The sale of Crown petroleum and natural gas rights in Saskatchewan for February raised C$197 million for the province, more than doubling the old record of C$85 million set in 1994. The 2007-08 fiscal year total of C$419 million also set a record, more than doubling the previous record of C$202 million set in 1994-95, according to the Saskatchewan government.
"These numbers are simply incredible and are a great start to 2008 for our province and our oil and gas industry," said Bill Boyd, the province's Energy and Resources minister. "They speak to the dynamic investment climate for our oil and gas resources and underscore the heightened interest in the rich Bakken oil play [the Canadian extension of the Williston Basin in the northern United States] in southeast Saskatchewan and the emerging oil play in the Shaunavon area."
The February sale included 16 exploration licenses, which sold for C$120.5 million, and 308 lease parcels, which brought in C$76.7 million. Another record shattered was the average price paid on a per-hectare basis at C$2,495, beating the old mark of C$1,515 set in October.
A total of C$132 million came in the Weyburn-Estevan area of the Bakken oil play, followed by the Swift Current area with C$47 million in sales, largely on the strength of the new Shaunavon oil play. The Kindersley-Kerrobert area was next at C$16 million, followed by the Lloydminster area at C$2 million.
The highest price paid for a single parcel was C$30.7 million, paid by Saskatoon Assets Inc. for a 2,900-hectare exploration license in the Shaunavon area. Saskatoon Assets -- a bidder representing unnamed clients -- also paid the highest price on a per-hectare basis, shelling out a total of C$2 million -- $15,255/hectare -- for a lease parcel of deeper rights in the Bakken play.
The results appear to verify the results of a survey of energy industry experts, issued in December by The Fraser Institute, indicating that potential investors rated Saskatchewan province as more favorable than neighboring Alberta (see NGI, Dec. 17, 2007). The survey was begun before Alberta's Royalty Review Panel recommended that the province raise royalties on new and existing oil and gas projects (see NGI, Sept. 24, 2007).
Houston-based Ziff Energy Group last week said industry response to the proposed royalty plan -- including Crescent Point Energy Trust's announcement that it would direct all of its 2008 capital budget to exploration and production activities in Saskatchewan (see NGI, Oct. 8, 2007) -- along with rising costs and the strong Canadian dollar are all hurting Alberta's natural gas business. Industry spending in Saskatchewan and British Columbia is booming and U.S. gas drilling continues to increase, thanks to lower costs and royalties, Ziff said (see related story).
Saskatchewan's next sale of Crown petroleum and natural gas dispositions is scheduled to be held April 7.
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