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Energy & Mines

January 2019

BC Land Sales

Alberta Land Sales

Western Canadian Land Sale Revenue Declined In 2018

Over 10,000 Wells Licensed In 2018, But December Permitting Slumps

Scott Land The Top Crown Land Buyer For 2018

Industry Drills Just Over 6,500 Wells To End Of November


BC Land Sales

The January 16th sale resulted in sales of licenses and leases of 4,002 hectares for $2,044,391, an average of $504.53 per hectare.

Contiguous Resources Ltd paid $278,031 for a 1,814 hectare drilling license and $493,997 for a 264 hectare license.

Storm Resources Ltd paid $252,676 for a 1,396 hectare lease. Synergy Land Services Ltd paid $502,843 for a 264 hectare license.

Buffalo Hill Resources Ltd paid $491,584 for a 264 hectare license.

BC Government 2019 Sale Results

Alberta Land Sales

By Stephen Marsters

The Alberta government’s first land sale of 2019 produced a total of $5.49 million in bonus bids — a ‘very subdued’ start to the year.

Industry purchased 35,112 hectares at an average price of $156.31/ha.

At the first sale in 2018, industry purchased 66,442 hectares for $18.69 million at an average price of $281.23/ha.

Sale highlights

Metropolitan Resources Inc. purchased a 256-hectare parcel for $730,001.92, which was the highest bonus bid in the sale.

The per-hectare high for the sale, at $5,515.14 per hectare, was produced a 128-hectare lease picked up by Canada West Land Services Ltd. for $705,937.92.

Oilsands bids

Seventeen oilsands parcels — or 5,312 hectares — sold for $533,754, or $100.48/ha.

BlackPearl Resources Inc. picked up six parcels in the Cold Lake oilsands area for a total of $117,974.40.

Canadian Natural Resources Limited picked up a parcel in the Cold Lake oilsands region for just over $77,000.

In the Athabasca oilsands area, Highwood Oil Company Ltd. and Woodcote Oil Corp. participated on a 50-50 basis to pick up 10 parcels for $415,779.84.

JuneWarren-Nickle's Energy Group

Western Canadian Land Sale Revenue Declined In 2018

Land sale spending in Western Canada declined by nearly 34 per cent in 2018, led by a sharp decrease in British Columbia.

Industry spent $527.05 million for the year, tying up 1.55 million hectares at an average price of $339.84.

Spending in the western Canadian provinces was $793.93 million in 2017 as producers tied up 1.77 million hectares at an average price of $448.11.

After land spending plunged by 65 per cent in 2015 to $375.78 million, producers tightened their wallets further in 2016, spending just $217.51 million in bonus bids in Western Canada for the year. Industry tied up 1.21 million hectares at an average price of $180.07. For 2015, the provinces sold 1.81 million hectares at an average price of $207.23.

Alberta

In Alberta, the Duvernay play dominated the headlines last year. The government closed 2018 with $411.38 million in bonus bids on 1.39 million hectares at an average of $296.84. In 2017, a bounce-back year after an anemic 2016, the province collected $556.39 million on the sale of 1.48 million hectares at an average price of $374.91.

Spending was fairly consistent throughout the year: $89.29 million on five land sales in the first quarter, $101.96 million on seven sales in Q2, and $108.24 million on six auctions in Q3. In the fourth quarter, spending declined markedly and sat at just $35.56 million heading into the final two sales of the year as acquisition activity slowed in the oil-prone Duvernay trend.

Auctions of $28.14 million and $48.86 million to end the year brought Q4 spending up to $111.88 million on six sales during the October-December period of 2018.

JuneWarren-Nickle's Energy Group

Over 10,000 Wells Licensed In 2018, But December Permitting Slumps

By Stephen Marsters

For the second straight year, over 10,000 wells were licensed across Canada in 2018, although a drop in December permitting is likely a harbinger for immediate 2019 trends.

Governments authorized 10,038 new wells last year, off slightly from 10,117 in 2017 (down less than one per cent).

The story in December was markedly different, however.

Last month, industry licensed 812 wells across Canada — down 35 per cent from 1,250 well authorizations in December 2017 — as the recent volatility in commodity prices impacted future drilling plans.

Operators in Alberta licensed 5,540 wells in 2018 compared to 5,338 wells the prior year (an increase of four per cent). In December, 516 wells were permitted compared to 830 a year ago.

In Saskatchewan, there were 3,270 new licences issued in 2018 compared to 3,586 licences the previous year (down nine per cent). The December licence count declined to 190 from 299 in December 2017.

There were 3,070 oil and bitumen wells permitted in Alberta last year compared to 2,957 in 2017, while 2,745 oil wells were authorized in Saskatchewan, down from 3,155 the prior year.

In B.C., the province approved 921 new licences last year, down slightly from 923 in 2017. In the final month of the year, 70 new wells were approved compared to 83 in December 2017.

Manitoba’s new licence count lifted 15 per cent to 290 wells in 2018 from 253 the previous year. In December, 34 wells were permitted versus 36 a year ago.

Across Western Canada, the 2018 licence count included 6,160 permits to drill for oil or bitumen, down four per cent from 6,398 the prior year.

Gas well permitting during 2018 in the three most western provinces lifted to 1,926 from 1,737 the prior year (up 11 per cent).

The 2018 total included 7,838 horizontal wells (excluding experimental wells), or about 87 per cent of the total, compared to 8,162 horizontal wells in 2017 (again, excluding experimental wells), or about 86 per cent of the total.

