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Mineral Prospecting – Know your Rights

By Chris Michlewicz; map courtesy of Douglas County

Do you live in the yellow boundary box? If so, you may be contacted about mineral rights under your property. Get the facts before paying for anything. This map was submitted to Douglas County with a letter of intent to pursue mineral rights under the properties within the boundaries. If you are contacted regarding mineral rights, contact your attorney immediately.

Douglas County is looking into the rights of mineral interest owners after a pair of recently-formed LLCs announced their intent to prospect underneath land in Douglas County.

The County received notice from Daniels Park LLC and Castle Pines LLC in January about their intent to prospect after recently acquiring mineral rights underlying a small portion of Cherokee Ranch & Castle, the historic, 3,400-acre property northeast of The Village at Castle Pines. Douglas County is the holder of a conservation easement on Cherokee Ranch.

Daniels Park LLC and Castle Pines LLC purchased a one-sixth share of the mineral interest underlying the properties, which also include portions of the City of Castle Pines and The Village at Castle Pines, according to a memo presented to the Douglas County Board of County Commissioners (BOCC) on February 7. The severed mineral interest was created in 1980 and was acquired by the LLCs after a lien was placed on the mineral rights due to unpaid taxes.

According to a letter to the County from the managing general partner of the LLCs that acquired the mineral interest, they are in the process of filing a notice of intent to prospect.

The company approached James Holmes, executive director of Cherokee Ranch & Castle, offering to sell the mineral rights for $1 million. After some research, Holmes discovered that the rights were acquired for less than $100, but also that the severed mineral interest explicitly excludes the right of surface entry.

“I said we’re not interested, nor do we have the resources to acquire the rights from you,” Holmes said.

The companies said they were about two months away from exploring the rights. The portion underlying Cherokee Ranch is about 60 acres, Holmes said, and any potential minerals would have to be accessed via lateral entry at a steep cost.

Holmes said he’s concerned that some property owners might end up paying the LLCs without fully understanding their rights.

He is also concerned they may be using uncertainty and a lack of clarity to get someone to buy back the rights, he said.

In the February memo to the BOCC, the County attorney said the LLCs have potentially reached out to other homeowners regarding their recently-acquired mineral interest, and the memo was intended to “provide the Board with background material if you are contacted by the affected property owner.”

In the letter to Douglas County, the LLCs stated they believe they have the right to prospect on the land, and said a special warranty deed on the mineral rights was wrongfully transferred to Cherokee Ranch & Castle. The severed mineral interest from 1980 says the land beneath the ranch could hold oil, gas, coal and other hydrocarbons.

The memo says County staff is working with the County attorney’s office to prepare an official response to the notice to prospect from Daniels Park LLC and Castle Pines LLC.

In an email correspondence Commissioner Lora Thomas recently sent to her constituents, she wrote (in part) “Should you or anyone you know be contacted by someone indicating he owns mineral rights under your property, you should not write a check to satisfy some demand. Contact your attorney immediately.”



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