pdc11k2008.htm
UNITED STATES SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON,
D.C. 20549
FORM 11-K
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þ
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ANNUAL
REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For the year ended: December 31,
2007
or
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o
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TRANSITION
REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For the transition period from ___to
___
Commission
file number 000-07246
A.
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Full
title of the plan and address of the plan, if different from that of the
issuer named below:
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The
Petroleum Development Corporation 401(k) & Profit Sharing Plan
B.
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Name
of the issuer of the securities held pursuant to the plan and the address
of its principal executive office:
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Petroleum Development
Corporation
120
Genesis Boulevard, Bridgeport, West Virginia 26330
REQUIRED
INFORMATION
1.
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In
lieu of the requirements of Item 1-3: audited statements and
schedules prepared in accordance with the requirements of ERISA for the
Plan’s fiscal years ended December 31, 2007 and
2006.
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Exhibit
23.
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Consent
of Schneider Downs & Co., Inc., Independent Registered Public
Accounting Firm.
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THE
PETROLEUM DEVELOPMENT CORPORATION 401(K) & PROFIT SHARING PLAN AND AUDITED
FINANCIAL STATEMENTS
AS
OF DECEMBER 31, 2007 AND 2006 AND FOR THE YEAR ENDED DECEMBER 31,
2007
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Page
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3
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Financial
Statements:
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4
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5
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6
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10
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11
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12
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13
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Exhibit 23 - Consent
of Independent Registered Public Accounting Firms
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*All
other schedules required by Section 2520.103-10 of the Department of
Labor’s Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974 have been omitted because they are not
applicable.
2
To the
Participants and Administrator of
The
Petroleum Development Corporation 401(k) & Profit Sharing Plan
Bridgeport,
West Virginia
We have
audited the accompanying statements of net assets available for benefits of The
Petroleum Development Corporation 401(k) & Profit Sharing Plan (the “Plan”)
as of December 31, 2007 and 2006, and the related statement of changes in net
assets available for benefits for the year ended December 31,
2007. These financial statements are the responsibility of the Plan’s
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We
conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Plan is not required
to, nor were we engaged to perform an audit of its internal control over
financial reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Plan’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
Our
audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental
schedules of assets (held at end of year) and the delinquent participant
contributions as of December 31, 2007 are presented for the purpose of
additional analysis and are not a required part of the basic financial
statements, but are supplementary information required by the Department of
Labor’s Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. These supplemental schedules
are the responsibility of the Plan’s management. Such schedules have
been subjected to the auditing procedures applied in our audit of the basic 2007
financial statements and, in our opinion, are fairly stated in all material
respects when consideration in relation to the basic 2007 financial statements
taken as a whole.
/s/
SCHNEIDER DOWNS & CO., INC.
Pittsburgh,
Pennsylvania
June 30,
2008
3
THE PETROLEUM DEVELOPMENT CORPORATION
401(K) & PROFIT SHARING PLAN
(in
thousands)
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December
31,
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Assets
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2007
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2006
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Participant
loans
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$ 330
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$ 369
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Petroleum
Development stock purchase account
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1
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1
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Investments
at fair value
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23,688
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17,821
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Total
investments
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24,019
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18,191
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Receivables:
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Employer
contributions
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1,434
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1,380
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Participant
contributions
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-
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71
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Accrued
interest
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2
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1
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Total
receivables
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1,436
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1,452
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Net
assets available for benefits
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$ 25,455
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$ 19,643
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See notes
to financial statements.
4
THE PETROLEUM DEVELOPMENT CORPORATION
401(K) & PROFIT SHARING PLAN
YEAR
ENDED DECEMBER 31, 2007
(in
thousands)
Additions
to net assets attributed to:
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Investment
income:
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Interest
and dividend income
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$ 1,047
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Participant
loan interest
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23
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Net
realized & unrealized change in fair value of
investments
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1,902
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Total
investment income
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2,972
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Contributions:
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Employer
contributions
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1,550
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Participant
contributions
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1,147
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Employer
contributions-profit sharing
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1,410
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Participant
rollovers
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178
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Total
contributions
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4,285
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Total
additions
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7,257
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Deductions
from net assets attributed to:
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Benefits
paid to participants
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1,443
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Administrative
expenses
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2
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Total
deductions
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1,445
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Net
increase
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5,812
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Net
assets available for benefits:
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Beginning
of year
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19,643
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End
of year
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$ 25,455
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See notes
to financial statements.
