University Lands, operated through the UT System’s Office of Business Affairs, sold almost $70 million of oil and gas leases during its semi-annual sale Wednesday, according to preliminary figures released by the office. 

University Lands is responsible for 2.1 million acres of land that together make up the Permanent University Fund, a state endowment established in 1876. The UT System’s investment company invests lease sale profits and revenue from production, including oil and gas extraction on the fund’s land, and returns on those investments benefit the UT and A&M systems. 

Executive director Jim Benson said he was happy with the results of the sale.

“I’m very pleased, especially in the continuing interest in University Lands for drilling purposes,” Benson said. “We had many returning companies and some new companies, too — I’m generally very pleased.” 

The sale netted slightly fewer dollars per acre than University Lands’ last sale in September. On Wednesday, University Lands offered 60,844 acres for lease, averaging roughly $1,144 per acre. In contrast, the September 2012 sale averaged $1,329 per acre. The March 2012 University Lands sale averaged $644 per acre. University Lands made record lease profits in 2011, when both lease sales averaged more than $2,000 per acre for a total of $560 million combined. 

Beyond the regular lease sale, University Lands also leased 134,000 acres in Hudspeth county in West Texas. Benson said while historically the land has not been a viable source for significant oil production, new advancements in technology might make the land more attractive to buyers. 

“It’s kind of exciting to have someone actually looking at the area,” Benson said. “The last time we leased it was back in the 1990s, and things have progressed quite a bit since then, so I’m sure the people who are interested think they might be able to find a reservoir that makes the land more economically profitable.”

Benson cited developments in horizontal drilling and hydraulic fracturing as examples of techniques that increase the odds a leaseholder will strike oil.

Printed on Thursday, April 11, 2013 as UT profits $70 million from sale of land leases