Anadarko Petroleum Corp. (APC) and its shareholders will be closely watching the midterm voting in Colorado as Proposition 112 could affect its future oil production plans in the state.

On Tuesday, Nov. 6, Colorado citizens will go to the polls to vote on Proposition 112, which would require all new oil and gas wells to be a minimum of 2,500 feet -- about half a mile -- from occupied buildings and "vulnerable areas," such as parks and irrigation canals. Currently, the requirements are 500 feet from homes and 1,000 feet from schools.

The measure needs a simple majority to pass and move to the governor's desk for consideration to be signed into law.

While polling data is "limited, and mixed," Anadarko has significant exposure to the vote, according to Morgan Stanley analysts, including Devin McDermott.

"Our updated analysis shows [Anadarko and Noble Energy Inc. (NBL - Get Report) ] have about 13% to 14% of net asset value at risk, and have underperformed E&P peers by 8% (APC) and 5% (NBL) since the measure came into focus on Aug. 5," the analysts wrote in a Nov. 5 research note.

Importantly, Proposition 112, formerly known as Initiative 97, apply to future permits only, meaning it will not affect existing production. Colorado has become one of the top ten oil producing states as companies have expanded production in the Denver-Julesburg basin.

Should Prop 112 pass, however, "the Colorado Oil & Gas Conservation Commission estimates that 78% of the surface area in Weld County (approximately 90% of current Colorado oil production) would be off limits to further oil & gas development," said McDermott, noting that drilling permit applications have increased ahead of the vote.

"In the event Proposition 112 passes, I would expect APC to take a hit based on the reduction of drilling acreage in the state, though shares have underperformed its Exploration and Production peers to a point where the blow would be softened," said Jeff Marks, the senior portfolio analyst for Jim Cramer's Action Alerts PLUS charitable trust, which owns Anadarko. "Some of the potential losses could also be recouped through the voting on Amendment 74, which requires states to fairly compensate property owners for decreased property value due to a state regulation initiative-but this is still highly uncertain."

"If Proposition fails at the polls, I expect Anadarko Petroleum's 'oily' production mix and significant free cash flow generation in the current energy environment to regain favor in the market, propelling shares towards higher levels," Marks said.

Anadarko has reportedly donated about $1 million to Protect Colorado, an organization fighting against Proposition 112, according to Reuters.

Anadarko did not immediately respond to a request for comment.

Shares of Anadarko rose 2.2% to $54.37 at 1:45 p.m. New York time.