69,056 Acres: Montana/Dakotas BLM Online Sale Slated for June 12

Cable tool drilling rig on display at the Oil Field Museum in Cut Bank.

Custer County Acreage Featured

Thanks to Rocky Mountain Oil Journal (rmoj.com) for allowing us to share this story with our readers.

The Montana/Dakotas Bureau of Land Management (BLM) will be holding a quick online oil and gas lease sale commencing on June 12 at 7:30 a.m. Mountain Time. Following a government directive allowing the agency to hold Internet sales, this will be the first time the northern BLM division does so on the Web. The previous Montana/Dakotas BLM sale, which was conducted in traditional format, took place in July 2016.

A total of 156 parcels comprising 69,056.13 acres in Montana will be available for bid at the upcoming event. There will not be any acreage offered in either North Dakota or South Dakota.

Each parcel will have its own unique, 24-hour open-bidding period, with start and stop times clearly identified. For registration and bidding information, go to EnergyNet.com, which is conducting this auction. Bidders must be registered at the website in order to participate in the event.

Of the tracts up for bid, more than half are located on the Miles City Arch in Custer County. A total of 76 parcels comprising 38,510.78 acres will be available in the overall area of 3n–8n, 50e–54e. The most recent exploratory activity in this area took place late in 2016, when Denver-based Highlands Montana Corporation (Highlands Montana) drilled two tests within section 16, 5n-52e—one a dry hole and what appears to be a noncommercial discovery.

Spotting some 28 miles southeast of Miles City, Mont., Highlands Montana reported the Helios #5-52 16-22, se-nw 16-5n-52e, was completed as a vertical Muddy gas strike; no official initial potential has been submitted to the state. However, the latest gas gauge noted for the well showed that during 15 days in January of 2017, 191 mcfg and 57.6 k bw were produced from a set of perforations at a depth approaching 4,520’; the formation was not disclosed. During 72 days of production, Highlands Montana reported the Helios #5-52 16-22 cumulated 612 mcfg and 220.5 k bw.

After drilling this prospect, Highlands Montana moved a ­quarter-mile to the northeast and spud another vertical test at the Helios #5-52 16-32, sw-ne 16-5n-52e. This projected 4,400’ gas well was scheduled to evaluate the Upper Cretaceous Eagle, Niobrara, and Greenhorn. Although the operator has released no information regarding what shows, if any, were encountered in the Helios #5-52 16-32, it is known they abandoned the prospect shortly after drilling. It is unclear if Highlands Montana plans to continue exploring this part of Custer County or if they will exit the area.

Other provinces that have acreage available at the upcoming BLM online sale are Big Horn, Carter, Fallon, Garfield, Powder River, and Rosebud counties.

At the previous Montana/Dakotas BLM sale held in July 2016, only three parcels were offered and sold. The tracts were all located on the western flank of the Black Hills Uplift in Fall River County, South Dakota. There were no leases offered in Montana or North Dakota at the prior auction.

High bid at the July 2016 sale was tendered by Murfin Drilling of Wichita, Kan., for a 320-acre parcel in the e/2 of section 31, 9s-1e. Earning $66.00 per acre, this tract sits generally several miles west of Porter Ranch and Cheyenne Bend fields, both small Minnelusa/Fall River oil pools. This is believed to be a new exploration area for the Kansas independent.

In the same area, Texas-based T-C Oil Company (T-C) picked up two parcels comprising 400 acres within portions of sections 1 and 25, 8s-1e. T-C paid just $5,200.00 for their purchase, which equates to a per-acre average of $13.00. Both Murfin and T-C appear to be playing shallow Pennsylvanian oil reserves.