believes to be reasonable but that may not prove to be accurate. PDC undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by applicable law. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.

Contacts:  Bill Crawford

                   VP – Finance



PDC Energy Announces $1.3 Billion Core Wattenberg Acquisition, Establishes Enhanced Return of Capital Framework, Provides 2021 Results and 2022 Guidance

February 28, 2022 – Denver, CO

Link to Press Release can be found here.

PDC Energy, Inc. (“PDC” or the “Company”) (Nasdaq:PDCE) today announced it has entered into a definitive purchase agreement with Great Western Petroleum, LLC (“Great Western”) and certain sellers under which PDC will acquire Great Western in a transaction valued at approximately $1.3 billion, including net debt of approximately $500 million (the “Acquisition”). Great Western is a Denver-based DJ Basin operator owned by affiliates of EIG, TPG Energy Solutions, L.P. and The Broe Group. Under the terms of the agreement, the Acquisition will be financed through the issuance of approximately 4.0 million shares of common stock to existing Great Western shareholders and approximately $543 million of cash, subject to customary post-closing adjustments. The transaction is expected to close in the second quarter of 2022 and is expected to be financed with cash on hand and borrowings under the Company’s credit facility. PDC does not expect its pro forma leverage ratio to exceed 1.0x upon closing.

The Company also provided its enhanced return of capital framework, 2021 fourth quarter and year-end operating and financial results, detailed 2022 PDC standalone guidance and a preliminary 2022 pro forma outlook.

Key Acquisition Highlights:

  • Materially increases PDC scale through the acquisition of approximately 55,000 barrels of oil equivalent (“Boe”) per day, composed of approximately 42 percent crude oil and 67 percent liquids and year-end 2021 SEC proved reserves of 185 MMBoe. PDC estimates its pro forma year-end 2021 SEC proved reserves were approximately 1 billion Boe.
  • Addition of 315 identified locations – approximately 125 of which are either drilled but uncompleted wells (“DUCs”) or approved permits. The Company’s pro forma combined DUC and approved permit count was approximately 500 locations at year-end 2021.
  • Accretive to key financial and operating metrics including adjusted free cash flow (“FCF”), a non-U.S. GAAP metric defined below, FCF per share, shareholder returns, oil mix, general & administrative expense (“G&A”) per Boe and lease operating expense (“LOE”) per Boe. The Company anticipates its pro forma leverage ratio to be less than 0.7x at year-end 2022.
  • Accretive to PDC’s current GHG and methane emission intensities while supporting the Company’s 2025 and 2030 emission intensity reduction goals and further enhancing its best-in-class community stewardship programs.

President and Chief Executive Officer Bart Brookman commented, “Coupled with our existing high-quality inventory, this Core Wattenberg acquisition adds meaningful scale to PDC while also demonstrating our commitment to – and confidence in – the future of safe and responsible energy development in the state of Colorado. This opportunity meets all the Company’s acquisition-related criteria we’ve previously communicated by strengthening our free cash flow, increasing our shareholder returns, honoring the balance sheet and adding competitive, high-quality inventory.”

Return of Capital Framework:

  • PDC’s board of directors has approved an increase to its 2022 first quarter base dividend to $0.25 per share from $0.12 per share in the fourth quarter of 2021. The Company anticipates further increasing the quarterly base dividend to $0.35 per share upon closing of the Acquisition in the second quarter.
  • In 2022 and beyond, PDC is committed to returning a minimum of 60 percent of post-dividend annual FCF to shareholders through the Company’s board-authorized $1.25 billion share repurchase program and year-end special dividend, if needed. The Company intends to utilize its entire $1.25 billion authorization by year-end 2023.
  • Cumulative 2022 and 2023 estimated pro forma FCF of approximately $2.7 billion and projected shareholder returns of more than $1.7 billion, equating to approximately 50 percent and 30 percent, respectively, of the Company’s current market cap.

“I’m extremely excited to execute our new return of capital framework.” commented Chief Financial Officer Scott Meyers. “Not only do we feel this will lead to industry-leading shareholder returns, but we maintain the ability to further strengthen the balance sheet and build a cash balance for future flexibility. While our primary goal is to honor and consistently grow the base dividend, we plan to aggressively buy back a significant portion of our stock while we trade at an unwarranted discount to our intrinsic value, our peers and the broad market in general. At our current share price, we not only plan to fully exhaust our new plan in under two years – but we also project to retire more shares by the end of the third quarter than we’re issuing in association with the Great Western acquisition.”

PDC Standalone and Pro Forma 2022 Highlights (1):

  • Assuming $75 per barrel WTI crude oil, $4.00 NYMEX natural gas and NGL realizations of approximately $27.50 per barrel, PDC anticipates generating approximately $1.1 billion of standalone FCF with anticipated pro forma FCF of approximately $1.3 billion.
  • PDC standalone oil and gas capital investments expected between $675 and $725 million with pro forma capital investments expected between $900 million and $1.0 billion.
  • Total standalone production and oil production expected between 195,000 and 205,000 Boe per day and 62,000 and 65,000 barrels (“Bbls”) of crude oil per day. Pro forma daily production and daily oil production in the second half of 2022 are expected between 250,000 and 260,000 and 82,000 and 87,000, respectively.

    (1)   Pro forma outlook assumes successful closing of Acquisition in the second quarter, are based on current estimates and subject to a higher degree of uncertainty.

Colorado Permits

PDC exited the year with approximately 145 DUCs and approximately 230 approved permits in-hand, which includes the eight-well Spinney OGDP that was approved by the COGCC in early October. Further, the Company’s 70-well Kenosha OGDP recently passed the completeness determination stage of the approval process and is tentatively scheduled to be heard by the COGCC Commissioners in May 2022. Finally, the Company submitted its 450-well Guanella Comprehensive Area Plan (“CAP”) in December 2021. PDC continues to work collaboratively with local communities, Weld County, the State of Colorado and other key stakeholders as this meaningful project progresses through the permit approval process.

The Acquisition consists of approximately 315 total locations, with approximately 115 combined DUCs and approved permits in Adams County and approximately 10 approved permits and 90 low-risk, unpermitted locations in Weld County. An additional 96 locations have approved Form 2A permits in Adams County, providing line of sight to attaining Form 2 sub-surface permits. PDC projects its current level of DUCs and approved permits to be sufficient for all completion activity through 2023.

Year-End Proved Reserves and Inventory

PDC’s estimated SEC proved reserves as of year-end 2021 were 814 million Boe, with proved developed reserves accounting for approximately 49 percent of the total. Year-end 2021 reserves reflect an increase of 11 percent compared to year-end 2020 and equate to a 217% reserve replacement ratio. Under SEC pricing of approximately $67 per Bbl WTI, $3.60 per MMBtu natural gas and NGL realizations of approximately $25 per Bbl, the Company’s standardized measure value of its proved reserves was $7.9 billion and the discounted pre-tax PV-10 of those reserves was $9.7 billion.

Pro forma for the Acquisition, PDC’s estimated year-end 2021 SEC proved reserves were approximately 1,000 MMBoe, with proved developed reserves accounting for approximately 50 percent of the total. The Company’s discounted pre-tax PV-10 value of the pro forma year-end 2021 proved reserves was nearly $12.0 billion.

In Wattenberg, the Company’s estimated year-end undeveloped inventory, including DUCs, was approximately 1,800 locations with an average lateral length of approximately 9,700 feet, an increase of nearly 10 percent compared to the average lateral length of undeveloped locations as of year-end 2020. Total inventory represents an inventory life of more than ten years at the current development pace.

Pro forma Wattenberg undeveloped inventory was approximately 2,100 locations.

The table below provides a summary of the estimated year-end 2021 pro forma inventory by status and location:

Area DUCsPermitsUnpermittedTotal
Kersey 7060124254
Summit 1289317418
Plains 4732386465
Prairie 1460688762
Range 1210596213
Total 1553461,6112,112

In the Delaware basin, PDC’s estimated year-end 2021 inventory was approximately 65 locations, including DUCs. The inventory had an average lateral length of approximately 10,200 feet, an increase of approximately 15 percent compared to year-end 2020. The Company’s estimated inventory equates to between three and four years of future TILs at its current development pace and reflects a more relaxed spacing design than prior development with a focus primarily on the Wolfcamp A and B zones. PDC is planning several initiatives in 2022 aimed at organically increasing inventory including testing the Bone Spring formation.

