DOI Bags Over $4B from Texas, New Mexico Lease Sale

The U.S. Department of the Interior (DOI) announced, in a statement posted on its website recently, that it generated over $4 billion in total receipts from a Bureau of Land Management (BLM) oil and gas lease sale in New Mexico and Texas.

The DOI, which outlined in the statement that these total receipts “underscore[ed]… strong industry demand for domestic energy development on public lands”, highlighted that the BLM leased 74 parcels totaling 33,530 acres during the quarterly lease sale.

Combined bonus bids and rental payments from the sale totaled approximately $4,007,944,870, according to the DOI, which noted that revenue generated through lease sales is shared between the federal government and the states where the parcels are located. 

The DOI highlighted that the sale was conducted under the Working Families Tax Cuts Act, which it said lowered the federal royalty rate for new onshore oil and gas production to 12.5 percent.

“The lower royalty rate reduces costs for energy producers operating on public lands and is expected to encourage additional investment, leasing and drilling activity across the West,” the DOI said in the statement.

“Oil and gas lease sales support reliable domestic energy production, strengthen American energy independence and help ensure the United States remains a global energy leader,” it added.

“Increased production on federal lands also supports manufacturing, transportation and national defense while helping stabilize energy costs for American families and businesses,” it went on to state.

The DOI noted in its statement that leasing is the first step in the process to develop federal oil and gas resources. Oil and gas leases are issued for a term of 10 years and continue as long as oil and gas are produced in paying quantities, the DOI highlighted in the statement.

“America is sitting on some of the richest energy resources in the world, and President Donald J. Trump is committed to putting those resources to work for the American people,” Secretary of the Interior Doug Burgum said in the statement.

“This over $4 billion lease sale is another sign that President Trump’s American Energy Dominance Agenda is delivering results,” he added.

A statement posted on the Railroad Commission of Texas’ (RRC) website highlighted that Texas oil and gas regulator Wayne Christian applauded the federal oil and gas lease sale in Texas and New Mexico. The statement described the sale as “the largest onshore federal oil and gas lease sale in U.S. history”.

“Christian emphasized that the record-setting sale reflects the results of the streamlined, cooperative federal regulatory environment under the Trump administration, which has facilitated increased leasing activity and market participation,” the statement noted.

“According to preliminary auction results released by the DOI, companies bid more than $4 billion for drilling rights covering more than 33,000 acres across portions of the Permian Basin in Texas and New Mexico,” the statement highlighted.

“That total is roughly four times the previous onshore federal lease sale record of $972 million set in 2018,” it added.

The RRC statement noted that the lease sale allows energy companies to bid for the right to explore for and produce oil and natural gas on federally owned land and said winning bidders secure leases on specific tracts, with development conducted under federal oversight. Revenue is generated through lease payments, royalties and production activity and is shared between state and federal governments, it pointed out.

“When the federal government allows American energy producers to do what they do best, investment surges, production grows, jobs are created and American energy security is strengthened,” Christian said in the statement.

“Under President Trump, America is once again unleashing the full power of domestic energy production,” he added.

“This sale is further proof that Texas’ oil and gas industry is entering a new era of strength and stability,” he continued.

In a statement posted on its Facebook page commenting on the results of the federal oil and gas lease sale, the New Mexico Oil & Gas Association noted that it was “a historic day” for the state.

“The Bureau of Land Management announced results from its federal oil and gas lease sale, which brought in more than $4 billion - the largest BLM lease sale ever recorded - across 74 parcels and 33,530 acres in New Mexico and Texas. About $2 billion comes directly back to our state!,” the association said in the statement.

“Those funds support classrooms, early childhood programs, infrastructure, and the public services New Mexicans rely on every day,” it added.

“Thank you to the operators, workers, and companies producing responsibly in our basins! To every worker in the fields every day - this one is for you,” it continued.

To contact the author, email andreas.exarheas@rigzone.com