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The Saskatchewan Natural Gas Advantage. Availability of Crown Mineral Rights. Ed Dancsok, P Eng., P Geo. Director Geology & Petroleum Lands Branch. “The Lay of the Land” Disposition Types Gas Areas 4. Land Values. Outline. MINERAL RIGHTS IN SASKATCHEWAN (SURVEYED AREA)
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The Saskatchewan Natural Gas Advantage Availability of Crown Mineral Rights Ed Dancsok, P Eng., P Geo. Director Geology & Petroleum Lands Branch
“The Lay of the Land” Disposition Types Gas Areas 4. Land Values Outline
MINERAL RIGHTS IN SASKATCHEWAN (SURVEYED AREA) CLASSAREAPERCENTAGE Millions of Ha. FREEHOLD 7.1 22% DOMINION CROWN 1.0 3% PROVINCIAL CROWN 24.375% Total 32.4 100 DISPOSITION TYPES - SPECIAL EXPLORATORY PERMITS - EXPLORATION LICENCES - LEASES
Crown Oil and Gas Rights (Dispositions) March 31, 2004March 31, 2005 NumberHectaresNumberHectares Leases 19,396 4,588,351 20,160 4,703,556 Exploration Licences 445 960,606 347 787,256 Special Exploratory Permits 13 734,814 14 821,051 Lease of Space Agreements 25 26,499 28 26,547 Total 19,879 6,310,268 20,549 6,338,410
CROWN DISPOSITIONS
Special Exploratory Permits SIZE: UP TO 200,000 HECTARES (OVER 770 SECTIONS) TERM: 5 YEARS - NO EXTENSIONS RENTAL: 25 CENTS PER HECTARE PER YEAR COMMITMENT: FIRST 2 YRS AT LEAST $2.00 PER HECTARE LAST 3 YRS $4.00 PER HECTARE *TO BE SPENT ON APPROVED EXPLORATION ACTIVITY (DRILLING OR SEISMIC) *** TECHNICAL MATERIAL MUST ACCOMPANY SEISMIC CLAIMS *** *DRILL A MINIMUM OF ONE WELL. IF PERMIT EXCEEDS 100,000 HA THEN DRILL TWO WELLS EXPECTATIONS: TO CONVERT 25% TO A LEASE ** NO PRODUCTION WITHOUT GOING TO LEASE **
25% of permit area Blocks no larger than 3 x 3 sections Blocks must be separated by at least one mile Blocks can touch at corners 60 days after permit termination to make selections Lease Selections*No discovery*
Can be made any time during term of permit 25% of permit area Any configuration for zone of discovery Must demonstrate commercial discovery Can have up six months to make selection Normal leasing on remaining zones Lease Selections*Discovery*
CROWN DISPOSITIONS
Exploration Licences • SIZE: FROM 1 TO 36 SECTIONS • TERM: 2 YEARS FOR MOST OF THE PROVINCE • 3 TO 4 YEARS FOR NORTHERN AREAS • RENTAL: $1.75 PER HECTARE • COMMITMENT: TO DRILL A WELL • LEASE SELECTION: SECTIONS OF LAND EARNED ON THE BASIS OF DEPTH OF WELLS DRILLED. • RIGHT TO EXPLORE AND PRODUCE OIL OR GAS *
Leases SIZE:UP TO 3,173 HECTARES (49 QUARTERS) (FROM PERMITS ONLY) Leases from sales are usually one section or less, however, postings of up to four sections will be accepted. TERM:5 YEAR PRIMARY TERM Then continuance as long as production is obtained or other special conditions prevail (e.g. Gas area) ***Complete continuance guidelines located on website at: Land Tenure/Resource Assessment RENTAL:$3.50 PER HECTARE
Poor market conditions Poor economics due to low prices Lack of accessible pipeline facilities Environmental restrictions Resource conservation restrictions Criteria RequiredGas Area Designations
LAND PRICE COMPARISON Saskatchewan - $275/ha. Alberta - $609/ha.1 British Columbia - $823/ha.1 2005 LANDSALE AVERAGES • ***The REAL Saskatchewan Advantage!*** • 1Nickel’sDAILY OIL BULLETIN
Landsale Notices and Results Go to: www.ir.gov.sk.ca/publicofferings