September 4, 2007

Saskatchewan launches first-ever public offering of oil sands rights

Regina, Saskatchewan – Sales of Crown petroleum and natural gas rights are on a record pace in 2007 in Saskatchewan, thanks to a continuing boom in the province’s oil and gas industry, and the first-ever public offering of oil sands rights.

A land sale in August generated $38.2 million in revenue for the province, bringing accumulated revenue to $151.1 million since the start of 2007. There are two sales left in 2007, which is already the fourth best year on record.

“These excellent results are the latest indicator of the oil and gas industry’s confidence in Saskatchewan’s growing economy,” says Harry Van Mulligen, Government Relations Minister. “This historic sale also heralds the beginning of a potential new oil sands industry in Saskatchewan.”

The August sale included 12 exploration licenses that sold for $14.5 million, and 257 lease parcels that brought in $20.4 million. Sales of the new oil sands dispositions included six exploration licenses that brought $3.3 million in bonus bids; in addition, two special exploratory permits were awarded on the basis of work commitments. One permit, covering over 198,000 hectares located 80 km north of Yorkton, was awarded to Saskatoon Assets Inc. with a work commitment of $4.1 million over the next two years; Whitland Consulting Inc. received the other permit, 65 km north of Regina, for a commitment of almost $900,000 for work on 97,000 hectares.

The sale also included a provincial first, with the awarding of two oil shale exploration permits in the Hudson Bay area.

The highest price received for a single parcel was $5.1 million, for a 36-section exploration license located 58 km south of Weyburn; the highest price paid for an oil sands parcel was $1 million, or $108 per hectare, for a 36-section north of the Clearwater River in the province’s northwest area. The highest overall price paid per hectare was $9,271 for a 32-hectare lease parcel in the Cactus Lake heavy oil region of west central Saskatchewan, for a total of $300,000.

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