Slawson Exploration was the top bidder at the U.S. Bureau of Land Management’s North Dakota oil and gas lease auction on Jan. 30. The Wichita, Kan., independent offered the highest single-parcel bid of $1,596,000 for an 80-acre tract in Mountrail County, which was also the top per-acre bid, $19,500, at the sale.
BLM netted a total of $11,433,090 from the sale of 2,831.38 acres in 25 federal leases, 48 percent of which it has to share with the State of North Dakota.
The tracts were in the western North Dakota counties of Mountrail, Burke, Dunn, Williams, Stark and McKenzie, where oil companies have been successfully drilling horizontal wells into the Bakken petroleum system since 2008.
The 13 winning bidders at the oral auction, which was held in Billings, Mont., appeared to have a variety of objectives — most of the six significant Bakken producers appeared to bid on acreage in existing spacing units that they either operated or in which they held an interest; most of the non-operators and small operators, also bid on existing spacing units, in which some of them already held an interest; and then there was some pure speculation, mainly on the part of what appeared to be land speculators.
Several of the leases were under an existing or pending communitization agreement for the Bakken formation, which means the operator could require the successful bidder to pay certain administrative and operating costs.
Top Bakken oil producers with winning bids in the sale included Slawson, Continental Resources, ExxonMobil subsidiary XTO Energy, Oasis Petroleum, Kodiak Oil & Gas and Hunt Oil (see adjacent chart of winning bids).
Per State of North Dakota preliminary oil production records for November, the latest month reported, Continental was the second largest operator of producing oil wells in the state at 61,680.9 barrels of oil per day; XTO the sixth (adding in the Denbury Resources wells it operates on behalf of its parent ExxonMobil); Slawson the eighth; Kodiak the tenth; Oasis the thirteenth; and Hunt the nineteenth at 9,724.2 barrels of oil per day.
Leases would be issued for a primary term of 10 years, BLM said in sale documents. They would continue beyond the primary term as long as the lease was producing in paying quantities or receiving production from another source.
Rental on the federal leases was $1.50 per acre for the first 5 years ($2 per acre after that) until production begun. Once in production, BLM said it charged a royalty rate of 12.5 percent on the production removed or sold from a lease.
Some parcels were subject to surface use restrictions or other conditions affecting how oil and gas operations were conducted.
The next quarterly oil and gas auction that will be held by BLM’s Montana office was scheduled for May 7.
—Kay Cashman
