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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_20140930.htm
EX-31.1 - 302 CERTIFICATION OF CHIEF EXECUTIVE OFFICER - ROCKIES REGION 2007 LPrr07-ex311_20140930.htm
EX-32.1 - 906 CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER - ROCKIES REGION 2007 LPrr07-ex321_20140930.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 September 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 September 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 impact of high line pressures and the timing, availability and effect of additional mid-stream facilities going forward; electronic, cyber or physical security breaches; 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 of 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)

 
September 30, 2014
 
December 31, 2013
Assets
 
 
 

Current assets:
 
 
 

Cash and cash equivalents
$
628,520

 
$
570,376

Accounts receivable
272,558

 
378,940

Crude oil inventory
35,132

 
55,308

Total current assets
936,210

 
1,004,624

Crude oil and natural gas properties, successful efforts method, at cost
55,934,623

 
55,748,749

Less: Accumulated depreciation, depletion and amortization
(33,501,184
)
 
(31,819,541
)
Crude oil and natural gas properties, net
22,433,439

 
23,929,208

Other assets

 
89,630

Total Assets
$
23,369,649

 
$
25,023,462

 
 
 
 
Liabilities and Partners' Equity
 
 
 
Current liabilities:
 
 
 
Accounts payable and accrued expenses
$
27,786

 
$
33,041

Due to Managing General Partner-other, net
73,097

 
119,994

Total current liabilities
100,883

 
153,035

Asset retirement obligations
990,615

 
935,813

Total liabilities
1,091,498

 
1,088,848

 
 
 
 
Commitments and contingent liabilities


 


 
 
 
 
Partners' equity:
 
 
 
   Managing General Partner
3,048,968

 
3,661,859

   Limited Partners - 4,470 units issued and outstanding
19,229,183

 
20,272,755

Total Partners' equity
22,278,151

 
23,934,614

Total Liabilities and Partners' Equity
$
23,369,649

 
$
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 September 30,
 
Nine months ended September 30,
 
2014
 
2013
 
2014
 
2013
Revenues:
 
 
 
 
 
 
 
Crude oil, natural gas and NGLs sales
$
857,727

 
$
1,500,286

 
$
2,906,026

 
$
4,536,215

Commodity price risk management loss, net

 

 

 
(417,689
)
Total revenues
857,727

 
1,500,286

 
2,906,026

 
4,118,526

Operating costs and expenses:
 
 
 
 
 
 
 
Crude oil, natural gas and NGLs production costs
233,899

 
331,242

 
734,235

 
980,150

Direct costs - general and administrative
28,021

 
42,575

 
90,641

 
129,317

Depreciation, depletion and amortization
516,457

 
761,369

 
1,681,643

 
2,438,069

Accretion of asset retirement obligations
18,625

 
17,229

 
54,802

 
50,699

Total operating costs and expenses
797,002

 
1,152,415

 
2,561,321

 
3,598,235

Income from continuing operations
60,725

 
347,871

 
344,705

 
520,291

Loss from discontinued operations

 

 

 
(33,370
)
Net income
$
60,725

 
$
347,871

 
$
344,705

 
$
486,921

 
 
 
 
 
 
 
 
Income from continuing operations
$
60,725

 
$
347,871

 
$
344,705

 
$
520,291

Less: Managing General Partner interest in income from continuing operations
22,468

 
128,712

 
127,541

 
192,508

Income from continuing operations allocated to Investor Partners
$
38,257

 
$
219,159

 
$
217,164

 
$
327,783

 
 
 
 
 
 
 
 
Loss from discontinued operations
$

 
$

 
$

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

 

 

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

 
$

 
$

 
$
(21,023
)
 
 
 
 
 
 
 
 
Net income (loss) per Investor Partner unit
 
 
 
 
 
 
 
Continuing operations
$
9

 
$
49

 
$
49

 
$
73

Discontinued operations

 

 

 
(4
)
Net income per Investor Partner unit
$
9

 
$
49

 
$
49

 
$
69

 
 
 
 
 
 
 
 
