NM oil & gas lease sales continue to climb

Earnings from the State Land Office’s monthly oil and gas lease sales jumped 12 percent in July compared to June, from $5.829 million to $6.517 million.

On July 19, Commissioner of Public Lands Patrick H. Lyons announced that 41 tracts covering 12,717 acres of trust lands were offered during the July auction, and all 41 tracts sold. In June, the land office auctioned off 50 tracts encompassing 13,896 acres.

In the July sale, Chalfant Properties Inc. of Midland, Texas, submitted the highest sealed bid of $800,007 for 320 acres in Chaves County southeast of Roswell. The highest oral bid came from Cimarex Energy Co. of Tusla, Okla., which paid $804,000 for 240 acres in Eddy County southeast of Artesia.

Sales take place the third Tuesday of each month at the State Land Office in Santa Fe. The sale is conducted like an auction, with potential buyers submitting sealed bids for specific plots prior to the sale date, or oral bids during the auction. Land put up for bid at the event is first nominated for lease by industry or state officials and then approved for lease by the land office, which manages all of New Mexico’s state trust lands.

In recent months, climbing oil prices have spurred oil and gas producer interest in New Mexico state trust lands, increasing the competition for exploration and development leases, according to officials at the land office.

Oil and gas lease sales in New Mexico set an all-time record in Fiscal Year 2006. Sales reached $57.5 million, representing a 40 percent increase over the the $41 million in sales reported in FY 2005.

“We just closed out FY 2006 with $472.5 million in rental and royalty earnings from the energy industry,” said Lyons in a news release. “Early estimates indicate that we will exceed even that this [fiscal] year.”

The land office’s Oil and Gas Minerals Division manages 9,800 oil and gas leases covering 3.1 million acres of mineral estate held in trust for public education, state universities, hospitals, the penitentiary and water projects. The State Land Office manages all of New Mexico’s state trust lands. The state’s fiscal year runs from July 1 to June 30.

Next month’s oil and gas lease sale is scheduled for Aug. 15. See www.nmstatelands.org.

Published July 20, 2006 by New Mexico Business Weekly