Active Water Investment Project
Deep Water Holdings LLC
Greenland Ranch Water Right
Executive Summary
Proposed Sale of Deepwater Right
Deepwater Holdings LLCis offering for purchase on a limited basis to qualified buyers a water right to develop 1.456 million acre-feet of non-tributary groundwater from the Denver Basin. The Colorado Water Court issued the water right decree in 1995. The decree entitles withdrawal of 1% of the total amount per year, 14,562 acre-feet, for 100 years. The water right is located 25 miles south of Denver in the heart of Colorado's rapidly growing Front Range and is well situated to serve two of the fastest growing counties along the Front Range, Douglas County and El Paso County. Deepwater Holding's water right represents a sufficient volume of water that could supply the annual needs of approximately 30,000 homes and generate between $370 and $400 million in revenue.
Purchase Price and Value:
Deepwater Holdings is accepting reasonable market offers from qualified buyers for the full interest of the Deepwater water right, development easements, and the related legal, engineering, technical, and market research. Recent water right transactions in the region have sold for $2,000 to $3,500 per acre-foot. A detailed review of water right market activity is available in the Dataroom. Please log into the Dataroom to view the Front Range Water Market Report.
Deal Terms:
Deepwater Holdings is seeking an all cash deal and looking to close the transaction before the end of June 2009.
Asset Highlights
The Deepwater water right provides a rare water investment opportunity for the following reasons:
- High Quality: The Denver Basin generally has the highest quality water. Water pumped from the Denver and Arapahoe aquifers generally have a small dissolved-solids concentration and, in most areas, meet drinking-water regulations established by the U.S. Environmental Protection Agency for public water supplies. The Deepwater water right requires minimal to no treatment.
- Limited Well Interference: The Deepwater water right is situated in what is considered the thickest and highest yielding portion of the Denver Basin. The overlying surface land of the Greenland Ranch is protected from development through conservation easements. Moreover, minimum development is occurring adjacent to the Greenland Ranch. As a result, the risk of other wells affecting the water quality and pumping capacity is low.
- Large Enough to Support Investment: The Deepwater water right is one of the only large contiguous blocks of groundwater available for sale in the region. The water right size provides sufficient quantity to financially support infrastructure development costs. The water right is for 14,562 annual acre-feet + 189,000 acre-feet of banked water available for immediate withdrawal. This large block of water can be developed as a principal source of water and used as a platform to acquire smaller surrounding area surface and groundwater rights. The ownership of groundwater rights within the Denver Basin is highly fragmented making it difficult to consolidate an equivalent quantity of water.
- Located between Growing Municipal Water Markets: The Deepwater water right is located in the center of growing urban centers constrained by shortages of water supplies. Douglas County and Northern El Paso County are among the fastest growing areas in Colorado and the nation. It is estimated that Douglas County will need an additional 45,000 acre-feet water supply by 2030. El Paso County municipalities are estimated to require an additional 88,000 acre-feet water supply by 2030. Extensive market research has been completed identifying at least three primary market opportunities for the water. In addition, letters of expression of interest in the water and delivery of the water have been tendered by two major end users in the region.
- Legal Title: Significant legal and consulting work has been done to obtain a water right decree from the Colorado Water Court. Legal entitlements and ownership is clearly established. Retained easements for water infrastructure development and conservation easements are in place with landowners.
Front Range Water Market Overview
Water supply represents the primary constraint on economic and property development growth in the Front Range. The US Census Bureau projects Colorado to be among the fasted growing states in the country. Front Range population is projected to grow from 3.9 million to 6.1 million (61%) residents by 2030. In addition, the region is predicted to experience severe long-term water supply problems by the US Bureau of Reclamation. By 2030 the incremental demand in the South Platte River Basin (northern Front Range) and the Arkansas River Basin (southern Front Range) is projected to be 507,700 acre-feet. Assuming all planned water supply projects and conservation efforts materialize, a supply shortfall of 122,300 acre-feet would still remain to meet the incremental demand by 2030. Variability in proposed supply projects and conservation efforts could leave a supply gap as large as 361,550 acre-feet.
Asset Development Plan
Purchasing the Deepwater water right presents a unique business opportunity to provide water on a wholesale basis to targeted end users along the Front Range. The business plan involves acquiring the water right asset, building well field and conveyance infrastructure and then selling the water wholesale to the end users.
The Deepwater water right provides a cost effective and immediate water supply alternative amid the rising cost of long term water supply projects along the Front Range. The Deepwater water right is ideally suited for the end user in multiple scenarios:
- Interim Supply Source for the municipalities until higher cost renewable sources of water are developed and become available.
- Drought Control and a risk free backup supply of water once these projects come online.
- Supply Replacement and Redundancy for municipalities with existing groundwater wells or renewable sources. (These municipalities may be experiencing declines in existing water sources and are seeking both long term and interim water supply options.)
Potential investors should contact WestWater Research for specific information about this opportunity.
To learn more about Colorado's Front Range Water Market and the Deepwater Holdings water asset, view the following links: