Rockies Region 2006 Limited Partnership - FORM 10-Q - November 13, 2015

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EX-32.1 - 906 CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER - Rockies Region 2006 Limited Partnershiprr06-ex321_20150930.htm
EX-31.1 - 302 CERTIFICATION OF CHIEF EXECUTIVE OFFICER - Rockies Region 2006 Limited Partnershiprr06-ex311_20150930.htm
EX-31.2 - 302 CERTIFICATION OF CHIEF FINANCIAL OFFICER - Rockies Region 2006 Limited Partnershiprr06-ex312_20150930.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, 2015
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 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, 2015, 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 ("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: future cash flows, liquidity and financial condition, and the ability of this Partnership to continue as a going concern; estimated crude oil, natural gas and natural gas liquids ("NGLs") reserves; anticipated capital expenditures and projects; the impact of high line pressures and the timing, availability, cost and effect of additional midstream facilities and services going forward; and the Managing General Partner's future strategies, plans and objectives.

The above statements are not the exclusive means of identifying forward-looking statements herein. Although forward-looking statements contained in this report reflect the Managing General Partner's good faith judgment, such statements can only be based on facts and factors currently known to the Managing General Partner. Consequently, forward-looking statements are inherently subject to risks and uncertainties, including known and unknown risks and uncertainties incidental to the development, production and marketing of crude oil, natural gas and NGLs, and actual outcomes may differ materially from the results and outcomes discussed in the forward-looking statements.

Important factors that could cause actual results to differ materially from the forward-looking statements include, but are not limited to:
•
future cash flows, liquidity and financial condition, and the ability of this Partnership to continue as a going concern;
•
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;
•
impact of governmental policies and/or regulations, including changes in environmental and other laws, the interpretation and enforcement related to those laws and regulations, liabilities arising thereunder and the costs to comply with those laws and regulations;
•
potential declines in the value of this Partnership's crude oil, natural gas and NGLs 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;
•
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;
•
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, 2014 (the “2014 Form 10-K”) filed with the U.S. Securities and Exchange Commission (“SEC”) on March 30, 2015 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 2006 Limited Partnership
Condensed Balance Sheets
(unaudited)

 
September 30, 2015
 
December 31, 2014
Assets
 
 
 

Current assets:
 
 
 

Cash and cash equivalents
$
12,410

 
$
136,226

Accounts receivable
101,269

 
59,470

Crude oil inventory
42,329

 
53,793

Total current assets
156,008

 
249,489

Crude oil and natural gas properties, successful efforts method, at cost
4,069,358

 
13,373,707

Less: Accumulated depreciation, depletion and amortization
(1,983,936
)
 
(7,893,923
)
Crude oil and natural gas properties, net
2,085,422

 
5,479,784

Total Assets
$
2,241,430

 
$
5,729,273

 
 
 
 
Liabilities and Partners' Equity
 
 
 
Current liabilities:
 
 
 
Accounts payable and accrued expenses
$
6,041

 
$
6,278

Due to Managing General Partner-other, net
105,419

 
98,886

Current portion of asset retirement obligations
223,399

 
—

Total current liabilities
334,859

 
105,164

Asset retirement obligations
1,544,711

 
1,673,982

Total Liabilities
1,879,570

 
1,779,146

 
 
 
 
Commitments and contingent liabilities


 


 
 
 
 
Partners' equity:
 
 
 
   Managing General Partner
(4,802,125
)
 
(3,474,466
)
   Limited Partners - 4,497.03 units issued and outstanding
5,163,985

 
7,424,593

Total Partners' Equity
361,860

 
3,950,127

Total Liabilities and Partners' Equity
$
2,241,430

 
$
5,729,273

    






See accompanying notes to unaudited condensed financial statements.

