The New Mexico State Land Office has reported earning $256 million in bonus payments from its latest oil and gas lease sale, setting a new record for the second consecutive month. The public auction, announced by Commissioner of Public Lands Stephanie Garcia Richard, featured 10 leases in Lea and Eddy counties, with nine subject to the recently implemented 25% royalty rate.
The law increasing the top royalty rate to 25% took effect on June 20, allowing the agency to offer premium parcels in the Permian Basin at market rates. This change was championed by Commissioner Garcia Richard over several years.
At the auction, all offered leases received bids. One parcel in Eddy County brought in more than $84 million, while another set a state record at $132,552 per acre. These results surpassed last month’s previous record of over $56 million.
“We are now two-for-two in shattering revenue records on behalf of our school kids since the 25% royalty rate took effect,” said Commissioner Garcia Richard. “As I’ve argued all along, oil companies are going to go where the resource is, and the oil resource in the Permian Basin is among the best in the world. Opponents who said oil companies would flee the state if we raised the rate clearly missed the mark. It was wrong to ask New Mexico’s public schools to subsidize the oil and gas industry for so many years. I’m glad the legislature finally took the critical step of raising the top oil and gas royalty rate in this year’s session. Bringing in billions more for our school kids was always my goal, and we are now well on our way to achieving that. The money the State Land Office brings in saves the average New Mexico taxpayer around $3,000 a year. I’m excited that this change will deliver millions more each year for our public institutions and save New Mexicans even more money.”
Monthly auctions allow companies to bid for development rights on specific oil and gas areas managed by the State Land Office. Leases go to high bidders; operators then pay royalties based on production as compensation for developing public resources.
The first lease sale under the new royalty structure occurred in July and generated $56 million from 14 parcels offered—nine at the new 25% rate.
Senate Bill 23 raised New Mexico’s maximum royalty rate from 20% to 25%, aligning it with Texas and private land rates within key sections of the Permian Basin. Sponsored by Sen. George Muñoz with co-sponsors Speaker Javier Martinez, Sen. Liz Stefanics, and Rep. Matthew McQueen, this legislation only applies to new leases within southeast New Mexico's most productive areas.
The last update to state land royalty rates occurred during the 1970s when New Mexico's full oil potential was not yet realized. Since taking office in 2019, Commissioner Garcia Richard has advocated for increased returns from energy development for public benefit.
Projections from New Mexico’s Legislative Finance Committee estimate that offering a market-rate royalty could increase annual contributions to the Land Grant Permanent Fund (LGPF) by $50–$75 million. The State Investment Council estimates these changes could boost LGPF value by $1.5–$2 billion by 2050 and increase cumulative distributions by between $750 million and $1.3 billion over that period.
Commissioner Garcia Richard has overseen more than $12 billion raised since assuming her role through leasing over 13 million acres of trust land for uses including agriculture, renewable energy projects, business development, mineral extraction, and recreation activities. The agency balances financial support for public institutions with stewardship responsibilities toward future generations.
