Oil and gas lease sale nets almost $8M in southeast New Mexico

Adrian Hedden
Carlsbad Current-Argus

The State of New Mexico made just shy of $8 million in October’s oil and gas lease sale, with dollars going to public schools, the New Mexico Military Institute and water conservation.

Twenty-three tracts were offered in the sale, covering about 6,877 acres of State Trust lands in Eddy, Lea, Chaves and Roosevelt counties, read a Friday news release from the State Land Office.

Thirty bidders from seven states participated in the online bidding, both sealed and open bids.

Sealed bids generated about $5.7 million, with about $2.2 million coming from open bids.

State Public Land Commission Aubrey Dunn wants to swap land.

“Business is booming in the Permian Basin, and fortunately for public education, State Trust Lands lie in the path of production,” said New Mexico State Land Commissioner Aubrey Dunn. 

The monthly lease sales gathered a total of about $60 million so far in Fiscal Year 2018, the release read, with about $43 million going toward public schools.

Estacado Land Services LLC, of Roswell, was the winning bidder in both sealed and open formats, paying just over $1 million for a 315-acre tract and $1 for a 320-acre tract.

Both pieces of land are in Lea County.

Earnings from the sales are earmarked for the Land Management Fund, which covers the Land Office’s operating expenses, the release read, spending about 5 cents for every dollar earned.

The remaining revenue is given directly to the beneficiaries, except public school funds, which go to the state’s general fund to be distributed to individual districts in appropriations approved by the Legislature.

From this month’s sale, public schools earned about $5.8 million, while the New Mexico Military Institute got $1.9 million.

About $162,000 was put toward the Irrigation Works Construction Fund, which through state appropriation, funds dams, water rights acquisitions and any purpose related to conserving New Mexico’s water resources.

The next lease sale is scheduled for Nov. 20, read a public notice from the Land Office.

A pumpjack runs day and night off County Road 31 just north of Loving, New Mexico.

Robert McEntyre, spokesman with the New Mexico Oil and Gas Association, said the ongoing interest among oil producers for New Mexico state land is a sign that the industry is picking up. 

He said New Mexico produces oil and gas from the most state-owned land in the country, and the state's regulations make the land ideal as compared to federal land. 

"New Mexico continues to be a significant place for oil and gas and energy investment," McEntyre said. "We certainly see that continuing for some time. Interest remains high for state lands, in part, because of the regulatory environment."

And that environment comes down to permitting, McEntyre said. 

He said NMOGA research shows southeast New Mexican producers waiting an average of one year for permits from the federal Bureau of Land Management. 

Further north in the Farmington area, McEntyre said producers can wait even longer for permits. 

The State Land Office, he said, provides permits within 45 days or less. 

"To acquire a piece of federal land and sit on it for a year really drives up the cost of business," McEntyre said. "When it comes to choosing where to invest, the cost of business is a factor."

Adrian Hedden can be reached at 575-628-5516, achedden@currentargus.com or @AdrianHedden on Twitter.