The slump in oil and gas prices that started in June has cost Colorado’s petroleum companies billions in lost market value — enough to cover the entire state budget for the upcoming fiscal year.
Thirty public Colorado-based oil and gas companies lost $26.4 billion, or nearly a third of their value, in the second half of 2014, according to a Denver Post analysis.
That amount is on par with the for the 2015-16 fiscal year.
The spot price for a barrel of West Texas Intermediate crude, which hit a recent peak of $107.26 a barrel June 20, closed Friday at $52.69.
Flattening global demand, increased domestic production and Saudi Arabia’s decision to no longer control supply to keep prices above $100 per barrel have all combined to push oil prices sharply lower.
As a group, the Colorado petroleum companies lost nearly a third of their total market value in the second half of the year, according to figures from Bloomberg.
Per company, the losses averaged closer to 50 percent, on par with the drop in oil prices since June.
Smaller companies, which often carry more debt and lack the financial backing to outlast a long stretch of depressed prices, were hit the hardest.
Of the 30 Colorado stocks tracked, eight lost 80 percent or more of their market value, with American Eagle Energy nursing a 90 percent loss that shaved its market value from $182.3 million on June 30 to just shy of $19 million at the end of the year.
American Eagle said Wednesday it would suspend all drilling activity until prices improved. And in a sign of how volatile the sector is right now, its shares surged 24.5 percent Friday.
While several Colorado-based companies drill in the state, the three largest producers active in the Denver-Julesburg Basin northeast of Denver are headquartered elsewhere.
The decisions they make in the weeks and months ahead could have a greater impact on local employment and capital spending, especially in Weld and Adams counties.
“We need to see what companies do with their capital expenditures,” said Stan Dempsey, president of the Colorado Petroleum Association. “They have made commitments to certain projects, and they can’t just pull the plug.”
The three giants in the Denver-Julesburg basin — Anadarko Petroleum, Noble Energy and Encana — shed $25.4 billion in market value among them in the second half of 2014.
Of that group, Noble Energy has lost about half of its market value, while Encana was down about 42 percent.
Anadarko has fared the best of the group, losing only a quarter of its value. But it is a much larger company, and in dollar terms its market value losses surpassed those of Noble and Encana combined.
Dempsey said the hope is that Colorado will provide a more favorable return as the pool of dollars available for investment shrinks. Also, if natural gas prices can stage any kind of rally in 2015, producers in the state would benefit, he said.
Aldo Svaldi: 303-954-1410, asvaldi@denverpost.com or twitter.com/aldosvaldi
