Well, it’s not -$37 anymore so we’ve got that going for us!  According to Enverus, as of 7/13/2020 the rig count in SE New Mexico is 52.  Exxon Mobil and Devon Energy are leading the way with 20 and 9, respectively.  Some Operators have been opening wells back up from temporary Shut-In status, and I have not heard of any having issues with the State of NM as of yet.

It appears that a few public companies struggling with low oil prices and high debt burdens have chosen to pursue reorganization paths, while private companies have gone down the 363 sales process.  Likely, the most noticeable to the NM Operators was Chesapeake Energy, Unit Corp., Lilis Energy, Chisholm Oil and Gas, Whiting Petroleum and Ultra Petroleum.

Although, the M&A activity in SE NM (and globally) is essentially nil in the first two quarters of 2020, there have been some interesting deals and renegotiations recently that have added contingency payments into the deal to make them more palatable.  For instance, BCE-Mach III, as Seller, and Alta Mesa, as Buyer, entered into an agreement to for some Mid-Continent acreage that was, “Adjusted by $2.5 million for each $1.00 change in price from $23.00/bbl, with a maximum +/- $20 million from starting value of $159.5 million.”  So, there are ways to get creative with deals if our Operators are in a sale situation.

The recent State Lease sales have been fairly active.  The drawback is the State seems to be arbitrarily creating minimum bids on tracts in the Sealed Bid process, without any consistency.  Some of minimums seem appropriate, and some do not.  They do seem to be willing to put up virtually any tract that an Operator nominates the month before, so that is good news.

I hope all of our members can keep their heads above water during these hard times.  I believe we have some very good times ahead.