Proposition 112 on the Colorado state ballot seeks to extend well setbacks from surrounding structures to a distance that would render 85% of the state unusable for oil and gas drilling, S&P Global Ratings said.
Prop 112 is a voter initiative that would require most new oil and gas development in Colorado to be at least 2,500 ft away from homes, schools, buildings, and other structures.
Currently, most new wells must be at least 500 ft away from homes and 1,000 ft away from schools and buildings.
Meanwhile, S&P analysts said oil producers have been accumulating as many drilling permits as possible before the Nov. 6 election. Drilling permits are valid for 2 years. Recent political polling indicates most voters favor the proposition.
Michael Grande, director, S&P Global Ratings, said, “Passage of Proposition 112 is clearly a credit negative for the energy companies we rate, and it will affect some companies more than others.”
