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EXCEL - IDEA: XBRL DOCUMENT - ROCKIES REGION 2007 LPFinancial_Report.xls
EX-31.2 - 302 CERTIFICATION OF CHIEF FINANCIAL OFFICER - ROCKIES REGION 2007 LPrr07-ex312_20140630.htm
EX-31.1 - 302 CERTIFICATION OF CHIEF EXECUTIVE OFFICER - ROCKIES REGION 2007 LPrr07-ex311_20140630.htm
EX-32.1 - 906 CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER - ROCKIES REGION 2007 LPrr07-ex321_20140630.htm




UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q

S  QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

For the quarterly period ended June 30, 2014
or

£  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE TRANSITION PERIOD ____________ TO ____________

Commission File Number 000-53201

Rockies Region 2007 Limited Partnership

(Exact name of registrant as specified in its charter)
 
West Virginia
 
26-0208835
 
 
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 

1775 Sherman Street, Suite 3000
Denver, Colorado 80203
(Address of principal executive offices) (Zip code)

Registrant's telephone number, including area code: (303) 860-5800

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 R No £

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes R No £

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer  £
 
Accelerated filer  £
 
 
 
 
 
 
 
Non-accelerated filer £
 
Smaller reporting company R
 
 
(Do not check if a smaller reporting company)
 
 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes £  No R

As of June 30, 2014 this Partnership had 4,470 units of limited partnership interest and no units of additional general partnership interest outstanding.



Rockies Region 2007 Limited Partnership


TABLE OF CONTENTS






SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q 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") regarding this Partnership's business, financial condition and results of operations. PDC Energy, Inc. (“PDC”) is the Managing General Partner of this Partnership. All statements other than statements of historical facts included in and incorporated by reference into this report are “forward-looking statements” within the meaning of the safe harbor provisions of the United States ("U.S.") Private Securities Litigation Reform Act of 1995. Words such as expects, anticipates, intends, plans, believes, seeks, estimates and similar expressions or variations of such words are intended to identify forward-looking statements herein. These statements relate to, among other things: estimated crude oil, natural gas and natural gas liquids ("NGLs") reserves; additional development plans; anticipated capital expenditures and projects; the effect of additional midstream facilities and services; the impact of high line pressures and the Partnership's inability to control the timing and availability of additional facilities going forward; and the Managing General Partner's future strategies, plans and objectives.
The above statements are not the exclusive means of identifying forward-looking statements herein. Although forward-looking statements contained in this report reflect the Managing General Partner's good faith judgment, such statements can only be based on facts and factors currently known to the Managing General Partner. Consequently, forward-looking statements are inherently subject to risks and uncertainties, including known and unknown risks and uncertainties incidental to the development, production and marketing of crude oil, natural gas and NGLs, and actual outcomes may differ materially from the results and outcomes discussed in the forward-looking statements.
Important factors that could cause actual results to differ materially from the forward-looking statements include, but are not limited to:
changes in worldwide production volumes and demand, including economic conditions that might impact demand;
volatility of commodity prices for crude oil, natural gas and NGLs;
the impact of governmental policies and/or regulations, including changes in environmental and other laws, the interpretation and enforcement related to those laws and regulations, liabilities arising thereunder and the costs to comply with those laws and regulations;
potential declines in the value of this Partnership's crude oil and natural gas properties resulting in impairments;
changes in estimates of proved reserves;
inaccuracy of reserve estimates and expected production rates;
potential for production decline rates from this Partnership's wells being greater than expected;
availability of future cash flows for investor distributions or funding of development activities;
timing and extent of this Partnership's success in further developing and producing from this Partnership's reserves;
the Managing General Partner's ability to secure supplies and services at reasonable prices;
availability of sufficient pipeline, gathering and other transportation facilities and related infrastructure to process and transport this Partnership's production, and the impact of these facilities on the price this Partnership receives for its production;
timing and receipt of necessary regulatory permits;
risks incidental to the operation of crude oil and natural gas wells;
future cash flows, liquidity and financial condition;
competition within the oil and gas industry;
success of the Managing General Partner in marketing this Partnership's crude oil, natural gas and NGLs;
impact of environmental events, governmental and other third-party responses to such events and the Managing General Partner's ability to insure adequately against such events;
cost of pending or future litigation;
adjustments relating to asset dispositions that may be unfavorable to this Partnership;
the Managing General Partner's ability to retain or attract senior management and key technical employees; and
success of strategic plans, expectations and objectives for future operations of the Managing General Partner.

Further, this Partnership urges the reader to carefully review and consider the cautionary statements and disclosures made in this Quarterly Report on Form 10-Q, this Partnership's Annual Report on Form 10-K for the year ended December 31, 2013 (the “2013 Form 10-K”) filed with the U.S. Securities and Exchange Commission (“SEC”) on April 7, 2014 and this Partnership's other filings with the SEC for further information on risks and uncertainties that could affect this Partnership's business, financial condition, results of operations and cash flows. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this report. This Partnership undertakes no obligation to update any forward-looking statements in order to reflect any event or circumstance occurring after the date of this report 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.

- 1-


PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Rockies Region 2007 Limited Partnership
Condensed Balance Sheets
(unaudited)

 
June 30, 2014
 
December 31, 2013
Assets
 
 
 

Current assets:
 
 
 

Cash and cash equivalents
$
660,006

 
$
570,376

Accounts receivable
252,456

 
378,940

Crude oil inventory
34,128

 
55,308

Total current assets
946,590

 
1,004,624

Crude oil and natural gas properties, successful efforts method, at cost
55,854,579

 
55,748,749

Less: Accumulated depreciation, depletion and amortization
(32,984,727
)
 
(31,819,541
)
Crude oil and natural gas properties, net
22,869,852

 
23,929,208

Other assets

 
89,630

Total Assets
$
23,816,442

 
$
25,023,462

 
 
 
 
Liabilities and Partners' Equity
 
 
 
Current liabilities:
 
 
 
Accounts payable and accrued expenses
$
26,746

 
$
33,041

Due to Managing General Partner-other, net
142,745

 
119,994

Total current liabilities
169,491

 
153,035

Asset retirement obligations
971,990

 
935,813

Total liabilities
1,141,481

 
1,088,848

 
 
 
 
Commitments and contingent liabilities


 


 
 
 
 
Partners' equity:
 
 
 
   Managing General Partner
3,195,788

 
3,661,859

   Limited Partners - 4,470 units issued and outstanding
19,479,173

 
20,272,755

Total Partners' equity
22,674,961

 
23,934,614

Total Liabilities and Partners' Equity
$
23,816,442

 
$
25,023,462

    






See accompanying notes to unaudited condensed financial statements.

