“Ultimately, the winning bidder in last year’s controversial auction was Casper-based Kirkwood Oil and Gas — the same company that had nominated the parcel — at $19 per acre for the 640-acre tract. When the company later learned that it had been competing against a conservation group, the owners cried foul and claimed they were duped into paying an artificially inflated price.”
The seller is upset they got a good deal? (Counterpoint: these are public leases being sold for the public good.)
Looks like the winning move is for conservation groups to start E&P arms. Snarling the process up in years of litigation might be as good as buying and sitting on it.
Devil's advocate, if Tesla camps on eBay listings for used Teslas for sale and places bids they have no intention of following through on for the sole purpose of driving others to bid higher and keeping the brand value high, this would be seen as manipulative by the end-buyers (though at the end of the day, they did ultimately bid and agree to the price they won at)
> bids they have no intention of following through on
That is fraud.
This “group expected that, if it was the winning bidder, it would pay about $12,000 for the lease (based on its $18 per acre bid) out of its own budget.”
In that situation Tesla would find themselves ultimately compelled to perform on the bids, or pay some sort of damages. They could gum up the works with lawyers for a while but the final bill would get larger as the courts got fed up with their shenanigans.
In this situation the conservation group was fully prepared to make good on their bid.
The state is basically selling the oil in the land on consignment. The state sells the oil rights, the group who buys the oil rights sells the oil, and they send a part of the profit back to the state (there's at least taxes, and maybe fees or royalties--I don't know the financial details of the oil industry).
If someone "buys the oil rights" and doesn't sell any oil, they're cheating the state.
You're reaching. Well, you're stretching like crazy, but not actually reaching anything.
Hypothetical taxes on unrealized (and possibly zero) profits are not in any way part of the transaction, and it's just bizarre to think of them that way.
There's no guarantee of royalties over and above the lease. You just dreamed that up to support your weird asspulled idea that there's some kind of fraud here. If they wanted guaranteed royalties, they could have written that in.
Furthermore, the state even had the advantage of writing the contract. If the state wants a condition on a lease, the state is perfectly capable of putting it in there (as it is now doing).
A sophisticated party (which a state is supposed to be), with experience in the business, made a public offer. Somebody took that offer with no modification, with every intention of performing on the contract, and with absolutely no attempt at falsification or even concealment of anything at all. The idea that that's somehow "fraud" is insane. Not only is it not legally fraud, but it's not colloquially fraud, either. It's nothing like fraud.
Which is probably why nobody actually involved was crazy enough to suggest that it was fraud.
If you make a deal you discover you don't like, that doesn't make it fraud.
[Edited to fix a false statement about royalties... I pasted in the wrong draft].
> the group who buys the oil rights sells the oil, and they send a part of the profit back to the state
Source? (Not challenging you.)
> If someone "buys the oil rights" and doesn't sell any oil, they're cheating the state
I’d argue a better solution than thinning the buyer pool is setting a high minimum rebate, possibly one that only kicks in if the plot isn’t exploited.
Would also note that Wyoming’s revenue is from sales tax, mining tax and ticketing tourists. (Property tax is mostly minerals [1].)
Shifts the risk that the land is not very productive onto the bidder, which I suspect is undesirable (except to the extent it incentivizes the bidder making a sincere effort).
This doesn't seem like a workable standard. How will Wyoming distinguish between conservation bidders and commercial bidders that simply choose not to produce for economic reasons? Meaning, what happens if the prices of oil and gas crash, causing a non-conservation bidder not to drill or pump on one of these parcels? Will the state compel them to produce and sell at a loss?
It likely will work like mining claims - if you work the claim, you can keep it. If you abandon the claim, it goes back to the public and someone else can claim it.
A potential creative conservation path is to buy a shell LLC from a defunct O&G company, acquire the lease in the bidding process, and slow roll the development until the state attempts to void the lease. File suit when the state attempts to void the lease, and allow the legal process to drag on. Find flaws in the process and work the process. This should all still be tax deductible if your paperwork is in order.
"Why haven't you developed yet?" "Still working on it, things are hard you know, parts, labor, low price of natural gas, all that jazz. But we'll get to it, promise."
Think like a threat actor attacking attack surface of a target system, if your desired outcome is to outmaneuver these folks from a conservation perspective.
Could be interesting if there was an alternative industry which could profit from the land and then the funds could be used for counter lobbying and offer an alternative source of tax revenue for the state.
I wonder if ecotourism would work. Like some sort of American safari to see these Pronghorn migrations.
> “So rather than wait for that to happen, we thought, ‘Well, let’s step in now and let’s put in place a bill that acts as a deterrent to doing that,” Petroleum Association of Wyoming President Pete Obermueller told WyoFile.
First, I know it is common practice for the language of bills to be written by industry groups, but I still think it's alarming, and annoying, that they're so open about having a direct channel to lawmakers that got this bill into law so quickly. I hardly think someone making an oil and gas company pay slightly more for a lease is the kind of work we want our legislators to prioritize.
Second, it just sounds like the kind of blatant protectionism that's often derided around here. If a lease has value to me remaining undeveloped, and it has value to them being developed, then shouldn't we be able to compete to see how much the market values those priorities? I think it's funny that they're afraid of a conservationist billionaire bidding on petroleum leases when there are probably way more petroleum billionaires who could bid if there was any sort of bidding war.
Heck, the lease was sold for $19/acre, something like $13,000, and the winner complained about the "inflated" price. I can't say that I know much about the startup costs for a drilling operation, but is $13,000 really a significant consideration?
>If a lease has value to me remaining undeveloped, and it has value to them being developed, then shouldn't we be able to compete to see how much the market values those priorities?
No, because the actual amount the lessee is paying is the $19/acre, plus the taxes on the oil they extract. The fact that the $19 is a separate transaction is just an accounting convenience.
The state could say "place bids of price per acre plus taxes. Highest bidder wins. We'll refund taxes up to the amount you paid in the bid." It would be inconvenient for multiple reasons, but it would average to the same thing, and it would stop the conservationists cold. The fact that the state doesn't do it that way and so the conservationists can pay the price per acre by itself is just a loophole.
No. If the NSF gives you a grant to research cancer and you use it to make an interpretive dance video, they’re allowed to call you out for breach of contract. Similarly, if you pay a fee to enter a national park and then proceed to paint dicks on El Capitan, the rangers won’t be in a conniption about your First Amendment rights.
The seller is upset they got a good deal? (Counterpoint: these are public leases being sold for the public good.)
Looks like the winning move is for conservation groups to start E&P arms. Snarling the process up in years of litigation might be as good as buying and sitting on it.