Rockies Region 2006 Limited Partnership - FORM 10-Q - August 12, 2016

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EX-31.1 - 302 CERTIFICATION OF CHIEF EXECUTIVE OFFICER - Rockies Region 2006 Limited Partnershiprr06-ex311_20160630.htm
EX-32.1 - 906 CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND INT PRINCIPAL FINANCIAL OFFICER - Rockies Region 2006 Limited Partnershiprr06-ex321_20160630.htm
EX-31.2 - 302 CERTIFICATION OF INTERIM PRINCIPAL FINANCIAL OFFICER - Rockies Region 2006 Limited Partnershiprr06-ex312_20160630.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, 2016
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 000-52787

Rockies Region 2006 Limited Partnership

(Exact name of registrant as specified in its charter)
 
West Virginia
 
20-5149573
 
 
(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 x No o

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 x No o

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  o
 
Accelerated filer  o
 
 
 
 
 
 
 
Non-accelerated filer o
 
Smaller reporting company x
 
 
(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 o  No x

As of June 30, 2016, this Partnership had 4,497.03 units of limited partnership interest and no units of additional general partnership interest outstanding.


Rockies Region 2006 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 and Section 21E of the Securities Exchange Act of 1934 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 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 may relate to, among other things: future production (including the components of such production), sales, expenses, cash flows, and liquidity; estimated crude oil, natural gas and natural gas liquids ("NGLs") reserves; anticipated capital expenditures and projects; availability of additional midstream facilities and services, timing of that availability and related benefits to this Partnership; the impact of high line pressures; 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:

•
availability of future cash flows to enable this Partnership to continue as a going concern, for investor distributions or funding of development activities;
•
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 and the risk of an extended period of depressed prices;
•
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;
•
declines in the value of this Partnership's crude oil, natural gas and NGLs properties resulting in further 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;
•
timing and extent of this Partnership's success in further developing and producing 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 and regional capacity on the prices 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, 2015 (the “2015 Form 10-K”) filed with the U.S. Securities and Exchange Commission (“SEC”) on March 25, 2016 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

- 1-

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.

- 2-

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Rockies Region 2006 Limited Partnership
Condensed Balance Sheets
(unaudited)

 
June 30, 2016
 
December 31, 2015
Assets
 
 
 

Current assets:
 
 
 

Cash and cash equivalents
$
12,339

 
$
12,445

Accounts receivable
70,318

 
53,932

Crude oil inventory
72,379

 
57,846

Total current assets
155,036

 
124,223

Crude oil and natural gas properties, successful efforts method, at cost
1,562,215

 
1,521,446

Less: Accumulated depreciation, depletion and amortization
(678,312
)
 
(571,528
)
Crude oil and natural gas properties, net
883,903

 
949,918

Total Assets
$
1,038,939

 
$
1,074,141

 
 
 
 
Liabilities and Partners' Equity
 
 
 
Current liabilities:
 
 
 
Accounts payable and accrued expenses
$
5,645

 
$
4,326

Due to Managing General Partner-other, net
145,315

 
135,480

Current portion of asset retirement obligations
360,000

 
345,000

Total current liabilities
510,960

 
484,806

Asset retirement obligations
1,914,423

 
1,846,433

Total Liabilities
2,425,383

 
2,331,239

 
 
 
 
Commitments and contingent liabilities


 


 
 
 
 
Partners' equity:
 
 
 
   Managing General Partner
(5,448,997
)
 
(5,401,139
)
   Limited Partners - 4,497.03 units issued and outstanding
4,062,553

 
4,144,041

Total Partners' Equity
(1,386,444
)
 
(1,257,098
)
Total Liabilities and Partners' Equity
$
1,038,939

 
$
1,074,141

    






See accompanying notes to unaudited condensed financial statements.

- 3-

Rockies Region 2006 Limited Partnership
Condensed Statements of Operations
(unaudited)

 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Revenues:
 
 
 
 
 
 
 
Crude oil, natural gas and NGLs sales
$
208,066

 
$
198,782

 
$
386,177

 
$
341,841

 
 
 
 
 
 
 
 
Operating costs and expenses:
 
 
 
 
 
 
 
Crude oil, natural gas and NGLs production costs
129,791

 
146,126

 
268,228

 
287,550

Direct costs - general and administrative
21,605

 
39,758

 
57,521

 
61,398

Depreciation, depletion and amortization
52,113

 
30,059

 
106,784

 
139,574

Impairment of crude oil and natural gas properties
—

 
—

 
—

 
3,266,759

Accretion of asset retirement obligations
41,898

 
31,372

 
82,990

 
62,144

Total operating costs and expenses
245,407

 
247,315

 
515,523

 
3,817,425

 
 
 
 
 
 
 
 
Net loss
$
(37,341
)
 
$
(48,533
)
 
$
(129,346
)
 
$
(3,475,584
)
 
 
 
 
 
 
 
 
Net loss allocated to partners
$
(37,341
)
 
$
(48,533
)
 
$
(129,346
)
 
$
(3,475,584
)
Less: Managing General Partner interest in net loss
(13,816
)
 
(17,957
)
 
(47,858
)
 
(1,285,966
)
Net loss allocated to Investor Partners
$
(23,525
)
 
$
(30,576
)
 
$
(81,488
)
 
$
(2,189,618
)
 
 
 
 
 
 
 
 
Net loss per Investor Partner unit
$
(5
)
 
$
(7
)
 
$
(18
)
 
$
(487
)
 
 
 
 
 
 
 
 
Investor Partner units outstanding
4,497.03

 
4,497.03

 
4,497.03

 
4,497.03






See accompanying notes to unaudited condensed financial statements.