- 2-


Rockies Region 2007 Limited Partnership
Condensed Statements of Operations
(unaudited)

 
Three months ended June 30,
 
Six months ended June 30,
 
2014
 
2013
 
2014
 
2013
Revenues:
 
 
 
 
 
 
 
Crude oil, natural gas and NGLs sales
$
847,932

 
$
1,368,588

 
$
2,048,299

 
$
3,035,929

Commodity price risk management gain (loss), net

 
69,520

 

 
(417,689
)
Total revenues
847,932

 
1,438,108

 
2,048,299

 
2,618,240

Operating costs and expenses:
 
 
 
 
 
 
 
Crude oil, natural gas and NGLs production costs
260,163

 
340,408

 
500,336

 
648,908

Direct costs - general and administrative
26,367

 
42,093

 
62,620

 
86,742

Depreciation, depletion and amortization
490,474

 
774,788

 
1,165,186

 
1,676,700

Accretion of asset retirement obligations
18,264

 
16,897

 
36,177

 
33,470

Total operating costs and expenses
795,268

 
1,174,186

 
1,764,319

 
2,445,820

Income from continuing operations
52,664

 
263,922

 
283,980

 
172,420

Loss from discontinued operations

 
(253,838
)
 

 
(33,370
)
Net income
$
52,664

 
$
10,084

 
$
283,980

 
$
139,050

 
 
 
 
 
 
 
 
Income from continuing operations
$
52,664

 
$
263,922

 
$
283,980

 
$
172,420

Less: Managing General Partner interest in income from continuing operations
19,486

 
97,651

 
105,073

 
63,795

Income from continuing operations allocated to Investor Partners
$
33,178

 
$
166,271

 
$
178,907

 
$
108,625

 
 
 
 
 
 
 
 
Loss from discontinued operations
$

 
$
(253,838
)
 
$

 
$
(33,370
)
Less: Managing General Partner interest in loss from discontinued operations

 
(93,920
)
 

 
(12,347
)
Loss from discontinued operations allocated to Investor Partners
$

 
$
(159,918
)
 
$

 
$
(21,023
)
 
 
 
 
 
 
 
 
Net income per Investor Partner unit
 
 
 
 
 
 
 
Continuing operations
$
7

 
$
37

 
$
40

 
$
24

Discontinued operations

 
(36
)
 

 
(4
)
Net income per Investor Partner unit
$
7

 
$
1

 
$
40

 
$
20

 
 
 
 
 
 
 
 
Investor Partner units outstanding
4,470

 
4,470

 
4,470

 
4,470






See accompanying notes to unaudited condensed financial statements.

- 3-


Rockies Region 2007 Limited Partnership
Condensed Statements of Cash Flows
(unaudited)

 
Six months ended June 30,
 
2014
 
2013
Cash flows from operating activities:
 
 
 
Net income
$
283,980

 
$
139,050

Adjustments to net income to reconcile to net cash from operating activities:
 
 
 
Depreciation, depletion and amortization
1,165,186

 
1,831,910

Accretion of asset retirement obligations
36,177

 
40,347

Net change in fair value of unsettled derivatives

 
1,693,233

Loss on sale of crude oil and natural gas properties

 
491,059

Changes in assets and liabilities:
 
 
 
Accounts receivable
126,484

 
237,399

Crude oil inventory
21,180

 
(3,127
)
Other assets
89,630

 
(22,327
)
Accounts payable and accrued expenses
(6,295
)
 
3,999

Due from Managing General Partner-other, net
22,751

 
268,043

Net cash from operating activities
1,739,093

 
4,679,586

 
 
 
 
Cash flows from investing activities:
 
 
 
Capital expenditures for crude oil and natural gas properties
(105,830
)
 

Proceeds from sale of crude oil and natural gas properties

 
13,831,901

Net cash from investing activities
(105,830
)
 
13,831,901

 
 
 
 
Cash flows from financing activities:
 
 
 
Distributions to Partners
(1,543,633
)
 
(4,679,585
)
Net cash from financing activities
(1,543,633
)
 
(4,679,585
)
 
 
 
 
Net change in cash and cash equivalents
89,630

 
13,831,902

Cash and cash equivalents, beginning of period
570,376

 
570,376

Cash and cash equivalents, end of period
$
660,006

 
$
14,402,278

 
 
 
 
Supplemental disclosure of non-cash activity:
 
 
 
Change in accounts payable and accrued expenses related
to disposition of properties and equipment
$

 
$
(463,651
)
Change in due from managing general partner-other, net
related to disposition of properties and equipment

 
124,785






See accompanying notes to unaudited condensed financial statements.

- 4-




ROCKIES REGION 2007 LIMITED PARTNERSHIP
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
June 30, 2014
(unaudited)


Note 1 - General and Basis of Presentation

Rockies Region 2007 Limited Partnership (this “Partnership” or the “Registrant”) was organized in 2007 as a limited partnership, in accordance with the laws of the State of West Virginia, for the purpose of engaging in the exploration and development of crude oil and natural gas properties. Business operations commenced upon closing of an offering for the private placement of Partnership units. Upon funding, this Partnership entered into a Drilling and Operating Agreement (“D&O Agreement”) with the Managing General Partner which authorizes PDC to conduct and manage this Partnership's business. In accordance with the terms of the Limited Partnership Agreement (the “Agreement”), the Managing General Partner is authorized to manage all activities of this Partnership and initiates and completes substantially all Partnership transactions.

As of June 30, 2014, there were 1,781 limited partners in this Partnership (the “Investor Partners”). PDC is the designated Managing General Partner of this Partnership and owns a 37% Managing General Partner ownership in this Partnership. According to the terms of the Agreement, revenues, costs and cash distributions of this Partnership are allocated 63% to the Investor Partners, which are shared pro rata based upon the number of units in this Partnership, and 37% to the Managing General Partner. The Managing General Partner may repurchase Investor Partner units under certain circumstances provided by the Agreement, upon request of an individual Investor Partner. Through June 30, 2014, the Managing General Partner had repurchased 62.8 units of Partnership interest from the Investor Partners at an average price of $4,241 per unit. As of June 30, 2014, the Managing General Partner owned 37.9% of this Partnership, including the repurchased interest.

In the Managing General Partner's opinion, the accompanying condensed financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary for a fair presentation of this Partnership's results for interim periods in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Accordingly, pursuant to such rules and regulations, certain notes and other financial information included in the audited financial statements have been condensed or omitted. The information presented in this Quarterly Report on Form 10-Q should be read in conjunction with this Partnership's audited financial statements and notes thereto included in this Partnership's 2013 Form 10-K. This Partnership's accounting policies are described in the Notes to Financial Statements in this Partnership's 2013 Form 10-K and updated, as necessary, in this Quarterly Report on Form 10-Q. The results of operations and cash flows for the three and six months ended June 30, 2014 are not necessarily indicative of the results to be expected for the full year or any future period.


Note 2 - Summary of Significant Accounting Policies

Recently Issued Accounting Standard

In April 2014, the Financial Accounting Standards Board issued changes related to the criteria for determining which disposals can be presented as discontinued operations and modified related disclosure requirements. Under the new pronouncement, a discontinued operation is defined as a disposal of a component of an organization that represents a strategic shift and that has a major effect on the organization's operations and financial results. These changes are to be applied prospectively for new disposals or components of this Partnership's business classified as held for sale during interim and annual periods beginning after December 15, 2014, with early adoption permitted. The Managing General Partner of this Partnership is currently evaluating the impact these changes will have on this Partnership's condensed financial statements.

