CONFORMED COPY

Washington, D.C. 20549

[X] Quarterly Report Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

For the period ended June 30, 2003

[ ] Transition Report Pursuant to Section 13 of 15(d) of

the Securities Exchange Act of 1934

For the transition period from to

Commission file number 0-7246

I.R.S. Employer Identification Number 95-2636730

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes XX No

Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date: 15,638,733 shares of the Company's Common Stock ($.01 par value) were outstanding as of June 30, 2003.

Indicate by check mark whether the registrant is an accelerated filer (as definition in Rule 12b-2 of the Exchange Act). Yes XX No

PETROLEUM DEVELOPMENT CORPORATION AND SUBSIDIARIES

INDEX

PART I - FINANCIAL INFORMATION

The Board of Directors

Petroleum Development Corporation:

We have reviewed the accompanying condensed consolidated balance sheet of Petroleum Development Corporation and subsidiaries as of June 30, 2003, the related condensed consolidated statements of income for the three-month and six-month periods ended June 30, 2003 and 2002, and the related condensed consolidated statements of cash flows for the six-month periods ended June 30, 2003 and 2002. These condensed consolidated financial statements are the responsibility of the Company's management.

We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical review procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America.

KPMG LLP

Pittsburgh, Pennsylvania

July 31, 2003

PETROLEUM DEVELOPMENT CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

June 30, 2003 and December 31, 2002

(Continued)

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PETROLEUM DEVELOPMENT CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets, Continued

June 30, 2003 and December 31, 2002

See accompanying notes to condensed consolidated financial statements.

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PETROLEUM DEVELOPMENT CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Income

Three Months and Six Months ended June 30, 2003 and 2002

(Unaudited)

See accompanying notes to condensed consolidated financial statements.

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PETROLEUM DEVELOPMENT CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

Six Months Ended June 30, 2003 and 2002

(Unaudited)

See accompanying notes to condensed consolidated financial statements.

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PETROLEUM DEVELOPMENT CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2003

(Unaudited)

1. Accounting Policies

2. Stock Compensation

3. Basis of Presentation

4. Oil and Gas Properties

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5. Earnings Per Share

6. Business Segments (Thousands)

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8. Commitments and Contingencies

9. Common Stock Repurchase

10. Change in Accounting Principle

11. Acquisition of Oil and Gas Properties

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations

Revenues. Total revenues for the three months ended June 30, 2003 were $42.2 million compared to $33.5 million for the three months ended June 30, 2002, an increase of approximately $8.7 million, or 26.0 percent. Such increase was primarily a result of increased sales from gas marketing activities and oil and gas sales offset in part by lower drilling revenues. Drilling revenues for the three months ended June 30, 2003 were $11.9 million compared to $13.3 million for the three months ended June 30, 2002, a decrease of approximately $1.4 million or 10.5 percent. Such decrease was primarily due to the smaller number of net wells drilled for the PDC 2003-A Partnership due in part to a larger participation by the Company and the pace of drilling in the Pieance Basin. Natural gas sales from the marketing activities of Riley Natural Gas (RNG), the Company's marketing subsidiary for the three months ended June 30, 2003 were $17.4 million compared to $12.0 million for the three months ended June 30, 2002, an increase of approximately $5.4 million or 45.0 percent. Such increase was due to natural gas sold at higher average sales prices offset in part by lower volumes sold. Oil and gas sales from the Company's producing properties for the three months ended June 30, 2003 were $10.9 million compared to $6.4 million for the three months ended June 30, 2002, an increase of $4.5 million or 70.3 percent. The increase was due to increased volumes sold at higher average sales prices of oil and natural gas. The volume of natural gas sold for the three months ended June 30, 2003 was 2.1 million Mcf at an average sales price of $4.34 per Mcf compared to 1.6 million Mcf at an average sales price of $2.99 per Mcf for the three months ended June 30, 2002. Oil sales were 58,000 barrels at an average sales price of $29.52 per barrel for the three months ended June 30, 2003 compared to 61,000 barrels at an average sales price of $24.95 per barrel for the three months ended June 30, 2002. The increase in na tural gas volumes was the result of the Company's increased investment in oil and gas properties, primarily the Williams property acquisition, effective April 1, 2003 and recompletions of existing wells. Financial results depend upon many factors, particularly the price of natural gas and our ability to market our production on economically attractive terms. Price volatility in the natural gas market has remained prevalent in the last few years. Natural gas prices declined dramatically at the end of 2001 and during the entire first quarter of 2002. However, in the second quarter of 2002, the Company saw a significant strengthening of natural gas prices in its Appalachian and Michigan producing areas. Natural gas prices in Colorado remained low for most of 2002. In the fourth quarter of 2002 and continuing in 2003, Colorado prices began to increase, although they continue to trail prices in other areas. The Company believes the lower prices in the Rocky Mountain Region, including Colorado, resulted from incre asing local supplies that exceeded the local demand and pipeline capacity available to move gas from the region. On May 1st of 2003, the Kern River pipeline expansion was completed and placed into service. The Kern River Pipeline Company has announced that the additional facilities will add about 900 million cubic feet per day of capacity for deliveries to Arizona, Nevada and southern California. This represents almost 30% of the prior pipeline capacity from the region to the West Coast and other markets outside the region. The Company believes that the completion and start-up of the pipeline eliminated or reduced the local supply surplus, leading to improved natural gas prices in the region. The Company has commodity price hedging contracts for production from July 2003 through December 2004 to protect against possible short-term price weaknesses.

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Well operations and pipeline income for the three months ended June 30, 2003 was $1.8 million compared to $1.4 million for the three months ended June 30, 2002, an increase of approximately $400,000 or 28.6 percent. Such increase was due to an increase in the number of wells and pipelines operated by the Company. Other income for the three months ended June 30, 2003 was $285,000 compared to $468,000 for the three months ended June 30, 2002, a decrease of approximately $183,000. Such decrease was due to lower interest income resulting from the lower interest rates.

Production by area of operations:

Costs and expenses. Costs and expenses for the three months ended June 30, 2003 were $35.3 million compared to $30.0 million for the three months ended June 30, 2002, an increase of approximately $5.3 million or 17.7 percent. Such increase was primarily the result of increased cost of gas purchased for gas marketing activities. Oil and gas well drilling operations costs for the three months ended June 30, 2003 were $10.1 million compared to $11.2 million for the three months ended June 30, 2002, a decrease of approximately $1.1 million or 9.8 percent. Such decrease was due to the reduced drilling activity referred to above. The cost of gas marketing activities for the three months ended June 30, 2003 were $17.1 million compared to $12.2 million for the three months ended June 30, 2002, an increase of $4.9 million or 40.2 percent. The increase was due to the significantly higher average purchase prices of natural gas purchased and marketed offset in part by lower volumes purchased for resale. Based on the nature of the Company's gas marketing activities, hedging did not have a significant impact on the Company's net margins from marketing activities during either period. Oil and gas production costs from the Company's producing properties for the three months ended June 30, 2003 were $3.5 million compared to $2.2 million for the three months ended June 30, 2002, an increase of approximately $1.3 million or 59.1% percent. Such increase was due to the increased production costs and severance and property taxes on the increased volumes and higher sales prices of natural gas and oil sold along with the increased number of wells and pipelines operated by the Company. General and administrative expenses for the three months ended June 30, 2003 increased to $1.2 million compared with $1.0 million for the three months ended June 30, 2002. Depreciation, depletion, and amortization costs for the three months ended June 30, 2003 increased to $3.1 million from approximately $3.0 million for the three months ended June 30, 2002. The increase was due to the increased production and investment in oil and gas properties by the Company offset in part by reduction in the average carrying cost of oil and gas reserves in Colorado which resulted from the second quarter property acquisition. Interest costs for the three months ended June 30, 2003 were $260,000 compared to $356,000 for the three months ended June 30, 2002.

Net income. Net income for the three months ended June 30, 2003 was $4.6 million compared to a net income of $2.4 million for the three months ended June 30, 2002, an increase of approximately $2.2 million or 91.7 percent.