2022 Free Cash Flow Allocation, Capital Investment and Financial Guidance

PDC Standalone

PDC’s 2022 and multi-year operating plans are based on generating significant and sustainable levels of FCF with an industry-leading level of shareholder returns through its recently established free cash flow allocation framework. This framework contemplates that PDC will focus on consistent and meaningful growth to its quarterly base dividend on an annual basis with a commitment to returning a minimum of 60 percent of its post-dividend annual FCF to shareholders through a systematic share repurchase program while utilizing a special dividend, if needed, to fulfill its annual targets.

On February 25, PDC’s board of directors approved more than doubling its quarterly base dividend, raising it to $0.25 per share from $0.12 per share. The first quarter dividend is payable on March 25 to stockholders of record at the close of business on March 11. To fulfill the increased shareholder return objectives, the board also authorized a $1.25 billion share repurchase program with the goal of fully executing the increased plan by year-end 2023. PDC aims to systematically repurchase shares on a daily basis and uses a variety of factors to manage the pace of buybacks, including intrinsic discounted after-tax net asset value analysis, trading multiples and current and projected commodity prices.

In 2022, PDC projects to generate approximately $1.1 billion of post-tax FCF assuming $75 per Bbl WTI, $4.00 per Mcf NYMEX natural gas and NGL realizations of approximately $27.50 per Bbl. Under its new framework, PDC projects 2022 post-base dividend shareholder returns to exceed $600 million. Given the recent improvements in oil and gas prices, PDC expects to begin to incur cash federal and state income taxes in 2022 and beyond.

In 2022, on a standalone basis, PDC anticipates capital investments between $675 and $725 million with total daily production expected between 195,000 and 205,000 and daily oil production between 62,000 and 65,000. The Company’s 2022 capital investment range reflects an increase of approximately 10 percent at the mid-point compared to prior messaging primarily due to service cost inflation associated with higher commodity prices and other macro conditions.

Due to a majority of the Delaware basin completion program occurring in the first quarter, PDC expects its first quarter capital investments of between $195 and $215 million to be the highest, on a quarterly basis, of 2022. First quarter average daily production is expected between 190,000 and 200,000 while average oil production is expected between 61,000 and 66,000 per day. Compared to the fourth quarter of 2021, anticipated first quarter daily production and daily oil production are expected to decrease approximately 15 percent in the Delaware basin due to a lack of recent operated TIL activity and approximately seven percent in Wattenberg due to the anticipated timing of first quarter TILs, lower non-operated volumes and weather-related freeze offs.

In Wattenberg, on a standalone basis, the Company expects to utilize one full-time completion crew while increasing its rig count from one to two in the second quarter for total capital investments of approximately $550 million. Assuming more than 20 completion stages per day and average spud times of less than five days for an extended-reach lateral, the Company projects to TIL between 115 and 130 wells and spud between 130 and 145 wells. Well costs for the year, which include an estimated 100 percent increase to steel costs per well, are estimated at $450 per lateral foot. Wattenberg maintains a best-in-class cost structure including projected LOE of less than $2.50 per Boe.

In the Delaware basin, the Company anticipates running one full-time drilling rig and a part-time completion crew, resulting in an estimated 15 to 20 spuds and TILs, respectively. Capital investments are projected at approximately $150 million with estimated well costs, including facilities, of $850 per lateral foot.

Corporate LOE and G&A are expected to be between $2.70 and $2.90 per Boe and $1.80 and $2.00, respectively, for 2022. The modest increase to anticipated LOE per Boe is primarily associated with service and labor cost inflation and the Delaware basin artificial lift program.

Assuming the same commodity prices in 2023, PDC anticipates similar ranges for capital investments and after-tax FCF while delivering zero to five percent total production and oil production growth. Cumulative 2022-2023 FCF of approximately $2.2 billion equates to approximately 40 percent of the Company’s current market cap. Under the Company’s enhanced return of capital framework, and assuming a $0.25 per share quarterly dividend throughout 2022 and 2023, cumulative shareholder returns are expected to exceed $1.4 billion.

Preliminary Pro Forma 2022 Outlook

The Company anticipates closing the Acquisition in the second quarter with all estimates below based on the assumption that closing is successful. See the “Risk Factors” section of our December 31, 2021 Annual Report on Form 10-K for a discussion of certain risks associated with the acquisition.

In 2022, PDC projects to generate approximately $1.3 billion of after-tax FCF with more than $800 million of total shareholder returns. Anticipated 2022 capital investments between $900 million and $1.0 billion are expected to generate total production between 225,000 and 240,000 Boe per day and between 74,000 and 81,000 Bbls of oil per day. Post-close, the Company plans to operate three Wattenberg rigs, one Delaware rig and one and a half Wattenberg completion crews, resulting in anticipated second half daily total production and daily oil production of approximately 250,000 to 260,000 Boe and 82,000 to 87,000 Bbls, respectively.

The Company currently estimates pro forma cumulative 2022-2023 FCF of approximately $2.7 billion – equating to approximately 50 percent of the Company’s current market cap. Under the Company’s enhanced return of capital framework, and assuming a $0.25 per share quarterly dividend in the first quarter of 2022 and $0.35 per share thereafter, cumulative shareholder returns in 2022 and 2023 are expected to exceed $1.7 billion.

Environmental, Social and Governance (“ESG”)

In 2022, PDC plans to invest approximately $80 million and undertake several initiatives aimed at further improving its ESG best-practices and meeting certain regulatory requirements. From an environmental standpoint, PDC anticipates the plugging and reclamation of more than 300 legacy vertical wells, the installation of air pneumatics as part of its facility retrofit program and the transition to an electric drilling program that we anticipate will contribute to year-over-year emission intensity reductions of approximately 10 percent and more than 15 percent for GHG and methane, respectively. In 2022, PDC modified its executive compensation program to include GHG and methane emission intensity performance targets. Including its existing safety-related performance bonus metrics, ESG is projected to account for approximately 30 percent of the short-term incentive program.

As highlighted in a separate press release issued on February 2, PDC continued its board refreshment initiatives with the appointment of Pamela Butcher. Including Ms. Butcher, seven of PDC’s eight board members are independent and five have joined the board since 2020. Further, three directors are either female and/or self-identify as underrepresented minorities.

Due to the average age of Great Western’s existing wellbores and facilities compared to those of PDC, the Company projects its pro forma GHG and methane emission intensities to improve compared to its existing metrics. PDC expects the Acquisition to further support or accelerate its existing GHG and methane emission intensity reduction targets of more than 50 percent and 60 percent, respectively, by 2025 compared to 2020.

2021 Fourth Quarter and Year-End Results

In the fourth quarter of 2021, PDC generated approximately $340 million of FCF and reduced total debt by approximately $300 million, exiting the year with a trailing twelve-month net leverage ratio of 0.6x. Additionally, PDC returned approximately $110 million of capital to shareholders through the $0.12 per share payment of its quarterly base dividend, the repurchase of approximately 1.0 million shares of common stock and a $0.50 per share special dividend. For the year, the Company generated approximately $950 million of FCF, reduced total net debt by approximately $700 million and returned approximately $245 million to shareholders.

Capital investments in the fourth quarter were approximately $134 million with total production of 19.4 million Boe, or 211,000 Boe per day, and oil production of 6.3 million Bbls, or 68,750 Bbls per day. Daily total production and daily oil production represent approximately three and four percent sequential increases from the third quarter of 2021. In 2021, PDC invested approximately $584 million to produce 71.3 million Boe, or 195,000 Boe per day, and 22.7 million Bbls of oil, or 62,000 Bbls per day.

In Wattenberg, the Company invested approximately $106 million in the fourth quarter to operate one drilling rig and one completion crew, resulting in 15 spuds and 36 turn-in-lines (“TILs”). Total production was 16.7 million Boe, or approximately 182,000 Boe per day, while oil production was 5.3 million Bbls, or approximately 57,500 Bbls per day. Full-year Wattenberg activity consisted of capital investments of approximately $432 million, 78 spuds and 149 TILs. Total production and oil production averaged approximately 170,000 Boe per day and 52,000 Bbls of oil per day, respectively.

In the Delaware Basin, PDC invested approximately $28 million to operate one drilling rig, resulting in four spuds and zero TILs in the quarter as the Company finished its 2021 completion activity in the second quarter. Total production was 2.7 million Boe, or approximately 29,000 Boe per day, while oil production was approximately 1.0 million Bbls, or approximately 11,000 Bbls per day. Fourth quarter total production and oil production benefited from the installation and utilization of five electrical submersible pumps and several workover projects completed in the third quarter, as well as strong non-operated well performance. For the full-year, PDC invested approximately $152 million to drill and TIL 18 wells. Total production and oil production averaged approximately 26,000 Boe per day and 10,000 Bbls per day, respectively.

