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Land office inches toward record revenue for oil, gas leases

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The State Land Office today collected nearly $1.5 million from March’s oil and gas lease sale, bringing fiscal year 2018 earnings from oil and gas lease sales to $95 million.

The agency’s largest single-year lease sale yield was in FY2012 when it collected nearly $102 million. Beneficiaries of today’s lease sale and their respective earnings are:

• Public Schools: $469,880
• Charitable, Penal and Reform Institutions: $1,026,282

Seven institutions own equal shares of the lands and permanent funds for the beneficiary identified as Charitable, Penal and Reform. The rentals, royalties, and Land Grant Permanent Fund distributions are shared equally by Carrie Tingley Hospital, New Mexico Behavioral Health Institute, Los Lunas Hospital, Miners’ Colfax Medical Center, New Mexico Boys School, New Mexico Penitentiary, and the Youth Diagnostic and Development Center.

Commissioner Aubrey Dunn offered 15 tracts covering 2,807 acres of State Trust Lands in Lea and Sandoval counties. This month, 20 bidders from eight states registered. The monthly lease sales, which are held on the third Tuesday of every month, are held online in sealed and open bidding formats. Sealed bids generated $1,073,412 and open bids brought in $422,750 for an average price per acre of $533.

Grey Wolf Oil and Gas, of Houston, Texas, was the top bidder in both formats bidding $442,000 for 160 acres and $330,050 for 157 acres all in Lea County.

“Last fiscal year 55.5 million barrels of oil were extracted from State Trust Lands, which is 25 percent of state production,” said Dunn. “We expect output will equal or exceed last year’s production levels, which is good news for education since oil and gas generates 92 percent of revenues earned by the State Land Office.”

Oil and gas lease sale earnings are paid into the Land Maintenance Fund, which covers the State Land Office’s operating expenses. The agency is entirely self-funded and spends about three cents of every dollar it earns. The balance is distributed monthly directly to the beneficiaries to supplement their operating budgets. Public school monies are paid into the state’s General Fund and distributed to each school district as appropriated by the Legislature.

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