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Alberta land sales top C$3 billion
It’s a land rush that has turned into a gold rush for the Alberta government, with the scramble for exploration nuggets generating C$3.1 billion in revenues, more than double the returns for the same period last year and easily eclipsing the record C$2.2 billion for all of 2005.
But there are signs the pace is slowing, with the first sale of October posting the second lowest return of 2006 at C$30.1 million, compared with the year’s low of C$23 million in April.
Among analysts the expectation is that the slump in commodity prices is forcing E&P companies to put the squeeze on their budgets through the rest of 2006 and well into 2007.
A clear sign of restraint at the Oct. 4 sale was the nosedive in spending on oil sands leases to C$500,000, although the year-to-date tally is a staggering C$1.8 billion compared with C$385 million for all of 2005.
Oil sands leases could be 20 years from production The gamble for those acquiring oil sands rights is that many of the leases could be 20 years or more away from production, when there is no guarantee that the output will be economic.
There are also hints that conventional oil and gas prospects are in decline as cash flows turn down, with producers acquiring land for C$100 an acre, a small fraction of the C$800-$1,000 prices earlier this year.
Land volumes are at their highest point in more than a decade, with just over 9 million acres changing hands vs. 5.75 million acres to the same point last year. Average per-acre prices are up 40 percent to C$345.
B.C., Saskatchewan also have good years Elsewhere in Western Canada, British Columbia and Saskatchewan also have their sights set on benchmark years.
British Columbia raked in C$101 million at its Oct. 11 sale, pushing its year-to-date total to C$597 million, C$203 million ahead of the 2005 pace, with volumes climbing to 1.44 million acres from 1.18 million acres.
At the current pace, the province is expected to top the 2003 record of C$650 million, although average per-acre prices have slumped 40 percent from the year’s peak of C$800.
Saskatchewan sales were C$128 million for the first nine months and are anticipated to pass C$200 million for the first time, with average prices at a record C$223 per acre in August.
—Gary Park
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