Speculators in MontanaJune DNRC auction acreage more than doubles, but prices fall below average Mike Ellerd For Petroleum News Bakken
The focus of interest during the Montana Department of Natural Resources and Conservation Minerals Management Division’s quarterly oil and gas lease auction June 4 shifted away from areas of more proven oil and gas production in eastern Montana and toward more speculative areas of the state.
Of the 29,355 acres leased in the June auction in Helena, most are in the central areas of the state where the largest acreages leased were in Meagher (8,653 acres), Musselshell (4,637 acres), Cascade (3,758 acres), Gallatin (2,080) and Glacier (1,560 acres) counties. The only acreages leased in eastern Montana counties were in Dawson (1,275 acres), Richland (920 acres) and Wibaux (480 acres). Other acreages leased during the June auction were in Hill and Toole counties, located in far northern Montana, Fergus County in central Montana, and in Park and Big Horn counties in southern Montana.
“Tracts in the Bakken and Cedar Creek Anticline areas continued to generate strong interest. However, the majority of tracts on the June sale were scattered in more speculative areas of the state, which is reflected in the sale results,” said Monte Mason, DNRC Minerals Management Division bureau chief.
Prices fall accordingly As the interest shifted to more speculative areas of Montana, the average price per acre in the June auction fell to $18.11, down dramatically from the near record average of $80.28 in the March auction and well below the five year average of $32.75 per acre. However, the near record average in the March auction was unusually high for recent years and was bolstered by the sale of two tracts in the Elm Coulee NE field in Roosevelt County adjacent to some recently completed Bakken wells. One of those tracts was 160 acres and sold for $2,000 per acre; the other was of 9.43 acres and sold for $2,225 per acre.
In contrast, the high bid per acre in the June auction was $270 that Harvey Mineral Properties paid for a 315.16-acre tract in Dawson County. The other high bids were $200 per acre that Montana Oil Properties paid for a 480-acre tract in Wibaux County, and $165 per acre that Alameda Energy of Wichita, Kan., paid for a 640-acre tract in Dawson County. Some bids ranged from $150 to $15 per acre, but most of the acres were leased for as little as $1.50 and $1.75 per acre (see chart).
The 29,255 acres of leases offered were more than double the 12,596 offered in the March auction. The total was the highest acreage in a DNRC auction since June of 2012; the highest acreage total over the last five years was 201,226 acres in September 2011.
Winning bidders A new player to the Montana lease auctions is Beckman Brothers Petroleum of Houston, which leased the highest total acreage at 10,813.06 acres all located in southern Cascade and northern Meagher counties in central Montana. Zone Exploration of Billings leased 3,837 acres in Musselshell County. Trilateral Energy USA of Calgary picked up leases on a 3,520 acres located in northeast Gallatin, northwest Park and southern Meagher counties. Vecta Oil and Gas of Lakewood, Colo., leased all of the 1,560 acres offered in Glacier County, and picked up an additional 800 acres in Musselshell County. JBLS Montana Inc. of Billings was the successful bidder on 1,600 acres in far western Richland and far eastern McCone counties. Big Horn Oil and Gas of Holladay, Utah, was the high bidder on 1,571 acres in northern Lewis and Clark County, and Willis Oil and Gas of Helena leased 1,160 acres in Hill County.
Back in eastern Montana, Alameda Energy acquired 960 acres in Dawson County, and James W. Gardner of Lewistown, Mont., was the successful bidder on a 40-acre tract, also in Dawson County. The tracts that Harvey Mineral Properties and Montana Oil Properties picked up Dawson and Wibaux counties, respectively, were the only acreages those two firms acquired in the June auction.
Other successful bidders in the June DNRC auction were PetroShale Energy of Lewistown, Mont., which acquired all of the 461 acres offered in Fergus County. In addition to Beckman Brothers Petroleum, Lonewolf Energy of Billings also picked up Cascade County acreage, acquiring the leases on 958 acres in the same area as the Beckman Brothers acreage. Briscoe Petroleum of Sheridan, Wyo., acquired the lease on 640 acres in northern Big Horn County and Tyler Petroleum of Billings was the successful bidder on 640 acres in far eastern Toole County just south of the Canadian border.
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