Delaware Basin sale parcels mostly in NMLea and Eddy counties, NM
The Federal onshore oil and gas program was always secondary to the offshore program, at least in the opinion of those of us who worked in the offshore program đ. That was before the shale era revolutionized US energy production.
The table below compares the last two Big Beautiful Gulf sales and the record 2008 Gulf of Mexico sale with the BLM NM sale. Most astonishing is the record $357,129 per acre bid for a single NM tract. Devon Energy, which exited the Gulf in 2010, was the mega-bidder acquiring 24 tracts for $2.6 billion! (Devon is still bogged down in the Hogan/Houchin decommissioning dispute in the Pacific, a case which should temper enthusiasm for relaxed lease assignment and financial assurance policies.)
The attractiveness of the Permian, Delaware, and similar onshore basins has been greatly enhanced by vastly improved drilling and well completion technology. The short lead times to first production are a big advantage relative to offshore development.
The total high bids for Gulf Sale 206, which dwarfed the BBG1 and 2 sales, are still a Federal oil and gas leasing record when converted to 2026 dollars, but the sale area was much larger than for the NM sale.
Sale
date
tracts bid on
acres bid on
total high bids
highest bid/acre
BLM NM
5/20/2026
74
33,529
$4,007,609,288
$357,129
BBG2
3/11/2026
25
140,753
$46,976,423
$3,647.57
BBG1
12/10/2025
181
1,023,526
$300,425,222
$3,227.79
206
7/21/2008
615
3,323,047
$3,677,688,245 ($5.7 million in 2026 dollars)
$18,333.47 ($28,300 in 2026 dollars)
The royalty rate on Sale 206 leases is 18.75%, versus 12.5% for the other 3 sales.
BSEE (2020) estimates the cost of decommissioning these facilities to be $85 million (too low), and there is no collateral or third party guarantee.
The responsibility for decommissioning these platforms has yet to be settled. ConocoPhillips, Oxy, and Devon have appealed decommissioning orders from BSEE. The Interior Board of Land Appeals (IBLA) has yet to rule on those appeals. The appellants are funding some plugging operations and facility upgrades pending the IBLA decision.
Per BSEE’s borehole file, this is the current status of the Hogan and Houchin wells:
33 completed and not yet plugged; these wells were drilled between 1968 and 2010
43 temporarily abandoned (TA) wells plugged in accordance with 30 CFR § 250.1721
10 wells have been updated to TA status in the past 6 months (latest 3/22/2026), so some progress is being made
If you are interested in the Hogan/Houchin mess or decommissioning liability in general, I highly recommend that you look at Devon’s informative and rather compelling appeal to IBLA. Similar appeals were submitted by Oxy and ConocoPhillips.
Lease history (excerpted from the Devon appeal):
Lease OCS-P 0166 was issued effective January 1, 1967.
Phillips Petroleum Company (âPhillipsâ) (predecessor to ConocoPhillips), Cities Service Oil Company (predecessor to Oxy), and Continental Oil Company (predecessor to ConocoPhillips) were the initial lessees
Phillips was designated operator on January 25, 1967
February 28, 1983: Petro-Lewis Funds, Inc., obtained the 37.5% interest of the Continental Oil Company (which in 1979 had changed its name to Conoco Inc., now Conoco Phillips Company (âConocoPhilipsâ)).
November 1983: Cities Service Oil Company assigned its 37.5% interest to Cities Service Oil and Gas Corporation (now OXY U.S.A. Inc).
July 2, 1987: the Minerals Management Service (âMMSâ) approved two more assignments of the Lease. One, from PetroLewis Funds, Inc. to American Royalty Producing Company (âAmerican Royaltyâ), was approved retroactively to December 31, 1984. The other, from American Royalty to Santa Fe Energy Company(âSanta Feâ), was approved retroactively to April 30, 1987.
April 1, 1988: Santa Fe transferred a 3.75% interest to Maersk Energy Incorporated, reducing Santa Feâs share to 33.75%.
1991 Assignment to Signal Hill: MMS approved assignment of the lease to Signal Hill effective February 5, 1991. The assignment was approved without any provision under which the assignors agreed to be liable for decommissioning operations on the lease. MMSâs approval actually had the opposite effect, leaving such obligations to the assignee. The assignment was approved despite concerns within the MMS about the financial strength of Signal Hill and the technical competence of Pacific Operators Offshore Inc (POOI), the affiliate that would operate the facilities.
Comments:
The assignment to Signal Hill should have never been approved. The outcome was predictable.
The Devon, Oxy, and ConocoPhillips appeals are very strong and would seem to have a good chance of success. Perhaps that is why the IBLA decision is taking so long (nearly 5 years to date).
Given the uncertainty regarding this appeal, the absence of transparency about other potential decommissioning liabilities, and the uncertainties regarding the administration of predecessor liability, this is not the time to be relaxing financial assurance requirements and further exposing taxpayers to decommissioning risks.
This is the final day to comment on BOEM’s proposal:
Bud's Offshore Energy (BOE) 