State Lease Sales Still Interesting -- North Dakota, USA

This is just idle chatter while waiting for today's news cycle to begin.

The quarterly state lease sale remains interesting.

Most of the attention in most recent sale (November, 2010) was in Williams and McKenzie Counties; relatively quiet elsewhere. Both Williams and McKenzie had sales exceeding $11 million whereas Mountrail did not even break the $1 million threshold.

It appears the largest bonus paid was $8,600/acre by Trinity Western for 3.34 acres under the river in McKenzie County.

Slawson paid $6,000/acre for 176 acres under the river, also in McKenzie County.

Total dollar amount paid to the state in the November lease sale: $42 million for 30,000 acres which works out to an average of $1,400/acre.

By comparison, the totals for August, 2010, were $64 million for 42,000 acres ($1,500/acre).

For May, 2010, $158 million for 53,000 acres ($3,000/acre).

And finally for February, 2010, $47 million for 40,000 acres ($1,200/acre).

As a reminder, in the best Bakken,the EUR for a well is conservatively estimated at 500,000 bbls. They will drill three wells per section = 1.5 million bbls EUR. Dividing by 640, that's 2,400 bbls/acre. At $50/bbl, that's $120,000/acre at the wellhead.