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Houston oil, gas firms granted extensions

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State Land Commissioner Aubrey Dunn is offering a grace period to Houston-based oil and gas lessees that pay royalties and interest on oil, gas and carbon dioxide extracted from New Mexico State Trust lands.

“Hurricane Harvey’s destruction is far-reaching and will cause substantial revenue volatility in New Mexico,” said Dunn. “By disrupting a key hub of the nation’s energy industry, Harvey will impact the revenues the State Land Office collects and distributes to the schools and institutions that count on us to pay their bills.”
There are 25 Houston-based companies and/or subsidiaries that remit monthly royalty payments to the State Land Office, according to a news release. All oil and gas lessees are required to file royalty returns on the 25th of every month. Generally, payments received after the 25th are charged interest. Because of the hurricane, payments due on Sept. 25 are extended until Oct. 25.

Oil and gas-related activity accounts for 92 percent of revenues collected by the State Land Office, and royalty payments are the bulk of those earnings. In fiscal year 2017, oil and gas royalty earnings totaled $435 million, while lease payments, monthly lease sale earnings and interest brought in $70 million.
Royalty payments flow into the Land Grant Permanent Fund and are invested by the State Investment Council. Five percent of the five-year average market value of the fund is distributed monthly to public schools, universities, hospitals and civil institutions supported by the State Land Office.
The impact of Hurricane Harvey also will be felt by New Mexico in other ways, according to the news release. The oil and gas industry contributes more than $2 billion a year to the New Mexico general fund, and about 40 percent of severance taxes collected by the state Taxation and Revenue Department are paid by Houston-based companies. Plus, federal mineral leases contribute about $500 million to the general fund.