A week ago, I attended a land auction to see if I could pick up some additional oil production. I’m not sure what land is going for in your neck of the woods, but around here it’s gone crazy!

Tracts 1 through 3 and 5 were primarily farm land, with acreage ranging from 30 acres to 300 acres. One of the tracts had some oil royalties attached to it that only amounted to about 200 barrels per year.

The farm land alone went for nearly $2,000 per acre. Unreal.

Tract 4 was what I was interested in. 630 acres (a full section) with all the mineral rights associated with the land included, with existing production, and the ability to drill out the section. I went in mainly to observe, knowing that I’d be way out of my league in no time at all. I figured the land would bring at most $1,000 per acre since it was such a large tract.

I’ve been wrong before.

The bidding started at $800 per acre, and the auctioneer quickly had the bid above a cool thousand an acre. Here’s where it gets interesting. About 5 minutes into the bidding, a gentleman walked in through the back door and immediately started bidding. This guy was so far out of his element it was funny. His hair was slicked back, a Bluetooth gizmo hanging from his ear, a pair of dockers accented by Nike tennis shoes, and to top it all off, a dark pair of sunglasses and brown leather satchel.

Not terribly out of place for, say, New York, but this was central Kansas where overalls, work boots and a cowboy hat was considered all gussied up. Out of about a hundred people, all of which knew each other, not a soul knew who this foreigner was, but he was sure cranking up the price on this land!

The bidding ended at $1,350 per acre, with the final bid being held by Mr. Big City. All in all, taxes and fees included, the guy probably ended up shelling out $1 million for a single section of land.

Too rich for my blood!

The spring will bring new opportunities, as many folks try to off load acreage during the rush. I’ll keep an eye out for a steal of a deal in the future.

Tags: Investing | land auction | oil and gas

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