Oklahoma City-based Devon Energy was the leading bidder in Wednesday’s quarterly sale of federal oil and gas leases in Texas and New Mexico by U.S. Bureau of Land Management. BLM offered 74 parcels of land covering 33,529 acres to generate $4,007,944,870. Devon acquired 24 parcels covering 16,297 acres in Eddy and Lea counties for $2.6 billion in total bids. Other top bidders included Federal Abstract Co., which paid $1.1 billion for 6 parcels of 5,154 acres, and Buffalo Frontier, which acquired 9 parcels of 6,214 acres for $144.1 million.
Chris Atherton, CEO of Efficient Markets, which managed the sale for BLM, said, “The extraordinary bidding activity and record-setting values reflect the industry’s urgent demand for high-quality inventory and long-term confidence in Delaware Basin.”
Devon’s transaction, valued at $161,500 per net acre, adds about 400 net drilling locations normalized to two-mile laterals adjacent to its existing operations. Clay Gaspar, president and CEO, said, “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.” Before the sale Devon held about 746,000 net acres in Delaware.
The sale was conducted according to the Working Families Tax Cuts Act, which lowered the federal royalty rate from 16.67 percent to 12.5 percent. Revenue from the sale is shared between the federal government and the states where the parcels are located.