Home Local News Lea County sets record revenue from oil

Lea County sets record revenue from oil

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Lea County set another oil and gas record, this time in actual dollars to the coffers.

“In oil and gas production, we’re 260 percent of the budget because, when you go back to July, we were under $1 million, now we’re just under $6 million,” county finance director Chip Low told county commissioners on Thursday.

“(Oil and gas revenue in) April was an all-time record,” Low continued. “I checked just before I came in this morning and we’ve got another record (for May). So, we’re in very good shape right now.”

The month of April set a new record at $5,683,031, indicated by the high point on a chart Low showed the commission. He later told the News-Sun the even higher number for May is $5,868,796.

At more than $60 per barrel and with generally high production numbers, Low expressed little surprise at the county’s recent oil and gas revenue numbers.

“It’s kind of interesting because production was down in February. I think it’s because of the cold snap; I don’t know of any other reason,” Low explained. “The prices are up and March production seems to be back to normal.”

The finance director explained he extrapolates daily production numbers from official online sources to get a projection before official data are finalized, which usually occurs a couple of months after actual production.

With last year’s drastic drop in oil prices briefly to negative levels still fresh in their minds, county officials remained conservative while developing a budget for the next fiscal year that begins July 1.

A few minutes earlier in Thursday’s meeting, commissioners unanimously approved the county’s preliminary budget, which is due to the state Department of Finance and Administration by May 31. A final budget will be due by July 31, giving the number crunchers time to finalized the end-of-the-year data.

County Manager Mike Gallagher reviewed the preliminary budget, noting the commission is responsible for $245,661,000, including beginning cash on hand and expected revenue.

“We’re proposing revenue at $87 million. If you add salaries and operations, we’re at $77 million,” Gallagher said. “The total for salaries and operations is about $10 million less than our revenue.”

Gallagher previously reminded the commissioners the conservative way to develop a budget is to estimate low on revenue and high on expenses, keeping the expenses less than projected revenue. He acknowledged additional federal funds may be coming to the county, but that money is omitted from the budget until it is actually received.

“There’s been a lot of talk about the American Cares Act money,” Gallagher said, referring to a report that the county would be receiving $13 million from the act. “We’re not incorporating that into the budget at this time. We’re not relying on any type of federal dollars to help us pay for our operations or our capital.”

If and when those federal funds arrive, complete with federal instructions about how they are to be used, Gallagher anticipates returning to the commissioners for further discussion.

According to the approved preliminary budget, county officials anticipate beginning FY 2022 on July 1 with about $159 million in cash, receiving revenue during the year of just under $87 million, and spending $36.5 million in salaries and benefits, $40 million in operations and $66.6 million in capital projects.

Gallagher said, “If we do everything that we say we’re going to do — which includes more than $6.6 million for a new roadway chip seal, more than $6 million at the detention center, more than a million at the event center, more than $21 million in this building (the traditional courthouse), and have a full staff — we’ll end the year with about $102 million in cash.”

After the unanimous approval of the commission, the county manager expressed appreciation for department heads and elected officials for their help in developing the budget.

“This is a group effort. Everyone contributes and we’ve been talking about this since January, having good conversations with the board,” Gallagher concluded.

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