SANTA FE, N.M.—The Bureau of Land Management reports it generated more than $4 billion in total receipts from an oil and gas lease sale in New Mexico and Texas that offered 74 parcels totaling 33,530 acres.

According to Efficient Markets, which hosted the online sale for the BLM on May 20, the event broke multiple records, including the record for aggregate high bids, which now stands at $4,007,609,288. David Blackmon, author of the Substack Energy Additions, notes that this is four times higher than the former record of $972 million.

The sale also set a new record for the highest per-acre bid, pushing it to $357,129.

Bidding activity remained highly competitive throughout the sale, with every parcel receiving multiple bids, Efficient Markets reports. A total of 61 unique, financially vetted bidders placed a combined 1,072 bids, with the highest per-parcel bid totaling $405,761,280.

The top three bidders paid a combined $3.9 billion, accounting for 98% of the total revenue, to acquire 39 parcels covering 27,665 acres, or 83% of the acreage offered. Those bidders were:

• Devon Energy Production Company LP, which acquired 24 parcels covering approximately 16,297 acres for $2.6 billion;
• Federal Abstract Company, which paid $1.1 billion for six parcels totaling 5,154 acres; and
• Buffalo Frontier LLC, which acquired nine parcels with 6,214 acres for $144.1 million.

“The extraordinary bidding activity and record-setting values reflect the industry’s urgent demand for high-quality inventory and long-term confidence in the Delaware Basin,” says Chris Atherton, CEO of Efficient Markets.

The BLM points out that the sale was conducted under the Working Families Tax Cuts Act, which lowered the federal royalty rate for new onshore oil and gas production to 12.5%, reversing the 16.67% rate established under the Inflation Reduction Act.

Extending Inventory

Devon Energy estimates that the 16,297 acres it gained through the lease sale will add 400 net locations normalized to two-mile laterals. The company says these wells will likely have strong economics and low breakevens, supported in part by:

• A high net revenue interest of 87.5%, with 10-year terms across all depths, more favorable than NRIs typical of state and fee leases in the region;
• Contiguous acreage that enables the company to drill longer laterals and lower costs through co-development and multiwell pads;
• Highly productive wells across multiple zones that are expected to compete for near-term capital; and
• Acreage directly adjacent to the company’s previous Delaware Basin footprint, meaning it can leverage existing facilities and infrastructure.

“This BLM lease sale presented a rare and compelling opportunity to add high-quality, contiguous federal acreage at scale in the core of the Delaware Basin,” says Clay Gaspar, Devon’s president and CEO. “Each tract was evaluated on rock quality, midstream connectivity, strategic fit and per-share value accretion for our owners. The favorable federal lease terms, including the lower royalty burden, multi-pay potential and the ability to develop with longer laterals on multi-well pads, are immediately accretive to our top-tier inventory.”

Core Acreage

Another sale participant, Matador Resources, says it expanded a premier position in the Delaware Basin by picking up 5,154 net undeveloped acres in the play’s core for $1.1 billion.

Joseph Wm. Foran, Matador’s founder, chairman and CEO, called the acreage highly complementary to Matador’s prior position. “This acquisition not only extends the amount and the duration of Matador’s high-quality inventory and reserve base, but also enhances the company’s current assets with increased operating efficiencies. These lease acquisitions lend themselves to extended reach laterals of three miles or more, leveraging of existing facilities and infrastructure with Matador’s existing field teams, and increased midstream value from potential future volume additions in the Delaware Basin,” he explains.

According to the company, the acquired acreage sits in the most prolific areas of the Delaware Basin, with nine or more discrete prospective formations. With acreage directly adjacent to existing operated units, Matador says it will be able to unlock greater operating efficiencies in areas that already have a completed cost per lateral foot averaging 10%-20% below its corporate average.

Matador adds that the new acreage increases its net operated inventory by 141 locations (normalized to two-mile laterals), including extended reach laterals, U-Turn well designs, multi-well developments and completions, and emerging horizons and targets.