- 4-

Rockies Region 2006 Limited Partnership
Condensed Statements of Cash Flows
(unaudited)

 
 Six Months Ended June 30,
 
2016
 
2015
Cash flows from operating activities:
 
 
 
Net loss
$
(129,346
)
 
$
(3,475,584
)
Adjustments to net loss to reconcile to net cash from operating activities:
 
 
 
Depreciation, depletion and amortization
106,784

 
139,574

Impairment of crude oil and natural gas properties
—

 
3,266,759

Accretion of asset retirement obligations
82,990

 
62,144

Changes in assets and liabilities:
 
 
 
Accounts receivable
(16,386
)
 
(24,404
)
Crude oil inventory
(14,533
)
 
(16,636
)
Accounts payable and accrued expenses
1,319

 
373

Due to Managing General Partner-other, net
(30,934
)
 
(447
)
Net cash from operating activities
(106
)
 
(48,221
)
 
 
 
 
Cash flows from investing activities:
 
 
 
Capital expenditures for crude oil and natural gas properties
—

 
(28,310
)
Net cash from investing activities
—

 
(28,310
)
 
 
 
 
Cash flows from financing activities:
 
 
 
Distributions to Partners
—

 
(47,167
)
Net cash from financing activities
—

 
(47,167
)
 
 
 
 
Net change in cash and cash equivalents
(106
)
 
(123,698
)
Cash and cash equivalents, beginning of period
12,445

 
136,226

Cash and cash equivalents, end of period
$
12,339

 
$
12,528

 
 
 
 
Supplemental cash flow information:
 
 
 
Non-cash investing activities:
 
 
 
Change in due to managing general partner-other, net
related to purchases of properties and equipment
$
40,769

 
$
—

 
 
 
 





See accompanying notes to unaudited condensed financial statements.

- 5-



ROCKIES REGION 2006 LIMITED PARTNERSHIP
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
June 30, 2016
(unaudited)


Note 1 - General and Basis of Presentation

Rockies Region 2006 Limited Partnership (this “Partnership” or the “Registrant”) was organized in 2006 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, 2016, there were 1,974 limited partners ("Investor Partners") in this Partnership. 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, 2016, the Managing General Partner had repurchased 164 units of Partnership interest from the Investor Partners at an average price of $2,351 per unit. As of June 30, 2016, the Managing General Partner owned 39.3% of this Partnership, including the repurchased interest. The Managing General Partner made no limited partner unit repurchases during the three months ended June 30, 2016.

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 statement 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 December 31, 2015 condensed balance sheet data was derived from financial statements audited by PricewaterhouseCoopers LLP, independent registered public accounting firm, as indicated in their report filed with the SEC on March 25, 2016, but does not include disclosures required by U.S. GAAP. 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 2015 Form 10-K. This Partnership's accounting policies are described in the Notes to Financial Statements in this Partnership's 2015 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, 2016 are not necessarily indicative of the results to be expected for the full year or any future period.

Note 2 - Going Concern

This Partnership has historically funded its operations with cash flows from operations. This Partnership’s most significant cash outlays have related to its operating expenses, capital program and distributions to partners. The market price for crude oil, natural gas and NGLs decreased significantly during 2015 and continued to be depressed during the six months ended June 30, 2016. Although this Partnership's production increased 48% during the six months ended June 30, 2016 as compared to the comparable prior year period, as a result of the continued depressed commodity prices, this Partnership generated modest revenue of $386,000 during the six months ended June 30, 2016. Further, there was no improvement in this Partnership's liquidity during the six months ended June 30, 2016 as cash flows generated from crude oil, natural gas and NGLs sales were utilized for operating activities.

This Partnership's strained liquidity position resulting from declining commodity prices raises substantial doubt about its ability to continue as a going concern. Due to the significant decrease in liquidity experienced in 2015 that has continued into 2016 and anticipated future capital expenditures required to remain in compliance with certain regulatory requirements and to satisfy asset retirement obligations, the Managing General Partner believes that cash flows from operations will be insufficient to meet this Partnership’s obligations. One of this Partnership's most significant obligations is to the Managing General Partner, which is currently due for reimbursement of costs paid on behalf of this Partnership by the Managing General Partner. Such amounts are generally paid to third parties for general and administrative expenses and equipment and operating costs, as well as monthly operating fees payable to the Managing General Partner. Beginning in the second quarter of 2015 and continuing during the six

- 6-



ROCKIES REGION 2006 LIMITED PARTNERSHIP
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
June 30, 2016
(unaudited)

months ended June 30, 2016, this Partnership made no quarterly cash distributions to the Managing General Partner or Investor Partners.

