The industry’s appetite for oil and gas drilling leases on Texas land is filling up the Permanent School Fund’s (PSF) coffers, with the latest auction generating nearly $42 million for school districts in the state.

On Aug. 2 the Texas General Land Office (GLO) said the semiannual sale, which offered about 8,880 acres to companies wanting to explore for oil and gas on state-owned land, brought in an average of $4,721.44 per acre. The previous sale, held in January, offered 14,036 acres and earned $84 million for an average of $5,881.38 per acre.

“Once again the GLO’s online lease sale has resulted in big returns for Texas school children,” GLO Commissioner George P. Bush said in a news release.

The successful lease sale results come despite market conditions that have seen better days.

Operators in Texas—home to the prolific Permian Basin—were forced to become more savvy in the way they operate like their peers elsewhere. They’ve found cost-savings via new technology, drilling techniques and relationships with oilfield service companies as they seek to grow production and profits. Many ditched assets that didn’t align with their portfolio, while others have gone further by concentrating solely on assets that hit or beat targeted breakevens.

It appears that the appeal of tracts offered in Texas coupled with a move by the GLO to online bidding in August 2015 is paying off for the PSF. The bidding process change allowed the GLO to expand its reach to potential bidders as the light shined brighter on Texas, specifically the Permian Basin.

The last traditional lease sale in January 2015 brought in just over $2.3 million for 10,119 acres, the GLO said. The amount jumped to more than $20 million for the first online lease sale, which was held just seven months later, with 11,820 acres.

The total, however, dropped for the January 2016 online lease sale when WTI spot prices were are at their lowest—falling from $36.81/bbl near the beginning of that month to as low as $26.68/bbl by mid-month. Still, the sale brought in nearly $11 million for 4,393 acres, according to the GLO. The sale was followed by the July 26 auction, which brought in more than a whopping $98 million for 13,339 acres. The average price per acre was $7,365.

The switch to online auctions took place when Bush stepped into office.

“One of my primary initiatives as commissioner is to use new innovations in technology to improve efficiency and productivity. The previous paper-based auction was antiquated and had limited outreach to potential bidders,” Bush said. “Today, using EnergyNet to host the lease sales online, we have modernized this process, expanded our target market pool and opened competition to the global marketplace. Greater access means greater opportunity and better returns for Texas’ schoolchildren.”

As explained in the news release, funds earned through the lease sales go to the PSF and are reinvested to grow the fund.

“The value of the lease auction is influenced by the attractiveness of the tracts being offered, and interested parties can recommend tracts to be offered prior to the auction being set,” the GLO said. “As of the most recent online lease sale, nearly all PSF-owned tracts have been leased. The benefit of successful leasing of PSF tracts is then compounded by the collection of royalties on drilling activity.”

Velda Addison can be reached at