MINUTES OF SPECIAL COMMISSION MEETING HELD APRIL 03, 2017 BEGINNING AT 1:30 A.M. IN COMMISSION CHAMBERS, IN DUCHESNE, UTAH
Present
Commission Chairman Ronald Winterton; Commissioner Greg Todd, Commissioner Ken Burdick, Deputy County Attorney Tyler Allred, Tracy Adams Independent Landman Acting On Behalf of Transcontinent Oil Company as Agent for EP Energy E&P Company, L.P., and Commission Assistant BobbiJo Casper taking minutes of the meeting.
Public Hearing – Consideration Of A Request To Obtain Leases For Oil & Gas Extraction On Certain Properties Owned By Duchesne County As Follows:
Township 3 South, Range 2 West, U.S.M.
Section 25: 12.54385758 acres of land, more or less, consisting of the following Lots and Blocks as shown on the plat of record of the City of Myton, Utah; as follows:
Block 62: Lots 20 and 21
Block 83: Lots 1-3, 13-16
Block 91: Lots 9-11
Block 92: Lot 9
Block 103: Lots 1, 2, 15, and 16
Block 105: Lots 1-16
Block 107: Lots 9-11
Block 114: Lot 8
Block 115: Lots 1-16
Block 116: Lots 5-8
Block 117: Lots 1-4
Block 125: Lots 15 and 16
(Including any claim to streets and alleys adjacent or contiguous thereto)
Containing 12.54385758 acres, more or less
Duchesne County has a standard lease form that set the lease royalty rate at 3/16 for three years by Ordinance No. 12-297.
Chairman Winterton stated that they received two bids as follows:
· Encore Land Services, Inc. - $5,200.00 per net mineral acre showing Duchesne County owning 8.966942 net mineral acres on the subject lands for a total of $46,628.10, 3/16ths (18.75%) Royalty, 5 year term
· Transcontinent Oil - $510.00 per net mineral acre x 6.272 net mineral acres total bonus of $3,198.72, 3/16ths, 3 year primary term
Chairman Winterton stated that it appears that there is a discrepancy in exactly how much the county owns according to the bids. Also, Encore has it at a 5 year lease instead of 3. We can find out if this was a typo, our ordinance states it’s a 3 year term.
Commissioner Todd asked how the two bids could be so different on what the net mineral acres are. Mrs. Adams stated that would like to ask the nominating company to put the gross and net mineral acres on the description so everyone can bid on the same thing. This has happened before so it would be very helpful to eliminate the confusion. She knows that EP ran title on this and they came back with the 6.72; which is an opinion. The gross is also very different. Assistant Casper stated that Encore is who nominated to have this on the auction, but the description is different than what they originally sent. They should be bidding on exactly what was in the paper because that’s what was nominated regardless of what the description is on their bid letter.
Jennifer Hall representing Encore Land Services, Inc. Agent for Crescent Point Energy joined the meeting at 1:42 P.M…
Chairman Winterton stated that according to Encores bid, it says 5 year lease when we will only do a 3 year contract. Also, you have excluded block 125 on your bid. We advertised exactly how you submitted it, but your bid is different. Mrs. Hall stated that since she nominated this, she has done research and found that Duchesne County doesn’t own block 125 so she didn’t include it in her bid. She wasn’t sure if the term was negotiable, she was hoping for a 5 year term, but is fine with a 3. Chairman Winterton stated that the bid is for all of the streets and alleys in Myton, but we really don’t have claim until the 10th Circuit Court rules on it. Mrs. Hall stated that her attorney and other title attorneys have told them that where the town site wasn’t deeded it was surveyed and put into action that everyone who owns the lots owns the streets and alleys because they are contiguous. She is aware of the litigation that the county is in, but the lease in no way states that you have ownership, you’re no way liable. We lease a lot of things that we’re not sure of, but once production comes into place the attorney’s take it from there. Commissioner Todd asked if it’s different than what was posted in the newspaper, is it grounds for disqualification? Chairman Winterton stated that the intent is to see the county in the best possible position and to see the wells being developed. Mrs. Adams stated that when these get nominated, we should all be on the same page and to be able to bid on the same thing. When she submits a nomination like this for state leases, she has to include the deed and associated documents and the state decides if they agree with you or not and then you bid on whatever they agree it is. She doesn’t feel that it’s a straight up deal with how it’s being done. She will have to go back and report to EP Energy and she doesn’t want anything to look shady. Mrs. Hall stated that Crescent Point is fully invested in extracting these minerals and making sure that the title is correct. This is the highest amount that she has ever offered in this county. Assistant Casper stated that according to the minutes from an auction that was held last year, we accepted a bid that had the term being 5 years if they would agree to change it from 5 years to 3; if not, we wouldn’t accept the bid. It appears that this has happened in the past, but there was just the one bid. in our ordinance, it states that after all proposals have been read into the record the successful applicant (based on greatest monetary value to the County) shall be named and the leases shall be signed. Commissioner Todd stated that they will look at amending our policy and requested the help from Mrs. Adams and others who are familiar in other processes. We need to change it so that if the bid is any different than what was advertised then it will be rejected; he doesn’t like the discussion. It needs to be black and white. Attorney Allred stated that bids should be off of the gross amount submitted. Chairman Winterton stated that we need to clarify this before the next auction.
Entered back into Special Commission Meeting at 1:49 P.M…
Commissioner Burdick motioned to accept the bid from Encore Land Services in the amount of $5,200 per net mineral acre for a total of $46,628.10 and enter into a 3 year lease at 3/16th royalty. Commissioner Todd seconded the motion. All commissioners voted aye and the motion passed.
Adjourn
Chairman Winterton adjourned the meeting at 2:54 P.M.
Read and approved this 1st day of May 2017.
Ronald Winterton / JoAnn EvansCommission Chairman / Clerk/Auditor
Minutes of meeting prepared by BobbiJo Casper______
Special Commission Meeting Held April 03, 2017
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