The Permanent University Fund in Texas this week completed a record-breaking natural gas and oil lease sale covering parts of West Texas that will bring $206 million to the fund.
The state endowment, established in 1876, supports 18 institutions and six agencies in the University of Texas and Texas A&M University systems. The board is responsible for 2.1 million acres of Permanent University Fund lands, primarily spread across 19 West Texas counties.
Jerry Patterson, commissioner of the Texas General Land Office and chair of the fund's board of lease of university lands, said bidding for the Midland, TX-area leases was strong, with land going for more than $1,000 an acre.
Lease Sale No. 118, which was held in Midland on Wednesday, topped the previous record, set in April, of roughly $54.4 million. The bonus sale brought in more revenue to the fund than all of the oil and gas royalties from last year combined, Patterson said.
El Paso Corp. said Thursday it was the winning bidder for leases covering 123,100 acres in the emerging Wolfcamp Shale in the Delaware Basin. El Paso, which already held leases on about 12,000 acres in the area, added acreage in Reagan, Crockett, Upton and Irion counties.
The purchase is El Paso's second organic shale entry following its acquisition of more than 170,000 net acres in the Eagle Ford Shale of South Texas.
"Our acreage acquisition is the culmination of an extensive regional study by our technical team, and we expect it to become a new oil-focused core area," said El Paso's Brent Smolik, president of the exploration division. He said the company would update the market on its plans for the Wolfcamp Shale on Nov. 3 in a quarterly earnings conference call.
El Paso said the $180 million cost of the acquired acreage "will be funded over time through portfolio rationalization, and future development capital will compete with other programs in the portfolio."
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