By Alaina Mencinger | Santa Fe New Mexican
July 16, 2025
A recent sale of primo oil and gas tracts brought in record-breaking profits for the State Land Office.
The auction — the first held since a law went into effect increasing royalty rates on the state’s most productive tracts — brought in $56 million, according to a news release Tuesday. The maximum rate was increased from 20% to 25%.
Oil and gas companies looking to drill on state land have to bid for tracts. Once production starts, they pay a royalty to the state.
Of the 14 leases in Eddy and Lea counties put up to bid, nine will have the increased royalty rate. Leases go to the highest bidder; all of the leases offered received bids.
The previous record for a sale was in 2018, when 35 parcels were auctioned and received $43 million in winning bids.
Lawmakers approved the rate increase during this year’s legislative session. State Land Commissioner Stephanie Garcia Richard said in the release that increases to the royalty rate, which hadn’t been increased for decades, were “long overdue.”
“Critics of raising the rate said oil companies would run to Texas, but instead they ran for their checkbooks,” she said.
This article originally appeared in the Santa Fe New Mexican.