Second mineral auction nets Moffat County $1.3 million
Mineral lease prices average $1,233 per acre
March 31, 2011
Moffat County Commissioner Tom Mathers said he recently saw something he has never seen in the county.
That surprise came Tuesday when the Moffat County Commission, Natural Resources Director Jeff Comstock and others opened sealed bids on 1,055 mineral acres owned by the county and the Museum of Northwest Colorado.
The sale resulted in average mineral lease prices reaching $1,233 per acre for a three-year lease — something Mathers thought had to be a mistake, he said.
"I said, 'Jeff, you probably made a mistake, that is probably $111 (per acre),'" he said.
However, it was no mistake as the mineral lease auction netted the county's various taxing districts $1.3 million, Comstock said.
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"I heard a story where back East they got up to $6,000 a mineral acre in New York and I couldn't believe it because through my whole life, I've never seen them get over $35 for a five-year lease here up until just recently," Mathers said.
Final numbers from the auction are pending official approval, but commissioner Audrey Danner expects the commission to give the thumbs up to the sale.
The mineral auction is the second of its kind the county has hosted, the first of which was the largest leasing effort at one time in recent county history, Comstock said.
The leasing companies' interest in Moffat County minerals relates to a portion of a geological formation known as the Niobrara, which is known for its oil, Comstock said.
In November 2010, the county leased 13,973.73 acres totaling more than $3.3 million to be split among the Moffat County taxing districts and the Museum of Northwest Colorado.
Then, the price of the minerals leased averaged $350 to $450 per acre and reached a high of $605 per acre, Comstock said.
The latest sale, which put up much less acreage for leasing, saw almost triple the per acre lease price, Comstock said.
"Those kind of dollars are more than many landowners pay for their property when they bought it," he said. "This is just the minerals. Those aren't terribly unusual prices compared to what we have seen on state land board sales in the last few weeks."
Five companies bid on the minerals, three of which "walked home with acreage," Comstock said.
Museum director Dan Davidson said the museum could see about $251,000 in revenue from the about 209 acres it leased in the auction.
Mathers said he had a hunch why the lease prices were so high.
"The company that got it wanted to keep one area together," he said. "That is where they are going to do their seismic and they wanted to make sure it was all hooked together, that they weren't doing seismic for somebody else."
Commissioner Tom Gray said both mineral sales have been a "shot in the arm" for the local taxing districts, including the Moffat County School District, Moffat County Affiliated Junior College and The Memorial Hospital, among others.
Money kept by the county will go toward capital improvements, Mathers said.
"We know that is one-time monies that we can't depend on for starting something and then keeping it going," he said. "So, it is usually capital projects, which we have plenty of."
Most of all, Mathers said he is happy to help the school district — which will receive the largest portion of the lease revenue — in the face of budget cuts.
"I know they can use that money because they have been strapped and with the chunk they got this last lease and this one, at least it fills the gap for this year," he said.
Danner said she sees the lease auction results as a "very hopeful sign of our economy stabilizing again."
"We are an energy economy and when we started to drop based on the national legislation that was affecting us, the economy, the state regulations, but this is a good sign to see an upward trend," she said.
Gray said his philosophy toward the mineral leasing activity on both county- and museum-owned minerals is still one of "cautious optimism."
"You can't count your chickens before they're hatched and they are all on the nest," he said with a laugh. "But, that is definitely a good sign."
"It makes me feel if they are going to spend that kind of money, they are going to come here and do some production," he said.
Brian Smith can be reached at 875-1794 or email@example.com.