Acres down, prices upBLM oil and gas lease auction beats five-year average by nearly five-fold Mike Ellerd Petroleum News Bakken
While the 1,742.18 acres leased in the BLM Montana/Dakotas office’s first quarter 2015 oil and gas lease auction held Jan. 27 in Billings had the lowest acre total in BLM auctions over the last five years, the average price per acre of $2,440.96 was nearly five times the five-year average of $524.16. Furthermore, the high bid per acre of $13,750 was the highest received in a Montana/Dakotas lease auction since January 2014 and the third highest lease-topping bid since 2010.
The BLM’s Montana/Dakotas office alternates among tracts in Montana, North Dakota and South Dakota offered in its quarterly auctions, and since 2008 the first quarter auction has been limited to tracts in North Dakota. The North Dakota acreages leased in the January auction were spread among seven tracts, three of which are in Dunn County, three in McKenzie County and one in Williams County (see map).
High bidders The high bid was paid by Herco LLC of Billings for a 233.30-acre tract in the Lost Bridge field in northern Dunn County. Herco paid the second highest bid of $12,000 for a neighboring 62.85-acre Lost Bridge-field tract (see table). To the southwest in the Little Knife field, a 3.91-acre tract along the Little Missouri River also brought $12,000 per acre in a bid from Langham Petroleum LLC of Greenwood, Colorado. Those were the only Dunn County tracts in the auction.
Langham Petroleum had the fourth highest bid of $575 for a 160-acre tract in Ellisville field in north-central Williams County. The remaining three tracts were in McKenzie County. One is a 2.12-acre Yellowstone River riverbed tract in the Hay Creek field in far western McKenzie County that Sparrow Investments LLC of Bismarck leased $500 per acre.
The remaining two tracts are in the Hay Draw field in south-central McKenzie County. One is a 320-acre tract that was leased by Nisku Royalty LP of Billings for $130 per acre and the other a 960-acre tract leased by Langham Petroleum for $100 per acre.
Perspectives In January 2014, a total of 2,262 acres in 45 tracts were leased and brought a record high average of $7,742.19 per acre, well above the five-year average at the time of $504.81. That auction also brought in a record high bid of $34,000 per acre for a 53.05-acre tract in the Van Hook Peninsula in southern Mountrail County. A neighboring 152.18-acre tract brought $33,000 per acre in that same auction, and 18 of the 45 tracts totaling 545.13 acres in Dunn, McKenzie, Mountrail and Williams counties brought between $11,000 and 28,000 per acre.
In the most recent BLM lease auction in October 2014, 6,390.19 acres in 12 tracts were leased in Powder River, Roosevelt and Yellowstone counties in Montana, and in Golden Valley County in North Dakota bringing an average of $105.52 per acre. However, an additional 8,598.02 acres in 16 tracts scattered from eastern through south-central and southwest Montana received no bids.
The lowest average price over the last five years was $39.64 in October 2013 when 20,845 acres were leased in 84 tracts in Montana, North Dakota and South Dakota.
The 1,742 acres leased in the January auction marked the lowest total acreage over the last five years of BLM Montana/Dakotas auctions and was well below the five-year average of 28,743 per auction. The average tract size of 248.88 acres was also well below the five-year average of 357.06 acres but nearly five times higher than average tract size of 50.24 acres in the January 2014 auction.
Upcoming auctions North Dakota Department of Trust Lands has its next lease auction scheduled for Feb. 3 at the Kelly Inn in Bismarck beginning at 9 a.m. Central Standard Time. A total of 20,752 acres in 246 tracts across nine counties have been nominated for that auction.
The Montana Department of Natural Resources and Conservation will hold its next oil and gas lease auction in Helena on March 3. A total of 35,292 acres in 78 tracts across seven counties have been nominated for that auction.
The next BLM Montana/Dakotas lease auction will be held in the Billings office on May 6. A list of nominated tracts will be available on the Montana/Dakotas website on Feb. 5.
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