By Carol Clark | Los Alamos Daily Post
July 15, 2025
SANTA FE – For the first time, the New Mexico State Land Office has auctioned oil and gas leases at a 25% royalty rate after a new state law backed by Commissioner of Public Lands Stephanie Garcia Richard kicked in. The law, which became effective June 20, allows the State Land Office to offer its best parcels in the Permian Basin at the market rate.
Each month, the State Land Office holds a public auction for the right to develop certain oil and gas areas. Companies submit bids for leases, with the award going to the highest bidder. Once a lease begins to produce, a developer also pays royalty—a payment back to New Mexicans for development of a public resource.
The State Land Office offered a total of 14 leases, all of which are located in Eddy and Lea counties, of which nine included the new 25% rate. All of the leases received bids, with a combined total of over $56 million in bonus payments being received. The three highest earning parcels each received bids of over $12 million. The previous sale record was over $43 million in 2018, when 35 parcels were offered for sale. This sale also set a new record for the highest bid per acre at over $80,000 per acre.
“Critics of raising the rate said oil companies would run to Texas, but instead they ran for their checkbooks,” Commissioner Garcia Richard said. “The $56 million we brought in for our schools today confirms that oil companies will go to where the resource is and are willing to pay top dollar for some of the best tracts of oil and gas land in the world. State lands fund our schools and other institutions, saving the average taxpayer around $3,000 per year in taxes they would otherwise have to pay. Because of this new law, New Mexicans will reap these rewards and companies will pay their fair share. This is long overdue.”
Senate Bill 23, which was sponsored by Sen. George Muñoz and co-sponsored by Speaker of the House Javier Martinez, Sen. Liz Stefanics and Rep. Matthew McQueen, increased the top oil and gas royalty rate for new state land leases from 20% to 25%, bringing it in line with what is offered in Texas and on private lands in the best parts of the Permian Basin.
The new, top rate only applies to new leases on state lands within the most productive oil-producing areas in southeast New Mexico. The last time the royalty rate was updated – which is how much companies pay for the right to extract publicly-owned oil and gas resources – was in the 1970s and well before the full economic potential of New Mexico’s oil and gas potential was fully understood. Commissioner Garcia Richard has fought for the public to receive a fair share of oil and gas earnings since assuming office in 2019.
According to the Legislative Finance Committee, offering the market rate of 25% for premium oil and gas leases is estimated to result in additional annual contributions of between $50 and $75 million to the Land Grant Permanent Fund (LGPF). State Land Office oil and gas royalties are transferred to the LGPF and invested by the State Investment Council (SIC) prior to distribution. The SIC estimated that the additional inflow of royalties from the State Land Office that would occur under the proposal would result in between $1.5 and $2 billion in increased value of the LGPF by 2050, and between $750 million and $1.3 billion more in cumulative distributions from the LGPF by 2050.
Commissioner of Public Lands Stephanie Garcia Richard has overseen the New Mexico State Land Office since 2019. In that time the agency has raised more than $12 billion for New Mexico public schools, hospitals, and universities. Over 13 million acres of state trust land are leased for a variety of uses, including ranching and farming, renewable energy, business development, mineral development, and outdoor recreation. The State Land Office has a dual mandate to use state trust land to financially support vital public institutions, while simultaneously working to protect the land for future generations.
This article originally appeared in the Los Alamos Daily Post.