In May 2014, the FASB and the International Accounting Standards Board ("IASB") issued their converged standard on revenue recognition that provides a single, comprehensive model that entities will apply to determine the measurement of revenue and timing of when it is recognized. The underlying principle is that an entity will recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services. The standard outlines a five-step approach to apply the underlying principle: (a) identify the contract with the customer (b) identify the separate performance obligations in the contract (c) determine the transaction price (d) allocate the transaction price to separate performance obligations and (e) recognize revenue when (or as) each performance obligation is satisfied. The revenue standard is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period, and can be adopted under the full retrospective method or simplified transition method. Early adoption is not permitted. The Managing General

- 5-




ROCKIES REGION 2007 LIMITED PARTNERSHIP
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
June 30, 2014
(unaudited)

Partner of this Partnership plans to adopt the revenue standard beginning January 1, 2017 and is currently evaluating the impact these changes will have on this Partnership's condensed consolidated financial statements.

Note 3 - Transactions with Managing General Partner

The Managing General Partner transacts business on behalf of this Partnership under the authority of the D&O Agreement. Revenues and other cash inflows received by the Managing General Partner on behalf of this Partnership are distributed to the partners, net of corresponding operating costs and other cash outflows incurred on behalf of this Partnership.

The following table presents transactions with the Managing General Partner reflected in the condensed balance sheets line item “Due to Managing General Partner-other, net,” which remain undistributed or unsettled with this Partnership's investors as of the dates indicated:

    
 
June 30, 2014
 
December 31, 2013
Crude oil, natural gas and NGLs sales revenues
collected from this Partnership's third-party customers
$
276,042

 
$
306,014

Other (1)
(418,787
)
 
(426,008
)
Total Due to Managing General Partner-other, net
$
(142,745
)
 
$
(119,994
)

(1)
All other unsettled transactions between this Partnership and the Managing General Partner. The majority of these are operating costs and general and administrative costs, which have not been deducted from distributions.

The following table presents Partnership transactions with the Managing General Partner for the three and six months ended June 30, 2014 and 2013. “Well operations and maintenance” and “Gathering, compression and processing fees” are included in the “Crude oil, natural gas and NGLs production costs” line item on the condensed statements of operations for continuing operations or in Note 8, Divestitures and Discontinued Operations, for discontinued operations.    
 
 Three months ended June 30,
 
Six months ended June 30,
 
2014
 
2013
 
2014
 
2013
 Well operations and maintenance
$
214,313

 
$
463,931

 
$
400,850

 
$
1,008,643

 Gathering, compression and processing fees

 
56,575

 

 
122,824

 Direct costs - general and administrative
26,367

 
368,144

 
62,620

 
412,793

 Cash distributions (1)
276,981

 
876,854

 
584,005

 
1,751,281


(1)
Cash distributions include $6,309 and $12,861 during the three and six months ended June 30, 2014, respectively, and $10,425 and $19,816 during the three and six months ended June 30, 2013, respectively, related to equity cash distributions for Investor Partner units repurchased by PDC.

Note 4 - Fair Value of Financial Instruments

Determination of fair value. This Partnership's fair value measurements are estimated pursuant to a fair value hierarchy that requires this Partnership to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date, giving the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable data (Level 3). In some cases, the inputs used to measure fair value might fall in different levels of the fair value hierarchy. In these cases, the lowest level input that is significant to a fair value measurement in its entirety determines the applicable level in the fair value hierarchy. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgment, considering factors specific to the asset or liability, and may affect the valuation of the assets and liabilities and their placement within the fair value hierarchy levels. The carrying value of the financial instruments included in current assets and

- 6-




ROCKIES REGION 2007 LIMITED PARTNERSHIP
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
June 30, 2014
(unaudited)

current liabilities approximate fair value due to the short-term maturities of these instruments.


Note 5 - Derivative Financial Instruments

This Partnership had no crude oil, natural gas or NGLs derivative activity subsequent to June 30, 2013 as all open positions were either sold or liquidated prior to that date. The following table presents the impact of this Partnership's derivative
instruments on its accompanying condensed statements of operations for the three and six months ended June 30, 2013:

Statement of operations line item:
 
Three Months Ended June 30, 2013
 
Six Months Ended June 30, 2013
Commodity price risk management gain (loss), net
 
 
 
 
Net settlements
 
$
631,288

 
$
1,275,544

Net change in fair value of unsettled derivatives
 
(561,768
)
 
(1,693,233
)
Total commodity price risk management gain (loss), net
 
$
69,520

 
$
(417,689
)

Note 6 - Commitments and Contingencies

Legal Proceedings

Neither this Partnership nor PDC, in its capacity as the Managing General Partner of this Partnership, are party to any pending legal proceeding that PDC believes would have a materially adverse effect on this Partnership's business, financial condition, results of operations or liquidity.

Environmental

Due to the nature of the oil and gas industry, this Partnership is exposed to environmental risks. The Managing General Partner has various policies and procedures in place to prevent environmental contamination and mitigate the risks from environmental contamination. The Managing General Partner conducts periodic reviews to identify changes in this Partnership's environmental risk profile. Liabilities are accrued when environmental remediation efforts are probable and the costs can be reasonably estimated. These liabilities are reduced as remediation efforts are completed or are adjusted as a consequence of subsequent periodic reviews. Liabilities for environmental remediation efforts are included in the line item captioned “Accounts payable and accrued expenses” on the balance sheets.

During the six months ended June 30, 2014 and June 30, 2013, as a result of the Managing General Partner's periodic review, no new environmental remediation projects were identified and this Partnership's expense for environmental remediation efforts was not significant. This Partnership had no liabilities for environmental remediation efforts as of June 30, 2014 or December 31, 2013.

The Managing General Partner is not currently aware of any environmental claims existing as of June 30, 2014 which have not been provided for or would otherwise be expected to have a material impact on this Partnership's condensed financial statements. However, there can be no assurance that current regulatory requirements will not change or that unknown past non-compliance with environmental laws will not be discovered on this Partnership's properties.



