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RESOLUTION
RE: AUTHORIZE EXTENSION OF TWO OIL AND GAS LEASES COVERING CERTAIN
PROPERTY OWNED BY WELD COUNTY, COLORADO - NW'/.S15 AND SE' S15,
T5, R61
WHEREAS, the Board of County Commissioners of Weld County, Colorado, pursuant to
Colorado statute and the Weld County Home Rule Charter, is vested with the authority of
administering the affairs of Weld County, Colorado, and
WHEREAS, Weld County, Colorado, is the owner of vast acres of mineral lands located
in Weld County, Colorado, and
WHEREAS, Sovereign Energy, LLC, submitted a request to extend the lease of 320 net
mineral acres, more or less, described to-wit:
NW' of Section 15 and SE'/ of Section 15, Township 5 North,
Range 61 West of the 6th P.M., Weld County, Colorado
WHEREAS, Weld County desires to approve the request submitted by Sovereign
Energy, LLC to extend the leases on the above described mineral acreage for$10 per net
mineral acre, for a total sum of$3,200, together with a rental fee of ONE DOLLAR ($1.00) per
net mineral acre, which is to run for a period of six (6) months, commencing, February 15,
1998, and ending August 15, 1998.
NOW, THEREFORE, BE IT RESOLVED by the Board of County Commissioners of
Weld County, Colorado, that the request of Sovereign Energy, LLC to extend oil and gas lease
be, and hereby is, granted for a period of six (6) months.
The above and foregoing Resolution was, on motion duly made and seconded, adopted
by the following vote on the 1st day of December, A.D., 1997.
BOARD OF COUNTY COMMISSIONERS
WELD OUNTY, COLO DO
eorg . Baxter, Chair
e Board j
fj%
onstance L. Harbert, rP o-Tem
BY
o the Board
Dale K. Hall
AP P D AS T ORM:
arbara J. Kirkmeyer ,
1n- �s( &J- ;ntt ney �Q i
W. H. Webs er
2584189 B-1637 P-1740 12/12/1997 02:58P PG 1 OF 1 REC DOC
Weld County CO JA Suki Tsukamoto Clerk & Recorder 0.00 972474
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TO: Board of County Commissioners On
J i
FROM: Bruce T. Barker, Weld County Attor} ).-1)1 26 1 it 1: III
CDATE: November 26, 1997 CLERK
TO THE EO�4r
RE: Request for Extension of Oil and Gas Leases from
COLORADO Sovereign Energy, LLC
A request for an extension of two oil and gas leases has been submitted by Sovereign Energy,
LLC. Each lease comprises 160 acres. (Lease #950266/LE0081 for the Northwest Quarter of
Section 15-5-61, and Lease #950265/LE0081 for the Southeast Quarter of Section 15-5-61.)
Sovereign is asking to extend each of the leases for a period of six months. Attached is a copy of
the Board's mineral leasing policy which states that one six month extension may be granted for
each lease.
Sovereign has submitted a check in the sum of$1,600 to cover the bonus for the extensions for
both leases. Sovereign figures the bonus as follows: the original bonus was $15 per acre. One-
third would be $5, so the minimum bonus of$10 per acre applies. The total bonus for 320 acres
is $3,200. Sovereign says the bonuses are usually for one year. Given that Weld County extends
only for 6 months,the company has cut that amount in half, or $1,600.
Tom Metzger of Sovereign has expressed to me that his company will pay $3,200 if the Board
desires.
I recommend that the Board extend both leases by resolution, each for a period of six months, but
pay the $3,200.
r i
Bruce T. Bark
Weld County ttorney
BTB/db:Memo/BOCC/Sovereign
972474
WELD COUNTY
ADM NI STB ATNE MANUAL
GENERAL ADMINISTRATION
Mineral Leasing Policy Concerning Extensions
Latest Revision Date: May 6, 1996
On August 29, 1985, the Board of County Commissioners adopted the following policy for extending the
terms of all mineral leases. The board will extend the terms of all mineral leases in which it is the Lessor
according to the following conditions:
1. No lease term will be extended for more than six (6) months from the original expiration date
as contained in the mineral lease.
2. That the Lessee shall pay to the Lessor the sum of one-third of the original bonus, with a
minimum bonus of Ten Dollars ($10.00) per acre.
3. The Lessee must pay to the Lessor the sum of One Dollar ($1.00) per acre leased as
delayed rental for the term of the extension.
4. That the royalty will remain the same as in the original lease.
37
972474
SOVEREIGN ENERGY LLC.