Oil and Gas Production, Sales and Operating Cost Data

Fourth quarter crude oil, natural gas and NGLs sales, excluding net settlements on derivatives, were $848 million, a 147 percent increase over 2020 levels of $343 million. The increase in sales between periods was due to a 111 percent increase in weighted average realized sales price per Boe to $43.71 from $20.72. The increase in sales price was driven by 89 percent, 159 percent and 157 percent increases in weighted average realized crude oil, natural gas and NGL prices, respectively. The combined revenue from crude oil, natural gas and NGLs sales and net settlements on commodity derivative instruments was approximately $653 million in 2021 compared to approximately $395 million in 2020.

Full-year crude oil, natural gas and NGLs sales, excluding net settlements on derivatives, were $2,553 million, a 122 percent increase over 2020 levels of $1,153 million. The increase in sales between periods was due to a 112 percent increase in weighted average realized sales price per Boe to $35.78 from $16.86. The increase in sales price was driven by 96 percent, 174 percent and 182 percent increases in weighted average realized crude oil, natural gas and NGL prices, respectively. The combined revenue from crude oil, natural gas and NGLs sales and net settlements on commodity derivative instruments was approximately $2,142 million in 2021 compared to approximately $1,432 million in 2020.

The following table provides weighted-average sales price, by area, for the three and twelve months ended December 31, 2021 and 2020, excluding net settlements on derivatives and TGP:

 Three Months Ended December 31, Year Ended December 31,
  2021  2020 Percent
  2021  2020 Percent
Crude oil (MBbls)           
Wattenberg Field 5,306  4,568 16 %  18,901  19,552 (3)%
Delaware Basin 1,019  1,019  %  3,781  4,168 (9)%
Total 6,325  5,587 13 %  22,682  23,720 (4)%
Weighted-Average Sales Price$76.50 $40.43 89 % $67.49 $34.44 96 %
Natural gas (MMcf)           
Wattenberg Field 40,870  35,559 15 %  154,150  140,845 9 %
Delaware Basin 6,163  6,276 (2)%  21,597  24,792 (13)%
Total 47,033  41,835 12 %  175,747  165,637 6 %
Weighted-Average Sales Price$4.10 $1.58 159 % $2.96 $1.08 174 %
NGLs (MBbls)           
Wattenberg Field 4,615  3,458 33 %  17,300  14,495 19 %
Delaware Basin 626  556 13 %  2,060  2,547 (19)%
Total 5,241  4,014 31 %  19,360  17,042 14 %
Weighted-Average Sales Price$32.74 $12.76 157 % $25.94 $9.21 182 %
Crude oil equivalent (MBoe)           
Wattenberg Field 16,732  13,952 20 %  61,892  57,521 8 %
Delaware Basin 2,673  2,622 2 %  9,441  10,847 (13)%
Total 19,405  16,574 17 %  71,333  68,368 4 %
Weighted-Average Sales Price$43.71 $20.72 111 % $35.78 $16.86 112 %

Production costs for the fourth quarter of 2021, which include LOE, production taxes and TGP, were $141 million, or $7.26 per Boe, compared to $80 million, or $4.83 per Boe, in 2020. Production costs for the full year were $446 million, or $6.26 per Boe, compared to $299 million, or $4.37 per Boe, in 2020. The increase in production costs per Boe between comparable periods was predominantly due to increases in production taxes per Boe of 197 percent and 167 percent, respectively.

The following table provides the components of production costs for the three and twelve months ended December 31, 2021 and 2020:

 Three Months Ended
December 31,
 Year Ended
December 31,
  2021  2020  2021  2020
Lease operating expenses$50.8 $38.7 $180.7 $161.3
Production taxes 64.1  18.4  165.2  59.4
Transportation, gathering and processing expenses 26.0  23.0  100.4  77.8
Total$140.9 $80.1 $446.3 $298.5
 Three Months Ended
December 31,
 Year Ended
December 31
  2021  2020  2021  2020
Lease operating expenses per Boe$2.62 $2.33 $2.53 $2.36
Production taxes per Boe 3.30  1.11  2.32  0.87
Transportation, gathering and processing expenses per Boe 1.34  1.39  1.41  1.14
Total per Boe$7.26 $4.83 $6.26 $4.37

Financial Results

Net income for the fourth quarter and full-year 2021 were $473 million, or $4.78 per diluted share, and $522 million, or $5.22 per diluted share, respectively, compared to net losses of $7 million, or $0.07 per diluted share, and $724 million, or $7.37 per diluted share in the comparable 2020 periods. Adjusted net income, a non-U.S. GAAP financial measure defined below, was $283 million in the fourth quarter of 2021 and $800 million for the full year compared to $111 million and a net loss of $625 million in the comparable 2020 periods. The year-over-year change between fourth quarter metrics was primarily due to an increase in sales partially offset by an increase in net derivative settlement losses and an increase in production taxes whereas the year-over-year difference between annual metrics was primarily due to an $882 million impairment expense in 2020.

Net cash from operating activities for the fourth quarter of 2021 was approximately $520 million compared to $221 million in 2020. Adjusted cash flows from operations, a non-U.S. GAAP metric defined below, was approximately $473 million in the fourth quarter of 2021 compared to approximately $269 million in 2020. Full year 2021 net cash from operating activities was $1,548 million compared to $870 million in 2020 while adjusted cash flows from operations were $950 million and $400 million, respectively. The year-over-year increase in each metric was primarily due to the increase in sales partially offset by the increase in costs and change in derivative settlements.

G&A, which includes cash and non-cash expense, was $31 million, or $1.62 per Boe, in the fourth quarter of 2021 compared to $31 million, or $1.88 per Boe, in 2020. G&A for the full year 2021 was $128 million, or $1.79 per Boe, compared to $161 million, or $2.36 per Boe in 2020. The 14 percent decrease in G&A per Boe between fourth quarter periods was primarily due to increased production volumes whereas the 24 percent decrease between annual periods is primarily attributable to transaction and transition costs associated with the acquisition of SRC Energy in 2020.

Timing and Approvals

The Acquisition, which is expected to close in the second quarter of 2022, is subject to customary closing conditions and the satisfaction of certain regulatory approvals.


PJT Partners is serving as exclusive financial advisor to PDC, and Davis, Graham and Stubbs LLP is serving as PDC’s legal counsel. Citi is serving as exclusive financial advisor to Great Western, and Latham & Watkins LLP is serving as Great Western’s legal counsel.

Reconciliation of Non-U.S. GAAP Financial Measures

We use “adjusted cash flows from operations,” “adjusted free cash flow (deficit), (or “FCF”)” “adjusted net income (loss)” and “adjusted EBITDAX,” non-U.S. GAAP financial measures, for internal management reporting, when evaluating period-to-period changes and, in some cases, in providing public guidance on possible future results. In addition, we believe these are measures of our fundamental business and can be useful to us, investors, lenders and other parties in the evaluation of our performance relative to our peers and in assessing acquisition opportunities and capital expenditure projects. These supplemental 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. In the future, we may disclose different non-U.S. GAAP financial measures in order to help us and 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 to not rely on any single financial measure.

Adjusted cash flows from operations and adjusted free cash flow (deficit). We believe adjusted cash flows from operations can provide additional transparency into the drivers of trends in our operating cash flows, such as production, realized sales prices and operating costs, as it disregards the timing of settlement of operating assets and liabilities. We believe adjusted free cash flow (deficit) provides additional information that may be useful in an investor analysis of our ability to generate cash from operating activities from our existing oil and gas asset base to fund exploration and development activities and to return capital to stockholders in the period in which the related transactions occurred. We exclude from this measure cash receipts and expenditures related to acquisitions and divestitures of oil and gas properties and capital expenditures for other properties and equipment, which are not reflective of the cash generated or used by ongoing activities on our existing producing properties and, in the case of acquisitions and divestitures, may be evaluated separately in terms of their impact on our performance and liquidity. Adjusted free cash flow is a supplemental measure of liquidity and should not be viewed as a substitute for cash flows from operations because it excludes certain required cash expenditures. For example, we may have mandatory debt service requirements or other non-discretionary expenditures which are not deducted from the adjusted free cash flow measure.

We are unable to present a reconciliation of forward-looking adjusted cash flow because components of the calculation, including fluctuations in working capital accounts, are inherently unpredictable. Moreover, estimating the most directly comparable GAAP measure with the required precision necessary to provide a meaningful reconciliation is extremely difficult and could not be accomplished without unreasonable effort. We believe that forward-looking estimates of adjusted cash flow are important to investors because they assist in the analysis of our ability to generate cash from our operations.