- 2-

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

 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2015
 
2014
 
2015
 
2014
Revenues:
 
 
 
 
 
 
 
Crude oil, natural gas and NGLs sales
$
236,133

 
$
376,326

 
$
577,974

 
$
1,161,395

 
 
 
 
 
 
 
 
Operating costs and expenses:
 
 
 
 
 
 
 
Crude oil, natural gas and NGLs production costs
191,890

 
210,968

 
479,440

 
595,344

Direct costs - general and administrative
31,477

 
28,021

 
92,875

 
90,494

Depreciation, depletion and amortization
46,298

 
106,039

 
185,872

 
319,023

Impairment of crude oil and natural gas properties
—

 
—

 
3,266,759

 
—

Accretion of asset retirement obligations
31,984

 
17,508

 
94,128

 
51,610

Total operating costs and expenses
301,649

 
362,536

 
4,119,074

 
1,056,471

 
 
 
 
 
 
 
 
Net income (loss)
$
(65,516
)
 
$
13,790

 
$
(3,541,100
)
 
$
104,924

 
 
 
 
 
 
 
 
Net income (loss) allocated to partners
$
(65,516
)
 
$
13,790

 
$
(3,541,100
)
 
$
104,924

Less: Managing General Partner interest in net income (loss)
(24,241
)
 
5,102

 
(1,310,207
)
 
38,822

Net income (loss) allocated to Investor Partners
$
(41,275
)
 
$
8,688

 
$
(2,230,893
)
 
$
66,102

 
 
 
 
 
 
 
 
Net income (loss) per Investor Partner unit
$
(9
)
 
$
2

 
$
(496
)
 
$
15

 
 
 
 
 
 
 
 
Investor Partner units outstanding
4,497.03

 
4,497.03

 
4,497.03

 
4,497.03






See accompanying notes to unaudited condensed financial statements.

- 3-

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

 
Nine Months Ended September 30,
 
2015
 
2014
Cash flows from operating activities:
 
 
 
Net income (loss)
$
(3,541,100
)
 
$
104,924

Adjustments to net income (loss) to reconcile to net cash from operating activities:
 
 
 
Depreciation, depletion and amortization
185,872

 
319,023

Impairment of crude oil and natural gas properties
3,266,759

 
—

Accretion of asset retirement obligations
94,128

 
51,610

Changes in assets and liabilities:
 
 
 
Accounts receivable
(41,799
)
 
32,777

Crude oil inventory
11,464

 
(5,286
)
Other assets
—

 
135,855

Accounts payable and accrued expenses
(237
)
 
(255
)
Due to Managing General Partner-other, net
6,533

 
181,741

Net cash from operating activities
(18,380
)
 
820,389

 
 
 
 
Cash flows from investing activities:
 
 
 
Capital expenditures for crude oil and natural gas properties
(58,269
)
 
(242,928
)
Net cash from investing activities
(58,269
)
 
(242,928
)
 
 
 
 
Cash flows from financing activities:
 
 
 
Distributions to Partners
(47,167
)
 
(499,922
)
Net cash from financing activities
(47,167
)
 
(499,922
)
 
 
 
 
Net change in cash and cash equivalents
(123,816
)
 
77,539

Cash and cash equivalents, beginning of period
136,226

 
352,687

Cash and cash equivalents, end of period
$
12,410

 
$
430,226






See accompanying notes to unaudited condensed financial statements.

- 4-



ROCKIES REGION 2006 LIMITED PARTNERSHIP
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
September 30, 2015
(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 September 30, 2015, there were 1,974 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 September 30, 2015, the Managing General Partner had repurchased 162 units of Partnership interest from the Investor Partners at an average price of $2,380 per unit. As of September 30, 2015, the Managing General Partner owned 39.3% 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 2014 Form 10-K. This Partnership's accounting policies are described in the Notes to Financial Statements in this Partnership's 2014 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, 2015 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 relate to its operating expenses, capital program and distributions to partners. The market price for crude oil, natural gas and NGLs decreased significantly during the fourth quarter of 2014, with continued weakness in the nine months ended September 30, 2015. As a result of these decreases, crude oil, natural gas and NGLs sales decreased $0.6 million, or 50%, to $0.6 million for the nine months ended September 30, 2015 compared to $1.2 million for the nine months ended September 30, 2014. Decreases in the market price for this Partnership’s production directly reduce its cash flows from operations and create operating deficits.