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)

 
Nine months ended September 30,
 
2014
 
2013
Cash flows from operating activities:
 
 
 
Net income
$
344,705

 
$
486,921

Adjustments to net income to reconcile to net cash from operating activities:
 
 
 
Depreciation, depletion and amortization
1,681,643

 
2,593,279

Accretion of asset retirement obligations
54,802

 
57,576

Net change in fair value of unsettled derivatives

 
1,693,233

Loss on sale of crude oil and natural gas properties

 
495,574

Changes in assets and liabilities:
 
 
 
Accounts receivable
106,382

 
397,957

Crude oil inventory
20,176

 
(11,028
)
Other assets
89,630

 
(32,666
)
Accounts payable and accrued expenses
(5,255
)
 
(48,525
)
Due to Managing General Partner-other, net
(46,897
)
 
746,568

Net cash from operating activities
2,245,186

 
6,378,889

 
 
 
 
Cash flows from investing activities:
 
 
 
Capital expenditures for crude oil and natural gas properties
(185,874
)
 

Proceeds from sale of crude oil and natural gas properties

 
13,488,520

Net cash from investing activities
(185,874
)
 
13,488,520

 
 
 
 
Cash flows from financing activities:
 
 
 
Distributions to Partners
(2,001,168
)
 
(19,867,409
)
Net cash from financing activities
(2,001,168
)
 
(19,867,409
)
 
 
 
 
Net change in cash and cash equivalents
58,144

 

Cash and cash equivalents, beginning of period
570,376

 
570,376

Cash and cash equivalents, end of period
$
628,520

 
$
570,376






See accompanying notes to unaudited condensed financial statements.

- 4-




ROCKIES REGION 2007 LIMITED PARTNERSHIP
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
September 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 September 30, 2014, there were 1,778 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 September 30, 2014, the Managing General Partner had repurchased 71 units of Partnership interest from the Investor Partners at an average price of $4,033 per unit. As of September 30, 2014, the Managing General Partner owned 38% 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 nine months ended September 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 Standards

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
September 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.

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. The Managing General Partner of this Partnership 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:

    
 
September 30, 2014
 
December 31, 2013
Crude oil, natural gas and NGLs sales revenues
collected from this Partnership's third-party customers
$
280,428

 
$
306,014

Other (1)
(353,525
)
 
(426,008
)
Total Due to Managing General Partner-other, net
$
(73,097
)
 
$
(119,994
)

(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, which have not been deducted from distributions.

The following table presents Partnership transactions with the Managing General Partner for the three and nine months ended September 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 September 30,
 
Nine months ended September 30,
 
2014
 
2013
 
2014
 
2013
 Well operations and maintenance
$
197,759

 
$
273,771

 
$
598,609

 
$
1,282,415

 Gathering, compression and processing fees

 
(3,807
)
 

 
119,017

 Direct costs - general and administrative
28,021

 
42,575

 
90,641

 
455,368

 Cash distributions (1)
173,778

 
5,694,280

 
757,783

 
7,445,561


(1)
Cash distributions include $4,489 and $17,350 during the three and nine months ended September 30, 2014, respectively, and $74,804 and $94,620 during the three and nine months ended September 30, 2013, respectively, related to equity cash distributions for Investor Partner units repurchased by PDC.

Note 4 - Fair Value of Financial Instruments

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

- 6-




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

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.


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 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 nine months ended September 30, 2013:

Statement of operations line item:
 
Nine Months Ended September 30, 2013
Commodity price risk management loss, net
 
 
Net settlements
 
$
1,275,544

Net change in fair value of unsettled derivatives
 
(1,693,233
)
Total commodity price risk management loss, net
 
$
(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.

During the nine months ended September 30, 2014 and 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 September 30, 2014 or December 31, 2013.

The Managing General Partner is not currently aware of any environmental claims existing as of September 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
September 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
54,802

Balance at September 30, 2014
$
990,615

 

Note 8 - Divestitures and Discontinued Operations

Piceance Basin. In June 2013, this Partnership divested its Piceance Basin assets 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 nine months ended September 30, 2013.

