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State Land Office says few premium tracts left

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The New Mexico State Land Office announced after its final oil and gas lease sale of 2020 that it only has about 9% of the “premium” oil and gas tracts in the Permian Basin still left for leasing.

The final monthly lease sale of the year occurred Dec. 15, with the state earning $2.36 million for mineral rights on 2,880 acres, about $818 an acre.

The total earned for lease sales for the year was $16.94 million, down about 68% from 2019, when the total was $52.68 million.

Public Lands Commissioner Stephanie Garcia Richards said the decline was directly related to the fewer premium tracts available. The Land Office estimates that only 2% of the state land leases in the Delaware Basin of the Permian Basin are available for leasing and only about 7% of the Capitan Reef leases.

As a general rule, leases do not expire and come up for bid again unless they are no longer producing oil and gas or unless a company relinquishes the lease or does not develop the tract.

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Garcia Richards said the Land Office has instituted minimum bid requirements in an effort to secure as much money as possible from future lease sales. She also has advocated for legislation that would increase royalty payments on oil and gas production on state lands.

The money raised from mineral leases is used to provide funding for public schools, colleges and hospitals in the state.

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