STATE News:
SANTA FE — For the third month in a row, the State Land Office has broken a record with its oil and gas lease sales and earned historic revenue, bringing in over $117 million in bonus payments at a public auction, New Mexico Commissioner of Public Lands Stephanie Garcia Richard announced today. It is the third auction the State Land Office has held since a new, 25% royalty rate for premium oil and gas leases long championed by Commissioner Garcia Richard kicked in.
The State Land Office has earned a total of over $429 million in bonus payments in just the last three months – payments made simply for the right to obtain an oil and gas lease. This money goes to support education and other public services in the state, while freeing up taxpayer money for other critical needs – such as addressing the drastic cuts to health care and food assistance by the Trump administration.
This month, the State Land Office sold a tract in Eddy County for over $175,000 per acre, far outpacing the nationwide price per acre record the agency set just last month. The State Land Office offered a total of 11 leases at today’s auction, all of which are located in Eddy and Lea counties. Eight tracts included the new 25% rate. All of the leases received bids, with the highest single lease selling for over $57 million.
“We’re now nearly a half a billion dollars in earnings in our three-month haul,” Commissioner Garcia Richard said. “As New Mexico prepares to hold a special legislative session to protect our residents from the worst of the Trump administration’s cuts to health insurance and food benefits, the money earned today gives our legislature and governor funding they can put to excellent use to meet the needs of New Mexican families. Industry knows that New Mexico has some of the best oil and gas plays in the world. After three highly successful auctions with the new top rate in place, we are now well on our way to earning billions more for our public schools in the long run. The results so far have been better than we could have even imagined.”
Each month, the State Land Office holds a public auction for the right to develop certain oil and gas areas. Companies submit bids for leases with the award going to the highest bidder. Once a lease begins to produce, an operator also pays royalty—a payment back to New Mexicans for development of a public resource.
The first oil and gas lease sale with the new, top royalty rate in July earned a then-record $56 million from 14 offered parcels, nine of which were auctioned at the 25% rate. The August auction then shattered the July record, earning $256 million in bonus payments from just 10 offered parcels. One parcel in the August lease sale in Eddy County set a new State Land Office record of over $84 million and a then nationwide record of $132,552 per acre.
The law that raised the top royalty rate, Senate Bill 23, became effective June 20th and allows the State Land Office to offer its best parcels in the Permian Basin at the market rate. The legislative change brings the rate in line with what is offered in Texas and on private lands in the best parts of the Permian Basin.
The new, top rate only applies to new leases on state lands within the most productive oil-producing areas in southeast New Mexico. The last time the royalty rate was updated was in the 1970s and well before the full economic potential of New Mexico’s oil and gas potential was fully understood. Commissioner Garcia Richard has fought for the public to receive a fair share of oil and gas earnings since assuming office in 2019.