Oil and Gas Lease Maintenance FAQs
Why is it that no more than two persons are allowed to own a state lease?
By State Land Office regulation, no more than two persons may be the lessee of record on an oil and gas lease. If two persons happen to be the lessee of record on a particular lease, they own that lease as tenants in common and each one has a 100% undivided interest in it. "Undivided" means that both lessees of record have the right to use and occupy the entire area covered by the lease.
What exactly are Miscellaneous Instruments?
Miscellaneous instruments include all documents that create an interest in an oil and gas lease but that do not actually change the lessee of record on the lease. For example, documents that create undivided working interests, overrides, farmouts or rights to explore and produce below a particular depth would all be considered miscellaneous instruments. Other examples of such instruments include: overriding royalties assignments, operating rights assignments, mergers/name changes, last will and testaments, mortgages and financial statements, powers of attorney, etc.
How do I assign record title ownership to someone else, but still retain either deep or shallow rights?
Submit these two forms at the same time:
- Assignment of Oil and Gas Lease (form 0-30) and
- Miscellaneous Instruments
The approved assignment shows record title passing from your Company A to the other Company B; and the miscellaneous instrument is recorded to show Company B assigning the deep or shallow rights back to you, Company A. A $30 filing fee is required for the form 0-30, and a $10 fee for the miscellaneous instrument.
What are the fees for submitting assignments?
A $30 filing fee is required on each lease for which an assignment of record title is filed. A late fee of an additional $75 is required if payment is received 100 days or more after the assignor’s execution date on the form. The fee for filing miscellaneous instruments is $10. That single fee is all that is required even if the instruments affect more than one lease. All assignment fees and all miscellaneous instrument fees are non-refundable.
What form is required when submitting a record title assignment?
- Assignment of Oil and Gas Lease (form 0-30)
There are two versions currently being accepted: the 4-6-99 and the 9-27-01 versions. The 0-30 form may NOT be altered; the language of the official form will bind all parties. The only "changes" allowed are: an added retroactive effective date, shown next to the first executed date; and, if the form is downloaded from the internet, it may be formatted to accommodate more than the required four party signatures. Attachments to the form are permitted for additional signatures. No reservations, percentages, depth restrictions, etc. are allowed for record title transfer; see Question #3. We also require the complete mailing address of the assignee.
Is the same 0-30 form required when filing a miscellaneous instrument?
No, however, you may use it if you prefer, and in this usage you are allowed to make any alterations for your intended purpose. The state accepts and records all submissions that are construed as miscellaneous instrument filings as long as the $10 filing fee accompanies the legal instrument; see Question #2.
Is the assignment 0-30 form available on the Internet?
Yes.
- Assignment of Oil and Gas Lease (form 0-30)
Additionally, you may contact the Assignments, Miscellaneous Instruments Analyst and they can fax or email you one.
If you need to copy the form you may do so. But, it is very important that all copies be exact reproductions of the official form.
Why does the form 0-30 require all signatures be notarized?
Any legal instrument that is a transfer of real property must be acknowledged before a notary; this is required by statute and allows the assignment to be recorded. Record title transfers are considered transfers of real estate in New Mexico.
Why does my lease assignment have a suffix number attached to it?
Every time a transfer of record title is approved, the next available suffix number is attached to give that lease a distinct lease number.
Is a transfer of record title on a portion of the lands accepted?
Yes, partial assignments of record title transfer are approved; but, as stated in Question #1, the transfer is of 100% record title on this portion of the total lands in the lease.
If I have a large number of assignments to make, do I have to complete the paperwork for each and every assignment?
No, we accept "blanket assignments" for up to 25 separate leases. These may be sent in on one set of three, original assignment forms with original signatures, and with an exhibit sheet showing all the required information including each lease number and each legal land description on the assignment form. Please, also send copies of the exhibit sheet and the assignment form equaling the number of leases being assigned. We require the $30 filing fee for each lease listed on the exhibit sheet; e.g., the fee for 25 leases covered by the blanket assignment is $750 ($30 x 25 leases).
What is an OGRID?
The acronym stands for: Oil and Gas Remittance Identifier. This is a number that is used by three NM state agencies: the NM State Land Office (SLO); the Oil Conservation Division (OCD) of the NM Energy, Minerals, and Natural Resources Department; and by the NM Taxation and Revenue Department (TRD). The three agencies have distinct business functions appearing in the shared data system, ONGARD. They use the OGRID number to enter data on transactions with entities doing business with them.
When do I need an OGRID?
Anytime you initially do business with any of the three state agencies - SLO, OCD, or TRD - you need to request your own OGRID number. This one number will identify you for all three agencies. To participate in our State Land Office monthly sale of Oil and Gas leases, you must have an OGRID number. You can get an OGRID number at anytime by contacting the OGRID #Analyst or the Units Analyst.
If we do not remember our OGRID number, can we submit an assignment without it?
Yes, the Oil, Gas, and Minerals Division staff will supply the OGRID number if it is left blank on the assignment form. You will have the number on your returned copy of the approved assignment.
Our address has changed, what do I need to tell the SLO?
Please write to us and give us your complete new address, and the exact, previous address. We enter your new information into our data system.
Do I need to secure bonding when I acquire a state oil and gas lease?
Once there are operations happening on a lease site, the SLO requires a surface improvement damage bond. On initial issuance of the lease, the SLO does NOT require bonding if the lease is NOT producing.
What kind of bonds does the SLO require from lessees?
There is a package of information about bonds that you can request from the bonds analyst.
Amounts for the various bonds are:
| single lease bond | $10,000, |
| multi-lease blanket bond | $20,000, and |
| megabond | $25,000. |
In lieu of these surety bonds, you may be able to submit:
- Cash Collateral Assignment Bond,
- Irrevocable Letter of Credit - Foreign Bank,
- Irrevocable Letter of Credit - NM Bank, or
- Surface Owner/Lessee Bond Requirement Waiver.
How do I know when the oil and gas lease sales are held?
The sales are held the third Tuesday of every month, promptly at 9:30 a.m. Mountain Time, in the State Land Office Building, in Morgan Hall, the auditorium at the lower level. The street address is 310 Old Santa Fe Trail, near the intersection with East Alameda in downtown Santa Fe. The notice that is published every month appears on our XXXX Lease Sales Notice XXXX page and you can receive it automatically through our hard XXXX Lease Sale Notice mailing list XXXX.
When would I need to pay a shut-in gas royalty?
You may choose to pay a shut-in gas royalty if your well is capable of producing gas in paying quantities, but is temporarily shut-in due to lack of market or lack of a pipeline connection. The amount due is dependent on the term of your lease contract. The payment must be "timely paid", which means on or before the next lease anniversary date after ninety days from the date of shut-in.
What is a stipulation?
It is an amendment of the terms of an older oil and gas lease, to update the lease to the current form. This is most often used to allow a longer period for payment of shut-in gas royalty. We have a form for this stipulation process which you can download from the XXXX Oil & Gas Forms XXXX page.