Beware of Falling Oil Prices - Pacific Standard

Beware of Falling Oil Prices

Tribal land offerings break one record — but not the one for sales.
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The Bureau of Indian Affairs announced last week that its sale of gas and oil mining leases in the Southern Plains region of Oklahoma netted land owners $6.1 million.

The 916 winning bids brought in a total of $6,114,443.59 — a figure significantly lower than the last sale in 2006, which raised nearly $37 million and with fewer tracts. The reduced take reflects is believed to reflect the current collapse in oil prices, and demonstrates why lessors had been in a hurry to get the sale off the ground. In a modern version of the Oklahoma land rush, tribes and mining companies had been pushing for a sale for a year and a half, only to be frustrated by bureaucratic and administrative delays.

The auction was first publicized in October of this year, and more than 1,534 tracts of tribal land were offered up for gas and oil mining lease rights. Nedra Darling, a Washington, D.C.-based spokesperson for the BIA, said the stacks of sealed bids had to be opened on Dec. 2 and quickly assessed. "We had a record number of tracts--the largest ever--up for auction this time. ... Tracts with two or more bids had to be opened up for oral auction. It's definitely a lively auction."

Darling said that this was a heroic effort to pull off, three days after the Thanksgiving holiday weekend, and praised BIA's Oklahoma Regional Anadarko Agency for its dedication.

Each tract owner from last week's auction will receive a one-time lease payment of $300-$700 per leased acre. This allows the leaseholder three years to develop the land. Once in production, the land owner will receive 20 percent in production royalties for the life of the well.

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