5
THE
PETROLEUM DEVELOPMENT CORPORATION 401(K) & PROFIT SHARING PLAN
AS
OF DECEMBER 31, 2007 AND 2006 AND FOR THE YEAR ENDED DECEMBER 31,
2007
1. DESCRIPTION OF THE
PLAN
The
following description of The Petroleum Development Corporation (the “Company”)
401(k) & Profit Sharing Plan (the “Plan”) is provided for general
information purposes only. Participants should refer to the Plan
agreement for a more complete description of the Plan’s provisions.
Plan
Merger
Effective
July 1, 2006, the Petroleum Development Corporation Profit Sharing Plan was
terminated and merged into the 401(k) Plan and it’s net assets of $8,749,582
were transferred to the 401 (k) Plan. The assets transferred
consisted of $3,382,142 of Petroleum Development Corporation Stock, $5,219,819
of money market funds, $126,693 of equity index funds, and $20,928 accrued
income. The Petroleum Development Corporation Stock was transferred in-kind and
each other individual participant investments were transferred to one of
Fidelity’s Freedom Fund’s based on that participant’s projected retirement
date.
General
The Plan
is a defined contribution plan covering all company employees except leased
employees and employees covered by a collective bargaining agreement of
Petroleum Development Corporation who meet the eligibility requirements of the
Plan. Currently no company employees are covered by a collective
bargaining agreement. The Plan is subject to the provisions of the Employee
Retirement Income Security Act (ERISA).
Trustee
and Recordkeeper
All of
the Plan’s assets are held by Fidelity Investments who also has participant
account record keeping responsibilities.
Contributions
Each
year, participants may make contributions of up to 60% of pretax annual
compensation, as defined in the Plan, subject to statutory
limitations. The Plan also allows catch up contributions for
participants who have reached age 50 by the end of the year, subject to
statutory limitations. The Company may make discretionary matching contributions
in such amounts as may be determined by the Company’s Board of Directors each
plan year. The Company made matching contributions of 100% of
participant contributions to all investment choices up to 10% of the participant
compensation in 2007. In addition, the Company may make discretionary
profit sharing contributions, if any, on the participant’s behalf in an amount
to be determined by the Board of Directors at the end of the Plan
year.
Participants
direct the investment of their contributions into various investment options
offered by the Plan. Currently, the Plan offers twenty-two (22)
mutual funds and the Company’s common stock as investment options for
participants. Participants may change their investment election for
current or future contributions, the percentage(s) invested in each of these
options, or transfer funds among these options on any business day.
6
Participant
Accounts
Each
participant’s account is funded with the participant’s contribution and
allocations of (a) the Company’s contribution and (b) plan earnings. Allocations
are based on participant earnings or account balances, as
defined. The benefit to which a participant is entitled is the
benefit that can be provided from the participant’s vested account.
Vesting
Participants
are vested immediately in their contributions plus actual earnings
thereon. Vesting in the Company’s contribution portion of their
accounts is based on years of continuous service. Participants vest
25 percent after one year of service, 50 percent after two years of service, and
are 100 percent vested after 3 years of service.
Loans
to Participants
Participants
may borrow from their fund accounts a minimum of $1,000, up to a maximum of
$50,000 or 50% of their account balance, whichever is less. The loans
are secured by the balance in the participant’s account. Principal
and interest are paid ratably through payroll deductions. Repayment period shall
be no more than five years unless such loan is for the purchase of a
Participant’s primary residence, in which case the repayment period may not
extend beyond ten years from the date of the loan. Interest
is set at the discretion of the plan administrator and will accrue at the annual
rate of 6%.
Payment
of Benefits
On
termination of service due to death, disability, or retirement (at age 59 ½), a
participant, representative, or beneficiary may elect to receive either a
lump-sum amount equal to the value of the participant’s vested interest in his
or her account, or installments under a systematic withdrawal plan. In addition,
hardship withdrawals from a Participant’s Deferral Contributions Account shall
be allowed.
Forfeitures
Company
discretionary contributions that are not vested upon termination of employment
are forfeited and may be used to reduce future Company contributions. At
December 31, 2007 and 2006, the forfeited nonvested accounts totaled $2,847 and
$102,666. For the year ended December 31, 2007, no forfeitures were used to
offset current year employer contributions.