Adjusted net income (loss). We believe that adjusted net income (loss) provides additional transparency into operating trends, such as production, realized sales prices, operating costs and net settlements on commodity derivative contracts, because it disregards changes in our net income (loss) from mark-to-market adjustments resulting from net changes in the fair value of our unsettled commodity derivative contracts, and these changes are not directly reflective of our operating performance.

Adjusted EBITDAX. We believe that adjusted EBITDAX provides additional transparency into operating trends because it reflects the financial performance of our assets without regard to financing methods, capital structure, accounting methods or historical cost basis. In addition, because adjusted EBITDAX excludes certain non-cash expenses, we believe it is not a measure of income, but rather a measure of our liquidity and ability to generate sufficient cash for exploration, development, and acquisitions and to service our debt obligations.

Cash Flows from Operations to Adjusted Cash Flows From Operations and Adjusted Free Cash Flow
 Three Months Ended
December 31,
 Year Ended
December 31,
  2021   2020   2021   2020 
Cash flows from operations to adjusted cash flows from operations and adjusted free cash flow:       
Net cash from operating activities$520.0  $220.8  $1,547.8  $870.1 
Changes in assets and liabilities (46.9)  48.0   (15.2)  51.5 
Adjusted cash flows from operations 473.1   268.8   1,532.6   921.6 
Capital expenditures for development of crude oil and natural gas properties (154.3)  (105.5)  (583.1)  (551.0)
Change in accounts payable related to capital expenditures for oil and gas development activities 20.7   (2.7)  (0.5)  28.7 
Adjusted free cash flow$339.5  $160.6  $949.0  $399.3 
Net Income (Loss) to Adjusted Net Income (Loss) and Adjusted Earnings Per Share, Diluted
 Three Months Ended
December 31,
 Year Ended
December 31,
  2021   2020   2021   2020 
Net income (loss) to adjusted net income (loss):       
Net income (loss)$473.1  $(6.7) $522.3  $(724.3)
(Gain) loss on commodity derivative instruments (5.7)  65.6   701.5   (180.3)
Net settlements on commodity derivative instruments (194.8)  51.8   (410.2)  279.3 
Tax effect of above adjustments (1) 10.5      (14.0)   
Adjusted net income (loss)$283.1  $110.7  $799.6  $(625.3)
Earnings (Loss) per share, diluted$4.78  $(0.07) $5.22  $(7.37)
Loss (gain) on commodity derivative instruments (0.06)  0.65   7.00   (1.83)
Net settlements on commodity derivative instruments (1.97)  0.52   (4.09)  2.84 
Tax effect of above adjustments (1) 0.11      (0.14)   
Adjusted earnings per share, diluted$2.86  $1.10  $7.99  $(6.36)
Weighted-average diluted shares outstanding 99.0   100.4   100.2   98.3 


(1) Due to the full valuation allowance recorded against our net deferred tax assets, there is no tax effect for the three months and year ended December 31, 2020.

Adjusted EBITDAX
 Three Months Ended
December 31,
 Year Ended
December 31,
  2021   2020   2021   2020 
Net income (loss) to adjusted EBITDAX:       
Net income (loss)$473.1  $(6.7) $522.3  $(724.3)
Loss (gain) on commodity derivative instruments (5.7)  65.6   701.5   (180.3)
Net settlements on commodity derivative instruments (194.8)  51.8   (410.2)  279.3 
Non-cash stock-based compensation 5.7   4.8   23.0   22.2 
Interest expense, net 23.5   21.7   82.7   88.7 
Income tax expense (benefit) 26.5   (4.4)  26.6   (7.9)
Impairment of properties and equipment 0.1   0.1   0.4   882.4 
Exploration, geologic and geophysical expense 0.2   0.4   1.1   1.4 
Depreciation, depletion and amortization 156.6   149.6   635.2   619.7 
Accretion of asset retirement obligations 2.9   2.7   12.1   10.1 
Loss (gain) on sale of properties and equipment (0.4)  (0.1)  (0.9)  (0.7)
Adjusted EBITDAX$487.7  $285.5  $1,593.8  $990.6 
Cash from operating activities to adjusted EBITDAX:       
Net cash from operating activities$520.0  $220.8  $1,547.8  $870.1 
Interest expense, net(1) 16.6   21.7   75.8   88.7 
Amortization and write-off of debt discount, premium and issuance costs (2.3)  (4.3)  (13.5)  (16.8)
Exploration, geologic and geophysical expense 0.2   0.4   1.1   1.4 
Other 0.1   (1.1)  (2.2)  (4.3)
Changes in assets and liabilities (46.9)  48.0   (15.2)  51.5 
Adjusted EBITDAX$487.7  $285.5  $1,593.8  $990.6 

(1) Excludes loss on extinguishment from early retirement of our senior notes amounting to $6.9 million for the three months and year ended December 31, 2021

Condensed Consolidated Statements of Operations
(unaudited, in thousands, except per share data)

 Three Months Ended
December 31,
 Year Ended
December 31,
  2021   2020   2021   2020 
Crude oil, natural gas and NGLs sales$848,162  $343,399  $2,552,558  $1,152,555 
Commodity price risk management gain (loss), net 5,731   (65,581)  (701,456)  180,270 
Other income 750   745   4,808   6,401 
Total revenues 854,643   278,563   1,855,910   1,339,226 
Costs, expenses and other       
Lease operating expense 50,811   38,666   180,659   161,346 
Production taxes 64,095   18,431   165,209   59,368 
Transportation, gathering and processing expense 25,950   22,991   100,403   77,835 
Exploration, geologic and geophysical expense 202   350   1,064   1,376 
General and administrative expense 31,366   31,080   127,733   161,087 
Depreciation, depletion and amortization 156,567   149,587   635,184   619,739 
Accretion of asset retirement obligations 2,901   2,674   12,086   10,072 
Impairment of properties and equipment 73   66   402   882,393 
Gain on sale of properties and equipment (351)  (82)  (912)  (724)
Other expenses (6)  4,189   2,490   10,272 
Total costs, expenses and other 331,608   267,952   1,224,318   1,982,764 
Income (loss) from operations 523,035   10,611   631,592   (643,538)
Interest expense, net (23,499)  (21,706)  (82,698)  (88,684)
Income (loss) before income taxes 499,536   (11,095)  548,894   (732,222)
Income tax (expense) benefit (26,473)  4,405   (26,583)  7,902 
Net income (loss)$473,063  $(6,690) $522,311  $(724,320)
Earnings (Loss) per share:       
Basic 4.87  $(0.07)  5.30  $(7.37)
Diluted 4.78  $(0.07)  5.22  $(7.37)
Weighted average common shares outstanding:       
Basic 97,140   99,708   98,546   98,251 
Diluted 99,021   99,708   100,154   98,251 

Consolidated Balance Sheets
(unaudited, in thousands, except share and per share data)

  December 31, 2021 December 31, 2020
Current assets:    
Cash and cash equivalents $33,829  $2,623 
Accounts receivable, net  398,605   244,251 
Fair value of derivatives  17,909   48,869 
Prepaid expenses and other current assets  8,230   12,505 
Total current assets  458,573   308,248 
Properties and equipment, net  4,814,865   4,859,199 
Fair value of derivatives  15,177   9,565 
Other assets  48,051   60,961 
Total Assets $5,336,666  $5,237,973 
Liabilities and Stockholders’ Equity    
Current liabilities:    
Accounts payable $127,891  $90,635 
Production tax liability  99,583   124,475 
Fair value of derivatives  304,870   98,152 
Funds held for distribution  285,861   177,132 
Accrued interest payable  10,482   14,734 
Other accrued expenses  91,409   81,715 
Current portion of long-term debt     193,014 
Total current liabilities  920,096   779,857 
Long-term debt  942,084   1,409,548 
Asset retirement obligations  127,526   132,637 
Fair value of derivatives  95,561   36,359 
Deferred income taxes  26,383    
Other liabilities  314,769   264,034 
Total liabilities  2,426,419   2,622,435 
Commitments and contingent liabilities    
Stockholders’ equity    
Common shares – par value $0.01 per share, 150,000,000 authorized, 96,468,071 and 99,758,720 issued as of December 31, 2021 and 2020, respectively  965   998 
Additional paid-in capital  3,161,941   3,387,754 
Accumulated deficit  (249,954)  (772,265)
Treasury shares – at cost, 54,960 and 37,510 as of December 31, 2021 and 2020, respectively  (2,705)  (949)
Total stockholders’ equity  2,910,247   2,615,538 
Total Liabilities and Stockholders’ Equity $5,336,666  $5,237,973 

Condensed Consolidated Statements of Cash Flows
(unaudited, in thousands)