- 7-




ROCKIES REGION 2007 LIMITED PARTNERSHIP
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
June 30, 2014
(unaudited)

Note 7 - Asset Retirement Obligations

The following table presents the changes in the carrying amount of the asset retirement obligations associated with this Partnership's working interest in crude oil and natural gas properties:

 
Amount
 
 
Balance at December 31, 2013
$
935,813

Accretion expense
36,177

Balance at June 30, 2014
$
971,990

 

Note 8 - Divestitures and Discontinued Operations

Piceance Basin. In June 2013, this Partnership divested its Piceance Basin assets and certain derivatives for total consideration of approximately $13.5 million. The divestiture of this Partnership's Piceance Basin assets resulted in a decrease of crude oil and natural gas properties of $23.8 million and a decrease of accumulated depreciation, depletion and amortization of $10.3 million. The sale resulted in a loss on divestiture of assets of approximately $0.5 million.
In July 2013, this Partnership distributed proceeds received for the Piceance Basin asset divestiture to the Managing General Partner and Investor Partners as follows:
 
 
Amount
Distributed to:
 
(millions)
 
 
 
Managing General Partner
 
$
5.0

Investor Partners
 
8.5

Total
 
$
13.5

 
 
 
Following the sale, this Partnership does not have a significant continuing involvement in the operations of, or cash flows from, the Piceance Basin oil and gas properties. Accordingly, the results of operations related to these assets have been separately reported as discontinued operations in the condensed statement of operations for the three and six months ended June 30, 2013.

- 8-




ROCKIES REGION 2007 LIMITED PARTNERSHIP
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
June 30, 2014
(unaudited)

The following table presents statement of operations data related to this Partnership's discontinued operations for the Piceance Basin divestiture:

Statement of Operations - Discontinued Operations
 
Three Months Ended June 30, 2013
 
Six Months Ended June 30, 2013
 
 
 
 
 
Revenues:
 
 
 
 
Crude oil, natural gas and NGLs sales
 
$
865,054

 
$
1,692,474

 
 
 
 
 
Operating costs and expenses:
 
 
 
 
Crude oil, natural gas and NGLs production costs
 
299,008

 
746,647

Depreciation, depletion and amortization
 

 
155,210

Direct costs - general and administrative expense
 
326,051

 
326,051

Accretion of asset retirement obligations
 
2,774

 
6,877

Loss on sale of crude oil and natural gas properties
 
491,059

 
491,059

Total operating costs and expenses
 
1,118,892

 
1,725,844

Loss from discontinued operations
 
$
(253,838
)
 
$
(33,370
)


- 9-



ROCKIES REGION 2007 LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)



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

Partnership Overview

Rockies Region 2007 Limited Partnership engages in the development, production and sale of crude oil, natural gas and NGLs. This Partnership began crude oil and natural gas operations in August 2007 and currently operates 75 gross (73.9 net) productive wells located in the Wattenberg Field of Colorado. The Managing General Partner markets this Partnership's crude oil, natural gas and NGLs production to midstream marketers. Crude oil, natural gas and NGLs are sold primarily under market-sensitive contracts in which the price varies as a result of market forces. PDC does not charge a separate fee for the marketing of the crude oil, natural gas and NGLs because these services are covered by the monthly well operating charge. Seasonal factors, such as effects of weather on prices received, costs incurred and availability of PDC or third-party owned pipeline capacity, and other factors such as high pressures in the gathering system whether caused by heat or third-party facilities issues, may impact this Partnership's results. In addition, both sales volumes and prices tend to be affected by demand factors with a seasonal component.

PDC, on behalf of this Partnership in accordance with the D&O Agreement, is authorized to enter into multi-year fixed price contracts and/or to utilize derivatives, including collars, swaps or basis protection swaps, in order to offset some or all of the commodity price variability for particular periods of time. The Managing General Partner has not entered into such arrangements on behalf of this Partnership in the last few years and does not anticipate doing so in the future, however, it may elect to change its intentions in this regard if warranted by significant changes in the underlying commodity markets.
Partnership Operating Results Overview

Crude oil, natural gas and NGLs sales from continuing operations decreased 33%, or approximately $1.0 million, for the six months ended June 30, 2014 compared to the same period of 2013, as sales volumes from continuing operations declined 35% period-to-period. The average sales price per barrel of crude oil equivalent ("Boe"), excluding the impact of net settlements on derivatives, was $53.28 for the six months ended June 30, 2014 compared to $50.94 for the same period a year ago. There were no net settlements on natural gas derivatives during the six months ended June 30, 2014 compared to approximately $1.3 million of positive net settlements for the same period of 2013. Additionally, discontinued operations contributed approximately $0.6 million to net cash from operating activities during the six months ended June 30, 2013. This Partnership had no discontinued operations in 2014 as the sale of the Piceance Basin assets was completed in the second quarter of 2013.


- 10-



ROCKIES REGION 2007 LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)


Results of Operations

Summary Operating Results

The following table presents selected information regarding this Partnership’s results from continuing operations:
 
Three months ended June 30,
 
Six months ended June 30,
 
2014
 
2013
 
 Change
 
2014
 
2013
 
 Change
Number of gross producing wells (end of period)
75

 
75

 

 
75

 
75

 

 
 
 
 
 
 
 
 
 
 
 
 
Production(1)
 
 
 
 
 
 
 
 
 
 
 
Crude oil (Bbl)
6,980

 
12,582

 
(45
)%
 
17,487

 
28,294

 
(38
)%
Natural gas (Mcf)
30,465

 
54,124

 
(44
)%
 
70,497

 
119,194

 
(41
)%
NGLs (Bbl)
4,079

 
5,940

 
(31
)%
 
9,209

 
11,443

 
(20
)%
Crude oil equivalent (Boe)(2)
16,137

 
27,542

 
(41
)%
 
38,446

 
59,602

 
(35
)%
Average Boe per day
177

 
303

 
(41
)%
 
212

 
329

 
(35
)%
 
 
 
 
 
 
 
 
 
 
 
 
Crude oil, natural gas and NGLs sales
 
 
 
 
 
 
 
 
 
 
 
Crude oil
$
638,013

 
$
1,098,675

 
(42
)%
 
$
1,560,672

 
$
2,472,878

 
(37
)%
Natural gas
127,057

 
193,155

 
(34
)%
 
300,757

 
387,683

 
(22
)%
NGLs
82,862

 
76,758

 
8
 %
 
186,870

 
175,368

 
7
 %
Total crude oil, natural gas and NGLs sales
$
847,932

 
$
1,368,588

 
(38
)%
 
$
2,048,299

 
$
3,035,929

 
(33
)%
 
 
 
 
 
 
 
 
 
 
 
 
Net settlements on derivatives
 
 
 
 
 
 
 
 
 
 
 
Natural gas
$

 
$
631,287

 
*
 
$

 
$
1,275,543

 
*
 
 
 
 
 
 
 
 
 
 
 
 
Average selling price (excluding net settlements on derivatives)
 
 
 
 
 
 
 
 
 
 
 
Crude oil (per Bbl)
$
91.41

 
$
87.32

 
5
 %
 
$
89.25

 
$
87.40

 
2
 %
Natural gas (Mcf)
4.17

 
3.57

 
17
 %
 
4.27

 
3.25

 
31
 %
NGLs (Bbl)
20.31

 
12.92

 
57
 %
 
20.29

 
15.33

 
32
 %
Crude oil equivalent (per Boe)
52.55

 
49.69

 
6
 %
 
53.28

 
50.94

 
5
 %
 
 
 
 
 
 
 
