Denver-based Extraction Oil & Gas Inc. has found some midstream relief from added natural gas processing for production from the Wattenberg field in Colorado’s Denver-Julesburg (DJ) Basin.

During a 2Q2018 earnings conference call Wednesday, Extraction CEO Mark Erickson and members of the senior management team expressed confidence that the independent exploration and production (E&P) company can keep its oil production growing.

“If we’re able to achieve our oil production numbers or get close to it, we should be really good on revenue,” Erickson said. Revenue was $260.1 million during the second quarter, up from $119.8 million in the year-ago period. About 82% of that was generated by oil production.

Extraction also exceeded its internal goal for production during 2Q2018, hitting 38,304 b/d, a 68% year/year jump.

Noting that the DJ Basin has the largest capacity expansion underway in its history, Erickson said Extraction has the most diversified portfolio for processing its production, relying on DCP Midstream LLC, Discovery Midstream Partners and Western Gas Partners LP.

Extraction management is projecting Colorado’s Initiative 97 will fail to ultimately qualify for the November ballot, despite recent reports that it will qualify. If it were to pass, E&Ps would be required to drill new wells with 2,500-foot setbacks from homes, versus the current 500 foot rule.

Several industry-backed analyses indicate the proposed requirements would shut down new energy development. The state has begun a review to determine the validity of the 171,000 signatures claimed by its supporters. Extraction executives voiced skepticism about the number of signatures.

“I would say that those backers haven’t always been the most reliable source of information in the past,” Erickson said. “It is still quite a process just to get the measure on the ballot once it has been submitted. We probably won’t know for two or three weeks or longer.”

Erickson said the statewide setback ballot measure would have some adverse impacts in every part of Colorado’s economy, so he envisioned a concerted public education effort for voters.

Erickson and President Matt Owens talked about continued DJ midstream challenges. DCP Midstream recently brought online its No. 10 processing plant (DCP-10), which Extraction’s team has been closely monitoring to determine its impact system pressures.

The new plant hasn’t run enough continuous hours as it remains in the start-up process. Owens said continuous runs and added compression should reduce pressure.

For 2Q2018, Extraction reported net income of $8.8 million (8 cents/share), compared with $7.2 million (2 cents) for the same period in 2017.