Coterra, Civitas Win Big in Record New Mexico State Lease Sale
Premium, undrilled inventory in the core of the Delaware Basin was gobbled up in New Mexico’s record-setting state lease sale. Coterra, Civitas and a resurgent Avant Natural Resources were among the winning bidders.
Several growing Delaware Basin E&Ps were among the winning bidders in the New Mexico State Land Office’s latest oil and gas lease auction.
The New Mexico State Land Office’s July auction, closed July 15, generated a record-setting $56 million from just 14 parcels, officials said.
The previous record was set in November 2018, with $43 million generated at an auction including 34 parcels.
It was also the first lease auction at New Mexico’s new 25% royalty rate. Championed by Commissioner of Public Lands Sephanie Richard Garcia, the new state law went into effect on June 20.
The State Land Office offered 14 leases in Lea and Eddy counties in the July auction, nine of which included the new 25% rate.
“Critics of raising the rate said oil companies would run to Texas, but instead they ran for their checkbooks,” Commissioner Garcia Richard said in a July 15 statement.
“The $56 million we brought in for our schools today confirms that oil companies will go to where the resource is and are willing to pay top dollar for some of the best tracts of oil and gas land in the world.”
The last time New Mexico’s state royalty rate was updated was in the 1970s, before the potential of the Permian Basin was fully understood, the State Land Office said.
Parcels in the July auction included undrilled “white space” in the core of the Delaware Basin, according to EnergyNet listings.
Some parcels lie within the potash mineral development area, a federally protected region where acreage has historically been withdrawn from oil and gas drilling.
E&Ps are typically subject to restrictions when drilling in the potash area, like having to use “drilling islands” that penetrate the potash formations. Protests from potash producers could also delay projects.
But according to State Land Office spokespeople, new parcels were carefully carved out for companies to easily develop for oil and gas. In an upcoming August lease sale, they’ll be offering 640-acre tracts, something the State Land Office hasn’t done before.
Operators can drill entirely within state property, meaning they won’t be subject to federal potash restrictions. The State Land Office has also coordinated with the Bureau of Land Management (BLM) to put together larger plays in the potash area, so operators can drill outside a 640-acre tract, a spokesperson said.
The sale closed July 15. Winning bidders include several growing Delaware Basin producers:
Coterra Energy
Coterra Energy bid about $2 million to acquire 160 acres in Lea County, New Mexico, or $12,513 per acre, according to State Land Office data.
The acreage is in the northern portion of the Delaware Basin, where Coterra has grown recently through M&A.
The deals add 400 and 550 net locations, mostly within Lea County, New Mexico, primarily targeting the Bone Spring, Harkey, Avalon and Lower Wolfcamp/Penn Shale.
Coterra’s newly acquired acreage from the July auction lies adjacent to the Franklin Mountain and Avant acreage.
Coterra’s acquisition of Avant Natural Resources and Franklin Mountain earlier this year established a new focus area for the company in the northern Delaware Basin. (Source: Coterra investor relations)
Civitas Resources continues to add to its Delaware Basin position. The company bid $3.4 million, or $42,500 per acre, to acquire 80 acres in southwestern Eddy County.
Civitas entered the Permian Basin in a big way in 2023 with Midland and Delaware acquisitions totaling $4.7 billion.
Civitas acquired Tap Rock Resources’ Delaware assets for $2.45 billion, including equity and $1.5 billion in cash. The assets included around 30,000 net acres in Lea and Eddy counties.
The new parcel Civitas acquired at auction is adjacent to the Tap Rock acreage, data show.
Civitas’ acquisition of Tap Rock Resources in 2023 gave the company a foundational asset in the New Mexico Delaware Basin. (Source: Civitas investor relations)
Paloma Permian, the latest iteration of the Paloma brand, is building a Delaware footprint.
Formed in February 2024, Paloma Permian LLC is backed by private equity firm EnCap Investments LP.
Paloma Permian bid $14.86 million to acquire nearly 400 acres in Eddy County at an average of $35,552 per acre. Offset operators include Devon, Matador Resources and Mewbourne Oil, data show.
Paloma has a small but growing footprint in the New Mexico Delaware. The company began reporting production to the state in October 2024.
From January through May 2025, Paloma produced around 30,000 bbl of oil and 71.3 MMcf of gas, state data shows.
Paloma E&Ps have been active in nearly every major U.S. basin, including the Eagle Ford, the Midcontinent, Appalachia, the Barnett Shale and the Haynesville Shale.
After selling their company to Coterra last year, the Avant team is back in action as bidders in New Mexico’s latest lease sale, a company spokesperson confirmed.
Avant Natural Resources bid $6.25 million, or $26,000 per acre, for 240 acres in southeastern Eddy County, data show.
Avant also brought bigger projects into the northern Delaware, like the 16-well (13.1 net) Sandra Jean pad. Sandra Jean targeted eight different intervals in north-central Lea County.
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