The ability of this Partnership to continue as a going concern is dependent upon its ability to attain a satisfactory level of cash flows from operations. Greater cash flow would most likely occur from improved commodity pricing and, to a lesser extent, a sustained increase in production. However, historically, as a result of the normal production decline in a well's production life cycle, this Partnership has not experienced a sustained increase in production without capital expenditures.

The Managing General Partner is considering various options to mitigate risks that raise substantial doubt about this Partnership’s ability to continue as a going concern, including, but not limited to, deferral of payment of certain obligations, continued suspension of distributions to partners, partial or complete sale of assets and the shutting-in of wells. However, there can be no assurance that this Partnership will be able to mitigate such conditions. Failure to do so could result in a partial asset sale or some form of bankruptcy, liquidation or dissolution of this Partnership.

The accompanying financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and satisfaction of liabilities and commitments in the normal course of business. The financial statements do not reflect any adjustments that might result if this Partnership is unable to continue as a going concern.

Note 3 - Summary of Significant Accounting Policies

Recently Issued Accounting Standards

In May 2014, the Financial Accounting Standards Board ("FASB") and the International Accounting Standards Board 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: (1) identify the contract with the customer, (2) identify the separate performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to separate performance obligations and (5) recognize revenue when (or as) each performance obligation is satisfied. In March 2016, the FASB issued an update to the standard intended to improve the operability and understandability of the implementation guidance on principal versus agent considerations when recognizing revenue. The revenue standard is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The revenue standard can be adopted under the full retrospective method or simplified transition method. Entities are permitted to adopt the revenue standard early, beginning with annual reporting periods after December 15, 2016. The Managing General Partner of this Partnership is currently evaluating the impact these changes may have on this Partnership's financial statements.

In August 2014, the FASB issued a new standard related to the disclosure of uncertainties about an entity's ability to continue as a going concern. The new standard will explicitly require management to assess an entity's ability to continue as a going concern every reporting period and to provide related footnote disclosures in certain circumstances. The new standard will be effective for all entities in the first annual period ending after December 15, 2016, with early adoption permitted. This Partnership expects to adopt this standard in the fourth quarter of 2016.


- 7-



ROCKIES REGION 2006 LIMITED PARTNERSHIP
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
June 30, 2016
(unaudited)

Note 4 - 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, 2016
 
December 31, 2015
Crude oil, natural gas and NGLs sales revenues
collected from this Partnership's third-party customers
$
64,084

 
$
59,824

Other (1)
(209,399
)
 
(195,304
)
Due to Managing General Partner-other, net
$
(145,315
)
 
$
(135,480
)

(1)
All other unsettled transactions between this Partnership and the Managing General Partner. The majority of these are capital expenditures, operating costs and general and administrative costs that have not been deducted from distributions. Included in the amount as of June 30, 2016 is $40,769 due to the Managing General Partner for purchases of crude oil and natural gas properties.

The following table presents Partnership transactions with the Managing General Partner for the three and six months ended June 30, 2016 and 2015. “Well operations and maintenance” is included in the “Crude oil, natural gas and NGLs production costs” line item on the condensed statements of operations.    
 
 Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
 Well operations and maintenance
$
118,022

 
$
148,801

 
$
253,480

 
$
286,167

 Direct costs - general and administrative
21,605

 
39,758

 
57,521

 
61,398

 Cash distributions (1)
—

 
—

 
—

 
18,219


(1)
During the three and six months ended June 30, 2016, this Partnership made no quarterly cash distributions to the Managing General Partner or Investor Partners as cash flows generated from crude oil, natural gas and NGLs sales were utilized for operating activities. Cash distributions during the six months ended June 30, 2015 include $767 related to cash distributions for Investor Partner units repurchased by PDC.

Note 5 - Fair Value Measurements

This Partnership's fair value measurements were 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 current liabilities approximate fair value due to the short-term maturities of these instruments.

- 8-



ROCKIES REGION 2006 LIMITED PARTNERSHIP
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
June 30, 2016
(unaudited)


The Managing General Partner utilizes fair value, on a non-recurring basis, to perform impairment testing on this Partnership's crude oil and natural gas properties by comparing net capitalized costs, or carrying value, to estimated undiscounted future net cash flows. If net capitalized costs exceed undiscounted future net cash flows, the measurement of impairment is based on estimated fair value and is measured by the amount by which the net capitalized costs exceed their fair value.

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.

During the six months ended June 30, 2016 and 2015, 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, 2016 or December 31, 2015.

The Managing General Partner is not currently aware of any environmental claims existing as of June 30, 2016 which have not been provided for or would otherwise 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 or other potential sources of liability will not be discovered on this Partnership's properties.