 
 
 
 
 
Average cost per Boe
 
 
 
 
 
 
 
 
 
 
 
Crude oil, natural gas and NGLs production cost(3)
$
16.12

 
$
12.36

 
30
 %
 
$
13.01

 
$
10.89

 
19
 %
Depreciation, depletion and amortization
30.39

 
28.13

 
8
 %
 
30.31

 
28.13

 
8
 %
 
 
 
 
 
 
 
 
 
 
 
 
Operating costs and expenses
 
 
 
 
 
 
 
 
 
 
 
Direct costs - general and administrative
$
26,367

 
$
42,093

 
(37
)%
 
$
62,620

 
$
86,742

 
(28
)%
Depreciation, depletion and amortization
490,474

 
774,788

 
(37
)%
 
1,165,186

 
1,676,700

 
(31
)%
 
 
 
 
 
 
 
 
 
 
 
 
Cash distributions
$
731,545

 
$
2,341,650

 
(69
)%
 
$
1,543,633

 
$
4,679,585

 
(67
)%

* Percentage change is not meaningful.
Amounts may not recalculate due to rounding.
_______________
(1) Production is net and determined by multiplying the gross production volume of properties in which this Partnership has an interest by the average percentage of the leasehold or other property interest this Partnership owns.
(2) One Bbl of crude oil or NGL equals six Mcf of natural gas.
(3) Represents crude oil, natural gas and NGLs operating expenses, including production taxes.


- 11-



ROCKIES REGION 2007 LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)




Definitions used throughout Management’s Discussion and Analysis of Financial Condition and Results of Operations:

Bbl - One barrel of crude oil or NGLs or 42 gallons of liquid volume.
Boe - Barrels of crude oil equivalent.
Mcf - One thousand cubic feet of natural gas volume.

Crude Oil, Natural Gas and NGLs Sales

Crude Oil, Natural Gas and NGLs Pricing. This Partnership's results of operations depend upon many factors, particularly the price of crude oil, natural gas and NGLs and the Managing General Partner's ability to market this Partnership's production effectively. Crude oil, natural gas and NGLs prices are among the most volatile of all commodity prices. These price variations can have a material impact on this Partnership's financial results and capital expenditures.

Crude oil pricing is predominately driven by the physical market, supply and demand, financial markets and national and international politics. Crude oil is sold under various purchase contracts with monthly pricing provisions based on NYMEX pricing, adjusted for differentials. Natural gas prices vary by region and locality, depending upon the distance to markets, availability of pipeline capacity and supply and demand relationships in that region or locality. The price this Partnership receives for our natural gas is based on CIG prices, adjusted for certain deductions. This Partnership's price for NGLs is based on a combination of prices from both the Conway hub in Kansas and Mt. Belvieu in Texas where this production is marketed.

This Partnership currently uses the "net-back" method of accounting for these arrangements related to its commodity sales pursuant to which the purchaser also provides the transportation and gathering services. This Partnership sells commodities at the wellhead and collects a price and recognizes revenues based on the wellhead sales price as transportation costs downstream of the wellhead are incurred by the purchaser and reflected in the wellhead price. The net-back method results in the recognition of a sales price that is below the indices for which the production is based.

As expected, this Partnership has experienced high gathering system pressures in the Wattenberg Field by the Partnership's primary third-party mid-stream provider during the first half of 2014. Overall, the line pressures in the first half of 2014 were within the Managing General Partner's expectations and were lower than they were in the comparable periods of 2012 and 2013, primarily due to the commissioning of the O’Connor gas plant in the fall of 2013, the recent startup of an additional compressor station in 2014 and relatively mild summer temperatures in 2014. Ongoing industry drilling activity in the area will continue to increase volumes on the gathering system and our midstream service provider will be challenged to keep pace with new midstream infrastructure. The Managing General Partner and other operators in the field are working with the midstream service provider, who continues to implement a multi-year facility expansion program that will significantly increase the long-term gathering and processing capacity of the system. Like most producers, this Partnership rely on our third-party midstream service providers to construct compression, gathering and processing facilities to keep pace with our production growth. As a result, the timing and availability of additional facilities going forward is beyond this Partnership's or the Managing General Partner's control.

Six months ended June 30, 2014 as compared to six months ended June 30, 2013

For the six months ended June 30, 2014 compared to the same period of 2013, crude oil, natural gas and NGLs production from continuing operations, on an energy equivalency-basis, decreased 35%, primarily because nine wells were shut-in during a portion of the three months ended June 30, 2014 for pipeline repairs performed by our third-party midstream provider and also because of normal production declines for this stage in the wells’ production life cycle. The decrease in production resulted in sales from continuing operations declining to approximately $2 million for the six months ended June 30, 2014 from $3 million for the six months ended June 30, 2013. The average sales price per Boe, excluding the impact of net settlements from derivatives, was $53.28 for the current year six month period compared to $50.94 for the same period a year ago.

Crude oil sales decreased by approximately $0.9 million, or 37%, during the six months ended June 30, 2014 when compared to the same prior year period, primarily due to a production volume decrease of 38%. The average selling price per Bbl was $89.25 for the current year six month period compared to $87.40 for the same prior year period. Natural gas sales decreased

- 12-



ROCKIES REGION 2007 LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)


by approximately $0.1 million, or 22%, during the six months ended June 30, 2014 when compared to the same prior year period, primarily due to a production volume decrease of 41%, partially offset by an increased average selling price of 31% per Mcf. The average selling price per Mcf was $4.27 for the current year six month period compared to $3.25 for the same prior year period. NGLs sales increased by approximately 7% during the six months ended June 30, 2014 when compared to the same prior year period, primarily due to an increase in the average selling price of 32% per Bbl, offset in part by a production volume decrease of 20%. The average selling price per Bbl was $20.29 for the current year six month period compared to $15.33 for the same prior year period.

Three months ended June 30, 2014 as compared to three months ended June 30, 2013

For the three months ended June 30, 2014 compared to the same period of 2013, crude oil, natural gas and NGLs production from continuing operations, on an energy equivalency-basis, decreased 41%, primarily because nine wells were shut-in during a portion of the three months ended June 30, 2014 for pipeline repairs performed by our third-party midstream provider and also because of normal production declines for this stage in the wells’ production life cycle. The decrease in production resulted in sales from continuing operations declining to approximately $0.8 million for the three months ended June 30, 2013 from $1.4 million for the three months ended June 30, 2013. The average sales price per Boe, excluding the impact of net settlements from derivatives, was $52.55 for the current year three month period compared to $49.69 for the same period a year ago.

