(Reuters) - Shares of Anadarko Petroleum Corp fell as much as 9.4 percent on Wednesday, after the cause of a fatal Colorado home explosion was linked by local authorities to a nearby well operated by the oil and gas producer.
The company said last week it would temporarily close more than 3,000 wells in Colorado in the wake of the blast that killed two men.
Anadarko has estimated the production impact from the shut-in at 13,000 barrels of oil equivalent per day (boe/d). That is a sliver of its oil and gas sales volumes of 795,000 boe/d in the first quarter.
The company reported a bigger-than-expected quarterly loss on Tuesday, as expenses shot up, offseting gains from higher crude prices.
“We will cooperate with the ongoing investigations to fully understand the fire district’s preliminary conclusions and will engage all possible resources as final determinations are reached in this matter,” Chief Executive Al Walker said on a post-earnings call on Wednesday.
A home in Firestone, roughly 30 miles (48 km) north of Denver, and located 170 feet from an Anadarko-owned oil well, had exploded on April 17.
Local fire protection authorities said on Tuesday the explosion was caused by natural gas that had seeped into the home from an abandoned well, which had not been disconnected from the wellhead. (bit.ly/2oXeAh6)
The vertical well was drilled in 1993 by a company Anadarko later bought.
Colorado Governor John Hickenlooper on Tuesday issued a directive ordering oil and gas companies in the state to inspect and pressure-test oil-and-gas lines within 1,000 feet of occupied buildings, and ensure that abandoned lines are marked, capped and sealed.
“We, like others in the industry, are responding to what the governor requested last evening,” Walker said on Wednesday’s call, declining further comment.
The governor’s order requires inspection of existing lines within 30 days and pressure-testing within 60 days.
“The potential for increased Colorado regulatory scrutiny provides a significant near-term overhang for (Anadarko) shares,” Morgan Stanley analysts said, downgrading their rating on the stock to “equal weight”, and lowering their price target by $15 to $74.
Anadarko’s shares fell to $50.99 in morning trade, their lowest level in nearly a year.
Wells Fargo also lowered its rating on the shares of Anadarko, besides those of SRC Energy Inc and Extraction Oil & Gas Inc, saying the Firestone findings would weigh on all companies operating in Colorado’s Denver-Julesburg oil and gas basin.
Reporting by Swetha Gopinath in Bengaluru and Gary McWilliams in Houston; Editing by Shounak Dasgupta and Sai Sachin Ravikumar