Colorado is home to several booming oil plays, and two companies are leading the charge to capitalize on the explosive growth with big investment plans for the region. 

Pleasant (D)rilling (C)onditions
PDC Energy (PDCE) is one of the players in the liquid-rich (70-80%) Wattenberg Field (which is in the Niobrara) with 98,000 net acres in the area.

PDC added a new rig in May to push up growth and bring more wells online. Currently PDC sees 2,000 gross locations to drill for more liquids in the area with plans to increase its 2013 production of 15,039 boe/d.

Going forward PDC sees more downspacing potential in the Niobrara. Downspacing increases the number of drilling locations and can sometimes increase the amount of recoverable reserves, making the asset more valuable. 

PDC sees 149 million barrels of recoverable oil equivalent in the area with the "probable possibility" of recovering 324 million boe from the region. PDC is spending $280 million of its $444 million capital expenditure budget on the Wattenberg and has the majority of its rigs operating in the area. If it can utilize downspacing to increase its drilling inventory then management might see the huge reserve increase it is forecasting for.

PDC is investing in more than just the Wattenberg, it also has 46,000 net acres in the Utica. For 2013 PDC sees production at 1,074 boe/d and is investing $96 million into the play so it can complete 11 wells in 2013. Overall PDC has 200 drilling locations in the area which means it has plenty of years of production growth.

PDC had a production mix of 65% gas and 35% liquids in 2012, and in 2013 PDC plans on making major improvements. By the end of 2013 PDC wants to have a production mix of 46% gas and 54% liquids. To meet this goal PDC is investing 95% of its capex budget toward liquid rich plays. Liquids carry much higher margins and boost cash flow significantly more than gas.

PDC has strong growth prospects, as more production will increase the top line and higher margins from liquids will significantly boost the bottom line. The more cash flow that PDC can generate the more cash it can invest in increasing production.

PDC isn't the only E&P company investing in Colorado, Noble Energy (NBL) is spending 45% of its capex budget there.

Big growth potential
Noble is betting big on Colorado, with 300 net wells to be drilled in 2013 with the $1.7 billion it's spending in the region. That is a 50% increase over 2012 and shows investors Noble is well on its way to double drilling activity by 2014 (over 2012).

By 2016 Noble wants to be completing 500 net wells a year, which will significantly boost production. That additional cash flow is being invested right back in the business as Noble plans on investing $10 billion in the Denver-Julesberg Basin (which houses the Wattenberg and Niobrara) through 2017.

Those wells are going to be drilling for Noble's 2.1 billion barrels of potentially recoverable oil equivalent in the region, with most of it liquid. Two areas house 1.7 billion barrels of oil equivalent with a production mix of ~85% liquids, and another houses 0.4 billion barrels of oil equivalent with less than 50% liquids but still offering growth potential.

Noble has a huge growth runway in the area as it sees 9,500 drilling locations on top of an area with huge reserves. What makes this even better is that Noble has been able to use drilling efficiencies to reduce the time to complete a well from ~17 days to less than 6. This enables wells to come online and start generating "significant free cash flow" much sooner.

Noble, like PDC, is seeing a shift toward liquids in its production mix. In 2012 Noble's production mix was 42% crude oil, 16% NGL, and 42% natural gas. By 2017 Noble wants to have its production mix at 56% crude oil, 12% NGL, and 32% natural gas. A production mix with a higher amount of liquids (especially crude oil) results in larger margins and more free cash flow.

By the end of 2013 Noble has said it will be producing around 110,000 boe/d in the region and plans on increasing that to 265,000 boe/d by 2017. This huge growth in production combined with higher margins will enable Noble to use that additional free cash flow to keep investing back into the business.

Final thoughts
Colorado is experiencing an energy revolution, and these are two of the companies spearheading the movement. As these two companies keep seeing higher levels of production and a more profitable production mix expect their bottom lines to significantly increase.

This bullish combination makes these two companies worth considering as growth plays for your portfolio.