Although this Partnership experienced an increase in production during the three months ended September 30, 2015 due to reduced line pressures as a result of the Lucerne II processing plant, the negative impact to its liquidity resulting from declining commodity prices raises substantial doubt about the Partnership’s ability to continue as a going concern. While this Partnership generated modest positive cash flows from operations during the three months ended September 30, 2015, due to the significant decrease in liquidity experienced in the first half of 2015 and anticipated future capital expenditures required to remain in compliance with certain regulatory requirements and to satisfy asset retirement obligations, we believe 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. During the three months ended September 30, 2015, this Partnership made no quarterly cash distributions to the Managing General Partner or Investor Partners.


- 5-



ROCKIES REGION 2006 LIMITED PARTNERSHIP
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
September 30, 2015
(unaudited)

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 wells’ 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 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 August 2015, the FASB deferred the effective date of the revenue standard to 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. The Managing General Partner of this Partnership is currently evaluating the impact these changes may have on this Partnership's financial statements.

In July 2015, the FASB issued an accounting update requiring all entities to measure inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. This guidance is effective for public entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Adoption of this guidance is not expected to have a significant impact on this Partnership's financial statements.


- 6-



ROCKIES REGION 2006 LIMITED PARTNERSHIP
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
September 30, 2015
(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:

    
 
September 30, 2015
 
December 31, 2014
Crude oil, natural gas and NGLs sales revenues
collected from this Partnership's third-party customers
$
56,231

 
$
141,762

Other (1)
(161,650
)
 
(240,648
)
Due to Managing General Partner-other, net
$
(105,419
)
 
$
(98,886
)

(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.

The following table presents Partnership transactions with the Managing General Partner for the three and nine months ended September 30, 2015 and 2014. “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 September 30,
 
Nine Months Ended September 30,
 
2015
 
2014
 
2015
 
2014
 Well operations and maintenance
$
191,065

 
$
194,887

 
$
477,233

 
$
534,946

 Direct costs - general and administrative
31,477

 
28,021

 
92,875

 
90,494

 Cash distributions (1)
—

 
52,699

 
18,219

 
191,565


(1)
During the three months ended September 30, 2015, this Partnership made no quarterly cash distributions to the Managing General Partner or Investor Partners as declining commodity prices resulted in insignificant cash flows from operations during the quarter. Cash distributions include $767 during the nine months ended September 30, 2015 and $1,945 and $6,593 during the three and nine months ended September 30, 2014, respectively, 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

- 7-



ROCKIES REGION 2006 LIMITED PARTNERSHIP
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
September 30, 2015
(unaudited)

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.

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. See Note 8, Impairment of Crude Oil and Natural Gas Properties, for information regarding an impairment charge recognized during the nine months ended September 30, 2015.

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, 2015 and 2014, 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, 2015 or December 31, 2014.

The Managing General Partner is not currently aware of any environmental claims existing as of September 30, 2015 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.

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 DJ Basin of Colorado. The Information Request focuses primarily on 46 production facilities, of which one production facility 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 is currently scheduled to respond to the Information Request in January 2016. The Managing General Partner cannot predict the outcome of this matter at this time.


- 8-



ROCKIES REGION 2006 LIMITED PARTNERSHIP
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
September 30, 2015
(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, 2014
$
1,673,982

Accretion expense
94,128

Balance at September 30, 2015
1,768,110

Less current portion
(223,399
)
Long-term portion
$
1,544,711


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.
 

Note 8 - Impairment of Crude Oil and Natural Gas Properties

During the nine months ended September 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.