  Three Months Ended
December 31,
 Year Ended
December 31,
   2021   2020   2021   2020 
Cash flows from operating activities:        
Net income (loss)  473,063  $(6,690) $522,311  $(724,320)
Adjustments to net income (loss) to reconcile to net cash from operating activities:        
Net change in fair value of unsettled commodity derivatives  (200,562)  117,339   291,268   99,001 
Depreciation, depletion and amortization  156,567   149,587   635,184   619,739 
Impairment of properties and equipment  73   66   402   882,393 
Accretion of asset retirement obligations  2,901   2,674   12,086   10,072 
Non-cash stock-based compensation  5,729   4,759   23,023   22,200 
Loss (gain) on sale of properties and equipment  (351)  (82)  (912)  (724)
Amortization and write-off of debt discount, premium and issuance costs  2,273   4,226   13,468   16,772 
Loss from extinguishment of debt  6,927      6,927    
Deferred income taxes  26,383   (4,099)  26,383   (6,530)
Other  98   1,054   2,451   3,004 
Changes in assets and liabilities  46,875   (48,067)  15,205   (51,528)
Net cash from operating activities  519,976   220,767   1,547,796   870,079 
Cash flows from investing activities:        
Capital expenditures for development of crude oil and natural gas properties  (154,277)  (105,459)  (583,108)  (550,964)
Capital expenditures for other properties and equipment  (531)  306   (894)  (1,634)
Acquisition of crude oil and natural gas properties           (139,812)
Proceeds from sale of properties and equipment  353   102   5,073   1,641 
Proceeds from divestitures  125   1,814   125   3,610 
Net cash from investing activities  (154,330)  (103,237)  (578,804)  (687,159)
Cash flows from financing activities:        
Proceeds from revolving credit facility and other borrowings  300,000   313,750   802,800   1,799,350 
Repayment of revolving credit facility and other borrowings  (300,000)  (430,750)  (970,800)  (1,635,350)
Proceeds from issuance of senior notes           148,500 
Redemption of senior notes  (308,584)     (308,584)  (452,153)
Redemption of convertible notes        (200,000)   
Payment of debt issuance costs  (13,066)  (341)  (13,066)  (6,538)
Purchase of treasury shares  (49,477)     (156,795)  (23,819)
Purchase of treasury shares for employee stock-based compensation tax withholding obligations  (202)  (933)  (6,038)  (9,345)
Dividends paid  (60,015)     (83,615)   
Principal payments under financing lease obligations  (395)  (451)  (1,688)  (1,905)
Net cash from financing activities  (431,739)  (118,725)  (937,786)  (181,260)
Net change in cash, cash equivalents and restricted cash  (66,093)  (1,195)  31,206   1,660 
Cash, cash equivalents and restricted cash, beginning of year  99,922   12,254   2,623   963 
Cash, cash equivalents and restricted cash, end of year $33,829  $11,059  $33,829  $2,623 

2021 Fourth Quarter and Year-End Teleconference and Webcast

The Company invites you to join Bart Brookman, President and Chief Executive Officer; Scott Meyers, Chief Financial Officer; Lance Lauck, Executive Vice President Corporate Development and Strategy; and David Lillo, Senior Vice President Operations for a conference call Monday, February 28, 2022 at 11:00 a.m. ET, to discuss its 2021 fourth quarter and year-end results. The related slide presentation will be available on PDC’s website at www.pdce.com.

Conference Call and Webcast:
Date/Time: Monday, February 28, 2022 at 11:00 a.m. ET
Domestic (toll free): 877-312-5520
International: 1-253-237-1142
Conference ID: 2197232
Webcast: available at www.pdce.com

Replay Information:
Domestic (toll free): 855-859-2056
International: 1-404-537-3406
Conference ID: 2197232
Webcast Replay: available for six months at www.pdce.com

About PDC Energy, Inc.

PDC Energy, Inc. is a domestic independent exploration and production company that acquires, explores and develops properties for the production of crude oil, natural gas and NGLs, with operations in the Wattenberg Field in Colorado and Delaware Basin in west Texas. Its operations in the Wattenberg Field are focused in the horizontal Niobrara and Codell plays and our Delaware Basin operations are primarily focused in the horizontal Wolfcamp zones.


This press release 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”) and the United States (“U.S.”) Private Securities Litigation Reform Act of 1995 regarding our business, financial condition, results of operations and prospects. All statements other than statements of historical fact included in and incorporated by reference into this press release are “forward-looking statements.” Words such as expect, anticipate, intend, plan, believe, seek, estimate, schedule and similar expressions or variations of such words are intended to identify forward-looking statements herein. Forward-looking statements include, among other things, the pending acquisition of Great Western and the effects thereof; the expected timing of the Acquisition and the possibility that the Acquisition will not close; statements regarding future: production, costs and cash flows; impacts of Colorado political matters, including initiatives influencing our ability to continue to obtain permits; drilling locations, zones and growth opportunities; commodity prices and differentials; capital expenditures and projects, including the number of rigs employed; cash flows from operations relative to future capital investments; financial ratios and compliance with covenants in our revolving credit facility and other debt instruments; adequacy of midstream infrastructure; the potential return of capital to shareholders through buyback of shares and/or payments of dividends; expected impact from emission reduction initiatives; and our ability to fund planned activities.

The above statements are not the exclusive means of identifying forward-looking statements herein. Although forward-looking statements contained in this press release 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 press release or accompanying materials, we may use the term “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 our 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:

  • market and commodity price volatility, widening price differentials and related impacts to the Company, including decreased revenue, income and cash flow, write-downs and impairments and decreased availability of capital;
  • adverse changes to our future cash flows, liquidity and financial condition;
  • changes in, and interpretations and enforcement of, environmental and other laws and other political and regulatory developments, including in particular additional permit scrutiny in Colorado;
  • the coronavirus 2019 (“COVID-19”) pandemic, including its effects on commodity prices, downstream capacity, employee health and safety, business continuity and regulatory matters;
  • declines in the value of our crude oil, natural gas and natural gas liquids (“NGLs”) properties resulting in impairments;
  • changes in, and inaccuracy of, reserve estimates and expected production and decline rates;
  • timing and extent of our success in discovering, acquiring, developing and producing reserves;
  • reductions in the borrowing base under our revolving credit facility;
  • availability and cost of capital;
  • risks inherent in the drilling and operation of crude oil and natural gas wells;
  • timing and cost of wells and facilities;
  • availability, cost, and timing of sufficient pipeline, gathering and transportation facilities and related infrastructure;
  • limitations in the availability of supplies, materials, contractors and services that may delay the drilling or completion of our wells;
  • potential losses of acreage or other impacts due to lease expirations, other title defects, or otherwise;
  • risks inherent in marketing our crude oil, natural gas and NGLs;
  • effect of crude oil and natural gas derivative 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;
  • impact to our operations, personnel retention, strategy, stock price and expenses caused by the actions of activist shareholders;
  • timing and amounts for cash income taxes;
  • uncertainties associated with future dividends to our shareholders or share buybacks;
  • our ability to retain or attract senior management and key technical employees;
  • difficulties in integrating our operations as a result of any significant acquisitions, including the Acquisition, or acreage exchanges;
  • a failure to complete the Acquisition or an unanticipated assumption of liabilities or other problems with the Acquisition;
  • civil unrest, terrorist attacks and cyber threats; 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”, in our Annual Report on Form 10-K for the year ended December 31, 2021 and our other filings with the U.S. Securities and Exchange Commission (“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 press release. We undertake no obligation to update any forward-looking statements in order to reflect any event or circumstance occurring after the date of this press release 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.

Kyle Sourk
Director Corporate Finance & Investor Relations

Great Western and Partners Raise Over $80,000 to Grant Wishes for Ten Local Children Battling Critical Illnesses

Denver, CO – October 2021

Great Western is #CommittedtoColorado and is dedicated to the safety and well-being of the communities in which we live and work. As part of that commitment, Great Western has had a multi-year partnership with Make-A-Wish Colorado in their effort to support Colorado families during health challenges.

In 2021, our Community Investment Team worked closely with Make-A-Wish to understand the needs of Coloradans, particularly against the backdrop of the challenges that all organizations have faced throughout the course of our pandemic. As the team learned that 55 children in our communities were on the waitlist for Make-A-Wish Colorado, Community Investment Team member and Production Manager Tim Musgrave knew hecould do something to ensure those wishes were granted as soon as possible.

Musgrave’s commitment to Make-A-Wish began in 2018, when he worked with his peers both within and outside of Great Western to help raise funds to grant wishes for 13 deserving children. Musgrave also had the opportunity to work with Roosevelt High School in Johnstown when they sponsored a local child’s wish in early 2020. This child hit close to home because the girl had gone to the same elementary school as Musgrave’s daughter. After witnessing the powerful life-changing impact that granted wish had on children battling a critical illness, Musgrave planned to repeat his effort in 2021.

