A Colorado oil and gas company has filed for bankruptcy, blaming the state’s new regulations on development for "collateral damage" that has resulted in a deceleration in the industry and job losses.
PetroShare said it filed petitions for Chapter 11 bankruptcy, which requires reorganization to pay off creditors.
The company told The Center Square it laid off three employees ahead of the bankruptcy announcement, and the company now has nine employees.
Company officials directly linked the bankruptcy filing to Senate Bill 181, signed into law by Gov. Jared Polis in April.
The law changes the mission of the Colorado Oil & Gas Conservation Commission (COGCC), the state’s body for the industry, to focus on public health, safety and the environment, instead of industry development. The law also allows local governments to more heavily regulate the industry.
“The new Colorado regulatory environment governing oil and gas permitting in the state and the associated uncertainty on rule-making has made it very difficult to attract new capital investment in this sector,” said PetroShare CEO Stephen J. Foley. “We are filing a voluntary Chapter 11 petition in order to proceed with the orderly recapitalization or sale of some or all of the Company’s assets and to continue to pay active vendors, suppliers and other ongoing business expenses without interruption during the process.”
“Unfortunately, the collateral damage of Senate Bill 181 has manifested itself in the slowdown of the state’s oil and gas sector, resulting in job losses,” Foley added.
PetroShare operates in the Wattenberg Field, which is located in both Adams and Weld counties.
Adams County this week approved strict new regulations on the industry, which includes a requirement that developments have at least a 1,000-foot setback from occupied buildings.
Weld County, the state’s top energy producer, last month opened up a new office to deal with permitting and land use regulations for the industry. Weld County and COGCC this week reached an agreement for the commission to review the county’s permits.
While the Colorado Oil & Gas Association (COGA), a trade group for the industry, does not comment on specific companies, it criticized the new law in a statement to The Center Square.
“As we’ve said all along, certainty and stability matter, and the only way that happens is if legislators and regulators allow businesses to function. If you go too far too fast, there are costs and consequences,” said COGA President Dan Haley. “This is no secret, and it’s why we are encouraging thoughtful implementation of SB 181, at both the state and local level.”
“SB 181 was not meant to be a stimulative bill for our industry, but if communities and agencies proceed with caution and focus on what is reasonable and necessary, then it gives our members a chance to continue responsibly producing the resources we all use and rely on each and every day,” Haley added.