Tuesday July 29, 2014

B.C. Land Sale Draws Over $24 Million

British Columbia's year-to-date land sale revenues are up sharply to $56.38 million after two sales, with this week's auction generating over $24 million.

The February auction this week attracted $24.23 million in bonus bids on 20,578 hectares at an average of $1,177.45 per hectare. Year-to-date, 44,790 hectares have exchanged hands in northeastern B.C. at an average of $1,258.66. This is a more positive start for the province compared to a dismal early 2011 when after two sales the government had collected just $9.98 million on 24,993 hectares at an average of $399.50.

Highlights of the sale included a bonus high bid of $7.28 million submitted by Absolute Land & Lease Ltd. The broker paid an average of $3,232 -- also a sale high -- for the 2,254-hectare parcel. Tract one was for several units at C-94-H-04, while tract two included several units at J-94-A-13, K-94-A-13, B-94-H-04 and C-94-H-04.

"[It] looks like the Montney is probably the primary target," said Brad Hayes, president of Petrel Robertson Consulting Ltd., noting that a high per-hectare value on a large parcel indicates a fair degree of confidence about the prospectivity of the lands. "They are situated on the eastern margin of the northern Montney play being pursued in the outer Foothills."

Windfall Resources Ltd., meanwhile, scooped up a licence for $7.1 million, paying an average of $919.18 for the 7,726-hectare parcel. The licence had two tracts. The first included several units at H-94-I-08, I-94-I-08 and A-94-I-09. The second included several units at H-94-I-08, I-94-I-08 and A-94-I-09.

Stomp Energy Ltd. acquired the rights to a 5,145-hectare parcel, paying $4.58 million at an average of $889.87. Tract one included several units at A-94-I-09 and B-94-I-09, while tract two included several units at H-94-I-08, I-94-I-08, J-94-I-08, A-94-I-09 and B-94-I-09.

These two parcels are different than the first and appear to be less mature. The per-hectare amounts are less than $1,000, although the total values are large because these are large parcels, about 30 and 20 sections, respectively, Hayes said.

"Deep rights are posted, below the base of the Jean Marie over most of the lands," he noted. "This would indicate the target could be Muskwa shales or a more conventional play in the Slave Point or older reefs." 

Because the lands are between the well-recognized Devonian shale basins (Horn River Basin, Cordova Embayment and Hotchkiss Embayment), shale prospectivity is not likely to be great, Hayes added. 

"The area is lightly explored, and somebody may be tying up big positions in a deep play fairway that hasn't yet attracted a lot of attention," he said. "[It's an] interesting area to keep an eye on.  It's hard to say whether these parcels will spark higher B.C. land prices and we will need to see more information on this play." 

So far, however, there's no firm indication that there's another high value play out there like the Horn River Basin or Montney trend, Hayes said.

"We acquired over half this week's B.C. sale," added Gregg Scott, president of Scott Land & Lease Ltd. "There is still lots of land in B.C. Some plays are expanding in aerial extent, as well there are townships of land expiring each year."

Companies held by Scott Land include Windfall, Plunkett Resources Ltd. and Canadian Coastal Resources Ltd.

Meanwhile, the province is providing up to $120 million in royalty credits to encourage oil and gas development in British Columbia through the infrastructure royalty program, which is being made available to industry again.

The program is designed to encourage new investments and create more jobs that may not have occurred otherwise, the government noted. The new investments will improve access to natural gas deposits and support year-round exploration and production.

Since its inception in 2004, the program has led to the development of 84 new road-based ventures and 115 new pipeline projects. This has accounted for more than $1.4 billion in capital investment and about $5 billion in private-sector drilling and other investment activities.

As part of the latest installment to this program, the Ministry of Energy and Mines is now accepting applications from companies who want to invest in projects such as new or upgraded roads or new pipelines.

To participate, successful applicants will be required to fund the entire cost of the projects. Once completed, they will become eligible to recover up to 50 per cent of an approved project's costs through credits that reduce the natural resource royalties they must remit to government.

Only projects that offer the highest economic benefits to B.C. will be approved, the government said. Applications will be accepted until April 19 at 2 p.m. Pacific time.

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