Current PDCE Stock Info

Initiative 75 (local government control over oil and gas) and 78 (mandatory 2,500-ft. setback) fall short of required signatures
The Colorado Secretary of State issued a press release today, explaining how two anti-oil & gas initiatives failed to achieve the minimum number of required signatures to make the November ballot.

If either attempt had succeeded, it would have put the fate of oil and gas development in Colorado into the hands of voters.

“Supporters didn’t collect enough valid voter signatures,” Secretary of State Wayne Will...

Analyst Commentary

From Wunderlich Securities E&P Research:

Overhang Removed from the Ballot Initiative & Colorado Looks to Raise the Bar
Key Points

Initiatives 75 and 78 do not qualify for the Colorado ballot. While we, many companies and others in the industry did not expect the two initiatives to get enough verified signatures to make the November ballot, this announcement today is a positive in that it removes a potential overhang in operations throughout the state. Both initiatives barely made the signature threshold and with only ~80% valid signatures from the sample the initiatives both fell well short of moving forward.

Raise the Bar is still in play. With the two initiatives out of the upcoming November ballot there likely will be a push to put more/new ballot initiatives on to hinder industry operations. That's why it is also important to note that Initiative 71, or Raise the Bar, has made the November ballot and would make future ballot initiatives and other changes to the state constitution much harder to execute.

With these positive developments an overhang on the Niobrara/Colorado operators is removed. While these have been considered long-shots, the fact is that they still were potentially crippling issues. With these initiatives removed, the companies can get back to business as usual in a Niobrara area that has strong economics at today's prices.

Reiterate our positive stance on the Niobrara as well as Bill Barrett Corp. (BBG-$6.41, Buy), Noble Energy Inc. (NBL-$36.34, Buy), PDC Energy (PDCE-$67.49, Buy) and Synergy Resources (SYRG-$6.66, Buy). These companies remain interesting investment opportunities and interestingly at this point BBG and SYRG are becoming the only essentially pure plays in the region. We continue to like these names given the strong Niobrara potential and economics especially following the positive ballot initiative news and would also point out Whiting Petroleum (WLL-$7.69, Hold) has a sizable position in the region as well.
From Wells Fargo:

Colorado Setback Initiatives Fail To Make Ballot

Summary - Positive. The Colorado Secretary of State's Office announced that Ballot initiative 75 and 78 (local control and setback) have failed to gather enough signatures to make the November ballot. Initiative 75 and 78 turned in 107,232 and 106,626 signatures, respectively, but after the verification process from a random sample, the Secretary's office determined that neither measure was going to reach the required threshold of 98,492 certified signatures. The backers of 75 and 78 can still appeal the decision, but based on verification rates from the other 5 initiatives submitted for the November ballot, an appeal would appear to be futile. Of note, Initiative 96 (''Raise the Bar'') did garner enough signatures and will be on the ballot - we view this initiative as pro-industry and pro-business, as it would make it more difficult to amend the state constitution (i.e. - may be able to prevent anti-oil and gas initiatives from being proposed every two years).

Over the last 3 weeks, we believe that the market has largely reflected the view that these initiatives would not make the ballot, with DJ based operators outperforming the broader sector by 9% since August 8th. Nonetheless, official confirmation of the failure of these initiatives to make the ballot should be a positive for DJ based operators including APC, BBG, PDCE, WLL as well SYRG and BCEI (SYRG and BCEI not covered).

From Baird Energy Research:

Initiatives 75 and 78 fail to make ballot. In a victory for oil and gas producers and midstreamers with operations in Colorado, Initiatives 75 and 78 failed to garner enough valid signatures to make the November election, the Colorado Secretary of State announced this morning. Only 80% and 78% of the required signatures were submitted, respectively.

• Initiative 75 would have allowed local control of oil and gas
drilling.107,232 signatures were submitted, and an audit of 5,362 of the signatures rejected 1,380, leaving only 80.85% of the 98,942 signatures required.

• Initiative 78 would have required an onerous 2,500-foot setback around oil and gas operations, a frack-ban in disguise. Proponents submitted 106,626 signatures. 5,332 were audited, rejecting 1,476, leaving the count shy at 78.29% of required signatures.

• In E&P coverage, we expect CRZO (Outperform) and WLL (Outperform) to outperform on this news. See 8/8/16 report: “Buy Negative Colorado Headlines” Other non-covered E&P names likely to be impacted include APC, BBG, NBL, PDCE, and SYRG.

• In MLP coverage, SMLP (Outperform) and to a lesser extent Tallgrass Energy (TEP/TEGP) should outperform. Link to SMLP upgrade, 8/12/16. Link to most recent TEP/TEGP report. Uncovered MLPs and midstream companies with exposure include DPM, SEMG/RRMS, and WES/WGP.  

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