Record Breaking State Oil & Mineral Lease Auction
A potentially huge unconventional natural gas reserve has been discovered in Northern Michigan. This new natural gas play has been dubbed the "Collingwood Utica" shale play, named after Collingwood Shale, which is present in Northern Michigan at varying depths, along with Utica Shale, which is also present at shallower depths.
Prompting incredible speculation in local gas, oil and mineral rights leases are reports of a successful natural gas test well in Missaukee County owned by Petoskey Exploration, LLC, a subsidiary of Canadian based natural gas producer Encana Corporation. Oil, gas and mineral leases on land owned by the state of Michigan were auctioned off for a record $176 million in early May of 2010. The average lease price of $1507/acre was exponentially higher than the $26/acre average lease price in previous auctions.
Oil and Gas Leasing Frenzy
The huge potential of the Collingwood Utica shale play has sparked a modern day gold rush. Landmen employed by the gas companies are rushing to lease oil and mineral rights from private landowners, many of whom have received multiple offers. In addition, opportunistic middlemen are attempting to obtain oil and gas leases from property owners who may be unaware of the recent jump in prices, and turn around and sell them to the gas companies for a huge profit.
Northern Michigan property owners need to understand that the negotiation of an oil and gas lease involves complex legal issues relating to the rights, privileges and obligations of the parties throughout exploration and production. It is essential that landowners arm themselves with as much information as possible to ensure that the terms of their oil and gas lease are favorable. To protect their future interests in their land, landowners who are considering entering into an oil and gas lease should seek the professional assistance of an experienced Northern Michigan oil and gas law attorney to guide them through the process and ensure that their legal rights are protected.