Private mineral owners in Wyoming banding together to auction off oil rights

Private mineral owners in Wyo. to auction rights

CHEYENNE, Wyo. — A group of people who own mineral rights in eastern Wyoming say they’re planning to sell those rights to oil developers in a public auction.

Energy companies have been snapping up federal, state and private leases in eastern Wyoming amid speculation that new drilling techniques could cause the Niobrara Shale to become a significant source of oil.

Typically the companies negotiate individually with private mineral rights owners.

But one owner of mineral rights, Ben Massion, who lives in southern California, said holding an auction could help establish fair prices for oil rights.

“It’s not to be greedy. It’s about making a business decision. Through the auction we might just establish what a fair price means,” Massion said.

Massion owns a share of land and minerals in Goshen County. So far, Massion and others say they want to offer the rights to drill on 14,000 acres.

The auction will be held sometime in September, he said. Federal and state lease auctions are planned in Cheyenne next week.

Massion said oil companies share almost no information about what they’re paying. That leaves federal and state lease auctions as the only public guidelines for the going price of mineral rights.

“People are getting a little more savvy and are afraid of working directly with the companies,” he said.

A year ago, new oil drilling in the region was unimaginable to most people. A mineral lease might have sold for $10 per acre.

Recently the right to drill one state parcel sold for $3,200 per acre.

There’s no reason private mineral owners shouldn’t also offer their lease parcels in an open, competitive bidding process, Massion said.

“Based on the success of the state and federal land auctions through the auction process, we thought it might be worthwhile to set up our own auction,” he said.

Joe Guth, president of Platte Valley Bank in Torrington, said he visited with a local couple this week who recently leased their minerals.

“Some of these leases are as much or more than they paid for the property,” Guth said. “Some people are putting it in the bank and some are paying off debts.”

Many people in Platte County are optimistic about the potential for oil drilling, said Mona Sherard, owner of Sherard Realty Inc. in Wheatland and a board member of Platte County Economic Development.

Community and business leaders expect oil to bring opportunities as well as challenges.

“We’re working on what we’re going to need and how to plan for it. Be proactive instead of reactive,” Sherard said.

Information from: Casper Star-Tribune - Casper, www.trib.com