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Revenues. Total revenues for the six months ended June 30, 2003 were $96.2 million compared to $69.6 million for the six months ended June 30, 2002, an increase of approximately $26.6 million or 38.2 percent. The increase was primarily a result of increased sales from gas marketing activities and oil and gas sales. Drilling revenues for the six months ended June 30, 2003 were $33.4 million compared to $34.4 million for the six months ended June 30, 2002, a decrease of $1.0 million or 2.9 percent. Natural gas sales from the marketing activities of Riley Natural Gas (RNG), the Company's marketing subsidiary for the six months ended June 30, 2003 were $39.0 million compared to $20.4 million for the six months ended June 30, 2002, an increase of approximately $18.6 million or 91.2 percent. Such increase due to natural gas sold at significantly higher average sales prices offset in part by lower volumes sold. Oil and gas sales from the Company's producing properties for the six month ended June 30, 2003 were $19.8 million compared to $10.9 million for the six months ended June 30, 2002, an increase of $8.9 million or 81.7 percent. The increase was due to increased volumes sold at significantly higher average sales prices of oil and natural gas. The volume of natural gas sold for the six months ended June 30, 2003 was 3.8 million Mcf at an average sales price of $4.41 per Mcf compared to 3.2 million Mcf at an average sales price of $2.57 per Mcf for the six months ended June 30, 2002. Oil sales was 115,000 barrels at an average sales price of $27.80 per barrel for the six months ended June 30, 2003 compared to 124,000 barrels at an average sales price of $21.46 per barrel for the six months ended June 30, 2002. The increase in natural gas volumes was the result of the Company's increased investment in oil and gas properties, primarily the Williams property acquisition, effective April 1, 2003 and recompletions on existing wells. Financial results depend upon many factors, particularly th e price of natural gas and our ability to market our production on economically attractive terms. Price volatility in the natural gas market has remained prevalent in the last few years. Natural gas prices declined dramatically at the end of 2001 and during the entire first quarter of 2002. However, in the second quarter of 2002, the Company saw a significant strengthening of natural gas prices in its Appalachian and Michigan producing areas. Natural gas prices in Colorado remained low for most of 2002. In the fourth quarter of 2002 and continuing in the first quarter of 2003, Colorado prices began to increase, although they continue to trail prices in other areas. The Company believes the low prices in the Rocky Mountain Region, including Colorado, resulted from increasing local supplies that exceeded the local demand and pipeline capacity available to move gas from the region. On May 1st of 2003, the Kern River pipeline expansion was completed and placed into service. The Kern River Pipeline Company has an nounced that the additional facilities will add about 900 million cubic feet per day of capacity for deliveries to Arizona, Nevada and southern California. This represents almost 30% of the prior pipeline capacity from the region to the West Coast and other markets outside the region. The Company believes that the completion and start-up of the pipeline eliminated or reduced the local supply surplus, leading to improved natural gas prices in the region. The Company has commodity price hedging contracts for production from July 2003 through December 2004 to protect against possible short-term price weaknesses. Well operations and pipeline income for the six three months ended June 30, 2003 was $3.4 million compared to $2.9 million for the six months ended June 30, 2002, an increase of approximately $500,000 or 17.2 percent. Such increase was due to an increase in the number of wells and pipelines operated by the Company. Other income for the six months ended June 30, 2003 was $670,000 compared to $883,000 f or the six months ended June 30, 2002, a decrease of approximately $213,000. The decrease was due to lower interest income resulting from the lower interest rates.

Production by area of operations:

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Costs and expenses. Costs and expenses for the six months ended June 30, 2003 were $81.8 million compared to $61.8 million for the six months ended June 30, 2002, an increase of approximately $20.0 million or 32.4 percent. Such increase was primarily the result of increased cost of gas purchased for gas marketing activities and oil and gas production costs. Oil and gas well drilling operations costs for the six months ended June 30, 2003 were $27.8 million compared to $28.6 million for the six months ended June 30, 2002, a decrease of approximately $800,000 or 2.8 percent. The cost of gas marketing activities for the six months ended June 30, 2003 were $38.5 million compared to $20.4 million for the six months ended June 30, 2002, an increase of $18.1 million or 88.7 percent. The increase was due to the significantly higher average purchase prices of natural gas purchased and marketed offset in part by lower volumes purchased for resale. Based on the nature of the Company's ga s marketing activities, hedging did not have a significant impact on the Company's net margins from marketing activities during either period. Oil and gas production costs from the Company's producing properties for the six months ended June 30, 2003 were $6.3 million compared to $4.3 million for the six months ended June 30, 2002, an increase of approximately $2.0 million or 46.5% percent. Such increase was due to the increased production costs and severance and property taxes on the increased volumes and higher sales volumes of natural gas and oil sold along with the increased number of wells and pipelines operated by the Company. General and administrative expenses for the six months ended June 30, 2003 increased to $2.4 million compared with $2.0 million for the six months ended June 30, 2002. Depreciation, depletion, and amortization costs for the six months ended June 30, 2003 were $6.4 million compared to $6.0 million for the six months ended June 30, 2002, an increase of approximately $400,000 or 6.7 percent. The increase was due to the increased production and investment in oil and gas properties by the Company offset in part by reduction in the average carrying cost. of oil and gas reserves in Colorado which resulted from the second quarter property acquisition. Interest costs for the three months ended June 30, 2003 were $500,000 compared to $600,000 for the six months ended June 30, 2002.

