Monday, April 18, 2011

Oil resource plays- Causing a stir in the industry!! Back to back crown land sales in Canada hit ~C$110 million

Alberta- April 2011 sale
Alberta kicked off its first land sale of fiscal 2011/2012 on 6th April, 2011 with a C$115.8 million land sale, fuelled once again by licences south of Grande Prairie and also several parcels near Lethbridge, which appears to be a continued chase for Exshaw/Alberta Bakken oil. The sale featured 233,431 hectares exchanging hands at an average of C$496.13 per hectare. Highlights included a sale high bonus bid of C$17.9 million by Scott Land & Lease Ltd for three tracts and several parcels at 61-24W5 and 60-24W5. The broker paid an average of C$8,735 per hectare (~C$3,500/acre) for the 2,048-hectare parcel, also a land sale high.

Saskatchewan- April 2011 sale
Heightened interest in the southwest's Shaunavon oil play has significantly boosted revenue from the latest sale of Crown petroleum and natural gas rights. The Shaunavon play accounted for more than half the total in April's sale, which brought in C$109 million in revenue for the province. Land sale revenues for the 2011 calendar year stand at C$152 million after two sales. The latest sale was the third best on record for an April sale. It also marked the seventh time in the last three years that a single land sale has topped C$100 million. The February-2011 sale of drilling and exploration rights raised C$43.4 million for the provincial coffers

The highest price for a single parcel was C$7.3 million, paid by Husky Oil Operations Ltd. for a 2,331-hectare exploration licence southwest of Estevan along the Canada-United States border. The highest price on a per-hectare basis was C$10,214 (~C$4,000/acre). Villanova Oil Corp bid C$320,000 for a 31-hectare lease parcel near Carnduff.

"This was a great sale, based on both the quantity and the quality of the bids we received," Energy and Resources Minister Bill Boyd said. "We had the usual strong interest in the Bakken play, but our rich oil resources in the southwest are obviously causing a stir in the industry.
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Unusually high acreage metrics in Canada!!
"Land sales are a key barometer of future activity in the industry, and based on what we've seen over the last 15 months from our sales, the forecast is very bright indeed for increased investment by the industry", said Bill Boyd. 

Land sale numbers tend to move higher in tandem with oil prices. These two recent crown land sales in Canada saw the acreage metrics running at C$3,500/acre and C$4,000/acre- relatively high for new land parcels! With the oil prices rising gradually, the oil resources plays like Bakken and Shaunavon are attracting flocks of companies. In particular, Saskatchewan is expecting Asians to invest in these oil rich plays. When Chinese were keen to make an entry into US shale plays in 2010, they wont' hesitate to venture into Canadian shales.

The following snapshot shows the 2010 M&A activity in Canada: 

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