US GoM Lease Sale Yields 'Bargains'

The US Interior Department issued results of its Gulf of Mexico oil and gas lease sale March 21. It generated $124.7mn of high bids on 815,403 acres of exploration acreage in US offshore federal waters. 

A total of 33 companies participated in Lease Sale 250, submitting $139.1mn of bids for 14,474 of previously unleased blocks in waters ranging from between three and 231 miles offshore and in water depths ranging from three to 3,400 metres.

Top bids per lease, ranked in descending order, can be accessed here. The highest bid for a lease was by Total ($7mn) but there were several other high bids from Chevron, Shell, BP, Hess, Statoil and BHP Billiton, plus more localised explorers such as EnVen, LLOG and Talos.  Terms include a 12.5% royalty rate for leases in less than 200 metres of water depth, and a royalty  of 18.75% for all other leases issued under the sale. Further details of Lease Sale 250 can be accessed here.

Consultancy Wood Mackenzie said that this latest sale's high bids of $124.8mn were only a modest $3mn higher than the August 2017 Lease Sale 249, which it said was at historic lows.

Its senior research analyst William Turner said: “Bidders got a bargain at today's lease sale. Bidding activity focused on Mississippi Canyon where operators were likely drawn to its established infrastructure and lowest cost developments in the Gulf of Mexico.” He added: “The biggest surprise came from BP who bid on 20 Block in DeSoto Canyon just one ridge over from Mississippi Canyon.... They could be chasing a new play opener."