- 8-




ROCKIES REGION 2007 LIMITED PARTNERSHIP
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
September 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
 
Nine months ended September 30, 2013
 
 
 
Revenues:
 
 
Crude oil, natural gas and NGLs sales
 
$
1,691,225

 
 
 
Operating costs and expenses:
 
 
Crude oil, natural gas and NGLs production costs
 
740,883

Depreciation, depletion and amortization
 
155,210

Direct costs - general and administrative expense
 
326,051

Accretion of asset retirement obligations
 
6,877

Loss on sale of crude oil and natural gas properties
 
495,574

Total operating costs and expenses
 
1,724,595

Loss from discontinued operations
 
$
(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.

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 36%, or approximately $1.6 million, for the nine months ended September 30, 2014 compared to the same period of 2013, as sales volumes from continuing operations declined 36% period-to-period. The average sales price per barrel of crude oil equivalent ("Boe"), excluding the impact of net settlements on derivatives, was $52.48 for the nine months ended September 30, 2014 compared to $52.34 for the same period a year ago. There were no net settlements on natural gas derivatives during the nine months ended September 30, 2014, as all derivative open positions were liquidated prior to June 30, 2013, compared to approximately $1.3 million of positive net settlements for the same period of 2013. Cash distributions decreased 90% to approximately $2 million during the nine months ended September 30, 2014 compared to $19.9 million during the nine months ended September 30, 2013. The decrease in cash distributions is primarily due to the July 2013 distribution of proceeds received for the Piceance Basin asset divestiture of $13.5 million, as well as a decrease in cash flows from operations during 2014 as a result of lower production and receiving no cash settlements from derivatives.

Potential for Future Asset Impairments

Decreases in forward crude oil and natural gas prices or significant changes to our refracturing and recompletion plans could cause a reduction in the estimated quantity of this Partnership’s proved reserves and a corresponding reduction in the estimated future net cash flows expected to be generated from these reserves. Such reductions could result in significant impairment charges to our crude oil and natural gas properties. These assets, which had a net book value of approximately $22.4 million at September 30, 2014, have the potential to be at risk of impairment. The cash flow model this Partnership uses to assess properties for impairment includes numerous assumptions, such as the Managing General Partner's estimates of future crude oil and natural gas production and prices, market outlook on forward commodity prices and operating and development costs.


- 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 September 30,
 
Nine months ended September 30,
 
2014
 
2013
 
 Change
 
2014
 
2013
 
 Change
Number of gross producing wells (end of period)
75

 
75

 

 
75

 
75

 

 
 
 
 
 
 
 
 
 
 
 
 
Production(1)
 
 
 
 
 
 
 
 
 
 
 
Crude oil (Bbl)
7,913

 
12,640

 
(37
)%
 
25,400

 
40,934

 
(38
)%
Natural gas (Mcf)
31,106

 
54,335

 
(43
)%
 
101,603

 
173,529

 
(41
)%
NGLs (Bbl)
3,830

 
5,369

 
(29
)%
 
13,039

 
16,812

 
(22
)%
Crude oil equivalent (Boe)(2)
16,927

 
27,065

 
(37
)%
 
55,373

 
86,667

 
(36
)%
Average Boe per day
184

 
294

 
(37
)%
 
203

 
317

 
(36
)%
 
 
 
 
 
 
 
 
 
 
 
 
Crude oil, natural gas and NGLs sales
 
 
 
 
 
 
 
 
 
 
 
Crude oil
$
664,990

 
$
1,240,866

 
(46
)%
 
$
2,225,662

 
$
3,713,744

 
(40
)%
Natural gas
117,872

 
162,979

 
(28
)%
 
418,629

 
550,662

 
(24
)%
NGLs
74,865

 
96,441

 
(22
)%
 
261,735

 
271,809

 
(4
)%
Total crude oil, natural gas and NGLs sales
$
857,727

 
$
1,500,286

 
(43
)%
 
$
2,906,026

 
$
4,536,215

 
(36
)%
 
 
 