Crude oil sales decreased by approximately $0.5 million, or 42%, during the three months ended June 30, 2014 when compared to the same prior year period, primarily due to a production volume decrease of 45%, partially offset by an increase in the average selling price of 5% per Bbl. The average selling price per Bbl was $91.41 for the current year three month period compared to $87.32 for the same prior year period. Natural gas sales decreased by approximately $66,000, or 34%, during the three months ended June 30, 2014 when compared to the same prior year period, primarily due to a production volume decrease of 44%, partially offset by an increased average selling price of 17% per Mcf. The average selling price per Mcf was $4.17 for the current year three month period compared to $3.57 for the same prior year period. NGLs sales increased by approximately 8% during the three months ended June 30, 2014 when compared to the same prior year period, primarily due to an increase in the average selling price of 57% per Bbl, offset in part by a production volume decrease of 31%. The average selling price per Bbl was $20.31 for the current year three month period compared to $12.92 for the same prior year period.

Commodity Price Risk Management

This Partnership previously used various derivative instruments to manage fluctuations in natural gas prices. In June 2013, derivative instruments that were due to mature subsequent to June 30, 2013 were liquidated or sold in connection with the sale of the Piceance Basin assets. Accordingly, as of June 30, 2014, this Partnership did not have any derivative instruments in place for its future production. Currently, the Managing General Partner does not anticipate entering into derivative instruments for any of this Partnership's future production.

The derivatives used by this Partnership prior to June 30, 2013 were comprised of collars, fixed-price swaps and/or basis swaps. This Partnership sold its natural gas at similar prices to the indices inherent in this Partnership's derivative instruments, adjusted for certain fees and surcharges stipulated in the applicable sales agreements. As a result, for the volumes underlying this Partnership's derivative positions, this Partnership's settlement price related to its collars was no less than the floor and no more than the ceiling and, for this Partnership's commodity swaps, this Partnership's settlement price was the fixed price related to its swaps, adjusted for differentials.


- 13-



ROCKIES REGION 2007 LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)


Commodity price risk management includes cash settlements upon maturity of this Partnership's derivative instruments and the change in fair value of unsettled derivatives related to this Partnership's natural gas production. The following table presents the net settlements and net change in fair value of unsettled derivatives included in commodity price risk management loss, net, for the three and six months ended June 30, 2013:

 
Three months ended June 30, 2013
 
Six months ended June 30, 2013
Commodity price risk management gain (loss), net:
 
 
 
Net settlements
$
631,288

 
$
1,275,544

Net change in fair value of unsettled derivatives
(561,768
)
 
(1,693,233
)
Total commodity price risk management gain (loss), net
$
69,520

 
$
(417,689
)

This Partnership had no crude oil, natural gas or NGLs derivative activity subsequent to June 30, 2013 as all open positions were either sold or liquidated prior to June 30, 2013. Unless this Partnership enters into derivative arrangements in the future, its income statement will not reflect activity in commodity price risk management.

Six months ended June 30, 2013

Net settlements of approximately $1.3 million for the six months ended June 30, 2013 were primarily the result of lower natural gas index prices at maturity of this Partnership’s derivative instruments compared to the respective strike prices. The net change in fair value of unsettled derivatives for the six months ended June 30, 2013 represents a $1.7 million net asset reduction in the beginning-of-period fair value of derivative instruments that settled during the period. The corresponding impact of settlement of these instruments is included in net settlements for the period as all open positions were either sold or liquidated prior to June 30, 2013.

Three months ended June 30, 2013

Net settlements of approximately $0.6 million for the three months ended June 30, 2013 were primarily the result of lower natural gas index prices at maturity of this Partnership’s derivative instruments compared to the respective strike prices. The net change in fair value of unsettled derivatives for the three months ended June 30, 2013 represents a $0.6 million net asset reduction in the beginning-of-period fair value of derivative instruments that settled during the period. The corresponding impact of settlement of these instruments is included in net settlements for the period as all open positions were either sold or liquidated prior to June 30, 2013.

Crude Oil, Natural Gas and NGLs Production Costs

Generally, crude oil, natural gas and NGLs production costs vary with changes in total crude oil, natural gas and NGLs sales and production volumes. Production taxes are estimates by the Managing General Partner based on tax rates determined using published information. These estimates are subject to revision based on actual amounts determined during future filings by the Managing General Partner with the taxing authorities. Production taxes vary directly with crude oil, natural gas and NGLs sales. Fixed monthly well operating costs increase on a per unit basis as production decreases per the historical decline curve. In addition, general oil field services and all other costs vary and can fluctuate based on services required, but are expected to increase as wells age and require more extensive repair and maintenance. These costs include water hauling and disposal, equipment repairs and maintenance, snow removal, environmental compliance and remediation and service rig workovers.

Six months ended June 30, 2014 as compared to six months ended June 30, 2013

Crude oil, natural gas and NGLs production costs for the six months ended June 30, 2014 decreased approximately $149,000 compared to the same period in 2013, primarily attributable to lower operating costs, a decrease in the rental of additional compressors used to accommodate high line pressures and a decrease in production taxes consistent with sales declines from 2013.

- 14-



ROCKIES REGION 2007 LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)


Crude oil, natural gas and NGLs production costs per Boe increased to $13.01 during 2014 from $10.89 in 2013 due to lower volumes.

Three months ended June 30, 2014 as compared to three months ended June 30, 2013

Crude oil, natural gas and NGLs production costs for the three months ended June 30, 2014 decreased approximately $80,000 compared to the same period in 2013, primarily attributable to lower operating costs, a decrease in the rental of additional compressors used to accommodate high line pressures and a decrease in production taxes consistent with sales declines from 2013. Crude oil, natural gas and NGLs production costs per Boe increased to $16.12 during 2014 from $12.36 in 2013 due to lower volumes.

Depreciation, Depletion and Amortization

Six months ended June 30, 2014 as compared to six months ended June 30, 2013

Depreciation, depletion and amortization ("DD&A") expense related to crude oil and natural gas properties is directly related to proved reserves and production volumes. DD&A expense decreased approximately $512,000 for the six months ended June 30, 2014 compared to the six months ended June 30, 2013 due to the 35% decrease in production volumes, partially offset by an increased DD&A expense rate in 2014. The DD&A expense rate per Boe increased to $30.31 for the first six months of 2014 compared to $28.13 during the same period in 2013, due to the effect of the net downward revision in this Partnership’s proved developed producing reserves as of December 31, 2013.

Three months ended June 30, 2014 as compared to three months ended June 30, 2013

DD&A expense related to crude oil and natural gas properties is directly related to proved reserves and production volumes. DD&A expense decreased approximately $284,000 for the three months ended June 30, 2014 compared to the three months ended June 30, 2013 due to the 41% decrease in production volumes, partially offset by an increased DD&A expense rate in 2014. The DD&A expense rate per Boe increased to $30.39 for the three months ended June 30, 2014 compared to $28.13 during the same period in 2013, due to the effect of the net downward revision in this Partnership’s proved developed producing reserves as of December 31, 2013.

Direct costs - general and administrative

Six months ended June 30, 2014 as compared to six months ended June 30, 2013

Direct costs - general and administrative for the six months ended June 30, 2014 decreased approximately $24,000 compared to the same period in 2013, primarily attributable to lower professional fees for audit services.

