§ 31-15-714 — Oil and gas leases - unit agreements

Colorado § 31-15-714

• Jurisdiction: Colorado
• Title 31: Government
• Art.: Exercise of Municipal Powers

Text

(1) The governing body of
each municipality has the power:

(a) To lease any real estate or any interest therein owned by the municipality
for oil and gas exploration, development, and production purposes, upon such
terms and conditions as may be prescribed and contracted by the governing body in
the exercise of its best judgment and as such governing body deems to be in the
best interests of the municipality. Any such lease of oil and gas rights shall be for a
term not to exceed ten years and as long thereafter as oil or gas is produced and
shall provide for a royalty of not less than twelve and one-half percent of all oil or
gas produced, saved, and marketed or the equivalent market value thereof, which
royalty may be reduced proportionately under appropriate provision in such lease if
the interest of the municipality is less than a full interest in the land or oil and gas
rights in the land described in such lease. When, in the opinion of the governing
body and because of the size, shape, or current use of any tract of real estate
owned by said municipality, the best interest of the municipality so requires, any
such lease of such tract may provide that no drilling shall be conducted on the land
covered thereby, in which case such lease shall be for a term not to exceed ten
years and so long thereafter as the municipality may share in royalties payable on
account of production of oil or gas from lands adjacent to such tract so leased.

(b) To enter into, on behalf of the municipality, when deemed by the
governing body to be in the best interest of the municipality, any agreement
providing for the pooling, unitization, or consolidation of acreage covered by any oil
and gas lease executed by such municipality with other acreage for oil and gas
exploration, development, and production purposes and providing for the
apportionment or allocation of royalties among the separate tracts of land included
in such unit or pooling agreement on an acreage or other equitable basis and, by
such agreement, with the consent of the lessee under such lease, to change any of
the provisions of any such lease issued by such municipality, including the term of
years for which such lease was originally granted and any drilling requirements
contained therein, in order to conform such lease to the terms and provisions of
such unit or pooling agreement and to facilitate the efficient and economic
production of oil and gas from the unit lands.

(2) All leases of oil and gas or rights therein and all unit agreements relating
to or dealing with oil and gas and containing provisions similar to those set forth in
this section affecting municipal lands made or entered into by any municipality
prior to April 16, 1953, acting by its governing body, are hereby confirmed,
validated, and declared to be legal and valid in all respects.

Legislative History

Source: L. 75: Entire title R&RE, p. 1121, � 1, effective July 1.