HOUSTON (Reuters) – Oil and gas producer Anadarko Petroleum Corp (APC.N) on Wednesday said it may shift some investment out of Colorado if voters in that state approve a ballot proposal that limits drilling in populated areas.
The measure would put at least 85 percent of new oil and gas development on non-federal lands off limits to new drilling, the Colorado Oil and Gas Conservation Commission has said. Oil companies have raised tens of millions to oppose the measure.
Anadarko could shift focus to properties in the Delaware Basin, which spans West Texas and New Mexico, if Colorado voters on November 6 pass a law requiring up to 2,500-foot separations between new wells and homes, schools and parks, executives said during an earnings conference call.
“We are interested in what’s going to happen in Colorado. That will have some impact in terms of where we’ll allocate capital,” said Chief Executive Al Walker.
The company’s backlog of drilled-but-uncompleted wells and approved well permits in Colorado give it confidence in what it has scheduled in the state next year, regardless of the vote, executives added.
Pressure pumper Liberty Oilfield Services (LBRT.N), which is headquartered in Denver, also said on Wednesday that approval of the state’s Proposition 112 drilling rules could affect its operations. It does not expect passage of the law to immediately curtail activity in the state, Liberty Chief Executive Chris Wright said on a call.
“That [proposal] would render a lot of non-governmental lands undrillable. It’s having the effect of oil companies shifting rigs out of Colorado now, and looking at the Powder River Basin and Permian and Bakken,” said Gregory Reid, president of investment management firm Salient MLP Complex.
If the rule is struck down, shares of Colorado-focused oil companies that have been negatively impacted by Proposition 112 could rally, Reid added.
Shares of Anadarko were down 2.4 percent tp $55.08 in midday trading on Wednesday even as analysts said its earnings were in-line with expectations.
Reporting by Liz Hampton; Editing by Chizu Nomiyama