Change in Accounting Principle. The Company adopted SFAS No. 143 "Accounting for Asset Retirement Obligations" on January 1, 2003 and booked the cumulative effect on prior years of $198,600 (net of taxes of $121,700).

Net income. Net income for the six months ended June 30, 2003 was $9.4 million compared to a net income of $5.4 million for the six months ended June 30, 2002, an increase of approximately $4.0 million or 74.1 percent.

The Company funds its operations through a combination of cash flow from operations, capital raised through drilling partnerships, and use of the Company's credit facility. Operational cash flow is generated by sales of natural gas from the Company's well interests, well drilling and operating activities for the Company's investor partners, natural gas gathering and transportation, and natural gas marketing. Cash payments from Company-sponsored partnerships are used to drill and complete wells for the partnerships, with operating cash flow accruing to the Company to the extent payments exceed drilling costs. The Company utilizes its revolving credit arrangement to meet the cash flow requirements of its operating and investment activities.

Natural gas and oil prices have been unusually volatile for the past few years, and the Company anticipates continued volatility in the future. Currently, the NYMEX futures reflect a market expectation of gas prices at Henry Hub close to or above record prices per million Btu's (Mmbtu). These prices look strong for the remainder of the year with natural gas storage levels at five-year low levels. The Company believes this situation creates the possibility of both periods of low prices and continued high prices.

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Colorado gas prices have been adversely affected by an increase in the negative "basis" between NYMEX and Colorado prices. In the past, natural gas produced by the Company in Colorado has sold for less than the Company's prices received in the Michigan and Appalachian basins, but the Company's Colorado development costs have been less than the costs per Mcfe of development in the Michigan and Appalachian basins. Pipeline capacity from the area to major markets in California and the Midwest is not adequate to move the new supplies developed over the past several years by oil and gas companies when local demand is at low summer levels. The result has been lower prices and some limited curtailment of production during the summer months. Higher winter demand by local Rocky Mountain markets improved gas prices during the first half of 2003, and the recent start-up of the Kern River Pipeline expansion project should help to correct this problem in the coming months. Several other pipeline projects are underway and in planning stages that will improve capacity over the next several years. There remains a possibility of greater seasonal volatility in Colorado than some other producing areas, but we expect the situation to improve to be better in the remainder of 2003 than it was in 2002.

Because of the uncertainty surrounding natural gas prices we have used various hedging instruments to manage some of the impact of fluctuations in prices. Through December of 2004 we have in place a series of floors and ceilings on part of our natural gas production. Under the arrangements, if the applicable index rises above the ceiling price, we pay the counterparty, however if the index drops below the floor the counterparty pays us. During the three months ended June 30, 2003 the Company averaged natural gas volumes sold of 706,200 Mcf per month and oil sales of 19,400 barrels per month. The positions in effect as of June 30, 2003 on the Company's share of production are shown in the following table:

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The Company hedges prices for its partners' share of production as well as its own production. Actual wellhead prices will vary based on local contract conditions, gathering and other costs and factors.

Oil prices have softened from earlier in the year. While oil prices are influenced by supply and demand, global geopolitics may be the single most important determinant. Since the percentage of the Company's production reflected by oil sales has increased to 16%, variations in oil prices will have a greater impact on the Company than in the past. The Company also has in place as of June 30, 2003 hedges on 4,800 barrels a month for its Wattenburg Field oil production for the period from July 2003 through December 2003 at a price of $30.00 per barrel.

The Company plans to conduct most, if not all, of its 2003 drilling operations in Colorado. If future planned pipeline capacity increases do not occur, it could reduce the Company's results from its producing activities. It could also make the company's drilling programs less attractive to potential investors. However, the Rocky Mountain region is the only onshore area of the U.S. with increasing production. The Company believes the necessary pipelines will be constructed, so increasing Rocky Mountain gas can move to the markets where it will be needed.