In August 2015, the Managing General Partner received a Clean Air Act Section 114 Information Request (the "Information Request") from the United States Environmental Protection Agency ("EPA"). The Information Request seeks, among other things, information related to the design, operation, and maintenance of certain production facilities in the Denver-Julesburg Basin of Colorado. The Information Request focuses on historical operation and design information for 46 production facilities, of which one relates to this Partnership, and asks that the Managing General Partner conduct certain sampling and analyses at the identified 46 facilities. The Managing General Partner responded to the Information Request in January 2016. The Managing General Partner continues to meet with the EPA and provide additional information, but cannot predict the outcome of this matter at this time.

In addition, in December 2015, the Managing General Partner received a Compliance Advisory pursuant to C.R.S. § 25-7-115(2) from the Colorado Department of Public Health and Environment's Air Quality Control Commission's Air Pollution Control Division alleging that the Managing General Partner had failed to design, operate, and maintain certain condensate collection, storage, processing and handling operations to minimize leakage of volatile organic compounds to the maximum extent possible at 65 facilities consistent with applicable standards under Colorado law. Certain of this Partnership's wells were included in this list of 65 facilities. The Managing General Partner is in the process of responding to the advisory, and working with the agency on specific response processes, but cannot predict the outcome of this matter at this time.


- 9-



ROCKIES REGION 2006 LIMITED PARTNERSHIP
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
June 30, 2016
(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, 2015
$
2,191,433

Accretion expense
82,990

Balance at June 30, 2016
2,274,423

Less current portion
(360,000
)
Long-term portion
$
1,914,423


The current portion of the asset retirement obligations relates to wells that are producing minimal or no hydrocarbons and are expected to be plugged and abandoned within the next 12 months.

This Partnership's estimated asset retirement obligation liability is based on historical experience in plugging and abandoning wells, estimated economic lives, estimated plugging and abandonment cost and federal and state regulatory requirements. The liability is discounted using the credit-adjusted risk-free rate estimated at the time the liability is incurred or revised. In periods subsequent to initial measurement of the liability, this Partnership must recognize period-to-period changes in the liability resulting from the passage of time, revisions to either the amount of the original estimate of undiscounted cash flows or changes in inflation factors and changes to this Partnership's credit-adjusted risk-free rate as market conditions warrant.
 

Note 8 - Impairment of Crude Oil and Natural Gas Properties

During the six months ended June 30, 2015, this Partnership recognized an impairment charge of approximately $3.3 million to write-down its proved crude oil and natural gas properties. The impairment charge represented the amount by which the carrying value of the crude oil and natural gas properties exceeded the estimated fair value, and was therefore not recoverable. The estimated fair value of approximately $1.0 million, excluding estimated salvage value of $1.1 million, was determined based on estimated future discounted net cash flows, a Level 3 input, using estimated production and prices at which the Managing General Partner reasonably expects this Partnership's crude oil and natural gas will be sold. This Partnership had no impairments during the six months ended June 30, 2016.

- 10-


ROCKIES REGION 2006 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 2006 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 September 2006 and currently operates 63 gross (62.9 net) 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 realized commodity prices, costs incurred and availability of PDC or third-party owned pipeline capacity, and other factors such as high line pressures in the gathering system, whether caused by heat or third-party facilities issues, may impact this Partnership's results.
Partnership Operating Results Overview

Crude oil, natural gas and NGLs sales increased 13%, or $44,000, for the six months ended June 30, 2016 compared to the same period of 2015, attributable to a 48% increase in sales volume, offset in part by a decrease in the average sales price per barrel of crude oil equivalent ("Boe") of 23%. The average sales price per Boe was $22.63 for the six months ended June 30, 2016 compared to $29.56 for the same period a year ago.

For the six months ended June 30, 2016, this Partnership had a negligible net cash flow deficit from operating activities as compared to a cash flow deficit from operating activities of $48,000 for the comparable period of 2015. During six months ended June 30, 2016, this Partnership made no quarterly cash distributions to the Managing General Partner or Investor Partners as cash flows generated from crude oil, natural gas and NGLs sales were utilized for operating activities and this Partnership currently has outstanding payables to the Managing General Partner.

Modest crude oil, natural gas and NGLs sales and negative cash flows from operations, as well as anticipated future capital expenditures and asset retirement obligations, raise substantial doubt about this Partnership’s ability to continue as a going concern. See Note 2, Going Concern, to this Partnership's financial statements and Financial Condition, Liquidity and Capital Resources for additional information.



