By Matt Whittaker / NewsBreak Denver
(Denver, Colo.) A Denver-based mineral rights acquisition company paid more than $33 million for mineral interests owned by the city of Thornton.
Phoenix Capital Group Holdings bought more than 4,000 net royalty acres – which entitle the owner to a fixed portion of oil and gas production – from the city, marking one of the largest mineral rights transactions in the Colorado portion of the Denver-Julesburg basin. The prolific oil and gas development patch spans northeastern Colorado and parts of Kansas, Nebraska and Wyoming.
The deal, which closed on Nov. 4, “represents a substantial win for the city of Thornton, its residents and the oil and gas community,” Phoenix Capital said Thursday.
In May, Thornton city staff recommended selling the city’s non-producing mineral rights instead of leasing them, saying Colorado’s regulatory environment discourages development and companies have cut back on drilling because of a lack of financing and supply chain constraints.
When they do develop acreage, companies are drilling more wells on the same amount of property, leading to expectations of lower royalty rates, the staff said.
Additionally, the staff pointed to oil prices as significantly higher than historical averages.
Although oil prices have declined recently amid worries about demand in a potential recession, they are still elevated by historical standards after economic recovery from the pandemic boosted demand and the war in Ukraine caused a price spike.
Over the past year, Phoenix Capital has acquired tens of thousands of acres of mineral rights and leasehold interests. The company has offices in California and Wyoming.