Tim took the lead on our efforts in 2021, and once again learned he again had a personal connection to one child waiting for his wish. Not only did Musgrave and his family know the little boy, Xander, through their 4-H program, he and his family are neighbors to his extended family. Xander is a six-year-old from Northglenn, who is battling leukemia.

Over the course of the summer, Tim reached out to his peers and proposed a fundraising campaign to challenge oil and gas service companies in the area to join Great Western in funding the wish of a child. Thirteen companies responded, including Black Label Services, Jacam Catalyst, Mundt Energy Services, Precision Service Equipment, Rival Services, S&R Compression, Zivaro Inc., Rapid Energy Solutions, Wright Choice and Silverline Services.

Tim worked closely with Make-A-Wish Colorado to match up each company with a child in their area to keep a local, close-to-home connection. Through our peer companies’ support, and with Tim’s determination, we are pleased to share that the campaign raised over $80,000 to grant the wishes of eleven deserving children in Adams and Weld County who have critical illnesses.

Join us as we follow the journey of these families—for the next 11 weeks, Great Western will highlight a story of a Make-A-Wish Colorado family during our “Make A Wish Monday” campaign. Follow us on LinkedIn and Facebook to learn more.

If you are as touched as we are by these stories, there are still more children waiting to have their wishes granted. Visit the fundraising website to learn more about these kids and find out how you can help.

Please join us in celebrating Tim’s #CommitmentToColorado and his leadership in action in supporting our communities.

Great Western President and CEO Rich Frommer Announces Retirement

Denver, CO – September 2021

Great Western Petroleum, LLC (“Great Western” or the “Company”)  today announced that President and Chief Executive Officer Rich Frommer has advised the Board of Directors of Great Western of his intention to retire as the Company’s President and CEO effective September 30, 2021.  The Board of Directors has appointed John McCready to serve as the Chief Executive Officer of the Company effective October 1, 2021.

Mr. Frommer has served as the Company’s President and CEO since February 2013.  Under Mr. Frommer’s leadership, Great Western underwent significant growth and transformation, through both operational developments and strategic acquisitions in the DJ Basin.  A lifelong executive in the oil and gas industry, Mr. Frommer has also served as a leader in the local community and as an advocate for responsible energy development in the state of Colorado.

Mr. McCready brings 20 years of oil and gas experience to the role and has served as Senior Advisor to the Board of Directors of Great Western since March 2021.  Prior to joining the Company in that capacity, Mr. McCready served as Chief Executive Officer of Felix Water LLC, which was sold to Pilot Water Solutions LLC in March 2021.

Mr. Richard Punches, Chairman of the Board at Great Western Petroleum, states, “On behalf of the Board of Directors, we would like to thank Rich for his dedicated service and significant contributions to Great Western.  Rich has played a critical role in the development and success of the Company, and he leaves Great Western well-positioned for success as the leading private operator in the basin.   We wish Rich well in his retirement and future endeavors.  We are excited about the future of the Company under John’s leadership and look forward to building upon the foundation established by Rich.”

Mr. Frommer said, “It has been my tremendous honor and privilege to lead and work alongside the wonderful Great Western employees over the past eight years. I would like to thank them for their hard work and resilience in growing this Company into a leading DJ Basin producer and wish Great Western all the best going forward.”

Great Western and its employees thank Rich for his dedication, passion and steadfast commitment to the Company, its people, its partners and the community. 

Great Western’s CEO Rich Frommer Named a 2021 Titan100

Denver, CO – March, 2021

With more than 36 years of professional experience and leadership in the natural gas and oil industry, Rich Frommer helped Great Western successfully expand in company size, strategic goals, community outreach and industry leadership. He positioned the company to become an industry-leading innovator in natural gas and oil. His poise, determination and strategic focus has not only led Great Western to be the operator of choice in Colorado but created the dynamic titan Rich is today.

Titan100 recently announced its 2021 cohort, showcasing CEOs like Rich and their accomplishments in the business community. The Titan100 awards program recognizes a premier group of 100 CEOs and C-level executives in Colorado each year. Representing both the private and public sector, these leaders are industry titans who demonstrate exceptional leadership, vision, passion, and influence in their field. Rich’s deep commitment to innovation, the community and the environment, position him as a leader in the industry and a titan in the business community.

In 2017, Rich also stepped into the role of chairman of the Western Energy Alliance, and in 2019, was named the chairman of the Colorado Oil and Gas Association (COGA). His new and broadened perspective of statewide operations helped him make better and more informed decisions for Great Western. As of 2021, Rich has expanded and positioned the company as the fifth largest oil producer in Colorado. What’s the national stat?

In addition to growth, Rich has helped Great Western focus priorities to include industry-leading strategies around environmental, social and governance (ESG) needs.  


Rich is a life-long visionary who spearheaded a continuous air emissions monitoring pilot program, enabling clean and safe operations and supporting Great Western’s stewardship and sustainability efforts. This proactive measure has allowed Great Western to be a technical resource to local communities as they seek to understand the relationship between air quality and natural oil and gas operations. 

Additionally, Rich oversaw the launch of the GREEN Initiative upholding Great Western’s commitment and role in the environmental sustainability ecosystem. GREEN – Globally Reduced Emissions and Extraction Network – is an integrated process for managing our field locations that highlight areas of sustainability.


Rich’s culture of conscience and spirit of innovation goes beyond being a determined leader of the natural gas and oil industry – it sets an inspirational example for Great Western employees and becomes a mindset that other industry leaders strive to embrace. Rich has the wellbeing of Coloradans at the forefront of his operations – on his mind and in his high-level executive decisions – that influence Great Western’s community partnerships and contributions. With operations across Colorado, Rich led Great Western in its efforts to partner with over 50 organizations, participating through donations, volunteering, and creating one-of-a-kind projects because he believes we must take care of the communities in which we live and work. Great Western has also partnered with the Butterfly Pavilion to restore the land at a site location to the short prairie it once was more than 100 years ago.

While working in an industry that is predominately male, Rich’s dedication to diversity, equity and inclusion (DEI) has influenced Great Western’s management team in several ways. Today, the team is composed of more than 40% female managers. Great Western has also made a commitment to DEI and is supporting community partners and nonprofits that value the same DEI commitments such as the Colorado Association of Black Professional Scientists and Engineers, and Women’s Energy Network. Great Western’s commitment to DEI will continue to grow as one of the leading natural gas and oil companies focusing on the importance of DEI throughout the industry as a whole.


In his career, Rich has held key roles in solving industry crisis matters and is trusted with his strategic and mindful thinking; most recently, Rich worked with the executive team to develop Great Western’s core values with the addition of its latest value – resilience – to reflect the everchanging natural gas and oil industry. Even before COVID-19 became a reality, this value was added and introduced companywide, and now it is the company’s rallying cry. Resilience has led Rich and his executive team over the last few months as they have sought to do the right thing through this pandemic. Rich and his executive team continue to fight to see the other side of COVID-19, the market downturn and Colorado’s regulatory regime.

Watch the full ESG presentation from EnerCom’s 2021 Energy Investment & ESG Conference here

In the last nine years under Rich’s leadership, he has solidified Great Western’s commitment to the environment by producing some of the cleanest natural gas and oil with the smallest footprint in Colorado; he’s led employees to view their position as a fulfilling career with a culture of positivity and growth; and at the height of pandemic, Rich upheld transparency and maintained resilience for the Great Western staff through emails and virtual town halls to connect with others.

It’s for these reasons we are excited to see Rich be named as a Titan100.

To learn more about the award and the nominating body, visit this website.

Read more about Rich’s accomplishments: Great Western’s CEO Wins 2020 Most Admired CEO Award! 

Great Western Cuts Drilling and Fracking Time in Half through Twin Rigs, Dual Completions Program

Denver, CO – April, 2021

In the natural gas and oil industry, time is not only money, but a precious commodity that impacts the communities in which we live and work. At Great Western, we value our neighbors, which is why we take pride in implementing innovative programs and new ways to operate efficiently and mindfully.

In 2018, as horizontal wells became more common and the Denver-Julesburg Basin became productive enough to support additional wells, Great Western started using twin drilling rigs on each pad. This initiative increased production and decreased disruption to the surrounding area by ultimately reducing the amount of drilling time onsite by as much as 50%. Each well takes about eight days to drill; depending on the site and number of wells, that could mean our crews are spending four months drilling onsite versus eight months.

