Newsmakers Dec. 12-25: Local drillers see shares tumble as oil price drops

Stocks of oil companies that drill wells in Weld County have plunged with declining oil prices, potentially leading to lower capital spending in 2015.

PDC Energy Inc. (Nasdaq: PDCE), which drills oil and natural-gas wells in Weld County, has seen among the steepest declines. PDC’s stock fell to a 52-week low of $27.91 in December after hitting a high of $70.44 in June, a 60 percent decline in just six months.

Oil prices began falling from around $100 per barrel in July to prices nearing $60 in December after OPEC said it would not cut production. Meanwhile, Northern Colorado oil company stocks have collapsed with the drop in oil prices, with many losing nearly half their value from highs seen this summer.

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The oil prices slump comes as oil producers plan to reveal their capital spending plans for 2015, and some analysts say those budgets will face cuts.

Since June, global oil supplies have risen with ballooning production in the United States and as Libyan crude supplies have returned online following conflict in 2011, according to Moody’s Investor Service. Growing demand next year, however will slow the fall in oil prices.

In December, PDC Energy said it would slash its 2015 capital budget to $557 million, a 14 percent decline from the company’s $647 million capital budget for 2014. The company, however, will increase its spending in the Wattenberg field, which includes territory in Weld County, to $516 million for next year, up from $272 million this year. It has decided to idle a drilling rig in Ohio to focus on higher return projects in the Wattenberg.

UPDATE

Weld County, where companies produced 80 percent of Colorado’s record-breaking 64.1 million barrels of oil last year, plans to watch the situation, said county spokeswoman Jennifer Finch.

Property taxes make up the foundation of Weld’s budget. Last year, oil and gas accounted for $3.9 billion, or 55 percent of the $7.1 billion of assessed property value in Weld. That’s up from $3.4 billion in assessed oil and gas property value, or 52 percent of Weld’s $6.5 billion in total assessed property value the year before.

Since the county assesses property values every other year, a downturn that occurs in any year would not be felt through property taxes until two years later.

“The downturn in oil prices, should it remain, would not be felt by Weld County with regard to the county budget for two years,” Finch said, “providing time for us to revise, and if needed cut, the budget to handle the financial loss.”