HomeMy WebLinkAbout20202155.tiffEsther Gesick
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Teale:
Bruce Barker
Thursday, July 16, 2020 9:17 AM
tstone@hpres.com
Esther Gesick
Request for Reduction in Royalty Rate
HighPoint Resources 7-9-20 Letter.pdf
I forwarded your request to the Board of County Commissioners. There is no desire by any of the Commissioners to
reduce the royalty rate from the current 22.5%. Your letter was clear and made good points, but the Board wants to
stay at the 22.5%.
Let me know if you have any questions.
Bruce T. Barker, Esq.
Weld County Attorney
P.O. Box 758
1150 "O" Street
Greeley, CO 80632
(970) 400-4390
Fax: (970) 352-0242
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2020-2155
HighPoint
-RESOURCES-
July 9, 2020
Board of County Commissioners of Weld County
1150 "O" Street
PO Box 758
Greeley, CO 80632
RE: Formal Request for Royalty Relief
Township 5 North, Range 61 West, Section 34: 52
Weld County, Colorado
To Whom It May Concern,
RECEIVED
JUL 13 2020
WELD COUNTY
COMMISSIONERS
HighPoint Operating Corporation ("HPOC") as successor in interest to Bonanza Creek Energy
Operating Company, LLC, respectfully requests a fifty percent (50.00%) reduction in royalty on
Weld County's Oil and Gas Lease recorded at Reception Number 4299053, covering Township 5
North, Range 61 West, Section 34: S2. This proposal will reduce Weld County's existing royalty
rate from twenty-two and one half percent (22.50%) to eleven and twenty-five hundredths
percent (11.25%). The reduced royalty rate will allow HPOC to invest capital in our Drilled
Uncompleted Wells ("DUC"), bringing them online within the next six (6) months. For
reference, the five (5) DUC's and their corresponding API numbers are referenced below:
HPOC Well Name
API Number
AEF 5-61-34-2532BS
05-123-48185
AEF 5-61-34-4033B
05-123-48184
AEF 5-61-34-4148B
05-123-48187
AEF 5-61-34-5649B
05-123-48183
AEF 5-61-34-5764B
05-123-48186
Even with a reduced royalty rate, Weld County would benefit from receiving royalty dollars on
the DUC's sooner than would otherwise occur. In addition, this relief would help increase
activity in Weld County during a time when activity is significantly declining. This will have an
economic impact beyond HPOC; specifically within the struggling oil and gas service industry.
We believe this requested reduction will be mutually beneficial and would like feedback on how
we can best serve both our interests in the most efficient and productive manner. Below,
please find a table of the estimated economics on a representative well in this area.
Representative Well Economics
Rate of Return (%)
Current Royalty (22.50%)
10.00%
Requested Royalty (12.50%)
11.25%
555 17th Street, Suite 3700. Denver, CO 80202 I T: 303.293.9100 I F: 303.291.0420 I HPRES.COM
,**))•
HighPoint
We appreciate appreciate your attention to this matter. Should you have any questions, please reach out
to either myself, at 303-312-8141 or tstone@hpres.com, or our Director of Corporate
Engineering and Development, Heidi Reger, at303-312-8768orhreger@hpres.com. We
appreciate your attention to this matter and look for continuing the conversation further.
Sincerely,
HIGHPOINT OPERATING CORPORATION
Teale Stone
Landman
55517th Street, Suite 3700. Denver, CO 80202 I T: 303.293.9100 I F: 303.291.0420 I HPRES.COM
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