Three months ended June 30, 2014 as compared to three months ended June 30, 2013

Direct costs - general and administrative for the three months ended June 30, 2014 decreased approximately $16,000 compared to the same period in 2013, primarily attributable to lower professional fees for audit services.

Discontinued Operations

In June 2013, this Partnership divested its Piceance Basin assets and certain derivatives for total consideration of approximately $13.5 million. The sale resulted in a loss on divestiture of assets of approximately $0.5 million. In July 2013, this Partnership distributed the proceeds from the divestiture of $13.5 million to the partners. The effective date of the transaction was January 1, 2013. Following the sale, this Partnership does not have significant continuing involvement in the operations of, or cash flows from, the Piceance Basin assets. Accordingly, the results of operations related to these assets have been separately reported as discontinued operations in the condensed statement of operations for the three and six months ended June 30, 2013. See Note 8, Divestitures and Discontinued Operations, to the accompanying condensed financial statements included elsewhere in this report for additional information.

- 15-



ROCKIES REGION 2007 LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)



The table below presents production data related to this Partnership's Piceance Basin assets that have been divested and that are classified as discontinued operations:
Discontinued Operations
 
Three Months Ended June 30, 2013
 
Six Months Ended June 30, 2013
Production
 
 
 
 
Crude oil (Bbl)
 
714

 
1,513

Natural gas (Mcf)
 
239,146

 
517,493

Crude oil equivalent (Boe)
 
40,572

 
87,762



Financial Condition, Liquidity and Capital Resources

This Partnership's primary source of liquidity has been cash flows from operating activities. This source of cash has been primarily used to fund this Partnership's operating costs, direct costs-general and administrative and monthly distributions to the Investor Partners and the Managing General Partner.

Fluctuations in this Partnership's operating cash flows are substantially driven by changes in commodity prices and sales volumes. Commodity prices have historically been volatile and, through June 30, 2013, the Managing General Partner managed this volatility through the use of derivatives. Therefore, prior to June 30, 2013, the primary source of cash flows from operations became the net activity between crude oil, natural gas and NGLs sales and the net settlements upon maturity of this Partnership's derivatives. This Partnership has no crude oil, natural gas or NGLs derivative positions at June 30, 2014 as all open positions were either sold pursuant to the Piceance Basin asset divestiture or liquidated prior to June 30, 2013. See Results of Operations for further discussion of the impact of prices and volumes on sales from operations and the impact of derivative activities on this Partnership's revenues for the six months ended June 30, 2013 and Partnership Overview regarding the Managing General Partner's current plans regarding derivatives.

This Partnership's future operations are expected to be conducted with available funds and revenues generated from crude oil, natural gas and NGLs production activities. Crude oil, natural gas and NGLs production from existing properties are generally expected to continue a gradual decline in the rate of production over the remaining life of the wells. Therefore, this Partnership anticipates a lower annual level of crude oil, natural gas and NGLs production and, in the absence of significant price increases or additional reserve development, lower revenues. This Partnership also expects cash flows from operations to decline if commodity prices remain at current levels or decrease in the future. Under these circumstances, decreased production would have a material adverse impact on this Partnership's operations and may result in reduced cash distributions to the Managing General Partner and Investor Partners through 2014 and beyond.

Although the D&O Agreement permits this Partnership to borrow funds on its behalf for Partnership activities, the Managing General Partner does not anticipate electing to fund any portion of this Partnership's refracturing and recompletion activities through borrowings. Partnership borrowings, should any occur, will be non-recourse to the Investor Partners. Accordingly, this Partnership, rather than the Investor Partners, will be responsible for repaying any amounts borrowed.

Working Capital

At June 30, 2014, this Partnership had working capital of $0.8 million, compared to working capital of $0.9 million at December 31, 2013. The decrease of $0.1 million was primarily due to the following changes:

accounts receivable decreased by $0.2 million between June 30, 2014 and December 31, 2013; and
cash and cash equivalents increased by $0.1 million between June 30, 2014 and December 31, 2013.

The $0.1 million increase in cash and cash equivalents is primarily the result of the Managing General Partner transferring previously-withheld plugging funds from its bank account to this Partnership's bank account. A corresponding decrease was made

- 16-



ROCKIES REGION 2007 LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)


to this Partnership's other assets, which are not part of working capital. The cash will be held by this Partnership to satisfy these or other future obligations.

Additional Development Plan activities, as described in this Partnership's 2013 Form 10-K, have been suspended. If the Additional Development Plan recommences, funding will be provided by the withholding of distributable cash flows from the Managing General Partner and Investor Partners. Future working capital balances are expected to fluctuate by increasing during periods of Additional Development Plan funding and decreasing during periods when payments are made for refracturing or recompletion activities.

Cash Flows

Operating Activities

This Partnership's cash flows from operating activities in 2014 were primarily impacted by commodity prices, production volumes, operating costs and direct costs-general and administrative expenses. The key components for the changes in this Partnership's cash flows from operating activities are described in more detail in Results of Operations above.

Net cash flows from operating activities were $1.7 million for the six months ended June 30, 2014 compared to $4.7 million for the comparable period in 2013. The decrease of $3 million in cash from operating activities was due primarily to the following:

a decrease in crude oil, natural gas and NGLs sales receipts of $2.8 million;
a decrease in commodity price risk management net settlements of $1.3 million; and
a decrease in production costs and direct costs-general and administrative payments of $1.1 million.

Investing Activities

Cash flows from investing activities primarily consist of investments in equipment and services and proceeds received from the dispositions of crude oil and natural gas properties. From time to time, this Partnership invests in equipment which supports treatment, delivery and measurement of crude oil, natural gas and NGLs or environmental protection. During the six months ended June 30, 2014, investments in equipment and services was approximately $0.1 million. During the six months ended June 30, 2013, proceeds from the dispositions of crude oil and natural gas properties were approximately $13.8 million.

- 17-



ROCKIES REGION 2007 LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)



Financing Activities

This Partnership initiated monthly cash distributions to investors in May 2008 and has distributed $111.9 million through June 30, 2014. The table below presents cash distributions to this Partnership's investors. Distributions to the Managing General Partner represent amounts distributed to the Managing General Partner for its 37% general partner interest in this Partnership and Investor Partner distributions include amounts distributed to Investor Partners for their 63% ownership share in this Partnership, as well as amounts distributed to the Managing General Partner for limited partnership units repurchased.
Distributions
 
 
 
 
 
 
 
Three months ended June 30,
 
Managing General Partner
 
Investor Partners
 
Total
2014
 
$
270,672

 
$
460,873

 
$
731,545

2013
 
866,429

 
1,475,221

 
2,341,650

 
 
 
 
 
 
 
Six months ended June 30,
 
Managing General Partner
 
Investor Partners
 
Total
2014
 
$
571,144

 
$
972,489

 
$
1,543,633

2013
 
1,731,465

 
2,948,120

 
4,679,585

 
 
 
 
 
 
 

Six months ended June 30, 2014 as compared to six months ended June 30, 2013

The decrease in distributions for the six months ended June 30, 2014 as compared to the same period in 2013 is primarily due to a decrease in cash flows from operations during 2014 as a result of lower production and receiving no cash settlements from derivatives.