2. SUMMARY OF SIGNIFICANT ACCCOUNTING
POLICIES
Basis of Presentation
The Plan
uses the accrual basis of accounting and the financial statements are prepared
in accordance with accounting principles generally accepted in the United States
of America.
Use
of Estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and changes therein, and
disclosure of contingent assets and liabilities. Actual results could
differ from those estimates.
Investment
Valuation and Income
The
Plan’s investments are stated at fair value. Shares of mutual funds are valued
at the net asset value of shares held by the Plan at year
end. Participant loans are valued at their outstanding balances,
which approximate fair value. The market value of the Company stock
was based on the publicly traded price as of the last trade date of the year,
December 31, 2007.
Purchases
and sales of securities are recorded on a trade-date basis. Dividends
are recorded on the ex-dividend date.
7
Administrative
Expenses
Administrative
expenses, including trustee, legal, auditing and other fees, are paid by the
Company and, as such, are not expenses of the Plan.
Payment
of Benefits
Benefits
are recorded when paid.
3. INVESTMENTS
The
following represents 5% or more of the Plan’s net assets available for benefits
at December 31: (in thousands)
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2007
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2006
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Petroleum
Development Corporation Common Stock
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$4,869
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$3,897
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Fidelity
Freedom 2010
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$1,210
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$1,469
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Fidelity
Freedom 2020
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$3,950
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$3,074
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Fidelity
Freedom 2015
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$2,992
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$2,738
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Fidelity
Freedom 2025
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$1,821
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$1,397
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Fidelity
Freedom 2030
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$1,233
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*
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Fidelity
Retirement Money Market
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$1,280
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*
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*
Investments did not represent 5% or more of the Plan’s net assets at December 31
for the respective year.
During
2007, the Plan’s investments (including gains and losses on investments bought
and sold, as well as held during the year) appreciated in value as
follows: (in thousands)
Mutual
funds
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$ 430
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Petroleum
Development Corporation Common Stock |
1,472
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Net
appreciation in fair value of investments
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$1,902
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4. PLAN
TERMINATION
Although
it has not expressed any intent to do so, the Company has the right under the
Plan to discontinue its contributions at any time and to terminate the Plan
subject to the provisions of ERISA. In the event of Plan termination,
participants will become 100% vested in their accounts.
5. TAX
STATUS
In
October 2003, the Plan obtained its latest determination letter in which the
Internal Revenue Service stated that the Plan, as then designed, was in
compliance with the applicable requirements of the Internal Revenue
Code. Therefore, the Plan administrator believes the Plan is exempt
from taxation. The Plan has been amended since receiving the
determination letter. However, the Plan administrator believes that
the Plan is currently designed and being operated in compliance with the
applicable requirements of the Internal Revenue Code.
8
6. RISKS
AND UNCERTAINTIES
The Plan
invests in various investment securities. Investment securities are exposed to
various risks such as interest rate, market, and credit risks. Due to
the level of risk associated with certain investment securities, it is at least
reasonably possible that changes in the values of investment securities will
occur in the near term and that such changes could materially affect
participants’ account balances and the amounts reported in the statement of net
assets available for benefits.
7. RELATED
PARTY / PARTY-IN-INTEREST TRANSACTIONS
Certain
Plan investments are shares of the Company’s common stock. The
Company is the plan sponsor and therefore qualifies as a related party /
party-in-interest. At December 31, 2007, the Plan held an investment
of 82,352 shares of the common stock of the Company. The fair value
of the Company common stock held by the fund at December 31, 2007 was
$4,869,462.
Certain
Plan investments are shares of mutual funds managed by Fidelity
Investments. Fidelity Investments is the trustee as defined by the
Plan, and therefore, these transactions qualify as party-in-interest
transactions.
8. RECONCILIATION
OF FINANCIAL STATEMENTS TO FORM 5500
Net
assets available for benefits per the financial statements are consistent with
the amounts reported in the Form 5500.
The
benefits paid to participants per the financial statements are consistent with
the amounts reported in the Form 5500.
9
INDEX
OF SUPPLEMENTAL SCHEDULES
·
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Form
5500, Schedule H, Part IV, Question 4a - Delinquent Participant
Contributions
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·
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Form
5500, Schedule H, Part IV, Line 4i - Schedule of Assets (Held at End of
Year)
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10
THE
PETROLEUM DEVELOPMENT CORPORATION 401(K) & PROFIT SHARING PLAN
DELINQUENT
PARTICIPANT CONTRIBUTIONS
FOR THE YEAR ENDED DECEMBER 31,
2007
Question
4a, “Did the employer fail to transmit to the plan any participant contributions
within
the
time period described in 29 CFR 2510.3-102,” was answered “yes.”
