The proposed state constitutional amendment reads: “Notwithstanding any other provision of law, local governments in Colorado may place restrictions on the time, place or method of oil and gas development, including but not limited to the use of hydraulic fracturing, that are intended to protect their communities and citizens.”
Language for the ballot measure was submitted to state officials last month. If it’s approved, backers must collect 86,000 signatures to get the issue placed on the ballot in November.
Encana (NYSE: ECA) (TSX: ECA), which is headquartered in Calgary, Alberta, and whose U.S. operations are based in Denver, cited the proposed initiative in its year-end disclosure documents to investors.
“Though broad in nature, the ballot initiative is understood to be primarily intended to restrict oil and gas development in the state,” the documents stated. “This and other possible measures could make certain Colorado jurisdictions inaccessible to drilling in the future. Therefore, it is possible that the company’s operations in Colorado could be impeded should such initiatives succeed.”
The Denver-Julesburg Basin, which includes territory in Northern Colorado, is one of Encana’s top sites for drilling.
“For our industry, like any, we require regulatory consistency in order to be successful, and an initiative like this that gives local governments the right to veto our ability to operate creates an uncertain business climate and it puts Colorado at a disadvantage when it comes to energy development,” Encana spokesman Doug Hock told the Calgary Herald. “We believe it’s bad public policy. It puts a sign in the window for Colorado that says ‘closed for business.'”
Even so, Zacks Investment Research reported today that analysts’ predictions for Encana share prices have taken a sharp rise. The consensus estimate trend for the current year has increased from 84 cents per share 30 days ago to 94 cents per share today, a gain of 11.9 percent. Encana stock has added 5.5 percent in value in the past four weeks.
Hydraulic fracturing to extract oil and natural gas from rock formations has been banned or suspended by voter-passed initiatives in Fort Collins, Longmont, Lafayette and Broomfield. Even so, Jon Haubert, a spokesman for the industry-funded Coloradans for Responsible Energy Development, told the Herald that a “vocal minority” is leading the anti-fracking campaigns.