The Company closed its first drilling program of 2003 in the second quarter and has drilled the wells in the second and third quarters of 2003. This first program of 2003 closed with investor subscriptions of $8.5 million compared to $7.1 million for the first program of 2002. To date, the second drilling program of 2003 is running significantly ahead of the second drilling program of 2002 and is expected to close in early September with higher investor subscriptions than last year's program. The wells of the second drilling program will be drilled in the third and fourth quarters of 2003. Additional programs are scheduled to close in November and December 2003. The Company generally invests, as its equity contribution to each drilling partnership, an additional sum approximating 20% of the aggregate subscriptions received for that particular drilling partnership. As a result, the Company is subject to substantial cash commitments at the closing of each drilling partnership. The funds received from these programs are restricted to use in future drilling operations. No assurance can be made that the Company will continue to receive this level of funding from these future programs.

Substantially all of the Company's drilling programs contain a repurchase provision where Investors may tender their partnership units for repurchase at any time beginning with the third anniversary of the first cash distribution. The provision provides that the Company is obligated to purchase an aggregate of 10% of the initial subscriptions per calendar year (at a minimum price of four times the most recent 12 months' cash distributions), only if such units are tendered, subject to the Company's financial ability to do so. The maximum annual 10% repurchase obligation, if tendered by the investors, is currently approximately $2,803,000. The Company has adequate liquidity to meet this obligation.

On March 13, 2003 the Company publicly announced a common stock repurchase program to repurchase up to 5% of the Company's outstanding common stock (785,000 shares) expiring on December 31, 2004. From inception of the program until June 30, 2003, the Company has repurchased 96,400 shares at an average price of $6.29 per share. The Company intends to fund this repurchase of common stock through internally generated cash flow.

The Company has a credit facility with Bank One, NA and BNP Paribas of $100 million subject to adequate oil and natural gas reserves. The current borrowing base is $80.0 million, of which the Company has activated $50.0 million of the facility. As of June 30, 2003, the outstanding balance on the line of credit was $48.0 million of which $10.0 million was subject to an interest rate swap at a rate of 8.39% and the remaining $38.0 million was subject to a prime rate of 4.25%. The line of credit is at prime, with LIBOR alternatives available at the discretion of the Company. No principal payments are required until the credit agreement expires on July 3, 2005.

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A summary of Company's contractual obligations and due dates are as follows:

The Company continues to pursue capital investment opportunities in producing natural gas properties as well as its plan to participate in its sponsored natural gas drilling partnerships, while pursuing opportunities for operating improvements and costs efficiencies. Management believes that the Company has adequate capital to meet its operating requirements.

Critical Accounting Policies

Certain accounting policies are very important to the portrayal of Company's financial condition and results of operations and require management's most subjective or complex judgments. The policies are as follows:

Revenue Recognition

Oil and gas wells are drilled primarily on a contract basis. The Company follows the percentage-of-completion method of income recognition for drilling operations in progress.

Sales of natural gas are recognized when sold, oil revenues are recognized when produced into a stock tank.

Well operations income consists of operation charges for well upkeep, maintenance and operating lease income on tangible well equipment.

Valuation of Accounts Receivable

Management reviews accounts receivable to determine which are doubtful of collection. In making the determination of the appropriate allowance for doubtful accounts, management considers the Company's history of write-offs, relationships and overall credit worthiness of its customers, and well production data for receivables related to well operations.

Impairment of Long-Lived Assets

Exploration and development costs are accounted for by the successful efforts method.

The Company assesses impairment of capitalized costs of proved oil and gas properties by comparing net capitalized costs to undiscounted future net cash flows on a field-by-field basis using expected prices. Prices utilized in each year's calculation for measurement purposes and expected costs are held constant throughout the estimated life of the properties. If net capitalized costs exceed undiscounted future net cash flow, the measurement of impairment is based on estimated fair value which would consider future discounted cash flows.

Unproved properties are assessed on a property-by-property basis and properties considered to be impaired are charged to expense when such impairment is deemed to have occurred.

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Deferred Tax Asset Valuation Allowance

Deferred tax assets are recognized for deductible temporary differences, net operating loss carry-forwards, and credit carry-forwards if it is more likely than not that the tax benefits will be realized. To the extent a deferred tax asset cannot be recognized under the preceding criteria, a valuation allowance has been established.

The judgments used in applying the above policies are based on management's evaluation of the relevant facts and circumstances as of the date of the financial statements. Actual results may differ from those estimates. See additional discussions in this Management's Discussion and Analysis.