This program is unlike any other throughout Colorado; it drastically reduces the impact to nearby communities, increases operational efficiencies, and saves everyone money – further cementing Great Western’s position as an industry-leading innovator in natural gas and oil. 

Watch the video below to see twin-rig drilling in action:

As twin rigs yielded impressive results, we doubled crews by implementing dual completions to further reduce the project timeline. “Well completions” is the process of making a well ready for production after drilling operations conclude and is commonly known as “fracking.”

Dual completions enable us to shorten the time spent in the completions stage in order to move into productions and wrap up operations onsite. With each well averaging 60 fracking stages at one hour per stage, two crews reduce the time spent fracking from an average of 60 hours per well to 30 hours – which adds up in time lost with eight to 20 wells per drilling site. Further, Great Western started fracking four wells between two crews at once in 2019, cutting the overall fracking time in half again, after learning our current frack design had the capacity to frack two wells at the same time.

For some sites, this process can cut fracking time by up to 75%, decreasing disturbances in the area by spending less time operating underground.  

Watch the video below to see the well completions stage that takes place after drilling concludes.

While Great Western is one of the only natural gas and oil companies to implement twin rigs per pad, it was the second company to implement dual completions to reduce time spent onsite.

As part of our core values, we are #CommittedToColorado, and we want to do our best to support our communities and our environment. Through the use of twin rigs and dual completions, we are able to produce our cleanest barrels of oil that will go on to support our schools, communities and local economies. It is for these efforts Great Western is the operator of choice in Colorado.

Great Western Petroleum’s Ivey Pad in Adam’s County, Colorado. March 18, 2021. Photo by Ellen Jaskol.

Great Western Announces the 2020 EHS Stewardship Award Winners!

Denver, CO – March, 2021

Great Western’s commitment to environmental stewardship is fundamental to the growth and innovation of the organization. In an effort to drive our environmental, health and safety (EHS) practices, we launched the Seal of Stewardship Program to honor employees for excellence in the fields of innovation, leadership, and safety. Our goal is to encourage our field personnel and reward excellent EHS operations in a way that is fun, competitive, and ultimately leads to long-term habits positioning Great Western as theleader of environmental stewardship in the Denver-Julesburg Basin.

As part of the fabric of our culture and everyday operations, these peer-nominated recognitions additionally galvanize our commitment to our values as a company and as individuals.

Great Western Seal of Stewardship from Great Western on Vimeo.

We are excited to present our 2020 Seal of Stewardship Award winners! Great Western selected these honorees for demonstrating innovation, displaying exceptional leadership behavior, and championing safety in the various technical fields of oil and gas. Read on to learn the proactive thinking and progressive actions that led to recognizing the winners below.

Innovator of the Year: Max Trehus

We are extremely proud of Max Trehus this year for demonstrating innovative problem-solving skills. Trehus has strived tirelessly to minimize bradenhead pressure on our producing wells and, this year, implemented an operation he created and developed from the ground up we refer to as “fluid displacement.” Fluid displacement is now a method we use to keep our thermal expansion-related bradenhead pressures below the actionable threshold. Trehus also implemented “catalytic heaters” in the field to bring our sustained bradenheads into regulatory compliance. By displacing fluid from the bradenhead and installing catalytic heaters, Trehus has made a positive impact on Great Western’s environmental stewardship, regulatory compliance and financial obligation, and also enabled us to reduce venting. By thinking outside the box and working with other internal and external teams, such as the Colorado Oil and Gas Conservation Commission (COGCC), Trehus consistently does his job with our core values in mind, and it’s evident his work truly exemplifies the term “innovation.” The combination makes him an excellent choice for Innovator of the Year.

Honorable Mention – Innovator of the Year: Bob Mese

Bob Mese is a leader when it comes to innovation. He is constantly looking at our facilities and operations with an eye for improvement. About a year ago, he brought up the idea of connecting our compressor blowdowns into the Vapor Recovery Unit (VRU) system and capturing the resulting gas. It took some work and planning, but we finally integrated this idea at our Wilson Facility; we connected the blowdown off of our gas lift compressor to the suction line for our treater VRU compressor, allowing us to capture 100% of the gas into our gas stream and put down the sales line, as opposed to blowing the unit down to atmosphere and releasing the gas. As our pilot site, this experiment led us to connecting more gas lift compressors at other locations, increasing efficiency on a larger scale. In addition, we were able to expand on Mese’s idea by integrating a full facility purge and blowdown system that routes to our Emission Control Device (ECD). This will give us the ability to capture 100% of our equipment blowdowns and system purge during our operations. These changes will decrease our site emissions, and in turn, allow us to add additional production to the site. As you can see, one relatively small idea that was tossed out during a meeting has transformed into a large operational change that will position Great Western ahead of our peers in the way we operate our sites and handle emissions.

Leader of the Year: Norman Rose

When it came to selecting the EHS Leader of the Year – Great Western had a clear winner.  Norman Rose personally takes the care and measures needed to protect the environment at each of the locations at which he operates, ensuring the sites exceed the EHS standards of excellence. His dedication to Great Western’s core values of stewardship and excellence are obvious in his daily walkthroughs of facilities. Rose is constantly vigilant in seeking potential sources of emissions. In fact, in the past year alone, he has found tank leaks that he not only immediately repaired but also investigated for the root cause to ensure they didn’t happen again. When the EHS team rolls out a new field inspection requirement, such as checking the tanks after a known operational pressure event, Rose easily folds the request into his daily work. Rose even has gone so far as to run around with the hydrovac on his day off just to make sure his sites were clean. His dedication to great housekeeping has led to seven of Rose’s facilities to glide through a COGCC field inspection without requiring any corrective actions. This sort of reputation – quickly repairing leaks and diligently ensuring our facilities are clean and efficiently operating – lends credence to Great Western’s social license to operate.  He is truly a role model for stewardship.

Safety Champion of the Year: Dustin Smith

Dustin Smith has proven himself to be a true leader when it comes to safety. He goes above and beyond his daily scope of work to ensure that job sites are safe, even if it is an area unrelated to what his crews are working on, in order to keep his crews safe. Lock Out Tag Out (LOTO) is an area where Smith focuses attention every day. Part of overseeing maintenance activities means he deals with live active sites on a regular basis. Confirming the proper steps to isolate energy sources are taken and checking the equipment is properly blown down is a crucial part of his daily activity. Smith takes the time to meet with all involved personnel prior to the start of a job to certify that proper LOTO is in place and that the site is safe to start the scheduled job. He is very thorough in his walkthroughs and makes sure to explain what will happen during the job to confirm everyone has full awareness and understanding of the task at hand. Smith takes personal responsibility for his crews and guarantees they all understand the importance of LOTO and why it’s being done, which is to protect everyone. He ensures that every person on site has a lock on the lock box and that no one is able to return a site to operation until final sign off is done for the job. In addition to LOTO, Smith walks all job sites, checks and removes any possible safety hazards he may find. This work may not be part of the scheduled task, but site safety and job safety are critically important to him, and to Great Western. His reporting communication with route operators and the rest of the team is top notch.


The environment, health and safety of our staff and communities will always be the highest priority at Great Western. Congratulations to our bright and innovative honorees. We are proud of their efforts and their commitment to Great Western and our EHS practices, and enjoy seeing their leadership qualities shine out in the field. The proactive contributions of our winning stewards propel our commitment to environmental stewardship into the future – and we look forward to seeing our teams develop even more inventive programs, initiatives, and technologies that enable us to produce the cleanest natural resources in the safest way possible.   

Great Western and its employees are committed to excellence and #CommittedtoColorado.

Great Western Petroleum, LLC Announces Closing of Equity Recapitalization Plan and Senior Secured Second Lien Notes Offering

February 2021 – Denver, CO

Great Western Petroleum, LLC (the “Company”) today announced that it has completed its previously announced comprehensive equity recapitalization transaction (the “Recapitalization Transaction”). The Company has amended and restated its limited liability company agreement to effect the exchange of all outstanding preferred units for new common units. This exchange results in the elimination of annual preferred distributions of approximately $23.7 million. In addition, as part of the Recapitalization Transaction, The Broe Group has made an additional equity investment in the Company.

Concurrently with the Recapitalization Transaction, the Company and its wholly owned subsidiary, Great Western Finance Corp., as co-issuer (“Finance Corp.” and, together with the Company, the “Issuers”), completed their previously announced offering (the “Offering”) of $235 million aggregate principal amount of 12.000% Senior Secured Second Lien Notes due 2025 (the “Notes”). The Notes will mature on September 1, 2025. The completion of the Offering was a condition precedent to the consummation of the Recapitalization Transaction. The net proceeds from the Offering will be used to redeem in full the Issuers’ outstanding 9.000% Senior Notes due 2021 (the “2021 Notes”), which redemption is expected to occur on March 3, 2021. The net proceeds from the Offering were irrevocably deposited with the trustee under the 2021 Notes, along with cash on hand, to satisfy and discharge all of the Issuers’ remaining obligations under the indenture governing the 2021 Notes. Upon such satisfaction and discharge, the indenture governing the 2021 Notes is generally no longer in effect.

