IPANM (Mar. 7, 2024) – The New Mexico State Land Office has abruptly notified the oil & gas industry that all future state premium tract lease offerings will be suspended indefinitely until a 25% royalty increase is approved by the state legislature. The maneuver comes as a result of the State Land Office not being able to pass their own legislation to raise royalty rates up to 25% on state leases. State legislators whom IPANM have spoken with since Thursday’s announcement were not aware of the State Land’s Offices demands on the Legislature to take action.
As a result of the notification, IPANM Executive Director has issued the following statement:
“The State Land Office has unilaterally decided to cut off future revenues to state beneficiaries and the general fund by suspending new leasing of premium tracts. IPANM strongly opposes this action especially considering the decision was abruptly announced without any consideration of the economic impact to all New Mexicans.”
IPANM has strongly opposed any increase to state royalties due to the fact that New Mexico is already the highest taxed state on oil & gas operations. An increase to 25% from the existing 20% would continue to put New Mexico small producers at an economic disadvantage in overall operating costs. While the state land office likes to point out that Texas’ royalty rates are at 25%, it is not an “apples to apples” state comparison given the higher overall operating costs for New Mexican operators.
IPANM is currently evaluating the legality of the Land Commissioner’s actions and will keep members informed of developments.
Announcement of Premium Leasing Suspension
