Cheaper Royalties, Smaller Checks? What Wyoming’s New Lease Terms Could Mean

Wyoming just wrapped its latest federal oil and gas lease auction: 32 parcels, 39,225 acres, $8.5 million in upfront “bonus bids,” per the Bureau of Land Management (BLM). Half of those bonus dollars head to Cheyenne; the rest to DC Royalties arrive later, if and when companies actually drill and produce.

Here’s the twist: this was the first Wyoming sale under the Big Beautiful Bill’s lower federal royalty rate—cut from 16.67% to 12.5%. And that change is where the fight begins.

Watchdogs say the lower rate means smaller royalty checks down the road. If all 32 parcels get fully developed, Taxpayers for Common Sense estimates the lower rate would leave about $22 million on the table compared with the old rate—roughly $11 million less for Wyoming.

They’re also sounding alarms on coal: a similar federal royalty haircut there could cost the state ~$50 million a year. Lawmakers are already grumbling about fixing that.

“Competitive, market-rate royalty rates do not affect industry interest or production decisions — lowering rates only shortchanges taxpayers,” the group argues.

Quick back-of-the-envelope: at 12.5% royalty, the public gets $12.50 per $100 of oil/gas produced; at 16.67%, it’s $16.67. That gap adds up fast across years of production.

BLM says not so fast. The agency’s line under the Trump administration: lower rates spur leasing and drilling, boosting overall production and US energy security. Industry in Wyoming agrees.

“It simply isn’t true to claim that higher royalty rates always result in more revenue,” says Pete Obermueller, head of the Petroleum Association of Wyoming.

He points to the Inflation Reduction Act era, when the federal royalty rose to 16.67% in 2022: Wyoming’s federal royalties fell 17% in 2023, then another 30% in 2024, he says. (Plenty of variables drive royalties—prices, volumes, timing—not just the rate.)

Conservation groups and a taxpayer watchdog say the bidding pattern smells speculative: buy now, hold land for later. Their evidence:

• In Fremont and Natrona counties, 90%+ of acres went for under $40/acre.
• The big money showed up in hot zones like Converse and Campbell counties—parcels topping $1,000/acre, with one at $4,612/acre.
• Alec Underwood of the Wyoming Outdoor Council says just 7% of acres generated over 80% of the sale’s revenue—classic “few gems, lots of cheap ground.”

His takeaway: stop the “fire sale” in critical habitat (think crucial winter range) and prioritize parcels near existing development where production is likelier.

Industry calls the speculation charge “odd.”

“Every single lease ever offered is, at one point, speculative,” Obermueller says, noting that big winners like the Jonah Field started as risky bets.

Without speculative leasing, he argues, exploration dries up.

It depends on what you measure—and when. Lower royalties absolutely cut the take per barrel. But if cheaper terms tip marginal projects into go, the total pie might grow. If not, taxpayers just… get less.

Meanwhile, the bonus-bid map suggests a familiar Wyoming pattern: high bids where geology is proven, bargain prices where it isn’t. Whether those cheap acres become tomorrow’s Jonah—or sit idle—will decide whether the rate cut paid off or merely paid out.

What to watch next

• December: Wyoming’s next BLM quarterly sale. Do bid levels rise with the lower rate?
• Development follow-through: How many of these 32 parcels get permits, wells, and production?
• Habitat vs. leases: Do agencies tweak offerings to avoid crucial wildlife range?
• Coal fallout: Does the Legislature move to offset that ~$50M annual hit from coal royalty cuts?

For now, the only thing everyone agrees on: royalties matter. Whether the 12.5% experiment brings more rigs or fewer revenues—that’s Wyoming’s million-(or several-million-)dollar question.

The original story by Dustin Bleizeffer for WyoFile.