- 11-


ROCKIES REGION 2006 LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)


Results of Operations

Summary Operating Results

The following table presents selected information regarding this Partnership’s results of operations:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
 Change
 
2016
 
2015
 
 Change
Number of gross productive wells (end of period)
63

 
63

 
—

 
63

 
63

 
—
 %
 
 
 
 
 
 
 
 
 
 
 
 
Production(1)
 
 
 
 
 
 
 
 
 
 
 
Crude oil (Bbl)
4,084

 
3,522

 
16
 %
 
8,927

 
6,333

 
41
 %
Natural gas (Mcf)
14,586

 
8,140

 
79
 %
 
29,045

 
17,113

 
70
 %
NGLs (Bbl)
1,657

 
1,311

 
26
 %
 
3,294

 
2,380

 
38
 %
Crude oil equivalent (Boe)(2)
8,172

 
6,190

 
32
 %
 
17,062

 
11,566

 
48
 %
Average Boe per day
90

 
68

 
32
 %
 
94

 
64

 
47
 %
 
 
 
 
 
 
 
 
 
 
 
 
Crude oil, natural gas and NGLs sales
 
 
 
 
 
 
 
 
 
 
 
Crude oil
$
166,755

 
$
169,191

 
(1
)%
 
$
310,004

 
$
276,196

 
12
 %
Natural gas
20,197

 
17,331

 
17
 %
 
42,101

 
39,599

 
6
 %
NGLs
21,114

 
12,260

 
72
 %
 
34,072

 
26,046

 
31
 %
Total crude oil, natural gas and NGLs sales
$
208,066

 
$
198,782

 
5
 %
 
$
386,177

 
$
341,841

 
13
 %
 
 
 
 
 
 
 
 
 
 
 
 
Average selling price
 
 
 
 
 
 
 
 
 
 
 
Crude oil (per Bbl)
$
40.83

 
$
48.04

 
(15
)%
 
$
34.73

 
$
43.61

 
(20
)%
Natural gas (per Mcf)
1.38

 
2.13

 
(35
)%
 
1.45

 
2.31

 
(37
)%
NGLs (per Bbl)
12.74

 
9.35

 
36
 %
 
10.34

 
10.94

 
(5
)%
Crude oil equivalent (per Boe)
25.46

 
32.11

 
(21
)%
 
22.63

 
29.56

 
(23
)%
 
 
 
 
 
 
 
 
 
 
 
 
Average cost per Boe
 
 
 
 
 
 
 
 
 
 
 
Crude oil, natural gas and NGLs production cost(3)
$
15.88

 
$
23.61

 
(33
)%
 
$
15.72

 
$
24.86

 
(37
)%
Depreciation, depletion and amortization
6.38

 
4.86

 
31
 %
 
6.26

 
12.07

 
(48
)%
 
 
 
 
 
 
 
 
 
 
 
 
Operating costs and expenses
 
 
 
 
 
 
 
 
 
 
 
Direct costs - general and administrative
$
21,605

 
$
39,758

 
(46
)%
 
$
57,521

 
$
61,398

 
(6
)%
Depreciation, depletion and amortization
52,113

 
30,059

 
73
 %
 
106,784

 
139,574

 
(23
)%
Impairment of crude oil and natural gas properties
—

 
—

 
*

 
—

 
3,266,759

 
*

 
 
 
 
 
 
 
 
 
 
 
 
Cash distributions
$
—

 
$
—

 
*

 
$
—

 
$
47,167

 
*


*Percentage change is not meaningful, or equal to or greater than 250%.
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.


- 12-


ROCKIES REGION 2006 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

Changes in Crude Oil, Natural Gas and NGLs Sales Volumes. For the six months ended June 30, 2016 compared to the six months ended June 30, 2015, crude oil, natural gas and NGLs production, on an energy equivalency-basis, increased 48%, primarily attributable to a reduction in system line pressures and, to a lesser extent, resumed production from certain wells that were shut-in during the comparable 2015 period for well-bore integrity testing, per state regulations.

This Partnership experienced lower line pressures in the six months ended June 30, 2016 when compared to the six months ended June 30, 2015 as gathering system line pressures decreased following the commissioning of DCP Midstream’s Lucerne II plant in the summer of 2015 and the Grand Parkway gas gathering project in December 2015 down to levels that were consistent with the Managing General Partner's projections. Line pressures on the midstream system decreased from an average of approximately 185 pounds per square inch ("psi") during the six months ended June 30, 2015 to an average of approximately 135 psi during the six months ended June 30, 2016.As a result of the reduction in line pressures during the six months ended June 30, 2016, production from this Partnership's vertical wells increased by 48% compared to the six months ended June 30, 2015. Despite experiencing lower pressures during the first six months of 2016 as compared to the comparable period of 2015, line pressures began to build toward the end of the second quarter of 2016 as system volumes increased and the region experienced warmer weather. Other contributing factors to the increase in line pressures were DCP Midstream experiencing significant unexpected downtime during the quarter on some of its major plants, as well as performing extensive scheduled maintenance on one of its higher capacity gas plants. The Managing General Partner expects the gathering system pressures on the system to stabilize and then decrease as cooler weather arrives by the end of the third quarter. Over time, however, potential improvement will be offset by natural production declines. This Partnership relies on its third-party midstream service provider to construct compression, gathering and processing facilities to keep pace with production growth. As a result, the timing and availability of additional facilities going forward is substantially beyond the Managing General Partner's control. Falling commodity prices have resulted in reduced investment in midstream facilities by some third parties, increasing the risk that sufficient midstream infrastructure will not be available in future periods.

