North Dakota - Difference in lease prices - private owners and ND government lands

My family and I own mineral rights in Mountrail, Williams and Divide Counties in ND. Some are in the same townships/ranges as those in the May 2010 auction bonus that went as high as $4,000/acre. We’ve received offers from $250/acre with 1/16 up to $450/acre and 3/16. Why is there such a difference between deals made with the State and individuals? Am I missing something?

The leasing companies try to tie up private land first. They can get a lower price from the private mineral owners, because of limited competition. After most of the private individuals are leased up, the state will hold an auction which all interested players are bidding on. The amount of competition can drive the price way up.

If a mineral owner has a large enough share of net acres in a spacing unit and they hold out until the state auction results are available for acres near their minerals, they should be able to get a better price.

Thanks so much for taking the time to reply.

Jay Dahl said:

The leasing companies try to tie up private land first. They can get a lower price from the private mineral owners, because of limited competition. After most of the private individuals are leased up, the state will hold an auction which all interested players are bidding on. The amount of competition can drive the price way up.

If a mineral owner has a large enough share of net acres in a spacing unit and they hold out until the state auction results are available for acres near their minerals, they should be able to get a better price.