Print Edition - 2017-04-20 | MONEY
New Mexico draws oil giants’ attention
Apr 20, 2017-
As New Mexico’s elected leaders wrangle over raising taxes to plug a budget shortfall, major multinational energy companies have quietly spent more than $13 billion in recent months on assets in the state’s oil and gas hot spots.
The new wave of investment bodes well for the industry being able to generate much-needed revenues for the struggling state over the long haul, analysts said.
Credit rating agency Standard & Poor’s Global Ratings on Tuesday predicted a turnaround in economic output for New Mexico in the near term, pointing to more growth in the oil and mining sectors in 2017.
The interest from companies such as Texas-based EOG Resources, ExxonMobil and Marathon Oil started last fall and is carrying into this year despite prices remaining around $50 a barrel.
“The way costs have come down and industry has restructured itself, they’ve found ways to make money at these prices. So they’re locking in, and they expect to keep ramping up production and drilling and putting people back to work,” said Andrew Dittmar, a senior analyst with Houston-based energy research firm PLS Inc.
The value of land in the Permian Basin, which includes stretches along the Texas-New Mexico border, also has increased rapidly because of the continued interest. Acreage in New Mexico is now going for twice the amount companies paid back in September, Dittmar said. New Mexico also led the nation last week in the number of new rigs added to the count, and state officials have been pulling in record earnings during monthly lease sales.
The uptick in the industry can’t come soon enough as development in oil- and gas-rich corners of the state contribute about one-third of the revenues New Mexico
uses each year to pay for education, public safety and other government services.
Published: 20-04-2017 10:36