New Mexico O&G Lease Sale Sets Record
American City Business Journals
|Monday, August 23, 2004
For the second consecutive month, the State Land Office has set a record for average income per acre during its monthly oil and gas lease sale, drawing in more $3.3 million.
The August sale, held in Santa Fe last week, reaped an average of more than $334 per acre on 10,037 acres of land.
Last month, the State Land Office saw an average per acre price of more than $322 -- a record that stood until the Aug. 17 sale.
For the third consecutive month, the average price per acre was higher than $300 and it was also the third month in a row and fourth out of the last five when more than $3 million was collected.
"I think that industry is enthusiastic," says Jami Bailey, director of the land office's oil, gas and minerals division and the sale's auctioneer. "And they see that the price is going to sustain."
Last week, the price of West Texas Intermediate Crude hit a dizzying high of $48.95 a barrel before settling back into the $47 range -- a considerable jump over prices at the start of the year when a barrel of oil was going for $33 to $34 each.
"Expectations are that all these prices will remain high," Bailey says.
The state's monthly sale is conducted like an auction. Potential buyers submit sealed bids prior to the sale date, or oral bids during the auction. Land that is put up for bid at the auction is nominated by industry and then approved for lease by the State Land Office.
The August sale's highest sealed bid, $372,844.80, was submitted by Yates Petroleum of Artesia, N.M., for 480 acres in Eddy County.
The highest oral bid of $347,000, was also submitted by Yates for 520 acres of land, also in Eddy County.
A total of 31 tracts were offered during the sale and all were leased.
All but 640 of the acres leased at the August sale were in southeastern New Mexico -- where the majority of the state's oil operations reside.
So far this calendar year, the State Land Office has collected more than $21.8 million in fees and bonus charges for land lease sales.
With energy commodity prices looking to continue their climb to new record highs, Bailey says she expects interest in the state lease sales to continue.
With about three weeks to go until the deadline for nominating land for the Sept. 21 lease sale, already more than 12,000 acres have been nominated by industry for lease, Bailey says.
In January, more than 14,600 acres of public land went up for bid -- the largest amount of land offered for lease by the state this year. All together in 2004, the State Land Office has leased about 88,000 acres of public land to oil and gas developers.