- 9-


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 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.
Partnership Operating Results Overview

Crude oil, natural gas and NGLs sales decreased 50%, or $583,000, for the nine months ended September 30, 2015 compared to the same period of 2014, attributable to the decrease in the average sales price per barrel of crude oil equivalent ("Boe") of 51%. The average sales price per Boe was $27.76 for the nine months ended September 30, 2015 compared to $57.13 for the same period a year ago.

As a result of the decreased sales revenues, this Partnership experienced a significant decrease in cash flows from operations. For the nine months ended September 30, 2015, this Partnership had a cash flow deficit from operating activities of $18,000, as compared to net cash from operations of $820,000 for the comparable period of 2014. Accordingly, cash distributions decreased 91% to $47,000 during the nine months ended September 30, 2015 compared to $500,000 during the nine months ended September 30, 2014. During the three months ended September 30, 2015, this Partnership made no quarterly cash distributions to the Managing General Partner or Investor Partners as cash flows from this Partnership's operations during the quarter were insignificant and this Partnership currently has outstanding payables to the Managing General Partner. Although this Partnership's production increased 43% during the three months ended September 30, 2015 when compared to the same prior year period, the crude oil, natural gas and NGLs sales were still lower by 37% as a result of the decline in commodity prices. Therefore, we expect this Partnership to continue to have cash flow deficits from operations for some time.

During the nine months ended September 30, 2015, this Partnership recognized an impairment charge of approximately $3.3 million to write-down its proved crude oil and natural gas properties. 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.

The significant decreases in crude oil, natural gas and NGLs sales and 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.


- 10-


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 September 30,
 
Nine Months Ended September 30,
 
2015
 
2014
 
 Change
 
2015
 
2014
 
 Change
Number of gross productive wells (end of period)
63

 
63

 
—

 
63

 
63

 
—

 
 
 
 
 
 
 
 
 
 
 
 
Production(1)
 
 
 
 
 
 
 
 
 
 
 
Crude oil (Bbl)
5,072

 
3,752

 
35
 %
 
11,405

 
10,592

 
8
 %
Natural gas (Mcf)
13,778

 
9,502

 
45
 %
 
30,891

 
33,583

 
(8
)%
NGLs (Bbl)
1,883

 
1,154

 
63
 %
 
4,263

 
4,140

 
3
 %
Crude oil equivalent (Boe)(2)
9,251

 
6,490

 
43
 %
 
20,817

 
20,330

 
2
 %
Average Boe per day
101

 
71

 
43
 %
 
76

 
74

 
2
 %
 
 
 
 
 
 
 
 
 
 
 
 
Crude oil, natural gas and NGLs sales
 
 
 
 
 
 
 
 
 
 
 
Crude oil
$
188,808

 
$
316,598

 
(40
)%
 
$
465,004

 
$
930,544

 
(50
)%
Natural gas
30,199

 
33,345

 
(9
)%
 
69,798

 
131,731

 
(47
)%
NGLs
17,126

 
26,383

 
(35
)%
 
43,172

 
99,120

 
(56
)%
Total crude oil, natural gas and NGLs sales
$
236,133

 
$
376,326

 
(37
)%
 
$
577,974

 
$
1,161,395

 
(50
)%
 
 
 
 
 
 
 
 
 
 
 
 
Average selling price
 
 
 
 
 
 
 
 
 
 
 
Crude oil (per Bbl)
$
37.23

 
$
84.38

 
(56
)%
 
$
40.77

 
$
87.85

 
(54
)%
Natural gas (per Mcf)
2.19

 
3.51

 
(38
)%
 
2.26

 
3.92

 
(42
)%
NGLs (per Bbl)
9.10

 
22.86

 
(60
)%
 
10.13

 
23.94

 
(58
)%
Crude oil equivalent (per Boe)
25.53

 
57.99

 
(56
)%
 
27.76

 
57.13

 
(51
)%
 
 
 
