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Little interest in SABMontana DNRC oil and gas lease auction average price drops to five-year low Mike Ellerd Petroleum News Bakken
With no eastern Montana Bakken acreage to bolster demand, the average price per acre in the Montana Department of Natural Resources and Conservation’s Sept. 3 oil and gas lease auction fell to a five-year low of $6.65 per acre. The auction was dominated by tracts in northern Lewis and Clark and southeastern Teton counties in northwest Montana at the southern end of an area generally known as the Southern Alberta Bakken (see map, page 16). While the Lewis and Clark County tracts brought the highest prices, at an auction high of $14 per acre, the demand for the leases was limited.
Six of Lewis and Clark County tracks totaling 2,396.36 acres were leased by Mauifish LLC of Whitefish, Montana. The other four tracts totaling 1,263.55 acres were leased by JP Furlong of Bismarck, North Dakota. In Teton County, Mauifish picked up nine of the 11 tracts totaling 1,990.35 acres for $1.75 per acre, with Leviathan Oil LLC of Spokane, Washington, picking up the other two tracts totaling 200 acres for $1.50 per acre.
The only other tracts in the auction were four in Big Horn County in south-central Montana, which Brisco Petroleum picked up for $1.50 per acre. Those four tracts totaled 1,788 acres.
Overall, 7,638.26 acres were leased for a total of $50,797.58, resulting in the $6.65 per acre average. The highest average price per acre over the last 12 years of DNRC auctions was $266.34 in March, which was supported by two Missouri River riverbed tracts in Richland County that brought $2,700 (21.67 acres) and $2,350 (640 acres) per acre.
Since 2008, the DNRC oil and gas lease auctions have averaged 172 tracts and 69,095 acres per auction with an average price per acre of $32.82.
Daniels Co. tracts pulled When the Minerals Management Bureau first released the nominations list for the September auction in June, it included 9,994.38 acres in 28 tracts in Daniels County in northeast Montana. However, at the request of the nominator, those tracts were pulled from the auction in August. The nominator may defer the tracts until the bureau’s December auction, and consequently the bureau is withholding the identity of the nominator until that time.
The December oil and gas lease auction is set for 9 a.m. Mountain Standard Time in the Montana Department of Transportation auditorium in Helena on Dec. 2. Nominations for that auction close at 5 p.m. Mountain Daylight Time on Sept. 16.
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BLM lease nominations focus on southwest MT
A total of 14,828.21 acres have been nominated for the October Bureau of Land Management Montana/Dakotas oil and gas lease auction, but the focus of the nominations has shifted away from the Bakken region and moved all the way into far southwest Montana where nearly half of the nominated acres are in Beaverhead and Madison counties, an area of Montana not necessarily known for oil and gas activity (see map).
Nominated acreage within the Williston Basin for the October auction includes one 40-acre tract in Roosevelt County, Montana, and a total of 5,350.88 acres in five U.S. Forest Service tracts in northeast Golden Valley County, North Dakota (see table). Those five Golden Valley County tracts are the only North Dakota tracts nominated for the auction — all of the remaining tracts are in Montana.
In addition to the tracts nominated in Beaverhead and Madison counties, two other tracts in southwest were nominated for the auction: a 360-acre tract in northeast Gallatin County and a 160-acre tract in nearby northeast Park County.
Other Montana nominations include five tracts totaling 602.44 acres in Big Horn County in south-central Montana, and 676.87 acres in four tracts in Powder River County in southeast Montana. Rounding out the nominations are two tracts totaling 6,880.24 acres in Prairie County in east-central Montana.
The October lease auction will be held at the Montana BLM office in Billings beginning at 9 a.m. Mountain Daylight Time on Oct. 21.
Above average tract size The 28 tracts nominated for the October BLM auction average 529.58 acres each, which is higher than the six-year average of 437.31 acres per tract. That average tract size was driven up by three of the Golden Valley County tracts in North Dakota (1,120, 1,440 and 1,760 acres); three of the Beaverhead County, Montana tracts (1,080, 1,306 and 1,448.48 acres); and both of the Madison County, Montana tracts (1,006 and 1,120 acres).
The last time the tract size average was above 500 acres was in the May 2011 auction when 14,458.25 acres were leased in 25 tracts for an average of 578.33 acres per tract. That average tract size was bolstered by five tracts in Dawson County, Montana, that ranged in size from 803.9 to 1,600 acres; one 1,520-acre and two 960-acre tracts in Richland County, Montana; and one 877.62-acre tract in McKenzie County, North Dakota.
—Mike Ellerd
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