The midterm election results, which leave the GOP in control of the Senate while the Democrats take control of the U.S. House of Representatives, will likely bring little legislative opposition to President Donald Trump's energy-focused efforts over the past two years, which aim at deregulating the fossil fuel industry and slapping sanctions on foreign oil producer Iran.
Still, some items on state ballots herald some changes for U.S. fossil fuel production.
In Colorado, voters defeated Prop. 112, which would have required 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. Up until now, the requirements have been set to 500 feet from homes and 1,000 feet from schools. The voting margin was 56% opposed compared with 43% in favor.
Anadarko Petroleum Corp. (APC) shares rose 5.4% and Noble Energy Inc. (NBL - Get Report) gained 4.3% in the wake of the voting, as the companies' assets in the state would have become less valuable and opportunities to expand production would have been reduced if the measure passed.
The Colorado Oil & Gas Conservation Commission had estimated that 78% of the surface area in Weld County, or about 90% of current Colorado oil production, would have been off limits to further oil and gas development, according to a recent research note from Morgan Stanley analysts, including Devin McDermott. The commission also estimated about 85% of non-federal land would have become off limits to future development, according to media reports. About 36% of Colorado is federal land.
Proponents of the measure argued that these numbers do not take into account directional drilling, which allows producers to drill horizontally to access pockets of fossil fuel resources beyond the location of the well's surface setback.
Anadarko shares, which have underperformed those of exploration and production peers in recent weeks, are rebounding now that the measure has been voted down, as TheStreet previously reported.
"Now that Proposition 112 is behind us, I expect Anadarko's significant free cash flow generation and oily production mix to regain favor in the market," said Jeff Marks, the senior portfolio analyst for Jim Cramer's Action Alerts PLUS charitable trust, which owns Anadarko.
Meanwhile, in New Mexico, the tight race for the state's next land commissioner, who can sell, lease or trade state land without anybody else's approval, resulted in an upset victory by Democrat Stephanie Garcia Richard.
International oil major Chevron Corp. (CVX - Get Report) reportedly put $2 million into a political action committee supporting Patrick Lyons, a Republican who served as New Mexico's land commissioner from 2003 to 2010. Chevron shares rose 1% to $120.33.
The New Mexico Secretary of State's office reported early Wednesday, however, that Garcia Richard won with 50.8% of the total vote, compared with 43.5% for Lyons. A third party candidate won about 6% of the vote.
Garcia Richard drew support from the League of Conservation Voters, a national conservation group, as well as local environmental organizations after she promised to rein in oil and gas efforts in the state in favor of greater investment in alternative energy.
New Mexico is among the top oil and natural gas producing states in the country and is home to one of the country's most prolific fossil fuel plays, the Permian Basin, along with bordering Texas.
--This story has been updated with New Mexico's results.