September 16, 2018

New Mexico Receives Record $1.2 billion as the Oil Boom Gains Traction

The oil-drilling boom in New Mexico is at the root of the projected $1.2 billion “new money” windfall for the state. What makes this even more astounding is that it comes on top of a prolific spending spree of $6.3 billion to improve services and infrastructure in this budget year. New Mexican Government projects such as public schooling, health care and the University of New Mexico's sports programs have all been gradually deteriorating due to insufficient financial support. Legislators, for many years, have been plagued by ongoing economic disappointments failing to provide enough net revenue to support much-needed improvement projects. Reducing state reserves has been a constant concern to the Finance Legislative Committee and its chief economist Jon Clark. The securing of a blockbuster $1.2 billion in “new money” (basically the difference between projected state revenues next year and state spending this year) has rejuvenated New Mexico lawmakers. The current oil renaissance, driven by shale oil and gas extraction, is funding a plethora of state activities that benefit residents. Drilling rigs in the NM Permian Basin have risen to 104 (a 67% increase in just one year). Fueling this resurgence is the entrepreneurial ingenuity of oil service companies like Chase Energy Services and mainstream oil exploration entities. New fracking technology has made the penetration of deep underground reserves a reality and has reduced extraction costs. An aura of permanence illuminates the region bringing bountiful new taxes and royalties into the state. Core oil activities aside, there are countless secondary industries spawned by the action in the Permian Basin. Electric, engineering, and plumbing contractors, real estate brokers, and an array of retailers setting up for business in New Mexico cities are all beneficiaries of being in and around the energy drilling boom. Consumer spending in a vibrant economy accelerates prosperity through the multiplier effect. Finally, a cash cushion of approximately $177 million to boost reserves is a welcome change from times when reserves were drawn down to meet budget crunches. The indicators from all sides point to New Mexico entering a higher level of economic prosperity on the back of its most significant new money surplus ever – all thanks to the oil and gas industry.


Chase Energy Services

Chase Energy Services is one of the largest privately held integrated oilfield services company in the US, providing end-to-end oilfield services through an experienced management team, innovative technologies and an unrelenting focus on safety. With more than 500 employees, the company serves customers across Southwest New Mexico and West Texas in frac and acidizing, well construction and completion, cementing solutions and well servicing. learn more