The smooth roll of an auctioneer’s call for bids jump-started the March 19 lease auction for Osage oil and gas. Mostly unnoticeable gestures, nods and slightly raised hands, provided enough signals for a bid on a 160-acre tract of potentially profitable land.
The Osage Minerals Council and the Bureau of Indian Affairs realty staff cooperatively managed the auction. This time around, 30 available tracts were up for bid, ranging from $4,700 to $65,000 per 160-acre tract.
A guide to OMC lease sales is as follows:
· The Bureau of Indian Affairs compiles potential sites until enough sites are ready for auction.
· Tracts are nominated by buyers.
· The OMC reviews the potential sites the BIA has prepared and makes the final approval of available sites for auction.
· No title or land department is involved in the sale, only the Nation and the buyer.
· Leases run for 24 months at 160 acres per tract including three tracts of a few acres or less.
· Buyers are responsible for doing their own homework on the potential profitability of a tract.
· Only a minimum price is established for tracts.
· 25 percent of the total amount owed for a tract is due at the time of sale.
· Sites are also representative of quarter sections of townships or property owners, the Nation owns all the mineral rights.
Most of the tracts for sale went for slightly more than the minimum bid and the rest went as high as $65,000, according to BIA reporting. The unique process at hand is highlighted when bids become competitive and run into the tens of thousands. At least five separate tracts went into this competitive bidding process during the auction. After researching sites or seeking to continue an already successful site, interested buyers bid to win.
“A lot of the people here are just here to watch the exciting parts,” said Curtis Bear, Councilman, who was unsuccessful getting his family to watch the auction. Bear laughed about not being able to convince his children the auctions are fun, “I really wanted them to see this process though, and I think they would like it too.”
According to the OMC:
· The Osage Mineral Estate is all subsurface resources within the 1.47 million acres of the Osage Reservation, including oil and gas.
· The United States holds title to the estate in trust for the Osage Nation, according to Section 3 of the 1906 Act.
The U.S. Department of Interior, acting through the BIA’s Osage Agency, has exclusive authority to collect funds derived from the sale of mineral leases. The BIA manages the day-to-day operations of the Osage Mineral Estate, including reporting on and the distribution of lease sales. The BIA reports to the elected members of the OMC who oversee the best interests of the estate for the shareholders, also known as “headrights.”
During the council meeting following the sale, Councilman and Chair, Andrew Yates, reported the outcome of the auction according to the BIA realty staff. “It was a good lease sale,” he reported. The tally was $356,200, which averages $65.45 per acre.
Councilman Galen Crum confirmed that 25 percent of the total amount due was paid the same day in accordance with regulation.
Chaparral Energy and Wellco Energy were primary purchasers. Thirty leases for sale included oil and gas, less cold bed methane, and one oil-only tract, which sold for $52,000 averaging $328 per acre.
The council voted to accept the auction results reported by the BIA. More of the conversation is available online at osagenation-nsn.gov.
Geneva HorseChief-Hamilton ON Communications
Original Publish Date: 2014-04-08 00:00:00