PDC Energy Inc. recently secured additional permits from Colorado oil regulators, which has given the company at least four more years of activity in the Denver-Julesburg (D-J) Basin despite an increasingly tougher regulatory environment in the state.

In a Nov. 4 company announcement, PDC revealed it received approval in September and October related to 32 future wells from the Colorado Oil & Gas Conservation Commission (COGCC), the state’s regulatory body within the department of natural resources.

Following the recently approved Colorado drilling permit applications, PDC said it expects to exit 2020 with approximately 23 approved surface permits comprising approximately 275 future locations as well as an additional 200 DUCs. The approximately 475 combined locations equate to nearly four years of future completion activity at the PDC’s current pace, the company announcement said.

According to Gabriele Sorbara, an equity research analyst with Siebert Williams Shank & Co. LLC, PDC Energy now has the permits/DUCs to navigate Colorado’s regulatory environment.

“We believe PDCE will continue to be able to successfully permit under the potentially more stringent criteria in Colorado,” Sorbara wrote in a Nov. 5 research note.

In late September, COGCC unanimously voted in favor of a preliminary approval establishing new 2,000-ft setback rules for drilling and fracking operations statewide. The new series of rules within Senate Bill 19-181 (SB 181) increased the distance from the current 500 ft that wellpad surfaces must be located from buildings. 

The extended setback, set to go into effect Jan. 1, 2021, was projected by analysts to have a significant impact on PDC Energy’s operations in the Wattenberg Field, where the Denver-based company is one of the largest leaseholders and producers.

PDC Energy has about 180,000 net acres in the core of the Wattenberg in Colorado’s Weld County. In its latest presentation, the company noted that roughly 80% of its position in Weld County, however, is located in unincorporated territory and not within municipal boundaries.

The recently approved inventory of 32 future wells is located on four surface locations averaging approximately 10 building units within 2,000 ft and 750 ft to the nearest building unit, the PDC announcement said.

COGCC has not yet approved any of PDC Energy’s surface location permits under the new regulations, according to Tyler Hoge with Enverus.

“The company estimates 95% of unpermitted inventory will require an exception to be granted from the COGCC,” Hoge wrote in a Nov. 4 research note. “We believe the risk associated with these exceptions will be unclear until early next year when the new regulations become effective.”

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