The majority of Front Range oil and gas rigs are being run by small operators, according to an analysis by a Houston-based energy investment bank.
The rig analysis by Tudor, Pickering Holt & Co. shows that 16 of 31 rigs in the Denver-Julesburg Basin, north of Denver, are being operated by private or “small cap” companies.
A small cap company has a stock market capitalization of $300 million to $2 billion.
“It is a Colorado thing,” said Steve Trammel, director of unconventional resources for Douglas County-based IHS Inc.
A 60 percent decline in the price of oil between June 2014 and last March to $43.46 a barrel led to a sharp cut in drill rigs.
“While we saw rigs drop by more than 60 percent nationwide, in Colorado it was not quite 50 percent,” Trammel said.
The Denver-Julesburg Basin rig count slipped to about 31 in May from 56 at the beginning of the year, according the survey.
Part of the reason is the mix of companies operating in Colorado, Trammel said.
They range from the biggest — Anadarko Petroleum Co. and Noble Energy Inc. — to small cap company Bill Barrett Corp. and private operator Great Western Oil & Gas Co.
Barrett and Great Western, both based in Denver, are operating one rig each, according to the survey.
To be sure, the big operators — The Woodlands, Texas-based Anadarko has eight rigs running and Houston-based Noble has four — continue to dominate the basin.
“Anadarko and Noble are both highly efficient operators in the D-J basin,” said Erika Coombs, an energy analyst with Lakewood-based consultant BTU Analytics. “This allows them to drill more wells with fewer rigs.”
So even though the two operators have 38 percent of the rigs, they account for 50 percent of the drilling activity, she said.
Still, the smaller companies, even in the tighter oil market, are accounting for about 30 percent of the wells drilled between mid-March and mid-April, according to BTU Analytics data.
Smaller operators who are focused on a single geographic area may not have other options, IHS’s Trammel said.
They also may not have cut capital expenditures as sharply as bigger operators, Trammel said.
In the best-producing areas of the Denver-Julesburg Basin — so-called “sweet spots” — improved efficiencies in drilling, hydrofacturing and production are making it profitable, even with lower oil prices, Trammel said.
“Getting $60 to $70 a barrel is the same as getting $80 to $90 a barrel a year ago,” Trammel said.
The price of benchmark U.S. crude oil on the New York Mercantile Exchange rose 99 cents to close at $58.98 a barrel.
Great Western CEO Richard Frommer said in an e-mail that his company plans to continue its current level of activity through the end of the year “barring any further material commodity price reduction.”
Mark Jaffe: 303-954-1912, mjaffe@denverpost.com or twitter.com/bymarkjaffe
