PDC 1996-1997 Drilling Program
Prospectus Supplement
Dated April 2, 1996 to Prospectus
Dated December 19, 1995
The language in the prospectus describing Preferred Cash
Distributions under the following captions "Summary -- Participation
in Costs and Revenues --Preferred Cash Distributions" on page 5,
"Participation in Costs and Revenues -- Preferred Cash
Distributions" on page 25, and "Participation in Costs and Revenues
- -- Cash Distribution Policy" on page 29, is hereby amended to extend
the subordination period from five to ten years, and by adding an
additional annual test as set forth below:
In addition to the foregoing subordination provision, if
on any anniversary of the first distribution after all
Partnership wells have been placed in production, the
cumulative distributions to the Investor Partners have
averaged less than 15% of their Subscriptions on an
annual basis, and the distributions for the twelve
months preceding the anniversary have totaled less than
10%, Petroleum Development Corporation shall refund to
the Partnership which shall thereupon distribute to the
Investor Partners an amount equal to the difference
between the amount distributed to Investor Partners
during the preceding twelve month period, and the lesser
of 10% of the Investor Partner Subscriptions or the
amount the Investor Partners would have received had
they been allocated 90% of the Partnership's
distributions during that twelve month period. These
subordination provisions shall expire on the tenth
anniversary of the first distribution from all
partnership wells.
To extend the subordination period and to add the annual test
Section 4.02 of the Partnership Agreement will be amended to read as
follows:
4.02 Distributions. Except as provided below, all
distributions (other than those made to wind up the
Partnership in accordance with Section 9.03 hereof)
shall be made 80% to the Investor Partners and 20% to
the Managing General Partner. If at any time during the
initial ten year period of distributions from all
Partnership wells the cumulative cash distributions to
the Investor Partners average less than 10% of their
Subscription on an annual basis, subsequent
distributions shall be adjusted to increase the Investor
Partners' interest in distributions until such time as
the cumulative average return is 10% or the
subordination period expires. The Managing General
partner shall subordinate up to 50% of its 20% share of
Partnership cash distributions so that the Investor
Partners will receive increased cash distributions. The
subordination period shall commence upon the initial
cash distribution of the Partnership after all
partnership wells have been placed in production and
shall continue in successive twelve-month periods
thereafter. In addition to the foregoing subordination
provision, if on any anniversary of the first
distribution after all Partnership wells have been
placed in production, the cumulative distributions to
the Investor Partners have averaged less than 15% of
their Subscriptions on an annual basis, and the
distributions for the twelve months preceding the
anniversary have totaled less than 10%, Petroleum
Development Corporation shall refund to the Partnership
which shall thereupon distribute to the Investor
Partners an amount equal to the difference between the
amount distributed to Investor Partners during the
preceding twelve month period, and the lesser of 10% of
the Investor Partner Subscriptions or the amount the
Investor Partners would have received had they been
allocated 90% of the Partnership's distributions during
that twelve month period. These subordination
provisions shall expire on the tenth anniversary of the
first distribution from all partnership wells. The
Partnership shall not require that Investor Partners
reinvest their share of cash available for distribution
in the Partnership. In no event shall funds be advanced
or borrowed for purposes of distributions, if the amount
of such distributions would exceed the Partnership's
accrued and received revenues for the previous four
quarters, less paid and accrued operating costs with
respect to such revenues. The determination of such
revenues and costs shall be made in accordance with
generally accepted accounting principles, consistently
applied. Cash distributions from the Partnership to the
Managing General Partner shall only be made in
conjunction with distributions to Investor Partners and
only out of funds properly allocated to the Managing
General Partner's account.<PAGE>
The information presented under the following captions
"Summary -- Participation in Costs and Revenues" on page 5,
"Participation in Costs and Revenues -- Preferred Cash
Distributions" on page 25, and "Participation in Costs and Revenues
-- Cash Distribution Policy" on page 29, regarding the Program's
preferred cash distribution feature, is hereby amended by adding the
following sentences at the end of each respective paragraph:
The above-referenced preferred cash distributions and
subordination policy is not, and should not be
considered by any Investor Partner to be, any form of
guarantee or assurance of a rate of return on an
investment in the Partnership. The policy is the result
of a contractual agreement by the Managing General
Partner as set forth in paragraph 4.02 of the Partnership
Agreement. There is no guarantee or assurance
whatsoever that the Partnership will drill commercially
successful gas wells or that the cash distributions to
the Partners, including any cash distributions pursuant
to the policy, will achieve a 10% rate of return.