 
 
 
 
 
 
 
 
 
Net settlements on derivatives
 
 
 
 
 
 
 
 
 
 
 
Natural gas
$

 
$

 
*
 
$

 
$
1,275,544

 
*
 
 
 
 
 
 
 
 
 
 
 
 
Average selling price (excluding net settlements on derivatives)
 
 
 
 
 
 
 
 
 
 
 
Crude oil (per Bbl)
$
84.04

 
$
98.17

 
(14
)%
 
$
87.62

 
$
90.73

 
(3
)%
Natural gas (Mcf)
3.79

 
3.00

 
26
 %
 
4.12

 
3.17

 
30
 %
NGLs (Bbl)
19.55

 
17.96

 
9
 %
 
20.07

 
16.17

 
24
 %
Crude oil equivalent (per Boe)
50.67

 
55.43

 
(9
)%
 
52.48

 
52.34

 
 %
 
 
 
 
 
 
 
 
 
 
 
 
Average cost per Boe
 
 
 
 
 
 
 
 
 
 
 
Crude oil, natural gas and NGLs production cost(3)
$
13.82

 
$
12.24

 
13
 %
 
$
13.26

 
$
11.31

 
17
 %
Depreciation, depletion and amortization
30.51

 
28.13

 
8
 %
 
30.37

 
28.13

 
8
 %
 
 
 
 
 
 
 
 
 
 
 
 
Operating costs and expenses
 
 
 
 
 
 
 
 
 
 
 
Direct costs - general and administrative
$
28,021

 
$
42,575

 
(34
)%
 
$
90,641

 
$
129,317

 
(30
)%
Depreciation, depletion and amortization
516,457

 
761,369

 
(32
)%
 
1,681,643

 
2,438,069

 
(31
)%
 
 
 
 
 
 
 
 
 
 
 
 
Cash distributions
$
457,536

 
$
15,187,824

 
(97
)%
 
$
2,001,168

 
$
19,867,409

 
(90
)%

* 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 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 crude oil, natural gas and NGLs production as the majority of the purchasers of these 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 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 increases in gathering system pressures in the Wattenberg Field by the Partnership's primary third-party midstream provider through the third quarter of 2014. Overall, the line pressures thus far in 2014 have been 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 has continued to increase volumes on the gathering system and pressures have remained at 2014 summer levels through the third quarter of 2014. The Managing General Partner believes our midstream service provider will be challenged to keep pace with industry drilling activity with the existing midstream infrastructure until the new Lucerne II plant is completed in the Spring of 2015. This should address system pressure issues at least until 2016, when the next significant midstream infrastructure projects are projected to be completed. If these infrastructure projects are not completed, this Partnership could continue to experience increased gathering system pressure which could negatively impact the Partnership's production. 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 relies 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.

Nine months ended September 30, 2014 as compared to nine months ended September 30, 2013

For the nine months ended September 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 36%, primarily because nine wells were shut-in during a portion of the nine months ended September 30, 2014 for pipeline repairs performed by our third-party midstream provider and 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 $2.9 million for the nine months ended September 30, 2014 from

- 12-



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


$4.5 million for the nine months ended September 30, 2013. The average sales price per Boe, excluding the impact of net settlements from derivatives, was $52.48 for the current year nine month period compared to $52.34 for the same period a year ago.

Crude oil sales decreased by approximately $1.5 million, or 40%, during the nine months ended September 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 $87.62 for the current year nine month period compared to $90.73 for the same prior year period. Natural gas sales decreased by approximately $0.1 million, or 24%, during the nine months ended September 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 30% per Mcf. The average selling price per Mcf was $4.12 for the current year nine month period compared to $3.17 for the same prior year period. NGLs sales decreased by approximately 4% during the nine months ended September 30, 2014 when compared to the same prior year period, primarily due to a production volume decrease of 22%, offset in part by an increase in the average selling price of 24% per Bbl. The average selling price per Bbl was $20.07 for the current year nine month period compared to $16.17 for the same prior year period.

