In less than an hour, the El Reno Airpark landed a cool $4.8 million and quite possibly more after the city conducted an auction of the mineral rights on the 320-acre site.
Haggard Land Company cast the winning bid for the three-year lease agreement, offering $15,000 per acre and a 20 percent royalty on any oil or natural gas it pulls from beneath the surface.
Mayor Matt White quickly made the three-man council vote unanimous with a “hell yes,” after J.T. Chronister and Timmy Robinson agreed to the deal.
“We were hoping to get more,” White said, drawing laughter from the half dozen or so energy representatives inside the council chambers.
It was the second energy-related windfall for the municipal government in recent weeks, the first coming when a Texas firm paid $800,000 with a 20 percent royalty for the minerals believed to be in the Lake El Reno area.
Because El Reno years ago acquired the airpark from the Federal Aviation Administration, the proceeds must be used for improvements there or aviation-related purposes.
Haggard battled back and forth with Armor Energy for the rights to the minerals. White opened the bidding at the special council meeting on Tuesday at $4,000. Jones Energy bid first, offering $4,000 per acre for five years with a 3/16 royalty.
The bids kept coming for the next 45 minutes before Haggard landed the deal shortly after noon.
When the bids had reached $14,000 per acre, City Manager Dan Galloway advised the council to lock in the three-year term that had been consistent since the Armor representative offered it early in the process. Council agreed and then reopened the process focusing on the per acre price as well as the royalty amount.
With the funds, White said he would like to see the debt at the airpark paid off. The authority owes the city of El Reno for loans it has taken over the years. That debt is said to be about $600,000.
If the airpark is made debt-free, it would mark the third municipal authority to achieve such status with White serving as mayor. Debts held by both the Hospital Authority as well as the Recreational Authority were cleared by the mayor and various members of the council.
The day after the airpark deal was struck, oil jumped by more than $4 as OPEC announced it had agreed to cut production.
Also, President-elect Donald Trump has indicated energy independence will be a priority of his administration. By Thursday, the price of oil was over $50 per barrel.