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Legislation Detail
CS/SB 23 OIL & GAS ROYALTY RATE CHANGES
Sponsored By: Sen George K Munoz

Actions: [1] SCONC/SFC-SCONC [4] DP-SFC [8] DNP-CS/DP [9] PASSED/S (21-15)- HENRC/HAFC-HENRC [12] DP-HAFC [16] DP [18] PASSED/H (37-31) SGND BY GOV (Apr. 10) Ch.137.

Scheduled: Not Scheduled

Summary:
 Senate Bill 23 (SB 23) sets the royalty rate on future oil and gas development leases on certain state trust lands to enhance revenue for beneficiaries. 

2/19/25
CS/SB 23 SFC sets the royalty rate on future oil and gas development leases on certain state trust lands to enhance revenue for beneficiaries and requires the manner of posting of certain information.
Legislation Overview:
 Senate Bill 23 (SB 23) creates an alternative royalty rate of not less than one-fifth nor more than one-fourth in the Development Form  (Section 19-10-4.3 NMSA 1978) if the leased premises is located in whole or in part as specified in this bill within the portions of the restricted districts established pursuant to Section 19-10-16 NMSA 1978 beginning on or after 1 July 2025. It makes technical changes.
Current Law: 
 The Development Form sets the royalty rate not less than three-sixteenths nor more than one-fifth. Section 19-10-16 NMSA 1978 allows the state land commissioner to set varying annual rental fees in a restricted district.
Committee Substitute:
 2/19/25
The Senate Finance Committee introduced a committee substitute for SB 23 (CS/SB 23 SFC) that creates an alternative royalty rate of not less than one-fifth nor more than one-fourth in the Development Form (Section 19-10-4.3 NMSA 1978) if the leased premises is located in whole or in part within the portions of the restricted districts established pursuant to Section 19-10-16 NMSA 1978 as specified in this bill beginning on or after 1 July 2025. It prohibits the commissioner of public lands from canceling leases except if the lessee fails to comply with or defaults on any of the provisions or covenants in the lease described in subsection B. It makes technical changes.
CS/SB 23 SFC amends the notice provisions in Section 19-10-17 NMSA 1978 to require that the individual percentages and total percentages for each factor listed in Section 19-10-3 NMSA (Classification of State Lands for Oil and Gas Leasing) be posted with the lease notice for each individual tract nomination, but that notice must keep the identity of the nominating company confidential. The factors used in determining if a restricted tract is categorized as regular or premium in Section 19-10-3 NMSA 1978 include oil and gas trends; oil and gas traps; reservoir volume and recovery rating; lease bonus rating; and exploration and activity.
CS/SB 23 SFC would be effective 1 July 2025.
  • Floor Amendments arrow_drop_down