PDC Energy To Settle Class Action Regarding Partnership Purchases In 2010, 2011

(RTTNews) - PDC Energy, Inc. (PDCE) announced the execution of a binding agreement to settle the securities class action pending against the company and its wholly-owned merger subsidiary regarding the acquisition of certain partnerships in 2010 and 2011.

The company said this class action, which was brought on behalf of a class of certain former partnership unit holders, was filed in December 2011 in the U.S. District Court for the Central District of and is titled Schulein v. Petroleum Development Corp.

The complaint alleged that the disclosures in the proxy statements issued in connection with the transactions were inadequate, and also alleged a state law breach of fiduciary duty, PDC Energy said.

As per the proposed settlement agreement, the class action will be dismissed with prejudice and all claims will be released.

The company's settlement obligation consists of an up-front cash payment by PDC of about $11.5 million and a transfer of interests, primarily net profit interests, which would generate cash in future years, in a certain number of Wattenberg wells to be drilled in 2015 and 2016.

PDC said it currently estimates the fair value of its two combined elements of the settlement, including the repurchase option, to be in the range of $30 to $35 million.

The proposed settlement remains subject to the satisfaction of various conditions such as negotiation and execution of the necessary agreements, including a formal settlement agreement relating to the net profit interests, funding to plaintiffs by the company's insurance carriers of $6 million which is in addition to the company's cash payment, preliminary approval by the Court and final Court approval following notice to members of the class.

The company maintains that the claims raised in the class action were without merit and it continues to deny any wrongdoing.