Highest Bids Ever for Oil and Gas Leases

Late last year when the Land Board raised royalty rates for oil and gas leases from 12.5 percent to 16.67 percent, industry representatives strongly opposed the move and made dire predictions of the effect the increased royalties would have on the oil and gas industry in Montana [see Focus on Montana State Lands, December 2005 issue]. Those predictions, however, would appear to have been merely a scare tactic, as shown by the latest round of bids for oil and gas leases on state lands.

At its March meeting, DNRC Director Mary Sexton asked the Board to approve the quarterly oil and gas lease sale, which took place March 7. The 248 tracts that were offered brought in nearly $6.3 million in bids, with the average bid at $61.61 per acre which, as Sexton told the Board, "is the highest ever received."

This was only our third quarterly sale and we are already ahead of all of last year at $30 million," said Sexton. She also noted that the tracts in Daniels County brought in $5.1 million alone, with the highest bid at $140 per acre.

When the Board approved the higher rates, Governor Schweitzer and Attorney General McGrath both promised to "revisit the issue" if there were problems with the bids in the future. Given the results of the latest lease sale, it looks like their concerns can be laid to rest.