Petroleum Dev'pment a Buy to $84

We are maintaining our Buy recommendation on Petroleum Development (PETD - Snapshot Report) shares ahead of the company's third-quarter results. Despite recent turmoil, the Petroleum Development story remains intact, with low-risk drilling in its three Colorado operating areas along with accretive acquisitions providing the fuel for double-digit production growth through 2010.

The company is expected to forego the drilling ramp-up announced earlier in the year in the current environment of lower commodity prices and credit market issues. We have made changes to our model to reflect a lower commodity-price deck and other adjustments.

We are decreasing our 12-month target price from $92.00 per share to $84.00 per share. In our NAV [net asset value] model for Petroleum Development, we have taken the company s year-end 2007 proved reserves base and future development opportunities into account. We discount expected future cash flows from each drilling area, net of expenses, and then subtract out certain liabilities such as debt, to come up with a per-share valuation.

Neil Malkin contributed to this report.

Read the full analyst report on PETD

Read the full analyst report on PETD