The city of Thornton struck a multimillion-dollar deal with Denver-based Phoenix Capital Group to sell some of its oil and gas rights in the Denver-Julesburg Basin.
About the buyer (Phoenix Capital Group Holdings)
Phoenix Capital Group is a prominent mineral acquisitions company in the oil and gas industry, headquartered in Denver, Colorado. It was founded in 2019 and has since thrived and moved to the top. Phoenix Capital Group develops partnerships with its customers through property acquisitions and investment opportunities and has a wide range of experience working with landowners across the country. Phoenix Capital Group is competitive in other oil and gas basins in Wyoming, Utah, and Texas.
About the deal.
The city of Thornton closed a $33 million deal with Phoenix Capital Group Holdings to sell the rights to oil and gas it owns in Adams and Weld counties.
Phoenix Capital Group bought the rights to 4,000 net royalty acres, which is the royalty revenue that can be produced per acre from the oil and gas production. The mineral rights are spread across 15 different tracts of land.
The deal, was closed on Nov. 4 2022, and is the biggest in the company’s history.
It was also believed that it is one of the largest of such acquisitions in Colorado’s Denver-Julesburg Basin, which is Colorado’s biggest oil producer.
The onset of the deal
Not long ago, Thornton concluded that the market was favorable and decided to sell the portion of its minerals that weren’t producing or were just starting to produce.
So, earlier this year, the Thornton City Council looked at whether it was more beneficial to lease the city’s minerals or sell them. Some didn’t agree with either but arguments were given by city staff who referred to issues such as the regulatory environment that dissuades drilling, cutbacks in drilling due to a lack of financing, and the present high oil prices.
In addition to this, the city staff stated that the estimated value of possible royalties would be comparable to the potential sales price, but generating revenue is less certain and spread out over time.
So in response to this, Thornton put the oil and gas rights up for auction in September and took bids from different parties for fractions of the tracts or the entire package. Several parties bid on it but Phoenix Capital group won the bid as it was the only party that offered bids on all the rights offered.
Thornton’s mineral rights were spread across several tracts, which makes it challenging to sort through the land titles. But over 15 members of the Phoenix Capital Group team worked on the acquisition and wrapped it up in 30 days.
Statement from others about the deal.
Phill Dunning, a director with the energy research firm Enverus, also one of the individuals who were privy to the deal said that the Thornton deal is intriguing because it is a government entity selling the assets.
He also added in mild concern that the issue of potential conflict is a bigger matter in Colorado than in most states because of Colorado’s stricter laws on how far new wells must be from homes and other buildings.
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