New Mexico Unlocks Strategic Potash Area Acreage in July and August Oil and Gas Lease Sales

The New Mexico State Land Office (NMSLO) is set to offer two strategically structured oil and gas lease sales in July and August, targeting development within the Potash Area of southeastern New Mexico. Both sales will be hosted on the Efficient Markets, EnergyNet, Indigo Energy Advisors platform and will be available for review on July 1, with sealed bids due July 15 and August 19, respectively.

The July sale includes approximately 2,800 acres across 14 tracts, while the August sale will feature 3,300 acres across 10 tracts. While most tracts follow standard configurations, there are key 640-acre full section parcels, specifically structured to support U-turn laterals and allow larger development areas; many parcels were specifically chosen to reduce regulatory friction.

These sales are the first offered under New Mexico’s new 25% royalty rate, and they are specifically designed to ease permitting challenges and minimize protest risk in an area that has historically posed development complications.

Potash Area: High Potential, Historic Barriers

The Potash Area, located in Eddy and Lea counties, is known for both its energy and mineral resources, as well as the tension that can arise between them. Federal leaseholds in the area are subject to unique “drill island” and “development area” restrictions intended to protect potash mining interests, often slowing down or blocking oil and gas development.

By contrast, the NMSLO’s state-owned parcels are not bound by these restrictions and can facilitate more direct development paths, when development occurs solely on the NMSLO owned land.

State Land Advantage: Tracts Built for Speed

NMSLO’s upcoming sales leverage full state ownership, surface and minerals, to sidestep federal layers of regulation and allow development exclusively under state jurisdiction. Highlights include:

• No federal surface or mineral interest—no BLM oversight or NEPA delays
• Exemption from federal “drill island” and “development area” mandates
• Select 640-acre tracts enable 2-mile, U-turn laterals with no need for federal communitization

A notable example is Section 36, T21S, R30E, a 640-acre tract that sits entirely within state boundaries. It can be developed under routine applications to drill to New Mexico’s Oil Conservation Division (OCD), with no federal nominations, approvals, or islanding requirements.  This land can also be included in longer, traditional, communitization agreements.

“These parcels are structured for efficiency. No delays, no additional federal process—just straightforward development with state permitting,” said a source familiar with the sale terms.

Simultaneous Release of July and August Tracts

Releasing both July and August lease sale tracts together is unchartered territory for the NMSLO.  However, a source noted the demand for land is extremely high, since the NMSLO held back its best tracts for years waiting for the new legislative royalty rate bill to pass.  During that time, the office also took steps to ensure oil and gas could be developed in the potash area and worked to remove certain obstacles hindering such development. Now, the office is finally releasing those tracts and allowing interested parties to see the larger picture of potential development by releasing both sales at once.

Royalty Reform: Higher Rate, Higher Confidence

Most of the tracts in these sales will carry a 25% royalty rate, a result of legislation passed earlier this year. The reform aligns New Mexico with market standards seen in Texas and on private lands, while also increasing returns for public beneficiaries. The move is expected to generate up to $75 million annually for the state’s Land Grant Permanent Fund.

Because the reform law prohibits public release of tract-level marketing before July 1, the July sale will operate under a shortened runway. The August sale will benefit from a longer evaluation period and contains several of the larger and more competitive tracts.

Timeline

With overlapping mineral interests, historic permitting hurdles, and aggressive protest activity, the Potash Area has traditionally posed high barriers to development. But New Mexico’s July and August lease offerings mark a shift, prioritizing operator certainty, efficiency, and control.

By offering state-controlled acreage exempt from federal encumbrances and proactively enforcing lease conditions, the NMSLO is creating new space for confident, streamlined drilling in one of the most regulated corners of the Delaware Basin.

For parcel lists, registration, and full bidding details, visit www.EfficientMarkets.com