New Accounting Standards

In December 2002, the FASB issued SFAS 148, Accounting for Stock-Based Compensation - Transition and Disclosure, an amendment of FASB Statement No. 123. This statement amends SFAS No. 123, Accounting for Stock-Based Compensation, to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this statement amends the disclosure requirements of SFAS 123 to require prominent disclosures in both annual and interim financial statements. Certain of the disclosure modifications are required for interim periods beginning after ending December 15, 2002 and are included in the notes to these condensed financial statements.

Open Disclosure Issues with the Securities and Exchange Commission

The Company has been advised by the Staff of the SEC that it, in consultation with the Staff of the Financial Standards Accounting Board, is considering certain implementation issues in the application of provisions of Statement of Financial Accounting Standards No. 141, "Business Combinations," and Statement of Financial Standards No. 142, "Goodwill and Other Intangible Assets" (SFAS No. 142), to companies in the extractive industries, including oil and gas companies. The Staff of the SEC is considering whether SFAS No. 142 requires registrants to reclassify costs associated with mineral rights, including both proved and unproved leasehold acquisition costs, as intangible assets in the balance sheet, apart from other capitalized oil and gas property costs. Historically, the Company and all other oil and gas companies have included the cost of these oil and gas leasehold interests as part of oil and gas properties. The Staff is also considering whether SFAS No. 142 r equires registrants to provide the additional disclosures prescribed by SFAS No. 142 for intangible assets for costs associated with mineral rights.

The reclassification of these amounts would not affect the method in which such costs are amortized or the manner in which the Company assesses impairment of capitalized costs. As a result, net income would not be affected by the reclassification.

Item 3. Quantitative and Qualitative Disclosure About Market Rate Risk

Interest Rate Risk

There have been no material changes in the reported market risks faced by the Company since December 31, 2002.

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Commodity Price Risk

The Company utilizes commodity-based derivative instruments as hedges to manage a portion of its exposure to price risk from its natural gas sales and marketing activities. These instruments consist of NYMEX and Colorado Interstate-traded natural gas futures contracts and option contracts. These hedging arrangements have the effect of locking in for specified periods (at predetermined prices or ranges of prices) the prices the Company will receive for the volume to which the hedge relates. As a result, while these hedging arrangements are structured to reduce the Company's exposure to decreases in price associated with the hedging commodity, they also limit the benefit the Company might otherwise have received from price increases associated with the hedged commodity. The Company's policy prohibits the use of natural gas future and option contracts for speculative purposes. As of June 30, 2003, PDC had entered into a series of natural gas future contracts and options contracts. Th e fair value of these floors and ceilings as of June 30, 2003 is ($511,200). Open future contracts maturing in 2003-2005 are for the sale of 4,070,000 Mmbtu of natural gas with a weighted average price of $4.43 Mmbtu resulting in a total contract amount of $18,032,700, and a fair market value of $(3,673,400). Open option contracts are for the sale of 913,700 Mmbtu of natural gas with an average ceiling price of $4.96 and for the sale of 4,499,900 Mmbtu of natural gas with an average floor price of $4.29 and a fair market value of ($511,200).

Item 4. Controls and Procedures

Under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, the Company has evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Exchange Act Rule 13a-14(c)) within 90 days of the filing date of this quarterly report, and, based on their evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective in all material respects, including those to ensure that information required to be disclosed in reports filed or submitted under the Securities Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the Commission's rules and forms, and is accumulated and communicated to management, including the Company's Chief Executive Officer and Chief Financial Officer, as appropriate to allow for timely disclosure. There have been no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

The Company is not a party to any legal actions that would materially affect the Company's operations or financial statements.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

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(b) Reports on Form 8-K during the quarter ended June 30, 2003

Form 8-K current report dated May 6, 2003, under Item 5. "Other Matters" the Company issued a news release announcing the close of the first 2003 drilling program.

Form 8-K current report dated May 7, 2003, under Item 5. "Other Matters", On May 7, 2003, the Company issued a news release announcing 1^st quarter 2003 earnings.

Form 8-K current report dated May 13, 2003, under Item 5. "Other Matters", On May 12, 2003, the Company issued a news release announcing the acquisition of producing properties.

Form 8-K current report dated May 13, 2003, under Item 5. "Other Matters", On June 25, 2003, the Company issued a news release announcing completion of purchase of Colorado properties from The Williams Companies, Inc (NYSE:WMB).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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