February’s Zero Sales Fades Further Away

The results of British Columbia Ministry of Natural Gas September Development Land Sale are in. Sixteen of the 19 drilling licenses up for sale were sold.

CAD $2,774,083.54 of gross bonuses were spent on 20,172 hectares out of 22,330 offered. The September sale raised the average YTD price per hectare in the province 2% from the previous month. But average annual prices are still down 45% year-over-year.

Montney Continues to be Hot Property

Scott Land Ltd. put in the top bid and bonus at the sale, purchasing Drilling License 66052 which consists of 5,287 hectares (13,064.2 acres) of mostly Montney rights in the Tupper Area (NTS 093-P-08). The acreage sold for $311.17/ha for a total bid of CAD $1.65 million, representing 59% of the total bonus spent at the sale.

In January, Enbridge (ticker: ENB) announced it would acquire Murphy Oil’s (ticker: MUR) acquisition of Tupper Main and Tupper West gas plants and associated pipelines in northeastern B.C. for $538 million. The Tupper plants are located 35 kilometers southwest of Dawson Creek, B.C.

The top parcel in the September sale is located to the southwest of Murphy Oil’s Tupper dry gas Montney development and “appears to have been previously owned by CononoPhilips,” according to a BMO report. “The lands are proximal to a higher permeability turbidite zone, similar to that found on the Murphy Tupper lands.” Advantage Oil & Gas holds the closest drilled wells at its active Glacier development 12 miles to the northeast in neighboring Alberta.

The chart below shows the year to date average price paid per hectare.

Sources: Government of British Columbia, BMO Capital Markets

Sources: Government of British Columbia, BMO Capital Markets

Overall, average land prices this year have yet to crack the levels seen in 2015, which ended the year 90% below 2014’s highest levels.

The last notable transaction this year in B.C. occurred in March, when $1.90 million was spent on 6,038 hectares. This transaction alone raised average prices to $242.56 per hectare, a 217% increase over the previous month when no sales occurred for the first time in history.


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