On April 21st, the Texas School Land Board unanimously approved three policies to work with operators within the constraints of our statutory authority, while maintaining our fiduciary duty to the school children of Texas to generate the highest revenues possible for the Permanent School Fund.

Due to the combined effects of a significant reduction in global crude oil demand caused by the economic impact of the Covid-19 virus, and the oversupply of crude oil caused by the recent global oil price war, both resulting in a drastic drop in the market price of domestic crude oil, the GLO has received numerous communications from concerned oil and gas companies operating on State lands about their ability to drill and complete commitment wells, timely pay royalties, timely file reports, and sustain oil and gas production in the current economic environment. These issues are further exacerbated by the potential near-term lack of sufficient storage capacity for oil, thereby causing further reductions in the price of any additionally produced oil. In response to these circumstances, and at the direction of the Land Commissioner, the School Land Board adopted the following temporary policy, stated as:

“It is the policy of the School Land Board, in the State’s best interests, that the Board should, and hereby does:

1) Delegate to the Land Commissioner the authority to waive penalties and interest on (a) late production reports regarding, and (b) late payments of, oil and gas royalties during the reporting period from April 1, 2020 to June 30, 2020;

2) (a) Delegate to the Land Commissioner, until December 31, 2020, the authority to grant extensions of time, not to exceed six months in duration, for the satisfaction of contractual oil and gas well drilling and completion commitments in State oil and gas leases and associated pooling agreements governed by the Board, and (b) confirm the Land Commissioner’s authority to grant extensions of time for the satisfaction of contractual oil and gas well drilling and completion commitments in State oil and gas leases issued under the Relinquishment Act if the owner of the soil ratifies such extension in writing, in both instances (a) and (b) when it is deemed by the Land Commissioner to be in the State’s best interest to grant such an extension, including in order to conserve the State’s oil and gas resources; and

3) Confirm the Land Commissioner’s authority to declare a period of tolling of up to 90 days under a State lease, whether issued by the Board or under the Relinquishment Act, which tolling period will not be counted towards the time period under an affected State lease after which the State may terminate the State lease for a cessation of production or for failure to produce in paying quantities.”

Operators seeking to defer a drilling or completion obligation

If a deferral would extend beyond a time frame set out in an RAL lease, applicants must demonstrate that it has written approval from the owner(s) of at least 65% of the surface ownership.


Commissioner George P. Bush with oilfield workers Commissioner George P. Bush with oilfield workers
“Oil and Gas is the backbone of this great states economy and a critical component of our nation’s workforce. There is no doubt that we will all feel the impacts of the pandemic and its consequential impact on oil and gas for years to come. Waiving the penalties and interest on late royalty payments is a small step that we as a state can take to help mitigate this crisis while protecting the best interest of Texas School Children. Texas has time and time again proven ourselves to be resilient, and I have no doubt that we will emerge stronger than ever.”

Texas Land Commissioner
George P. Bush