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Amount
of
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Employee
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Total
Nonexempt (Not Corrected Under VFC)
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Contributions
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Total
Not
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Total
Corrected
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Total
Pending
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Corrected
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Remitted
Late
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Corrected
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Outside
of VFC
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Under
VFC
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Under
VFC
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$ 787,139
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$ -
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$ -
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$ 787,139
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$ -
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11
THE
PETROLEUM DEVELOPMENT CORPORATION 401(K) & PROFIT SHARING PLAN
EIN
25-1211621, PLAN 001
DECEMBER
31, 2007
(a)
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(b)
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(c)
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(d)
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(e)
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Identity
of Issuer, Borrower, Lessor or Similar Party
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Description
of Investment Including Maturity Date and Rate of Interest
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Cost**
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Current
Value
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(in
thousands)
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ABF
Large Cap Val PA
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American
Beacon Large Cap Value Plan Ahead Class
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$ 628
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Rainier
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Rainier
Small/Mid Cap Equity Mutual Fund
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808
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Royce
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Royce
Opportunity Mutual Fund
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116
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*
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Petroleum
Development Corporation
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Common
Stock
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4,869
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*
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Fidelity
Contrafund
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Fidelity
Contrafund Mutual Fund
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694
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*
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Fidelity
Value
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Fidelity
Value Mutual Fund
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154
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*
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Fidelity
Balanced
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Fidelity
Balanced Mutual Fund
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335
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*
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Fidelity
International Discovery
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Fidelity
International Discovery Mutual Fund
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530
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*
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Fidelity
Export and Multinational
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Fidelity
Export and Multinational Mutual Fund
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202
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*
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Fidelity
Freedom Income
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Fidelity
Freedom Income Mutual Fund
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5
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*
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Fidelity
Freedom 2000
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Fidelity
Freedom 2000 Mutual Fund
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508
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*
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Fidelity
Freedom 2010
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Fidelity
Freedom 2010 Mutual Fund
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1,210
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*
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Fidelity
Freedom 2020
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Fidelity
Freedom 2020 Mutual Fund
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3,950
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*
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Fidelity
Freedom 2030
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Fidelity
Freedom 2030 Mutual Fund
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1,233
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Spartan
Total Market Index
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Spartan
Total Market Index Mutual Fund - Investor Class
|
103
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Spartan
International Index
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Spartan
International Index Mutual Fund - Investor Class
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322
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*
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Fidelity
Retirement Money Market
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Fidelity
Retirement Money Market Mutual Fund
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1,280
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*
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Fidelity
US Bond Index
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Fidelity
US Bond Index Mutual Fund
|
358
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*
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Fidelity
Freedom 2040
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Fidelity
Freedom 2040 Mutual Fund
|
597
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*
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Fidelity
Freedom 2005
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Fidelity
Freedom 2005 Mutual Fund
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408
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*
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Fidelity
Freedom 2015
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Fidelity
Freedom 2015 Mutual Fund
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2,992
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*
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Fidelity
Freedom 2025
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Fidelity
Freedom 2025 Mutual Fund
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1,821
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*
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Fidelity
Freedom 2035
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Fidelity
Freedom 2035 Mutual Fund
|
514
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*
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Fidelity
Freedom 2045
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Fidelity
Freedom 2045 Mutual Fund
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34
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*
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Fidelity
Freedom 2050
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Fidelity
Freedom 2050 Mutual Fund
|
17
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*
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Petroleum
Development Stock Purchase Account
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Money
Market
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1
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*
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Participant
Loan Balances
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Loans
with maturities ranging from 1 month to 60 months
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and interest rates at 6%. |
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330
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$ 24,019
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* Denotes
party-in-interest to the Plan
** Historical
cost is not required as all investments are participant-directed.
12
SIGNATURES
The Plan. Pursuant to the
requirements of the Securities Exchange Act of 1934, the trustees (or other
persons who administer the employee benefit plan) have duly caused this annual
report to be signed on its behalf by the undersigned hereunto duly
authorized.
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THE
PETROLEUM DEVELOPMENT CORPORATION 401(K) & PROFIT SHARING
PLAN
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/s/
Darwin L. Stump
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Darwin
L. Stump
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June
30, 2008
|
Chief
Accounting Officer
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13