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The agreement between the State Board of Land Commissioners and Bonanza Creek will net the state land board nearly $60 million in bonus payments over five years. The funding will benefit primary and secondary education in Colorado, the state Department of Natural Resources said in a statement.
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Bonanza Creek won the bid from the state land board, which offered the parcels, known as 70 Ranch, in a sealed-bidding process. The 70 Ranch property was previously part of the National Hog Farm operation, which occupied the land from 1989 to 2011.
The state land board selected the company because it offered a bonus price for the acreage and because it operates on adjacent lands and has already developed infrastructure with access agreements in place.
Bonanza Creek has operated in the Wattenberg field for more than 10 years and has drilled more than 250 wells in the area.
In addition to the bonus payment, the agreement includes a 20-percent royalty for the state land board on oil and gas resources produced from the acreage.
“These lands are located in an area where there are many producing wells, and we are optimistic that this lease will generate significant revenues for our beneficiaries through production royalties in years to come,´ said Bill Ryan, director of the state land board.
The major lease comes as state land board revenue continues to grow. Revenues totaled $146 million last fiscal year. The number of parcels leased as well as bonus bid amounts also continue to set records.
The state land board manages more than 4 million acres mineral rights. Its activities generate revenue for eight beneficiaries, the largest of which is the primary and secondary public education trust.