Changes in Crude Oil Sales. The approximate $34,000, or 12%, increase in crude oil sales for the six months ended June 30, 2016 as compared to the same prior year period, was attributable to a production volume increase of 41%, offset in part by a decrease in the average selling price of 20% per Bbl. The average selling price per Bbl was $34.73 for the current year six month period compared to $43.61 for the same prior year period.

The decrease in crude oil sales for the three months ended June 30, 2016 as compared to the same prior year period, was attributable to a decrease in the average selling price of 15% per Bbl, offset in part by a production volume increase of 16%. The average selling price per Bbl was $40.83 for the current year three month period compared to $48.04 for the same prior year period.

Changes in Natural Gas Sales. The 6% increase in natural gas sales during the six months ended June 30, 2016 as compared to the same prior year period, was attributable to a production volume increase of 70%, offset in part by a decrease in the average selling price of 37% per Mcf. The average selling price per Mcf was $1.45 for the current year six month period compared to $2.31 for the same prior year period.

The approximate 17% increase in natural gas sales during the three months ended June 30, 2016 as compared to the same prior year period, was attributable to a production volume increase of 79%, offset in part by a decrease in the average selling price of 35% per Mcf. The average selling price per Mcf was $1.38 for the current year three month period compared to $2.13 for the same prior year period.


- 13-


ROCKIES REGION 2006 LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)


Changes in NGLs Sales. The approximate $8,000, or 31%, increase in NGLs sales during the six months ended June 30, 2016 as compared to the same prior year period, resulted from the 38% increase in production volume, partially offset by a 5% decrease in the average selling price per Bbl. The average selling price per Bbl was $10.34 for the current year six month period compared to $10.94 for the same prior year period.

The approximate $9,000, or 72%, increase in NGLs sales during the three months ended June 30, 2016 as compared to the same prior year period, resulted from the 36% increase in the average selling price per Bbl and the 26% increase in production volume. The average selling price per Bbl was $12.74 for the current year three month period compared to $9.35 for the same prior year period.

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. While the price of crude oil decreased during the first half of 2016 compared to the first half of 2015, prices during the second quarter of 2016 increased substantially compared to the first quarter of 2016 as the number of US crude oil rigs and inventories declined. Natural gas prices also decreased during the first half of 2016 when compared to the same prior year period. Due to an oversupply of nearly all domestic NGLs products, this Partnership's average realized sales price for NGLs during the first half of 2016 reflected the same low levels seen during the last quarter of 2015, although NGLs prices were somewhat higher in the second quarter relative to the prior year period. With the initiation of ethane exports and increased NGLs demand, NGLs prices are starting to trend upward.

This Partnership's crude oil, natural gas and NGLs sales are recorded under the “net-back” as purchasers of the commodities also provide transportation, gathering and processing services. This Partnership sells commodities at the wellhead and collects a price and recognizes revenues based on the wellhead sales price as transportation and processing 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.

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 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. 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, 2016 as compared to six months ended June 30, 2015

Crude oil, natural gas and NGLs production costs for the six months ended June 30, 2016 decreased $19,000 compared to the same period in 2015, primarily attributable to a decrease in well swabbing costs and wireline work, fittings and lift system repair costs, offset in part by an increase in production taxes, labor costs and metering charges by this Partnership's midstream provider.

Three months ended June 30, 2016 as compared to three months ended June 30, 2015

Crude oil, natural gas and NGLs production costs for the three months ended June 30, 2016 decreased $16,000 compared to the same period in 2015, primarily attributable to a decrease in well swabbing costs and wireline work, fixed monthly well operating costs, fittings and lift system repair costs, offset in part by an increase in production taxes, labor costs and metering charges by this Partnership's midstream provider.



- 14-


ROCKIES REGION 2006 LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)


Direct costs - general and administrative

Six months ended June 30, 2016 as compared to six months ended June 30, 2015

Direct costs - general and administrative for the six months ended June 30, 2016 decreased approximately $4,000 compared to the same period in 2015, primarily attributable to lower professional fees for audit services.

Three months ended June 30, 2016 as compared to three months ended June 30, 2015

Direct costs - general and administrative for the three months ended June 30, 2016 decreased approximately $18,000 compared to the same period in 2015, primarily attributable to lower professional fees for audit services.


Depreciation, Depletion and Amortization

Six months ended June 30, 2016 as compared to six months ended June 30, 2015

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 for the six months ended June 30, 2016 compared to the six months ended June 30, 2015 due to a decrease in the DD&A expense rate, partially offset by increased production volumes. The DD&A expense rate per Boe decreased to $6.26 for the first six months of 2016 compared to $12.07 during the same period in 2015 due to the effect of impairments recorded in 2015 to write-down certain capitalized well costs on this Partnership's proved crude oil and natural gas properties. Partially offsetting this decrease was the decline in proved developed reserves at December 31, 2015 as compared to December 31, 2014, as a result of the significant decrease in SEC commodity prices utilized in the December 31, 2015 reserve report and the removal of vertical re-fracs and re-completions from the proved developed reserves, due to the current depressed commodity price environment.

