Petroleum Development Corp. (PETD) or PDC and Lime Rock Partners announced the formation of PDC Mountaineer, LLC, a joint venture company principally focused in the Marcellus Shale region. PDC said it will contribute acreage, producing properties, reserves and related gathering assets valued at about $158.5 million. The joint venture is planning to drill its initial horizontal well in the first quarter of 2010.
Under deal, PDC will contribute about 115,000 net acres in the Appalachia Basin, of which about 55,000 acres are considered to be prospective in the Marcellus. PDC Mountaineer plans to develop and construct a new gathering system for its Marcellus volumes primarily within its current right of ways.
Lime Rock funded $45 million as a return of capital at closing, and PDC has an option to take a second cash contribution of $11.5 million by year-end 2010. Subject to agreement provisions, Lime Rock has an obligation to fund in full by December 31, 2011 to earn a 50% interest in the joint venture and expects to satisfy its funding obligation by early-to-mid 2011.
The company announced that Dewey Gerdom appointed as Chief Executive Officer of the Joint Venture. The company specified that Gerdom previously served with the company as Vice President - Eastern Operations.
The company said that the new strategic joint venture will accelerate the growth and visibility of PDC's Marcellus Shale gas position. The company also stated that partnering with Lime Rock provides the growth capital required to increase production, develop low cost reserves, and grow acreage position in the Marcellus Shale fairway.
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