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November 17, 1997 r'l
, NOV 1 9 1997
Ly J LJ
Bruce Barker ,ti ELD COUNTY
Weld County Attorney ATTORNEY'S OFFICE
P O Box 1948
915 10th Street
Greeley, CO 80632
RE: Request For Oil and Gas Lease Extension
Township 5 North,Range 61 West
Section 15: NW/4 (950266/LE0081)
Section 15: SE/4 (950265/LE0081)
Weld County, Colorado
Dear Mr. Barker:
Per our conversation dated September 12, 1997, you advised us to make written
application for a lease extension 30 - 60 days before the expiration date (2-15-98) of the
primary term. Therefore, Sovereign Energy LLC. ("Sovereign") respectfully requests an
extension to the above referenced leases for the maximum allowable time period due to
the following circumstances:
1. The referenced Weld County oil and gas leases are diagonally opposed 160 acre tracts
in section 15. Sovereign's prospective geologic target is an ancient river channel (D-
Sandstone Formation)projected to underlie section 15 in a southwest-northeast
orientation. Owing to the presumption that well locations would be situated in the
center of the section, Sovereign needed to purchase, lease and/or obtain offset acreage
support in the SW/4 and NE/4 of section 15 before initiating drilling plans.
Subsequent to leasing the Weld County minerals, Sovereign immediately contacted
the leasehold owners in each quarter section.
• SW/4 Sec. 15: Leasehold owners initially indicated a willingness to work out an
equitable trade and then spend 2 'h years trying to cause Sovereign to accept a very
one-sided trade. The well that held their SW/4 by production ceased to produce the
summer of 1997 and Sovereign has just recently obtained a new oil and gas lease on
this 160 acres.
621 17TH STREET,SUITE 1145,DENVER,COLORADO 80293.303/297-0347•FAX 297-9075 972474
Weld County Attorney
Request For Oil and Gas Lease Extension
November 17, 1997
Page -2-
■ NE/4 Sec. 15: This tract is held by a producer in the NE/4 NE/4 Sec. 15 which
Sovereign has currently purchased from the previous operator after lengthy
negotiations caused by their knowledge of Sovereign's intent to drill in this section.
Therefore, Sovereign just now has the necessary offset acreage support to facilitate
drilling operations. PS - at $300,000 to drill and complete these wells, no one wants to
drill another company free offsets without some equitable sharing agreements in place
prior to drilling.
2. During the protracted negotiations outlined in No. 1 above, Sovereign decided to high
grade its geologic interpretation through the acquisition of a seismic profile
previously shot across section 15. Sovereign has factored this into its interpretation
and is now able to schedule the drilling of its well.
3. Pending the extension of these leases, Sovereign intends to permit and drill its first
well around March 31, 1998. If productive, Sovereign would then drill the other
Weld County lease in an effort to hold all 320 acres by production.
Sovereign has spent much time, effort and expense on this project and would greatly
appreciate your understanding and cooperation in preserving our existing rights to drill
and develop your minerals for the benefit of both parties.
Please advise us at 621 17h Street, Denver, CO 80293 or(303) 297-0347 of your decision
at your earliest convenience so that we may plan accordingly. Should you have any
questions or comments please don't hesitate to advise.
Sincerely,
SOVEREIGN ENERGY LLC.
Thomas S. Metzger
Manager
972474
SOVEREIGN ENERGY LLC.
December 9, 1997 ilEi51997s;
NEW COUNTY
Bruce Barker ATTC3RfiJEY'S
Weld County Attorney
P O Box 1948
915 10th Street
Greeley, CO 80632
RE: Request for Oil and Gas Lease Extension _
Township 5 North.Range 61 West cc,- 1 4 /5-6,
Section 15: NW/4 (950266/LE0081) /
Section 15: SE/4 (950265/LE0081)
Weld County, Colorado
Dear Mr. Barker:
Per your attached letter dated December 3, 1997, enclosed please find a check in the
amount of$3520.00 as consideration for the Oil and Gas Lease Extension referenced
above. Such consideration was calculated based on the conditions set forth in Article 24
("Extension") of said leases, as follows:
Article 24 Extension
A. Lease term of six (6)months from the original expiration date.
B. Lessee shall pay one-third of original bonus ($16/acre x 1/3 = $5.33/acre), with a
minimum bonus of$10 per acre.
C. Lessee shall pay $1.00 per acre delay rental.
Therefore:
$10.00 per acre bonus x 320 acres = $3200
$1.00 per acre annual delay rental x 320 acres = 320
Total: $3520
621 17Te STREET,SUITE 1145,DENVER,COI,ORADO 80293.303/297-0347 •FAX 297-9075 97247
Weld County Attorney
December 9, 1997
Page -2-
Please prepare and execute the extensions, notarize and forward on to Sovereign Energy
LLC at your earliest convenience. Should you have any questions or comments please
don't hesitate to advise.
Sincerely,
S REIGN ENERGY LLC.
Thomas S. Metzger
Manager
Attachment: Bruce T. Barker letter dated 12/3/97
972474
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