Industry licensed 925 oilsands evaluation wells in 2018, an increase of 89 per cent from 490 licences in 2017. The final month of 2018 saw 138 oilsands evaluation wells permitted, down from 296 in December 2017.

Top licensees

The top licensee of new wells in 2018, including experimental wells, was Canadian Natural Resources Limited (1,002 permits), up from 761 in 2017.

Second-place finisher Crescent Point Energy Corp. licensed 732 wells, down from 908 in 2017, when it was the top licensee for the year.

The top five for 2018 was rounded out by Encana Corporation (466), Husky Energy Inc. (435) and Baytex Energy Corp.(411).

British Columbia off 63 per cent

B.C. ended the year with $64.13 million in bonus revenue, driven largely by the June sale which attracted $42.08 million. Landsolutions GP Inc. picked up a 1,847-hectare drilling licence in B.C.’s June land sale for $42.05 million.

The parcel, at 87-24W6M, produced a per-hectare price of $22,767.84.

Industry acquired 69,980 at land sales in B.C. for 2018 at an average of $916.39. For 2017, the province attracted $173.25 million in bonus bids on 79,238 hectares at an average price of $2,186.49.

Saskatchewan

The provincial government attracted $50.71 million for all of 2018 on 89,552 hectares at an average price of $566.28. In 2017, industry paid $62.83 million for 200,967 hectares at an average price of $312.65.

Manitoba

For the year, Manitoba collected $828,576.21 in bonus bids on the sale of 5,514.09 hectares at an average price of $150.27. For 2017, the province picked up $1.46 million on 7,480.34 hectares at an average of $194.59.

Newfoundland and Labrador

In November, the Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB) received $1.39 billion in its 2018 Call for Bids, and a record single successful bid amount of $621.02 million in work commitments.

Successful bids were submitted for four exploration licences in the Eastern Newfoundland region (NL18-CFB01) and for one exploration licence (NL18-CFB02) in the Jeanne d’Arc region.

These bids are not included in the bonus totals. In Newfoundland, the sole criterion for selecting a winning bid for the exploration licences is the total amount the bidder commits to spend on exploration of the parcel during Period I (the first period of a nine-year licence). The minimum acceptable bid for each parcel is $10 million in work commitments.

JuneWarren-Nickle's Energy Group

Scott Land The Top Crown Land Buyer For 2018

Scott Land & Lease Ltd. was the top buyer of Crown land for all of 2018.

The broker acquired 285,555 hectares during the 12-month period on behalf of its clients for $128.31 million at an average price of $449.33 per hectare.

Scott Land picked up 234,394 hectares in Alberta for $100.05 million and 44,525 hectares for $13.29 million in B.C. The broker acquired 6,637 hectares in Saskatchewan for $14.97 million.

The second most active Crown buyer during the January-December period was broker Landsolutions LP, which acquired 34,246 hectares for $57.97 million at an average price of $1,692.84.

JuneWarren-Nickle's Energy Group

Industry Drills Just Over 6,500 Wells To End Of November

Industry rig released 6,530 wells in the first 11 months of 2018, excluding experimental wells, about a one per cent decline from 6,592 wells drilled in the comparable period last year.

Operators across Canada drilled 18.19 million metres of hole to the end of November, up almost three per cent from 17.73 million metres that were rig released in the first 11 months of 2017.

Alberta producers rig released 3,426 wells to the end of November compared to 3,397 a year ago (up about one per cent). Total metres drilled in the province lifted six per cent to 10.7 million metres versus 10.14 million metres a year ago.

Saskatchewan’s rig release count improved two per cent to 2,435 wells compared to 2,386 rig releases in the same timeframe a year ago. Rig-release meterage in the province rose 10 per cent to 5.13 million metres from 4.65 million metres a year ago.

In B.C., 397 wells were drilled to the end of November, down 30 per cent from 571 wells drilled in the January-to-November period last year. Operators have drilled 1.77 million metres in the province over that timeframe compared to 2.45 million metres last year (a decrease of about 28 per cent).

Operators working in Manitoba drilled 262 wells over the first 11 months of 2018 compared to 223 in the year-prior period (an increase of 17 per cent), with 535,595 metres drilled compared to 416,995 metres rig released a year ago (up 28 per cent).

In November, producers across Canada drilled 647 wells, again excluding experiment wells, up about 11 per cent from 582 rig releases a year ago. Operators drilled 1.8 million metres in November, up from 1.6 million metres in November 2017.

Rig release counts, including experimental wells

Operators drilled 7,009 wells, including experimental wells, over the first 11 months of 2018, down about two per cent from 7,137 rig releases in January-November 2017.

In November 2018, 649 wells were rig released compared to 583 in the year-prior month (an increase of 11 per cent).

Across Canada, of those wells with a reporting status, 72.23 per cent of the wells with a status are listed as oil or bitumen wells — up from 63.08 per cent last year. Meanwhile, 15.41 per cent of the rig released wells to the end of November have gas as an objective, down from 22.55 per cent last year.

In Alberta, oil or bitumen is listed as the objective for 2,725 wells rig released over the first 11 months of the year compared to 2,594 wells last year. Wells targeting gas or CBM declined to 780 rig releases versus 1,040 a year ago.

Oil is listed as the objective of 2,076 wells drilled in Saskatchewan (compared to 2,105 in January-to-November 2017), while three wells have been rig released in the province with gas as an objective — up from zero a year ago.

JuneWarren-Nickle's Energy Group