Three months ended June 30, 2016 as compared to three months ended June 30, 2015

DD&A expense increased for the three months ended June 30, 2016 compared to the three months ended June 30, 2015 due to an increase in the DD&A expense rate and an increased production volumes. The DD&A expense rate per Boe increased to $6.38 for the three months ended June 30, 2016 compared to $4.86 during the same period in 2015 due to the decline in proved developed reserves at December 31, 2015 as compared to December 31, 2014, as a result of the significant decrease in SEC commodity prices utilized in the December 31, 2015 reserve report and the removal of vertical re-fracs and re-completions from the proved developed reserves, due to the current depressed commodity price environment.


- 15-


ROCKIES REGION 2006 LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)


Impairment of Crude Oil and Natural Gas Properties

Six months ended June 30, 2016 as compared to six months ended June 30, 2015

During the six months ended June 30, 2015 , this Partnership recognized an impairment charge of approximately $3.3 million to write-down its proved crude oil and natural gas properties. The impairment charge represented the amount by which the carrying value of the crude oil and natural gas properties exceeded the estimated fair value, and was therefore not recoverable. The estimated fair value of approximately $1.0 million, excluding estimated salvage value of $1.1 million, was determined based on estimated future discounted net cash flows, a Level 3 input, using estimated production and prices at which the Managing General Partner reasonably expects this Partnership's crude oil and natural gas will be sold. Further deterioration of commodity prices could result in additional impairment charges to this Partnership's crude oil and natural gas properties. See Note 8, Impairment of Crude Oil and Natural Gas Properties, to this Partnership's financial statements included elsewhere in this report for additional information.

Asset Retirement Obligations and Accretion Expense

Six months ended June 30, 2016 as compared to six months ended June 30, 2015

Of the 63 wells in this partnership, 31 wells had an increase in production totaling approximately 8.0 MBoe, or 69%, during the six months ended June 30, 2016 compared to the same prior year period and eight wells had a decrease in production totaling approximately 1.6 MBoe, or 14%, during the six months ended June 30, 2016 compared to the same prior year period. The remaining 24 wells did not produce or produced minimal amounts of hydrocarbons during both periods. The Managing General Partner is reviewing the Partnership's wells that have the potential to increase production during this lower line pressure environment by incurring minimal expense. The Managing General Partner expects that a portion of this Partnership's wells may be uneconomical to operate and may be plugged and abandoned. As a result, as of June 30, 2016, this Partnership has classified a portion of the asset retirement obligation as a current liability.

Accretion of asset retirement obligations ("ARO") expense for the six months ended June 30, 2016 increased $21,000 compared to the same period in 2015, primarily attributable to an increase in asset retirement obligations recorded in December 2015 to reflect increased estimated costs for materials and services related to the plugging and abandonment of certain vertical wells, as well as a decrease in the estimated useful life of these wells.

Three months ended June 30, 2016 as compared to three months ended June 30, 2015

ARO expense for the three months ended June 30, 2016 increased $11,000 compared to the same period in 2015, primarily attributable to an increase in asset retirement obligations recorded in December 2015 to reflect increased estimated costs for materials and services related to the plugging and abandonment of certain vertical wells, as well as a decrease in the estimated useful life of these wells.


Financial Condition, Liquidity and Capital Resources

Historically, this Partnership's primary source of liquidity has been cash flows from operating activities. Fluctuations in this Partnership's operating cash flows are substantially driven by changes in commodity prices and sales volumes. This source of cash has been primarily used to fund this Partnership's operating costs, direct costs-general and administrative, capital program and distributions to the Investor Partners and the Managing General Partner.

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. Greater cash flow would most likely occur from improved commodity pricing and, to a lesser extent, a sustained increase in production. However, 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. Accordingly, this Partnership anticipates a lower annual level of crude oil, natural gas and NGLs production and, therefore, lower revenues unless commodity prices increase. Under these circumstances, decreased production would have a material adverse impact on this Partnership's operations and may result in a continued lack of cash distributions to the Managing General Partner and Investor Partners through 2016 and beyond. This Partnership generated no liquidity during the six months ended June 30, 2016, as cash flows generated from crude oil, natural gas and NGLs sales were utilized for operating activities. Due to the significant decrease in liquidity experienced in 2015 that has continued into 2016 and anticipated future capital expenditures required to remain in compliance with certain regulatory requirements and to satisfy asset retirement obligations, the Managing General Partner believes that cash flows from operations will be insufficient to meet this Partnership’s obligations. Commodity prices during the three months ended June 30, 2016 have shown improvement over pricing experienced during the three months ended March 31, 2016. This level of price improvement alone is not likely to be sufficient to alleviate concerns of this Partnership’s ability to meet its obligations. To meet such obligations, this Partnership would likely need to continue to experience the production volume improvement seen during the six months ended June 30, 2016 and commodity pricing would need to significantly improve over pricing seen during the six months ended June 30, 2016. Beginning in the second quarter of 2015 and continuing through the six months ended June 30, 2016, this Partnership made no quarterly cash distributions to the Managing General Partner or Investor Partners. See Note 2, Going Concern, included elsewhere in this report for additional information.
Working Capital

At June 30, 2016, this Partnership had a working capital deficit of $356,000 compared to a working capital deficit of $361,000 at December 31, 2015. The $5,000 decrease from December 31, 2015 to June 30, 2016 was primarily due to the following changes:

•
an increase in accounts receivable of $16,000; and

- 16-


ROCKIES REGION 2006 LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)


•
an increase in crude oil inventory of $15,000.