Three months ended June 30, 2014 as compared to three months ended June 30, 2013

The decrease in distributions for the three months ended June 30, 2013 as compared to the same period in 2013 is primarily due to a decrease in cash flows from operations during 2014 as a result of lower production and receiving no cash settlements from derivatives.

Off-Balance Sheet Arrangements

As of June 30, 2014, this Partnership had no off-balance sheet arrangements, as defined under SEC rules, which have or are reasonably likely to have a material current or future effect on this Partnership's financial condition, results of operations, liquidity, capital expenditures or capital resources.

Commitments and Contingencies

See Note 6, Commitments and Contingencies, to the accompanying condensed financial statements included elsewhere in this report.

- 18-



ROCKIES REGION 2007 LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)



Recent Accounting Standards

See Note 2, Summary of Significant Accounting Policies, to the accompanying condensed financial statements included elsewhere in this report.

Critical Accounting Policies and Estimates

The preparation of the accompanying condensed financial statements in conformity with U.S. GAAP requires management to use judgment in making estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses.

There have been no significant changes to this Partnership's critical accounting policies and estimates or in the underlying accounting assumptions and estimates used in these critical accounting policies from those disclosed in the financial statements and accompanying notes contained in this Partnership's 2013 Form 10-K.


- 19-



ROCKIES REGION 2007 LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)


Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4. Controls and Procedures

This Partnership has no direct management or officers. The management, officers and other employees that provide services on behalf of this Partnership are employed by the Managing General Partner.

(a)    Evaluation of Disclosure Controls and Procedures

As of June 30, 2014, PDC, as Managing General Partner on behalf of this Partnership, carried out an evaluation, under the supervision and with the participation of the Managing General Partner's management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of this Partnership's disclosure controls and procedures pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e).

Based on the results of this evaluation, the Managing General Partner's Chief Executive Officer and Chief Financial Officer concluded that this Partnership's disclosure controls and procedures were effective as of June 30, 2014.

(b)    Changes in Internal Control over Financial Reporting
 
During the three months ended June 30, 2014, PDC, the Managing General Partner, made no changes in this Partnership's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that have materially affected or are reasonably likely to materially affect this Partnership's internal control over financial reporting.

- 20-



ROCKIES REGION 2007 LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)



PART II – OTHER INFORMATION

Item 1.    Legal Proceedings

Neither this Partnership nor PDC, in its capacity as the Managing General Partner of this Partnership, are party to any pending legal proceeding that PDC believes would have a materially adverse effect on this Partnership's business, financial condition, results of operations or liquidity.

Item 1A. Risk Factors

Not applicable.

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

Unit Repurchase Program. Beginning in May 2011, the third anniversary of the date of the first Partnership cash distributions, Investor Partners of this Partnership are permitted to request that the Managing General Partner repurchase their respective individual Investor Partner units, up to an aggregate total limit during any calendar year for all requesting Investor Partner unit repurchases of 10% of the initial subscription units.

The following table presents information about the Managing General Partner's limited partner unit repurchases during the three months ended June 30, 2014:

Period
 
Total Number of
 Units Repurchased
 
Average Price Paid
 Per Unit
April 1-30, 2014
 
3.50

 
$
3,653

May 1-31, 2014
 

 

June 1-30, 2014
 
2.00

 
3,210

     Total
 
5.50

 
$
3,492



Item 3.    Defaults Upon Senior Securities

Not applicable.

Item 4.    Mine Safety Disclosures

Not applicable.

Item 5.    Other Information

None.


- 21-



ROCKIES REGION 2007 LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)


Item 6.    Exhibits Index
 
 
 
 
Incorporated by Reference
 
 
Exhibit
Number
 
Exhibit Description
 
Form
 
SEC File
Number
 
Exhibit
 
Filing Date
 
Filed
Herewith
 
 
 
 
 
 
 
 
 
 
 
 
 
31.1
 
Certification by Chief Executive Officer of PDC Energy, Inc., the Managing General Partner of this Partnership, pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act Rules, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
 
 
 
 
 
 
 
 
X
 
 
 
 
 
 
 
 
 
 
 
 
 
31.2
 
Certification by Chief Financial Officer of PDC Energy, Inc., the Managing General Partner of this Partnership, pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act Rules, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
 
 
 
 
 
 
 
 
X
 
 
 
 
 
 
 
 
 
 
 
 
 
32.1*
 
Certifications by Chief Executive Officer and Chief Financial Officer of PDC Energy, Inc., the Managing General Partner of this Partnership, pursuant to Title 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
101.INS
 
XBRL Instance Document
 
 
 
 
 
 
 
 
 
X
 
 
 
 
 
 
 
 
 
 
 
 
 
101.SCH
 
XBRL Taxonomy Extension Schema Document
 
 
 
 
 
 
 
 
 
X
 
 
 
 
 
 
 
 
 
 
 
 
 
101.CAL
 
XBRL Taxonomy Extension Calculation Linkbase Document
 
 
 
 
 
 
 
 
 
X
 
 
 
 
 
 
 
 
 
 
 
 
 
101.DEF
 
XBRL Taxonomy Extension Definition Linkbase Document
 
 
 
 
 
 
 
 
 
X
 
 
 
 
 
 
 
 
 
 
 
 
 
101.LAB
 
XBRL Taxonomy Extension Label Linkbase Document
 
 
 
 
 
 
 
 
 
X
 
 
 
 
 
 
 
 
 
 
 
 
 
101.PRE
 
XBRL Taxonomy Extension Presentation Linkbase Document
 
 
 
 
 
 
 
 
 
X
*Furnished herewith.

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ROCKIES REGION 2007 LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)





SIGNATURES
 
Pursuant to the requirements of Section 13 or 15(d) 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.

Rockies Region 2007 Limited Partnership
By its Managing General Partner
PDC Energy, Inc.

 
By: /s/ James M. Trimble
 
 
James M. Trimble
Chief Executive Officer
of PDC Energy, Inc.
 
 
August 13, 2014
 
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:


Signature
 
Title
Date
 
 
 
 
/s/ James M. Trimble
 
Chief Executive Officer
August 13, 2014
James M. Trimble
 
PDC Energy, Inc.
Managing General Partner of the Registrant
 
 
 
(principal executive officer)
 
 
 
 
 
/s/ Gysle R. Shellum
 
Chief Financial Officer
August 13, 2014
Gysle R. Shellum
 
PDC Energy, Inc.
Managing General Partner of the Registrant
 
 
 
(principal financial officer)
 
 
 
 
 
/s/ R. Scott Meyers
 
Chief Accounting Officer
August 13, 2014
R. Scott Meyers
 
PDC Energy, Inc.
Managing General Partner of the Registrant
 
 
 
(principal accounting officer)
 
 

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