 
 
 
 
 
 
 
 
 
Average cost per Boe
 
 
 
 
 
 
 
 
 
 
 
Crude oil, natural gas and NGLs production cost(3)
$
20.74

 
$
32.51

 
(36
)%
 
$
23.03

 
$
29.28

 
(21
)%
Depreciation, depletion and amortization
5.00

 
16.34

 
(69
)%
 
8.93

 
15.69

 
(43
)%
 
 
 
 
 
 
 
 
 
 
 
 
Operating costs and expenses
 
 
 
 
 
 
 
 
 
 
 
Direct costs - general and administrative
$
31,477

 
$
28,021

 
12
 %
 
$
92,875

 
$
90,494

 
3
 %
Depreciation, depletion and amortization
46,298

 
106,039

 
(56
)%
 
185,872

 
319,023

 
(42
)%
Impairment of crude oil and natural gas properties
—

 
—

 
*

 
3,266,759

 
—

 
*

 
 
 
 
 
 
 
 
 
 
 
 
Cash distributions
$
—

 
$
137,172

 
(100
)%
 
$
47,167

 
$
499,922

 
(91
)%

*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.


- 11-


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

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. The price of crude oil decreased during the third quarter of 2015 compared to the first half of 2015 amid continuing concerns regarding high U.S. inventories and slowing global demand for crude oil. Natural gas prices during the third quarter of 2015 remained at the low levels seen throughout 2015, and were at significantly lower levels than the comparable periods of 2014. NGL prices declined significantly during the first nine months of 2015 and, while they have stabilized with the prospect of cooler weather, also remain at low levels relative to those experienced in the comparable periods of 2014. These declines in prices have had a material impact on this Partnership's financial results and resulted in a cash flow deficit from operations for the nine months ended September 30, 2015.

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. The Managing General Partner is currently pursuing various alternatives with respect to oil transportation with a view toward improving pricing. 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 its natural gas is based on Colorado Interstate Gas and local utility 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. Due to an oversupply and growing inventories of nearly all domestic NGLs products, this Partnership's realized sales price for NGLs declined significantly during the first three quarters of 2015 and, while these prices have stabilized, the Managing General Partner expects pricing to remain at depressed levels into 2016 and perhaps beyond.

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 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.

This Partnership continued to experience high line pressures on the midstream system in the Wattenberg Field in the first half of the year, but the Lucerne II processing plant and additional new compressor stations on the gathering system began initial operations in June 2015, resulting in immediate reductions in line pressures. This Partnership experienced further line pressure reductions in the third quarter of 2015. Further, the Managing General Partner expects sustained relief of gathering system pressure through 2016, depending upon the impact of reduced drilling activity in the field going forward. This Partnership relies on third-party midstream service providers to construct compression, gathering and processing facilities to keep pace with production growth in the basin. As a result, the timing and availability of additional facilities going forward is beyond this Partnership's and the Managing General Partner's control. Although additional production may result from decreases in the gathering system pressure, the Managing General Partner does not expect this would have a significant enough effect to dramatically improve this Partnership's cash flows in the absence of considerable improvement of commodity prices.


- 12-


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


Nine months ended September 30, 2015 as compared to nine months ended September 30, 2014

Crude oil, natural gas and NGLs sales decreased to $578,000 during the nine months ended September 30, 2015 compared to $1,161,000 during the nine months ended September 30, 2014, primarily due to a 51% decrease in the average sales price per Boe. The average sales price per Boe was $27.76 for the nine months ended September 30, 2015 compared to $57.13 for the same period a year ago. For the nine months ended September 30, 2015 compared to the same period of 2014, crude oil, natural gas and NGLs production, on an energy equivalency-basis, remained constant.