Additionally, in connection with the completion of the Offering and the Recapitalization Transaction, the Issuers have exchanged all $75 million aggregate principal of their outstanding 8.500% Senior Notes due 2025 (the “Prior 2025 Notes”) for additional Notes (the “Private Exchange”). The Issuers paid accrued and unpaid interest on the Prior 2025 Notes with cash on hand through, but not including, the date of the Private Exchange. The Notes issued in the Private Exchange constitute “Additional Notes” under the indenture governing the Notes and will comprise one series with the Notes issued in the Offering. As a result of the Private Exchange, there are no Prior 2025 Notes outstanding and the indenture governing the Prior 2025 Notes is no longer in effect.

The Notes have not been, and will not be, registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities laws and may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the rules promulgated thereunder and applicable state securities laws. The Notes were offered only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act and non-U.S. persons in transactions outside the United States in reliance on Regulation S under the Securities Act.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy any security, nor shall there be any sale of the Notes or any other security of the Issuers, in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. This press release does not constitute a notice of redemption under the optional redemption provisions of the indenture governing the 2021 Notes.

About Great Western Petroleum, LLC

Denver-based Great Western Petroleum, LLC, is an independent oil and natural gas company focused on the exploration,

development, acquisition and exploitation of unconventional reserves of oil, natural gas and NGLs in the core of the Wattenberg Field, which is located within the DJ Basin. The Company’s properties are primarily located in northwestern Adams County and western Weld County in Colorado.

Forward-Looking Statements

The information in this press release includes “forward-looking statements.” All statements, other than statements of historical facts, included in this press release, concerning, among other things, planned capital expenditures, increases in oil and gas production, future cash flows and borrowings, the Company’s financial position, business strategy and other plans and objectives for future operations, are forward-looking statements. When used in this press release, the words “may,” “expect,” “estimate,” “project,” “plan,” “believe,” “intend,” “achievable,” “anticipate,” “will,” “continue,” “potential,” “should,” “could,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on the Company’s current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. These forward-looking statements are based on management’s current beliefs, based on currently available information, as to the outcome and timing of future events, which may differ from actual outcomes due to, among other things: the Company’s ability to continue as a going concern, the volatility of oil, natural gas and NGL prices or a prolonged period of low oil, natural gas or NGL prices and the effects of actions by, or disputes among or between, members of the Organization of Petroleum Exporting Countries, such as Saudi Arabia, and other oil and natural gas producing countries, such as Russia, with respect to production levels or other matters related to the price of oil; the effects of public health threats, pandemics and epidemics, such as the ongoing outbreak of COVID 19, and the adverse impact thereof on the Company’s business, financial condition and results of operations, including, but not limited to, the Company’s growth, operating costs, supply chain, labor availability, logistical capabilities, the Company’s liquidity, the Company’s ability to access capital markets, and the global economy and financial markets generally; decreased demand for the Company’s oil, natural gas and NGLs and industry demand generally as a result of the ongoing outbreak of COVID-19 and possibly longer-term recessionary impacts of COVID-19, elimination of available storage options, which could further reduce demand and cause additional constraints on operations; uncertainties about, or revisions to, the Company’s estimated oil, natural gas and NGL reserves, the presence or recoverability of estimated oil, natural gas and NGL reserves and actual future production rates and associated costs of the Company’s properties; the Company’s ability to discover, estimate, develop and replace oil, natural gas and NGL reserves; incorrect estimates associated with properties we acquire relating to estimated proved reserves; the presence or recoverability of estimated oil, natural gas and NGL reserves and the actual future production rates and associated costs of such acquired properties; weakness in economic conditions and uncertainty in financial markets, including the availability of credit and access to existing lines of credit; changes in domestic and global production, supply and demand for oil, natural gas and NGLs; operating hazards and difficulties inherent in the exploration and production of oil, natural gas and NGLs, including adverse weather and environmental conditions; the Company’s ability to meet the Company’s proposed drilling schedule and to successfully drill wells that produce oil or natural gas in commercially viable quantities; the Company’s ability to satisfy the covenants in the Company’s debt instruments and agreements, capital requirements and uncertainty of obtaining additional funding on terms acceptable to the Company; the Company’s ability to control capital and operating expenditures, the availability and cost of drilling and production equipment, supplies, raw materials and third- party labor; the Company’s ability to secure adequate fresh water and wastewater disposal capacity; title uncertainties or defects in the Company’s properties and inability to retain the Company’s leases; the Company’s ability to hold title to the Company’s leasehold by production, competition in the onshore United States exploration and production industry, geographical concentration of the Company’s operations in the DJ Basin; the Company’s ability to develop a successful marketing plan for the Company’s oil, natural gas and NGL production; constraints in the DJ Basin with respect to gathering, transportation and processing facilities and marketing; the Company’s ability to execute the Company’s financial and operational strategies, including, but not limited to, the Company’s hedging strategies; the Company’s ability to mitigate credit risks posed by the Company’s counterparties, including significant purchasers of the Company’s production and derivative counterparties, the Company’s ability to implement new or improved technologies in the Company’s business; the Company’s ability to implement new or improved technologies in the Company’s business; the Company’s ability to manage growth, successfully identify and consummate strategic acquisitions at purchase prices that are accretive to the Company’s financial results and successfully integrate acquired businesses, assets and properties; changes to federal, state and local regulations, permitting processes and taxes, including the adoption of regulations that prohibit or restrict the Company’s ability to apply hydraulic fracturing to the Company’s oil and natural gas wells and to

access and dispose of water used in these operations; environmental hazards, such as uncontrollable flows of oil, natural gas, brine, produced water, well fluids, toxic gases or other hazardous materials into the environment, including groundwater, air, soil and surface water contamination; the Company’s ability to avoid material legal or environmental liabilities, the impact of seasonal weather conditions on the Company’s operations; security threats, including cybersecurity attacks, computer viruses or malware, and terrorist attacks, against, or otherwise impacting, the Company’s facilities and systems; volatility in global financial markets; and the development and comparative cost of alternative energy sources. While the Company makes these statements and projections in good faith, neither the Company nor the Company’s management can guarantee that anticipated future results will be achieved. The Company assumes no obligation to publicly update or revise any forward-looking statements made herein or any other forward- looking statements made by the Company, whether as a result of new information, future events, or otherwise.

Employee Profile Series: Meet Kim Sands, Director of Reserves & Planning

February 2021 – Denver, CO

With an inclusive and diverse workplace, it’s of high importance to Great Western that we showcase the women working in the natural gas and oil industry who lead Great Western and embody all qualities of being the operator of choice in Colorado. 

In the newest addition of our employee profile series, Kim Sands, our director of reserves and planning, who is proud to see gender diversity and opportunities for women to advance their careers within Great Western. Currently, more than 40% of mangers are women, showcasing Great Western’s impactful strides in balancing gender diversity and creating a path to leadership for women.  

Find out why Kim is proud to work at Great Western in our latest employee profile video below.

Great Western is #CommittedtoWomen.

Follow our employee profile series to witness Great Western’s dedication to an inclusive culture and core values in action:

Employee Profile Series: Meet Zeb Wells, Production Superintendent and Colorado Native

February 2021 – Denver, CO

Great Western is Colorado born, Colorado built, and #CommittedtoColorado, and this mentality is carried out and valued among our employees, especially Zebediah “Zeb” Wells, our production superintendent. Zeb has roots imbedded in Colorado, just like Great Western, and after more than 14 years in the natural gas and oil industry, his work continues to be an inspiration for him and his family every day.

Zeb has long appreciated the importance Great Western sets on serving Colorado with family values in mind. Like Great Western, Zeb is proud to be an environmental steward for this great state through his work with new technologies and sustainable standards that lead to us producing energy in a safe, responsible way for all Coloradans. He believes in protecting his community and his family the same way we do at Great Western. Quite frankly, there’s nowhere else he’d rather be.

We’re excited to continue our employee profile series in 2021! Watch what working at Great Western means to Zeb in his employee profile video below.

Employee Profile – Zeb Wells from Great Western on Vimeo.

Follow our employee profile series to learn what our employees have to say about Great Western’s dedication to an inclusive culture and core values in action: