Current PDCE Stock Info

Wattenberg power player PDC is confident ballot initiatives will not reach the number of signatures required for certification
Colorado ballot initiatives No. 75 (local control over oil and gas) and No. 78 (mandatory 2,500-foot setback) have been a major concern for oil and gas companies as groups that hope to effectively shut down drilling in Colorado collected signatures for two proposed constitutional amendments.

After boxes of collected signatures were turned in at Monday’s 3:00 p.m. deadline, Denver-based PDC Energy (ticker: PDCE) said...

Analyst Commentary

Johnson Rice & Company
PDCE reported a solid beat and raise this morning (see note). Perhaps more importantly, on the call PDCE noted that the two anti-industry initiatives (Prop 75 & 78) had only ~105k signatures apiece. Applying the typical 60-70% verification rate this would only amount to 68k signatures, well short of the 98.5k needed. Further, the “raise the bar” measures put forward by the industry got 185k signatures and will have a significantly funded campaign to win the November vote. As a reminder, the “raise the bar” measures (now called Prop 96) would require signatures of 2% of each of CO’s 35 State Senate districts to be put on the ballot and initiatives would need 55% of the vote, versus the current 50%, to be enacted (see pg 4 for more info). PDCE continues to be a favored name due to its low multiples, high growth, and FCF+ spending plans. Additionally, the Wattenberg group trades at a 4-6x EV/EBITDA discount to the Marcellus and Permian groups; we feel that the failure of Prop 75 and 78 and the success of Prop 96 should close that gap.

Stifel
On today's 2Q earnings call, PDCE management indicated that initiatives #75 and #78, which have the potential to shut down new drilling in Colorado, are unlikely to reach the November 8 ballot. Based on unofficial estimates, the company's sources suggest 105M-110M signatures were gathered for each proposal while the validation process usually nullifies 30%-40%. If these numbers are accurate, both proposals could be thrown out within the next 30 days. We had not heard the signature estimates when we published yesterday's note: Colorado Initiatives Appear Headed for Vote. Initiative #96, which would raise the criteria for amending Colorado's constitution, had 185M signatures and is therefore likely to be included on the ballot.  


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