The government’s first oil and gas lease sale in five months kicked off this week but attracted weaker bidding in New Mexico while some sales were made in Oklahoma.
The average price for the three Oklahoma tracts of land in Custer, Dewey and Ellis counties was $119 an acre, higher than recent sales in the state due to a $201 an acre bid for 58.6 acres in Dewey county. (click here to view previous story about the sites)
The average price for the three Oklahoma parcels was $119 per acre, higher than recent sales in the state due to a $201 per acre bid for 58.6 acres in Dewey County.
The 2,800-acre sale was the Trump administration’s first since March, when lockdowns to fight the spread of the coronavirus crippled crude oil demand and prices tanked. It will be followed on Aug. 27 with a far larger sale of more than 45,000 acres in New Mexico and Texas, according to EnergyNet.
The sales are a test of industry appetite for investment as crude oil prices remain below levels at which many companies can drill profitably and bankruptcies in the sector are mounting.
The average bid per acre of $466 for nine parcels in New Mexico fell far short of recent sales in the state from before the pandemic, when average bids routinely were in the thousands of dollars per acre. The New Mexico parcels overlay parts of the sprawling Permian Basin, the world’s biggest oil field.
A spokeswoman for the U.S. Bureau of Land Management (BLM) in New Mexico, Cathy Garber, said the bid prices were “competitive.”
“Without comparing this sale with past sales involving parcels in the same general area, it is difficult to characterize the average prices,” Garber said in an email.
The acreage being offered on Aug. 27 had previously been scheduled by the BLM to be offered in May. That sale was postponed to give drillers time to recover from the oil price slide.