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

For the three months ended September 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 37%, primarily because nine wells were shut-in during a portion of the three months ended September 30, 2014 for pipeline repairs performed by our third-party midstream provider and 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 $0.9 million for the three months ended September 30, 2014 from $1.5 million for the three months ended September 30, 2013. The average sales price per Boe was $50.67 for the current year three month period compared to $55.43 for the same period a year ago.

Crude oil sales decreased by approximately $0.6 million, or 46%, during the three months ended September 30, 2014 when compared to the same prior year period, primarily attributable to a production volume decrease of 37% and a decrease in the average selling price of 14% per Bbl. The average selling price per Bbl was $84.04 for the current year three month period compared to $98.17 for the same prior year period. Natural gas sales decreased by approximately $45,000, or 28%, during the three months ended September 30, 2014 when compared to the same prior year period, primarily due to a production volume decrease of 43%, partially offset by an increased average selling price of 26% per Mcf. The average selling price per Mcf was $3.79 for the current year three month period compared to $3.00 for the same prior year period. NGLs sales decreased by approximately 22% during the three months ended September 30, 2014 when compared to the same prior year period, primarily due to a production volume decrease of 29%, offset in part by an increase in the average selling price of 9% per Bbl. The average selling price per Bbl was $19.55 for the current year three month period compared to $17.96 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. Accordingly, as of September 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 nine months ended September 30, 2013:

 
 
Nine months ended September 30, 2013
Commodity price risk management loss, net:
 
 
Net settlements
 
$
1,275,544

Net change in fair value of unsettled derivatives
 
(1,693,233
)
Total commodity price risk management loss, net
 
$
(417,689
)

This Partnership had no crude oil, natural gas or NGLs derivative activity subsequent to June 30, 2013 as all open positions were 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.

Nine months ended September 30, 2013

Net settlements of approximately $1.3 million for the nine months ended September 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 nine months ended September 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 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. 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.

Nine months ended September 30, 2014 as compared to nine months ended September 30, 2013

Crude oil, natural gas and NGLs production costs for the nine months ended September 30, 2014 decreased approximately $246,000 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 $13.26 during 2014 from $11.31 in 2013 due to lower volumes.


- 14-



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


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

Crude oil, natural gas and NGLs production costs for the three months ended September 30, 2014 decreased approximately $97,000 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 $13.82 during 2014 from $12.24 in 2013 due to lower volumes.

Depreciation, Depletion and Amortization

Nine months ended September 30, 2014 as compared to nine months ended September 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 $756,000 for the nine months ended September 30, 2014 compared to the nine months ended September 30, 2013 due to the 36% decrease in production volumes, partially offset by an increased DD&A expense rate in 2014. The DD&A expense rate per Boe increased to $30.37 for the first nine 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 September 30, 2014 as compared to three months ended September 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 $245,000 for the three months ended September 30, 2014 compared to the three months ended September 30, 2013 due to the 37% decrease in production volumes, partially offset by an increased DD&A expense rate in 2014. The DD&A expense rate per Boe increased to $30.51 for the three months ended September 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

Nine months ended September 30, 2014 as compared to nine months ended September 30, 2013

Direct costs - general and administrative for the nine months ended September 30, 2014 decreased approximately $39,000 compared to the same period in 2013, primarily attributable to lower professional fees for audit services.

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

Direct costs - general and administrative for the three months ended September 30, 2014 decreased approximately $15,000 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 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. 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 nine months ended September 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
 
Nine Months Ended September 30, 2013
Production
 
 
Crude oil (Bbl)
 
1,512

Natural gas (Mcf)
 
517,493

Crude oil equivalent (Boe)
 
87,761



Financial Condition, Liquidity and Capital Resources

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 and monthly 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. 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, therefore, 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 the remainder of 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, 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.

Working Capital

At September 30, 2014, this Partnership had working capital of $835,000, compared to working capital of $852,000 at December 31, 2013. The decrease of $17,000 between September 30, 2014 and December 31, 2013 was primarily due to the following changes:

accounts receivable decreased by $106,000;
crude oil inventory decreased by $20,000;
cash and cash equivalents increased by $58,000;
amounts due to Managing General Partner-other, net, decreased by $47,000; and
accounts payable decreased by $5,000.

