Landowners in northern Michigan are finding themselves in a hot spot after natural gas and condensate reserves were found in the region, according to the Petoskey News.

Close to 500 residents attended a town meeting in Emmet County where approximately one-third of the residents voiced that they had received inquiries from companies interested in leasing their mineral rights. In addition to these individual accounts, Emmet County officials also divulged that they had been contacted by Ludington-based Western Land Services, who is hoping to purchase approximately 6,000 acres in the area.

The abrupt interest in the Emmet County area was spurred by a successful test in neighboring Missaukee County by Petoskey Exploration LLC, a Colorado-based subsidiary big-name Calgary operator Encana Corp. The test tapped into valuable reserves in the Collingwood and Utica shales.

This test well has pulled in substantial interest from around the U.S. and thus far, the state of Michigan has sold off nearly 118,000 acres of rights in 22 counties. Average per-acre price was $1,507 – a dramatic increase compared to the old average of $26 per acre. OIL Niagaran LLC turned out to be the auction’s big star as the company snapped up approximately $128 million worth of mineral-rights leases. The total amount sold in the auction peaked at $178 million.

“I’ve never seen anything like what has been happening over the last few weeks,” said Susan Topp, a Gaylord-based attorney who specializes in mineral rights leases. “This is an issue that isn’t going away.”

With all of the hype stirred by Encana’s test well a number of companies are showing interest in the area, including Chesapeake Energy, Core Energy and Meridian.

“We knew there was keen interest in this auction from the amount of inquiries we had beforehand, but we did not expect the level of nationwide attention it generated,” said Thomas Wellman, manager of the mineral and land division of Michigan’s Department of Natural Resources and Environment.

With the strongest potential sites located in the central and northwest areas of the state, landowners local to that region are trying to get smart on mineral rights leases and what lending could mean for them now and in the long run.

“The dollars being offered are causing landowners to jump into a lease without even reading [it] or getting assistance so they understand what they are signing,” Topp said.

“Good leases take time and last a long time,” said Curtis Talley Jr., a farm management educator with Michigan State University Extension. “While leasing could make landowners a lot of money, [it] is complicated.”

Currently, numerous residents are moving forward and creating agreements with drilling companies regarding the valuable property.

As an area that has been hit hard by the economic downturn, these positive results could mark the beginning of a much needed boost for the state’s constituents.

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