Eddy County agreed to issue $500 million in industrial revenue bonds to Pronto Midstream for the construction of a natural gas processing plant near Carlsbad.
Eddy County Manager Roberta Gonzales said the Eddy County Board of County Commissioners approved a resolution declaring the intent to sell the industrial revenue bonds (IRBs) on Oct. 3 to the Texas-based company.
“The proceeds of the bond would be used to acquire, construct and equip a natural gas processing plant located approximately 25 miles east-northeast of Carlsbad,” read a memorandum written by Gonzales and Eddy County Attorney Cas Tabor.
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The memo noted pipelines, compressor stations and acid gas injection wells will be part of the construction work.
Commissioners approved the sale on Nov. 7.
Pronto, a subsidiary of Matador Resources, would build the facility to accommodate the production of 200 cubic feet of natural gas (mcf) a day, according to a company proposal.
Matador has a mixture of exploration and production in southeast New Mexico and West Texas, noted the company’s website.
What is an IRB?
According to the New Mexico Legislature website, IRBs are a loan from the bond purchaser to a company where the loan proceeds and is repaid through a governmental issuer via a trustee.
“Instead of purchasing a facility directly, companies can enter into a lease with the issuer, and, at the end of the lease, purchase the facility from the issue for a nominal amount,” noted the website.
An IRB is not a loan from a community to a company and is a way for a community to provide a loan guarantee for the company’s project, per the Legislature’s website.
Gonzales and Tabor wrote in their memorandum that Pronto would pay all property taxes due to the Carlsbad Municipal Schools and Southeast New Mexico College.
“An annual payment in lieu of taxes to the county equal to 20% of the county property taxes that would have been payable but for the issuance of the bond for a period of 24 years, or as long as the bond remains outstanding,” stated the memorandum.
Mike Smith can be reached at 575-628-5546 or by email at MSmith@currentargus.com or @ArgusMichae on X, formerly known as Twitter.
Read More: Eddy County agrees to issue $500M in bonds for new gas plant