The $58,000 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 to this Partnership's other assets, which are not part of working capital. The cash will be held by this Partnership to satisfy 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

- 16-



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


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 $2.2 million for the nine months ended September 30, 2014 compared to $6.4 million for the comparable period in 2013. The decrease of $4.2 million in cash from operating activities was due primarily to the following:

a decrease in crude oil, natural gas and NGLs sales of $3.3 million;
a decrease in commodity price risk management net settlements of $1.3 million; and
a decrease in changes in operating assets and liabilities of $0.9 million.

Offset in part by:

a decrease in production costs of $1 million; and
a decrease in direct costs-general and administrative of $0.4 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 nine months ended September 30, 2014, investments in equipment and services was approximately $0.2 million. During the nine months ended September 30, 2013, proceeds from the disposition of crude oil and natural gas properties were approximately $13.5 million.

Financing Activities

This Partnership initiated monthly cash distributions to investors in May 2008 and has distributed $112.4 million through September 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 September 30,
 
Managing General Partner
 
Investor Partners
 
Total
2014
 
$
169,289

 
$
288,247

 
$
457,536

2013
 
5,619,476

 
9,568,348

 
15,187,824

 
 
 
 
 
 
 
Nine months ended September 30,
 
Managing General Partner
 
Investor Partners
 
Total
2014
 
$
740,432

 
$
1,260,736

 
$
2,001,168

2013
 
7,350,941

 
12,516,468

 
19,867,409

 
 
 
 
 
 
 

- 17-



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



Nine months ended September 30, 2014 as compared to nine months ended September 30, 2013

The decrease in cash distributions for the nine months ended September 30, 2014 as compared to the same period in 2013 is primarily due to the July 2013 distribution of proceeds received for the Piceance Basin asset divestiture of $13.5 million, including $5 million and $8.5 million to the Managing General Partner and the Investor Partners, respectively, as well as a decrease in cash flows from operations during 2014 resulting from lower production and receiving no cash settlements from derivatives.

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

The decrease in distributions for the three months ended September 30, 2014 as compared to the same period in 2013 is primarily due to the July 2013 distribution of proceeds received for the Piceance Basin asset divestiture of $13.5 million, including $5 million and $8.5 million to the Managing General Partner and the Investor Partners, respectively, as well as a decrease in cash flows from operations during 2014 resulting from lower production and receiving no cash settlements from derivatives.

Off-Balance Sheet Arrangements

As of September 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.

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.


- 18-



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 September 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 September 30, 2014.

(b)    Changes in Internal Control over Financial Reporting
 
During the three months ended September 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.

- 19-



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 September 30, 2014:

Period
 
Total Number of
 Units Repurchased
 
Average Price Paid
 Per Unit
July 1-31, 2014
 
4.25

 
$
2,488

August 1-31, 2014
 
4.00

 
2,406

September 1-30, 2014
 

 

     Total
 
8.25

 
$
2,448



Item 3.    Defaults Upon Senior Securities

Not applicable.

Item 4.    Mine Safety Disclosures

Not applicable.

Item 5.    Other Information

None.


- 20-



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.

- 21-



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.
 
 
November 14, 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
November 14, 2014
James M. Trimble
 
PDC Energy, Inc.
Managing General Partner of the Registrant
 
 
 
(principal executive officer)
 
 
 
 
 
/s/ Gysle R. Shellum
 
Chief Financial Officer
November 14, 2014
Gysle R. Shellum
 
PDC Energy, Inc.
Managing General Partner of the Registrant
 
 
 
(principal financial officer)
 
 
 
 
 
/s/ R. Scott Meyers
 
Chief Accounting Officer
November 14, 2014
R. Scott Meyers
 
PDC Energy, Inc.
Managing General Partner of the Registrant
 
 
 
(principal accounting officer)
 
 

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