In the October 11 Alberta land sale, each of the three regions Alberta Energy divides the province into received average bonus payments (the amount essentially paid to win a bid) rivaling the average payments received in 2014, when in the first half of that year, WTI averaged roughly $100 per barrel. From July 2014 to January 2015, the price of WTI suffered its sharpest decline (from roughly $105 to $46).
Alberta Energy splits the province’s land sales (a misnomer as the crown still retains title) into the Plains, Northern, and Foothills region. On October 11, the average dollar amount per hectare paid for the Plains region was $931.26. For the Northern region, the average was $460.27. The Foothills regions received no bids and thus was nil. Altogether close to $125,000,000 was forked over to the government.
For all of 2017, the average price paid per hectare for the Plains region has been $501.84; the Northern region, $318.84, and the Foothills region, $521.89. Comparing the October 11 land sale results to the 2017 average price paid per hectare indicates an upward trend and an increased willingness for producers to pay to play.
Although the price of oil declined precipitously in the second half of 2014, the amount paid per hectare in each of the three regions took roughly 6 months to catch up to the price decline. For 2014, the average price paid per hectare was $263.43, $599.13, and $393.49 respectively for the Plains, Northern and Foothills regions.
As soon as 2015 came around however, those averages plummeted and stayed low only until 2017 came around. For 2015, the average price paid per hectare was $104.76, $196.46, and $239.82 respectively for the Plains, Northern and Foothills regions.
So what do all these numbers mean? It appears that despite WTI hovering around $50 for the better part of 2017, Alberta land sale numbers have climbed to levels that in some cases exceed the average price paid when WTI was above $100/barrel. Bullish indeed and certainly a trend the now debt laden provincial government can appreciate.