Crude oil sales decreased by $466,000, or 50%, during the nine months ended September 30, 2015 when compared to the same prior year period, primarily attributable to a decrease in the average selling price of 54% per Bbl, offset in part by a production volume increase of 8%. The average selling price per Bbl was $40.77 for the current year nine month period compared to $87.85 for the same prior year period. Natural gas sales decreased $62,000, or 47%, during the nine months ended September 30, 2015 when compared to the same prior year period, primarily due to a decrease in average selling price of 42% per Mcf and a production volume decrease of 8%. The average selling price per Mcf was $2.26 for the current year nine month period compared to $3.92 for the same prior year period. NGLs sales decreased by $56,000, or 56%, during the nine months ended September 30, 2015 when compared to the same prior year period, primarily attributable to a decrease in the average selling price of 58% per Bbl. The average selling price per Bbl was $10.13 for the current year nine month period compared to $23.94 for the same prior year period. Further deterioration of commodity prices could result in additional impairment charges to this Partnership's crude oil and natural gas properties.

Three months ended September 30, 2015 as compared to three months ended September 30, 2014

Crude oil, natural gas and NGLs sales decreased to $236,000 during the three months ended September 30, 2015 compared to $376,000 during the three months ended September 30, 2014, primarily due to a 56% decrease in the average sales price per Boe, offset in part by a 43% increase in production. The average sales price per Boe was $25.53 for the three months ended September 30, 2015 compared to $57.99 for the same period a year ago. For the three months ended September 30, 2015 compared to the same period of 2014, crude oil, natural gas and NGLs production, on an energy equivalency-basis, increased 43%, mainly due to a decrease in high line pressures, and to a lesser extent, installation of compressors and a reconfiguration of downhole tools. The resulting increase in production was offset in part by the normal production declines for this stage in the wells’ production life cycles.

Crude oil sales decreased by $128,000, or 40%, during the three months ended September 30, 2015 when compared to the same prior year period, primarily attributable to a decrease in the average selling price of 56% per Bbl, offset in part by a production volume increase of 35%. The average selling price per Bbl was $37.23 for the current three month period compared to $84.38 for the same prior year period. Natural gas sales decreased $3,000, or 9%, during the three months ended September 30, 2015 when compared to the same prior year period, primarily due to a decrease in average selling price of 38% per Mcf, offset in part by a production volume increase of 45%. The average selling price per Mcf was $2.19 for the current three month period compared to $3.51 for the same prior year period. NGLs sales decreased by $9,000, or 35%, during the three months ended September 30, 2015 when compared to the same prior year period, primarily attributable to a decrease in the average selling price of 60% per Bbl, offset in part by a production volume increase of 63%. The average selling price per Bbl was $9.10 for the current three month period compared to $22.86 for the same prior year period. Further deterioration of commodity prices could result in additional impairment charges to this Partnership's crude oil and natural gas properties.

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.

- 13-


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



Nine months ended September 30, 2015 as compared to nine months ended September 30, 2014

Crude oil, natural gas and NGLs production costs for the nine months ended September 30, 2015 decreased $116,000 compared to the same period in 2014, primarily attributable to a decrease in production taxes consistent with sales declines from 2014 and a decrease in fixed monthly well operating costs and contract labor costs, offset in part by an increase in well swabbing costs and wireline work.

Three months ended September 30, 2015 as compared to three months ended September 30, 2014

Crude oil, natural gas and NGLs production costs for the three months ended September 30, 2015 decreased $19,000 compared to the same period in 2014, primarily attributable to a decrease in production taxes consistent with sales declines from 2014 and a decrease in fixed monthly well operating costs, offset in part by an increase in lift system repair costs.

Depreciation, Depletion and Amortization

Nine months ended September 30, 2015 as compared to nine months ended September 30, 2014

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 nine months ended September 30, 2015 compared to the nine months ended September 30, 2014 due to a decrease in the DD&A expense rate in 2015, partially offset by increased production volumes. The DD&A expense rate per Boe decreased to $8.93 for the first nine months of 2015 compared to $15.69 during the same period in 2014 due to the effect of an impairment recorded in the first quarter of 2015 to write-down certain capitalized well costs on this Partnership's proved crude oil and natural gas properties.

