Commission approves amended agreement with Axia Energy | CraigDailyPress.com

Commission approves amended agreement with Axia Energy

Joe Moylan

In other news …

At its regular meeting Tuesday, the Moffat County Commission:

• Approved, 3-0, $5,030 in bids from the county's surplus equipment sale.

• Approved, 3-0, September supplemental budget requests totaling $424,098.77.

• Granted, 3-0, permission to the Museum of Northwest Colorado to join acreage into the Williams Fork unit concerning the museum's mineral leases with Shell.

The Moffat County Commission approved Tuesday entering into a sole source contract with Axia Energy, LLC, to lease 460 county-owned mineral acres for $162,068.81.

Jeff Comstock, Moffat County's natural resources director, said the agreement is unusual because the county typically puts its mineral interests up for public bid.

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The county strayed from the typical process with Axia because of circumstances surrounding another mineral lease contract with the company dating back to December 2010, Comstock said.

In its original dealings with the Denver-based company, Moffat County approved numerous mineral lease agreements for $2.3 million.

Axia acquired the leases during the county's 2010 mineral lease sale.

But, Comstock said the county recently discovered Axia overpaid for the December 2010 leases by $162,068.81.

"The county recognized the overage," Comstock said. "And, we were going to return their money to them."

Instead of having the county return overpaid funds, Axia officials suggested adding bonus acreage to the original mineral lease agreements.

The bonus consideration Axia suggested to the county includes 460 mineral acres about seven miles northwest of the Lay town site.

According to the agreement, Axia and Moffat County will abide by the December 2010 conditions, which stated a primary lease term of five years with a 3/16th royalty interest going to the county if there is any oil or natural gas production.

Axia Energy also agrees to a rate of $351.80 per mineral acre, which works out to $162,068.81, or the amount of the overpayment.

Although the term of the lease is for five years from Dec. 30, 2010, Axia also committed to drilling a well inside the parameters of the bonus acreage within two years and at a sufficient depth to test the Niobrara Formation.

If the company does not drill a well by Sept. 19, 2013, the lease ends, Comstock said.

The commission approved the bonus consideration Tuesday, 3-0. Funds generated from the lease agreement will benefit the county's taxing districts.

Commissioner Tom Mathers said he was pleased with the outcome.

"Jeff, I commend you or whoever put this whole thing together," Mathers said. "This is going to work out really well."

Comstock told the commissioners he believes the agreement with Axia is beneficial to the county because the agreed upon rate is higher than what he generally sees in that part of the county.

"I think a deal like this is fantastic," Comstock said. "If we went to the open market with this, we would probably only see one bidder, Axia.

"And, they probably wouldn't pay that price and they probably wouldn't commit to drill."

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In other news …

At its regular meeting Tuesday, the Moffat County Commission:

• Approved, 3-0, $5,030 in bids from the county’s surplus equipment sale.

• Approved, 3-0, September supplemental budget requests totaling $424,098.77.

• Granted, 3-0, permission to the Museum of Northwest Colorado to join acreage into the Williams Fork unit concerning the museum’s mineral leases with Shell.

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