Offset in part by:

•
an increase in the current portion of asset retirement obligations of $15,000; and
•
an increase in amounts due to managing general partner, net of $10,000.

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 a portion of this Partnership's activities, if any, 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.

Cash Flows

Operating Activities

This Partnership's cash flows from operating activities in the six months ended June 30, 2016 were primarily impacted by commodity prices, production volumes, operating costs and direct costs-general and administrative expenses. The key components of the changes in this Partnership's cash flows from operating activities are described in more detail in Results of Operations above.

Net cash flow deficits from operating activities was negligible during the six months ended June 30, 2016 compared to net cash flow deficits from operating activities of $48,000 for the comparable period in 2015. The increase of $48,000 in cash from operating activities was due primarily to the following:

•
an increase in crude oil, natural gas and NGLs sales of $44,000;
•
a decrease in production costs of $19,000; and
•
a decrease in direct costs - general and administrative of $4,000.

Offset in part by:

•
an decrease in changes in operating assets and liabilities of $19,000.

In 2016, this Partnership plans to fund its operations from cash flows from operating activities; however, this is dependent upon the commodity price environment. Greater cash flow would most likely occur from improved commodity pricing and, to a lesser extent, a sustained increase in production. The Managing General Partner is considering various options to maximize the Partnership's liquidity, including, but not limited to, deferral of payment of certain obligations, continued suspension of distributions to partners, partial or complete sale of assets and the shutting-in of wells. However, there can be no assurance that this Partnership will be able to generate sufficient liquidity. Failure to do so could result in a partial asset sale or some form of bankruptcy, liquidation or dissolution of this Partnership.

Investing Activities

Cash flows from investing activities consist of investments in equipment. 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, 2016, there was no cash expended for investment in equipment compared to $28,000 during the six months ended June 30, 2015.

Financing Activities

This Partnership initiated monthly cash distributions to investors in May 2007 and has distributed $93.8 million through June 30, 2016. 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

- 17-


ROCKIES REGION 2006 LIMITED PARTNERSHIP
(A West Virginia Limited Partnership)


Investor Partner distributions include amounts distributed to Investor Partners for their 63% ownership share in this Partnership, including amounts distributed to the Managing General Partner for limited partnership units repurchased.

Beginning in the second quarter of 2015 and continuing during the six months ended June 30, 2016, this Partnership made no quarterly cash distributions to the Managing General Partner or Investor Partners as cash flows generated from crude oil, natural gas and NGLs sales were utilized for operating activities. This Partnership made distributions totaling $17,000 and $30,000 to the Managing General Partner and Investor Partners, respectively, during the first quarter of 2015.

Off-Balance Sheet Arrangements

As of June 30, 2016, 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.

Recent Accounting Standards

See Note 3, 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 2015 Form 10-K.


- 18-


ROCKIES REGION 2006 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, 2016, 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 Principal 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 Principal Financial Officer concluded that this Partnership's disclosure controls and procedures were effective as of June 30, 2016.

(b)    Changes in Internal Control over Financial Reporting
 
During the three months ended June 30, 2016, 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.

- 19-


ROCKIES REGION 2006 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. 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 Managing General Partner made no limited partner unit repurchases during the three months ended June 30, 2016.

Item 3.    Defaults Upon Senior Securities

Not applicable.

Item 4.    Mine Safety Disclosures

Not applicable.

Item 5.    Other Information

None.


- 20-


ROCKIES REGION 2006 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 Principal 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 Principal 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.

- 21-


ROCKIES REGION 2006 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 2006 Limited Partnership
By its Managing General Partner
PDC Energy, Inc.

 
By: /s/ Barton R. Brookman
 
 
Barton R. Brookman
President and Chief Executive Officer
of PDC Energy, Inc.
 
 
August 12, 2016
 
 
 
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/ Barton R. Brookman
 
President and Chief Executive Officer
August 12, 2016
Barton R. Brookman
 
PDC Energy, Inc.
Managing General Partner of the Registrant
 
 
 
(principal executive officer)
 
 
 
 
 
/s/ R. Scott Meyers
 
Chief Accounting Officer
August 12, 2016
R. Scott Meyers
 
PDC Energy, Inc.
Managing General Partner of the Registrant
 
 
 
(principal financial officer)
 
 

- 22-

Rockies Region 2006 Limited Partnership Reports