PDCE – No Traded CDS, Base Case iCDS 100bps, Negative Case iCDS 338bps, 2026 5.750% Bond YTW of 4.854%, iYTW of 2.174%, Ba2 Rating from Moody’s, IG4 (equivalent to Baa2) Rating from Valens, Low Refinancing Need

• Credit markets are grossly overstating PDCE’s credit risk, with a cash bond YTW of 4.854%, relative to an Intrinsic YTW of 2.174% and an Intrinsic CDS of 100bps. Meanwhile, Moody’s is overstating the firm’s fundamental credit risk, with its Ba2 credit rating three notches lower than Valens’ IG4 (Baa2) credit rating.
  
• Incentives Dictate Behavior™ analysis highlights mostly positive signals for credit holders. PDCE’s compensation metrics incentivize management to improve all three value drivers: sales, margins, and asset utilization, which should drive Uniform ROA improvement and lead to increased cash flows available for servicing obligations going forward. Moreover, most management members are not well-compensated in a change in control, indicating they are not incentivized to pursue a sale or accept a buyout of the firm, reducing event risk. Finally, most members of management are material holders of PDCE equity relative to their annual compensation, indicating they may be well-aligned with shareholders for long-term value creation.
  
• Earnings Call Forensics™ of the firm’s Q3 2021 earnings call (11/4) highlights that management is highly confident they have ample liquidity of about $1.7 billion.