SUBJECT:
Title
PUBLIC HEARING: An Ordinance of the Town Council of the Town of Erie Authorizing the Sale of Minerals to 7N, LLC, Accepting the Conveyance of Real Property from 7N, LLC, and Approving Agreements with 7N, LLC, SM Energy Company, and Extraction Oil and Gas, Inc. Regarding the Exchange of the Mineral Rights for the Real Property
Department
DEPARTMENT: Town Attorney
Presenter
PRESENTER(S): Breena Meng, Town Attorney
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Time
TIME ESTIMATE: 150 minutes
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For time estimate: please put 0 for Consent items.
Fiscal
FISCAL SUMMARY:
Approval of the ordinance and agreement would approve for the Town:
• $4.5M cash payment.
• Three properties on County Line Road appraised at ~$13.575M.
• Production revenue increased from 2% to 3%, estimated as high as ~$25.5M over the life of the Draco Well.
Policy
POLICY ISSUES:
Per the Town Charter, the purchase and sale of Town property, including mineral rights, must be approved by the Town Council by ordinance.
Recommendation
STAFF RECOMMENDATION:
Staff has no recommendation; this is a policy decision of the Council.
Body
SUMMARY/KEY POINTS
The Draco Pad was approved, March 26, 2025, by the Colorado Energy and Carbon Management Commission (ECMC) despite Erie's objections and thorough testimony. The Civitas/SM Energy project involves 26 wells in a pad located in unincorporated Weld County with underground drilling extending west under the Town of Erie and Boulder County.
Civitas/SM Energy approached the Town in Spring 2025 regarding the possibility of acquiring the Town’s mineral rights to access from the Draco pad.
The basic contract points are:
• Land to be received by the Town to include three parcels on County Line Road approximately 158 acres appraised at ~$13.575M.
• The plugging of 17 existing wells in Erie.
• The ability of the Town to pursue its own on-site facility inspections at the Draco Pad.
• Percentage of the revenue from the wellhead to be paid to the Town increased from 2% to 3%; estimated to be as high as ~$25.5M+.
• Cash payment of $4.5M.
BACKGROUND OF SUBJECT MATTER:
• June 2 Meeting Materials <https://erie.legistar.com/View.ashx?M=PA&ID=1366895&GUID=892FCB94-3BCF-4E50-8A33-E9DDADC22C48>
• June 2 Meeting Video <https://erie.granicus.com/player/clip/3516?view_id=9&redirect=true>
• April 21 Meeting Materials <https://erie.legistar.com/View.ashx?M=PA&ID=1398700&GUID=0DE387ED-D18D-49D0-9654-3FA3DDC8558A>
• April 21 Meeting Video <https://erie.granicus.com/player/clip/3501?view_id=9&redirect=true>
priorities
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attachments
ATTACHMENT(S):
1. Ordinance
2. Contract to Exchange Real Property and Mineral Rights
3. Agreement Regarding Draco Pad
4. Agreement Regarding Draco Pad - Highlighted Change from 2% to 3%
5. Comments from Council Member Dan Hoback
6. FAQs <https://erieco.gov/m/faq?cat=103> including maps of the drilling area
7. Public Comments, June 3 - June 12 (11 am)