Anadarko Petroleum Corp. and Noble Energy Inc. have the most riding on an anti-drilling referendum unfolding Tuesday in Colorado, one of the biggest U.S. oil-producing states.
The two explorers collectively control drilling rights to about 750,000 acres — assets they might not be able to drill if voters approve Proposition 112, a measure that would curb oil and gas development across more than half the Rocky Mountain state.
Other exposed companies include BP Plc, Extraction Oil & Gas Inc., PDC Energy Inc., SRC Energy Inc., HighPoint Resources Corp., and Bonanza Creek Energy Inc., according to Bloomberg Intelligence.
Prop 112 would require new drilling sites, processing plants and gathering lines to be more than 2,500 feet (760 meters) from homes, schools and other “vulnerable” areas. It’s the latest effort to limit oil and gas development in Colorado amid soaring crude production driven by activity in the prolific Denver-Julesburg Basin.
Output reached a record 477,000 barrels a day in August, making Colorado the fifth largest producer in the nation. But the boom’s proximity to Denver’s suburbs has raised concerns about health and safety, especially after an Anadarko gas line explosion last year that killed two people and leveled a home.
Uncertainty over the vote’s outcome has prompted producers including Anadarko and SRC to hold off on issuing financial guidance for 2019, while Noble and others have tried to mitigate risk by building up a surplus of drilling inventory. So far this year, the state has received more than 8,000 drilling applications, the most in a decade.
More than 94 percent of drilling locations for Anadarko and PDC would be pushed off limits if the measure succeeds, according to Rystad Energy AS. An S&P Global Platts analysis found that oil production could fall 55 percent by 2023 in a state that trails only Texas, North Dakota, New Mexico and Oklahoma in crude output.
At least one explorer, HighPoint, has developed alternative development plans that comply with the measure. While the company would be able to access most of its acreage, the plan would raise costs by increasing surface disturbance and requiring new gathering systems, Chief Executive R. Scot Woodall said during a third-quarter earnings call.