Denver-based PDC Energy Inc.'s senior executive team said Thursday the company is keeping equal rig counts, fracturing crews and interest in the Denver-Julesburg (DJ) and Permian basins, but said there is a political threat in Colorado from a ballot measure seeking to extend setback requirements for future oil and gas wells.
Speaking on a 2Q2018 earnings conference call, CEO Bart Brookman said in no uncertain terms the industry and most of Colorado's voters will reject Initiative 97, the anti-oil and gas measure in Colorado, if it qualifies for the ballot this November.
"If there are enough signatures, we at PDC Energy, along with the greater business community, are prepared to defeat this initiative, known as the Safer Setbacks from Fracking,” Brookman said. "We're committed to making sure that voters in Colorado are aware of the extremely negative consequence to our industry and the economy in the state if the measure passes."
If Initiative 97 were to pass, there would be little to no impact on drilled but uncompleted (DUC) wells, and/or already issued permits received for future development.
"It would allow us to continue to complete the DUCs and drill on the permits we have in hand," said COO Scott Reasoner.
In addition, Brookman expressed confidence in a second ballot measure, the Farm Bureau's Initiative 108, which could give the oil and gas industry recourse for seeking to recover lost investments caused by government or regulations.
"This is a very favorable initiative with the voters, so we have a lot of confidence the Farm Bureau is moving forward with this and it will be well received by voters," Brookman said.
He said that the next two weeks for counting and verifying signatures are crucial to the process. Colorado’s Secretary of State has until Sept. 5 to complete the process.
Asked if PDC might move development funds from Colorado because of environmental activism, Brookman said it has a "long-term battle" on its hands, but the company intends to "continue to educate our voters and recognize we have this opposition and these are the fights we expect to continue."
In any case, production in the Wattenberg field of the DJ is "significantly unbundled" with the advent of midstream expansions coming online, and in the Permian Delaware sub-basin is "continuing to accelerate our growth.” He cited as proof the eight-well Grizzly pad in the Delaware, which is coming online this year.
PDC expects to continue its pace of growth with $1 billion annually in capital spending and operating three rigs each in the DJ and Delaware.
"Our Delaware has tremendous momentum right now, and Wattenberg is positioned to demonstrate substantial production growth," said Brookman.
Production in the second quarter was up 20% year/year to 9.4 million boe, or 103,000 boe/d, a record for PDC, Brookman reported. However, while “production overall exceeded expectations in the Delaware,” it “came in under expectation in the Wattenberg due to midstream constraints throughout the quarter.”
In 2Q2018, PDC reported a net loss of $160.3 million (minus $2.43/share), compared with net income of $41.3 million (62 cents) for the same period in 2017.