Oil leases in the Lloydminster area contributed nearly $3 million to Saskatchewan’s public offerings this month. The latest public offering of Crown petroleum and natural gas rights held Tuesday, June 4, generated more than $6 million in revenue for the province of Saskatchewan, bringing the current fiscal year’s total to about $8 million.
Six leases posted north of St. Walburg in the Lloydminster area were acquired for a total of $2,881,280.38. These parcels are prospective for heavy oil in the Mannville Group and were acquired by Millennium Land (111) Ltd., Millennium Land (333) Ltd., Millennium Land (555) Ltd., BASM Land & Resources Ltd., Rockwell Resources Inc. and Prairie Land & Investment Services Ltd.
Paul Mahnic, executive director of the Ministry of Energy and Resources land and mineral tenure branch, believes there’s a high value on this parcel of land. He thinks this can indicate a sense of competition among industry bidders.
“Industry will determine what they think a minimum bid is based on the economics of the project, and they’ll look at the competition, and say ‘we need to add a premium’ if they think somebody else will be interested, or multiple parties. That’ll push the bonus bid higher,” says Mahnic.
Mahnic adds that the offering experienced a good average. The average price per hectare for the June offering was $1,654 per hectare, the highest per hectare for an offering since August 2014. He also believes it’s a sign of confidence in the province’s royalty regimes, tenure regimes, and the industry in general.
“It’s all positive indicators that there is still interest. In these areas, where you’re looking at heavy oil, they’re typically longer-term projects. They’re not just looking to get in and get out in the next year or two.”
Mahnic believes they could indicate a twenty or thirty-year project in the area. The scheduled date for the next public offering will be August 13.