US ELECTIONS: Independent producers ponder effects of a Biden administration

Independent oil and gas producers did not have the best relationship with the Obama administration, but most industry executives seem uncertain about what effect a victory for former Vice President Joe Biden in the 2020 election would have for their companies.

During second-quarter earnings calls, the prospect of a Biden presidency was frequently raised, both in discussion of drilling on federal lands and the future of the industry as a whole. In spite of the hostility toward the administration he was part of, as well as Biden's own comments opposing fracking, a surprising number of independents downplayed any effects a victory for the Delaware Democrat would have on their company.

"This country could elect Biden. And there will be some significant changes," Pioneer Natural Resources CEO Scott Sheffield said. "I think most of that will be on federal lands. There's discussion about banning on fracking. I don't know what the end result will be. But as we have noted, we have zero [acreage] on federal lands and so should be unaffected."

Continental Resources Executive Chairman Harold Hamm, perhaps the most vocal industry supporter of President Donald Trump, said he believed Trump would win reelection but it was difficult to ascertain what Biden would do should he win.

"He's backed off on several negative things that he said about the energy industry, but who knows where he would come from if he were there. And who knows how much he would get past ... Congress," Hamm said.

A number of independents operating in the Permian Basin have leases on federal lands, largely in New Mexico. While a Biden administration could be significantly tougher on producers drilling on federal acreage, most companies acted like they were only mildly concerned at the prospect.

"It's hard to know exactly what and how a new administration might do to limit onshore development. From a federal permitting front, though, we believe we have enough permits in hand that we're in process for probably one to two years worth of drilling on our federal acreage," Concho Resources COO C. William Giraud said. "We feel confident we can quickly shift our capital to other acreage in our portfolio without any significant impact to our capital efficiency over [the next five years]."

Occidental Petroleum has about 1.7 million net acres of federal land leased, including 900,000 in the Gulf of Mexico. That could indicate potential problems in the event of a Biden administration, but Director of Investor Relations Jeff Alvarez said the company was largely unconcerned.

"From a permitting standpoint, both in New Mexico and [the Gulf], which would be the most exposed to federal land given the question you asked, we've got permits approved that give us running room for the foreseeable future," he said. "At activity rates even at a much higher activity than where we were prior to COVID, we would have plenty of running room [with] permits that are already approved in both of those areas."

Likewise, EOG Resources expressed minimal concern. "We've been able to successfully navigate all the changes in the past. We've had many changes over the years. And so I'm confident we're well positioned to continue to adapt and not let those changes significantly affect us," CEO Bill Thomas said Aug. 7.

During his company's earnings call, Diamondback Energy CEO Travis Stice said the only thing certain about a Biden presidency for oil and gas producers is uncertainty. The CEO did indicate, however, that the industry would be willing to vocally oppose Biden, as it did Obama, if they believe regulations are being unjustly tightened.

"We don't have a lot of clarity on what the regulatory environments can look like if we fast forward to administration change, but what we do know is that it won't speed up," Stice said. "We support sound science that drives regulation, and ... we'll continue to support regulation that's backed by sound science. When those two things deviate is where Diamondback and our industry are likely going to have a problem with the regulation."