Talk of a frac ban has one driller tapping federal lands in advance

HOUSTON (Bloomberg) - Independent shale producer Concho Resources Inc. said it’s tapping federal acreage for drilling now in case the U.S. elects a president who favors a fracing ban.

Democratic presidential candidates including Elizabeth Warren and Bernie Sanders have said they support a moratorium on fracing on federal lands. While such a move would likely meet strong legal challenges, the possibility is prompting some oil producers to discuss what it could mean.

Concho CEO Tim Leach said Wednesday his company has “quite a bit of activity” on federal lands in New Mexico and is prepared to move rigs across the state line into Texas if the politics of the White House change.

“Today, sentiment toward the sector is low and amplified by campaign promises to severely limit or regulate oil and gas operations,” Leach said on a third-quarter earnings call Wednesday morning. Concho’s exposure to federal acreage is about 20% of its total position, he said.

“We have a great deal of flexibility if we need to reallocate that capital,” Leach said.