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Montana State Office
Release Date: 02/29/12
Contacts: Mel Lloyd 406-896-5260    

BLM Montana/Dakotas Holds Successful Coal Lease Sale

The Bureau of Land Management (BLM) today accepted a single, high bid of $10,650,000 ($0.30 per recoverable ton) from Signal Peak Energy LLC for five unleased coal parcels in the Bull Mountains Mine No. 1 Federal coal tract in Musselshell County. The competitive coal lease sale was a reoffer of the coal lease tract the BLM previously offered for sale by sealed bid on November 16, 2011. The BLM rejected the sole bid received at that sale, which was also submitted by Signal Peak Energy, because the bid did not meet or exceed BLM’s estimate of the fair market value of the tracts.

“The BLM carefully and wisely manages its coal leasing program in close cooperation with the State of Montana, Tribes, and other federal agencies such as the Office of Surface Mining,” BLM State Director Jamie E. Connell said. “With this successful coal lease sale, Musselshell County, the Montana economy, and all Americans benefit from the jobs and royalty payments generated.”

The 2,679.86-acre tract in Musselshell County contains an estimated 35.5 million tons of recoverable coal reserves. Signal Peak Energy’s bid today for the tract met or exceeded BLM’s estimate of the fair market value of the tract.  The minimum bid for this tract was $100 per acre, or fraction thereof, and was not intended to represent fair market value.
Some of the factors that could influence an estimate of the fair market value include the size of the tract, the quality of the coal, the tract’s location (whether it’s adjacent to an existing mine with in-place infrastructure or is the start-up of a new mine), the timing of the revenue stream (when will the coal be mined), and sales of other similarly situated or comparable coal tracts.   Thus it is difficult to make assumptions as to why one coal tract may be valued differently than another. In the case of the Bull Mountains Mine No. 1 federal coal tract, the tract is within the Life-of-Mine permit boundary and is integral to the continued operation of the existing mine.

In December 2011, Signal Peak Energy LLC requested that the BLM Montana/Dakotas offer the coal lease tract for sale again, and the BLM agreed to do so. The Musselshell County tract was reoffered for sale in response to a lease by application (LBA) filed by Signal Peak Energy in March 19, 2008. The coal resource offered and sold consists of all reserves recoverable by underground mining methods.  The tract is located approximately 12 miles south of Roundup and is adjacent to the existing Bull Mountains Mine No 1.

Once a lease is issued, an annual rental payment of $3 per acre is required, along with a royalty payment of eight percent of the value of coal produced by underground mining methods. For more information on the BLM’s coal leasing program, please contact Greg Fesko at 406-896-5080.

The BLM manages more than 245 million acres of public land, the most of any Federal agency. This land, known as the National System of Public Lands, is primarily located in 12 Western states, including Alaska. The BLM also administers 700 million acres of sub-surface mineral estate throughout the nation. The BLM's mission is to sustain the health, diversity, and productivity of America’s public lands for the use and enjoyment of present and future generations. In Fiscal Year 2015, the BLM generated $4.1 billion in receipts from activities occurring on public lands.

Montana State Office   5001 Southgate Drive      Billings, MT 59101  

Last updated: 06-28-2012