Anadarko Petroleum Corp., Noble Energy Inc. and other companies exploring for oil and natural gas in Colorado jumped in stock market trading Wednesday after voters rejected a plan that sought to limit their ability to drill in the state.
Proposition 112 was voted down with 57% of ballots cast against the measure. It would have forced oil and gas development further away from residential and environmentally “sensitive” areas, curbing drilling across more than half of Colorado.
Oil and gas companies raised more than $41 million to defeat the proposal, compared with just $1.3 million amassed by its supporters. The battle over the proposition illustrated the industry’s influence in a state that’s producing more crude than ever, driven by activity in the prolific DJ basin just north of Denver. Energy extraction and production contributed about $13.1 billion to Colorado’s economy in 2017, or about 4.3% of the state’s total gross domestic product.
The vote lifts a threat that hung over some energy stocks since early August, when supporters gathered enough signatures to get the measure on the ballot. Anadarko’s stock has fallen 20% in that time, SRC Energy Inc. 35 percent and Extraction Oil & Gas Inc. 43%, analysts at Houston-based Tudor Pickering Holt & Co. said in a note.
On Wednesday, Anadarko rose 7.8% at 10:03 a.m. in New York while Noble gained as much as 7.1%; Extraction climbed as much as 19%; PDC Energy Inc. jumped 14%; SRC gained 20%; HighPoint Resources Corp. rose 24%; and Bonanza Creek Energy Inc. advanced 16%.
Pipeline companies with a presence in Colorado also increased, with DCP Midstream LP and Western Gas Partners LP gaining as much as 14% and 12% respectively.
As of August, Colorado’s oil output reached 477,000 bpd, leading the state to overtake California and become the nation’s fifth-largest producer. 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 killed two people and leveled a home.
Despite failure at the ballot box, Colorado’s legislature may take action early next year to further regulate the industry. House Majority Leader KC Becker, a Democrat representing Boulder county who endorsed Proposition 112, has said the statehouse will consider legislation tackling funding for orphan wells, air and water monitoring, greater local control over siting and potentially a setback from infrastructure.
While Colorado’s voters rejected the drilling limits, they elected as governor Democrat Jared Polis, a past critic of oil and gas development.
In a statement on Anadarko’s website, CEO Al Walker cheered “the defeat of this extreme measure” but also said the company was ready to work with the state to find “a better equilibrium” with Colorado’s growing population.
“For the betterment of the state, the communities, and our industry, we need to work together to eliminate, to the extent possible, this two-year cycle that increasingly hurts economic stability,” Walker said.
The industry intends to “continue substantive, serious dialogue with our colleagues on the other side of this debate,” Tracee Bentley, executive director of the Colorado Petroleum Council, said in another statement.