CODY, Wyo. — Park County commissioners have given one of the world’s biggest oil companies a break on paying office space rent, citing the oil and gas industry’s financial woes because of low prices.
At the company’s request, the commission provided Marathon Oil Corp. a two-year reprieve from the annual 2.4 percent rate hikes they typically demand of office tenants at a county owned office complex in Cody.
“Due to oil prices being down nearly 70 percent, we’re facing several challenges,” Marathon attorney Kirby Iler told commissioners.
The decision could save Marathon about $22,500 over the new five-year lease, although the actual figure depends on how the region’s cost of living changes in the coming years, the Powell Tribune reported (http://bit.ly/1MDpxre).
Even with the discount, Marathon, which also is reducing the physical size of its office in the Park County Complex to trim costs, will pay the county about $1.023 million over the five years.
“It’s a good relationship and we just hope for your sake — and our assessed valuation’s sake — that oil comes back up in price,” commissioner Tim French said. “I’m sure it will at some point, but, you know, tough situation right now.”
Marathon has been leasing about 19,200 square feet in the office complex, but by the start of 2016 the company will give up roughly 2,950 square feet. It will remain the largest renter in the complex.
Legacy Reserves LP — another oil and gas company housed in the complex — plans to expand into the space Marathon is vacating.
French asked if Marathon really wanted to give up the square footage, wondering what will happen if the oil market rebounds.
“The way it’s going right now, unfortunately, at least looking forward, things … seem like they’re going to stay somewhat stable where they’re at for some time,” Iler responded. “And that’s something that’s been a hard decision.”
A multi-national corporation, Marathon is currently focusing its resources on three “high return areas” in the United States: the Eagle Ford Shale in South Texas, the Bakken Shale in North Dakota and eastern Montana and Oklahoma.
Marathon has cut roughly 400 jobs throughout the company from its overall payroll in early 2015, saving roughly $100 million a year, Marathon Oil CEO Lee Tillman recently told analysts and investors. The company’s Wyoming workforce was included in the cutbacks.
Noting the other tenants at the county complex, commission Chairman Joe Tilden initially expressed some reservations about giving Marathon a discount.
“We need to be treating everybody the same, and so far we haven’t waived any of the price increases. That’s my only concern,” Tilden said.
But commissioner Bucky Hall said the county doesn’t have to be fair.
Both Hall and French noted Marathon’s long-standing presence in Park County and pointed out that Marathon gave the county a substantial discount when it sold the complex to the county in 2005.
“I think we’re all sympathetic about the price of oil, and it’s certainly impacted Park County as much as it has Marathon,” commissioner Loren Grosskopf said.
Grosskopf added that he wished the county could get a break on its increased utility and maintenance costs.
Information from: Powell (Wyo.) Tribune, http://www.powelltribune.com
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