Three months ended September 30, 2015 as compared to three months ended September 30, 2014

DD&A expense decreased for the three months ended September 30, 2015 compared to the three months ended September 30, 2014 due to a decrease in the DD&A expense rate in 2015, partially offset by increased production volumes. The DD&A expense rate per Boe decreased to $5.00 for the three months ended September 30, 2015 compared to $16.34 during the same period in 2014 due to the effect of an impairment recorded in the first quarter of 2015 to write-down certain capitalized well costs on this Partnership's proved crude oil and natural gas properties.

Impairment of Crude Oil and Natural Gas Properties

Nine months ended September 30, 2015 as compared to nine months ended September 30, 2014

During the nine months ended September 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. 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

Of the 63 wells in this partnership, three wells did not produce hydrocarbons or produced less than five Boe during all periods presented. Of the 60 remaining wells, 33 wells had an increase in production totaling approximately 6.4 MBoe, or 31%, during the nine months ended September 30, 2015 compared to the same prior year period and 27 wells had a decrease in production totaling approximately 5.9 MBoe, or 28%, during the nine months ended September 30, 2015 compared to the same prior year period. The Managing General Partner is performing a study to identify wells that have the potential to increase production by incurring minimal expense, wells that would require significant capital expenditure and wells that are uneconomical. The analysis

- 14-


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


is currently in-process and is expected to be completed in 2015. The Managing General Partner expects that upon completion of the study, a portion of this Partnership's wells may be plugged and abandoned. As a result, as of September 30, 2015, this Partnership has classified a portion of the asset retirement obligation as a current liability.

Nine months ended September 30, 2015 as compared to nine months ended September 30, 2014

Accretion of asset retirement obligations ("ARO") expense for the nine months ended September 30, 2015 increased $43,000 compared to the same period in 2014, primarily attributable to an increase in asset retirement obligations recorded in December 2014 to reflect increased estimated costs for materials and services related to the plugging and abandonment of certain wells, as well as a decrease in the estimated useful life of these wells.

Three months ended September 30, 2015 as compared to three months ended September 30, 2014

Accretion of ARO expense for the three months ended September 30, 2015 increased $14,000 compared to the same period in 2014, primarily attributable to an increase in asset retirement obligations recorded in December 2014 to reflect increased estimated costs for materials and services related to the plugging and abandonment of certain 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. 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, unless commodity prices increase.

The negative impact to this Partnership’s liquidity resulting from declining commodity prices raises substantial doubt about the Partnership’s ability to continue as a going concern. Negative cash flow from operations during the nine months ended September 30, 2015 of $18,000, as well as distributions totaling $47,000 made to partners and capital expenditures of $58,000, reduced its cash and cash equivalents to $12,000 at September 30, 2015 as compared to $136,000 at December 31, 2014. While this Partnership generated modest positive cash flows from operations during the three months ended September 30, 2015, due to the significant decrease in liquidity experienced in the first half of 2015 and anticipated future capital expenditures required to remain in compliance with certain regulatory requirements and to satisfy asset retirement obligations, we believe that cash flows from operations will be insufficient to meet this Partnership’s obligations. Based on current production and commodity price levels, the Managing General Partner does not expect this Partnership to have funds available to make future cash distributions to the Managing General Partner and Investor Partners. 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 wells’ production life cycles, 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 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.

- 15-


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


Working Capital

At September 30, 2015, this Partnership had a working capital deficit of $179,000, compared to a working capital surplus of $144,000 at December 31, 2014. The decrease of $323,000 between September 30, 2015 and December 31, 2014 was primarily due to the following changes:

•
a decrease in cash and cash equivalents of $124,000;
•
a decrease in crude oil inventory of $11,000; and
•
an increase in current asset retirement obligations of $223,000.

Offset in part by:

•
an increase in accounts receivable of $42,000.

The $124,000 decrease in cash and cash equivalents is primarily attributable to cash utilized to fund operating activities, capital expenditures and cash distributions to partners.

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.

Cash Flows

Operating Activities

This Partnership's cash flows from operating activities in 2015 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.

The cash flow deficit from operating activities was $18,000 for the nine months ended September 30, 2015 compared to net cash flows from operating activities of $820,000 for the comparable period in 2014. The decrease of $838,000 in cash from operating activities was due primarily to the following:

•
a decrease in crude oil, natural gas and NGLs sales of $583,000; and
•
a decrease in changes in operating assets and liabilities of $369,000.

Offset in part by:

•
a decrease in production costs of $116,000.

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 nine months ended September 30, 2015, investment in equipment was $58,000 compared to $243,000 during the nine months ended September 30, 2014.

Financing Activities

This Partnership initiated monthly cash distributions to investors in May 2007 and has distributed $93.8 million through September 30, 2015. 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

- 16-


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


and 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. During the three months ended September 30, 2015, this Partnership made no quarterly cash distributions to the Managing General Partner or Investor Partners as cash flows from this Partnership's operations during the quarter were insignificant and this Partnership currently has outstanding payables to the Managing General Partner. Given the depressed commodity prices and decrease in production, we expect this Partnership to continue to have cash flow deficits from operations for some time.
Distributions
 
 
 
 
 
 
 
Three Months Ended September 30,
 
Managing General Partner
 
Investor Partners
 
Total
2015
 
$
—

 
$
—

 
$
—

2014
 
50,754

 
86,418

 
137,172

 
 
 
 
 
 
 
Nine Months Ended September 30,
 
Managing General Partner
 
Investor Partners
 
Total
2015
 
$
17,452

 
$
29,715

 
$
47,167

2014
 
184,971

 
314,951

 
499,922

 
 
 
 
 
 
 

Nine months ended September 30, 2015 as compared to nine months ended September 30, 2014

The decrease in distributions for the nine months ended September 30, 2015 as compared to the same period in 2014 is primarily due to a decrease in cash flows from operations during 2015, primarily resulting from the decrease in the average sales price per Boe.

Three months ended September 30, 2015 as compared to three months ended September 30, 2014

During the three months ended September 30, 2015, this Partnership made no quarterly cash distributions to the Managing General Partner and Investor Partners as cash flows from this Partnership's operations during the quarter were insignificant.

Off-Balance Sheet Arrangements

As of September 30, 2015, 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.

- 17-


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



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 2014 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 September 30, 2015, 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, 2015.

(b)    Changes in Internal Control over Financial Reporting
 
During the three months ended September 30, 2015, 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. Beginning in May 2010, 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, 2015:

Period
 
Total Number of
 Units Repurchased
 
Average Price Paid
 Per Unit
July 1-31, 2015
 
24.38

 
$
136

August 1-31, 2015
 
—

 
—

September 1-30, 2015
 
—

 
—

     Total
 
24.38

 
$
136



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 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 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.
 
 
November 13, 2015
 
 
 
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
November 13, 2015
Barton R. Brookman
 
PDC Energy, Inc.
Managing General Partner of the Registrant
 
 
 
(principal executive officer)
 
 
 
 
 
/s/ Gysle R. Shellum
 
Chief Financial Officer
November 13, 2015
Gysle R. Shellum
 
PDC Energy, Inc.
Managing General Partner of the Registrant
 
 
 
(principal financial officer)
 
 
 
 
 
/s/ R. Scott Meyers
 
Chief Accounting Officer
November 13, 2015
R. Scott Meyers
 
PDC Energy, Inc.
Managing General Partner of the Registrant
 
 
 
(principal accounting officer)
 
 

- 22-

Rockies Region 2006 Limited Partnership Reports