New Mexico Military Institute will receive $254,546 as a result of the State Land Office’s land lease sale in Roswell this week. Leasing rights for 7,887 acres of state lands in Chaves, Eddy, Lea and Roosevelt counties were sold Tuesday for a total of $2,890,000. (Timothy P. Howsare Photo)
The New Mexico State Land Office reported earnings of more than $2.8 million at its monthly oil and gas lease sale in Roswell on Tuesday.
All of the funding will go to beneficiaries of the land office, such as hospitals and public schools across the state, and New Mexico Military Institute, which will reap more than a quarter million dollars from Tuesday’s lease sale.
A total of 37 tracts of land, covering 7,887 acres of state lands in Chaves, Eddy, Lea and Roosevelt counties, were sold Tuesday, at an average price of about $367 per acre.
Several of the tracts were designated for the New Mexico Military Institute, which is one of the land office’s beneficiaries.
The military institute was the beneficiary of a 320-acre sale Tuesday to Yates Petroleum Corp. of Artesia for $43,926; a 160-acre sale to Turner Oil & Gas Properties of Oklahoma City for $129,120; an 80-acre sale to Yates Petroleum for $13,000; a 320-acre sale to Yates Petroleum for $16,000; a 160-acre sale to Federal Abstract Co. of Santa Fe for $2,500; and a 160-acre sale to Robert Hooper for $50,000.
In total, the Institute will receive $254,546 as a result of Tuesday’s land lease sale.
Commissioner Ray Powell of the New Mexico State Land Office said the Institute drew the lucky straw when beneficiaries of state lands were designated a century ago. Oil and gas lease sales provide revenue from oil and natural gas production on state trust lands for trust beneficiaries.
“By the luck of the draw, each beneficiary was assigned land at statehood,” Powell said. “They (NMMI) got the land, most of it down in the Permian Basin, before we knew there was oil and gas. The last time I checked, about 85 percent of their re-occurring revenue comes from these working lands. So this is a really significant amount of money.”
The Permian Basin is a 250-mile wide, 300-mile long sedimentary basin largely contained in west Texas and southeastern New Mexico. It is one of the world’s thickest deposits of rocks from the Permian geologic period and has large deposits of oil and natural gas. The basin is also a major source of potash and sylvite.
Thirteen buyers registered for Tuesday’s sale at the Daniels Leadership Center at NMMI.
Both five-year oral and sealed bids were submitted.
The highest sealed bid was $563,000 from landman Douglas W. Ferguson, of Midland, Texas, for 322 acres, about 12.6 miles southwest of Carlsbad. New Mexico’s public schools are the beneficiaries of that sale.
The highest oral bid was $680,000 from Nearburg Exploration Co., of Dallas, for 252 acres in Eddy County, about 23 miles southwest of Loving. The state’s public schools are also the beneficiaries of that land sale.
The state land office is responsible for administering 9 million acres of surface and 13 million acres of subsurface lands for beneficiaries of the state land trust, which include schools, universities, hospitals and other public institutions in the state.
By leasing state trust land for a wide array of uses, the land office generates hundreds of millions of dollars annually to support the beneficiaries.
“In the last three years, those lands have generated over $2 billion,” said Powell, who attended Tuesday’s sale. “The $2 billion over the last three years translates into about $2,500 per working family in New Mexico that they haven’t had to pay in taxes over the last three years. The last three years have been the most productive in the history of the land office. Every division in our office is producing at a higher level. This year should be, for the first time ever, we’ll have an $800 million year. That’s about $164 million more than we’ve ever generated before.”
All 37 tracts up for sale were sold Tuesday for a total of $2,890,000, said Greg Bloom, assistant commissioner for mineral resources at the land office. Bloom said each tract sold for at least the minimum acceptable bid.
A total of 2,360 acres in Chaves County were sold for $177,000.
“So that’s almost four square miles of oil and gas leasing,” Bloom said.
The land office holds state land sales every month, auctioning the rights to state lands across the state.
“It’s almost always southeastern New Mexico tracts,” Bloom said. “We do this one lease sale in Roswell every year in conjuction with the New Mexico Landmen’s Association holding their annual conference at the military institute.”
State trust land is located in 32 of New Mexico’s 33 counties, including Chaves County, with each acre of land designated to a specific beneficiary.
“Each piece of land is designated for a specific beneficiary, so whatever is earned on that land goes to that beneficiary,” Powell said. “Each May, we make it a point to come down in Roswell and it gives our folks who work in oil and gas a chance to actually connect with the voices that are usually coming over the phone. A lot of Roswell was state trust land and still we own the mineral estate, but they sold the surface off in the 1960s and ’70s.”
Trust lands were granted to New Mexico by Congress under the Ferguson Act of 1898 and the Enabling Act of 1910. The latter act allowed New Mexico’s admission to the United States upon voter approval of the state constitution.
Revenue generated from the extraction of oil and gas, from mining, the sale of land, and any other activity that depletes the resource is placed in the Land Grant Permanent Fund, which is invested for the beneficiaries.
Revenues from activities such as grazing, rights of way, and commercial activities that do not permanently deplete the resource are distributed through the Land Maintenance Fund to the designated beneficiaries after the land office covers its own expenses.