Gulf of Mexico Lease Sale 252 yields more than $244 million in high bids

Offshore staff

WASHINGTON, D.C.– The Bureau of Ocean Energy Management reported Lease Sale 252 generated $244,299,344 in high bids for 227 tracts covering 1,261,133.85 acres in federal waters of the Gulf of Mexico.

Thirty companies submitted 257 bids that totaled $283,782,480.

Shell Offshore Inc. submitted 87 high bids totaling $84,827,644. Its highest bid, $8,201,988, was for the deepwater Alaminos Canyon block 343.

Anadarko US Offshore LLC submitted 27 high bids totaling $24,061,854. Its highest bid, $4,567,505, was for the ultra-deepwater Mississippi Canyon block 783.

BP Exploration & Production Inc. submitted 23 high bids totaling $15,451,679.

W&T Offshore Inc. submitted 15 high bids totaling $3,533,000.

Hess Corp. submitted 12 high bids totaling $17,940,072. Its highest bid, $10,100,991, was for the ultra-deepwater Mississippi Canyon block 684.

Kosmos Energy Gulf of Mexico Operations submitted nine high bids totaling $11,201,811.

Chevron U.S.A. Inc. submitted eight high bids totaling $12,415,760. Its highest bid, $4,311,212, was for the deepwater Green Canyon block 822.

Beacon Offshore Energy Exploration LLC submitted seven high bids totaling $5,411,709.

LLOG Exploration Offshore L.L.C. submitted seven high bids totaling $4,273,661.

Fieldwood Energy LLC submitted seven high bids totaling $3,372,000.

Murphy Exploration & Production Co. submitted five high bids totaling $4,743,935.

Equinor Gulf of Mexico LLC submitted three high bids totaling $29,205,659. Its and the sale’s highest bid, $24,495,776, was for the deepwater Mississippi Canyon block 801.

TOTAL E&P USA INC. submitted two high bids totaling $15,006,020. Its highest bid, $9,003,010, was for the ultra-deepwater Mississippi Canyon block 693.

Commenting on the results, William Turner, senior research analyst at Wood Mackenzie, said: “We saw a modest increase in overall spend, but it was outpaced by the increase in acreage leading to lower amount per acre, furthering our hypothesis that it is a buyer’s market in the Gulf of Mexico.

“The number of companies participating has thinned out, with the only notable absence beingExxonMobil. It seems those left in the Gulf of Mexico are committed to the region and taking this opportunity to quietly strengthen their prospect inventory.

“One of the most interesting details of the sale were unique partnerships between majors and smaller players likeKosmos with Equinor, Fieldwood with Chevron, LLOG with BP, and Talos with EcoPetrol.  This demonstrates a shrinking pool of partners, but also an increased willingness of the majors to partner with these more nimble players.”

He added: “Shell had the most bids and was the highest spender but went at it alone, picking up acreage across the entire region.”

National Ocean Industries Association President Randall Luthi issued the following statement: “Gulf of Mexico Lease Sale 252 allowed the federal government to check the temperature of the offshore industry in the US Gulf of Mexico in the face of the slow pace of recovering commodity prices.  Lease Sale 252 not only reflects the relatively stable oil prices, but also the efforts by the overall industry to cut costs. Much of the cost cutting has drastically affected service companies, as their profit margin remains thin or non-existent. However, the trajectory of this and the past few sales shows stability and helps establish a new normal for the US offshore industry. Companies continue to shore up existing development operations (in both shallow and deepwater) in known geologic areas, but are not yet ready for heavy investment in truly new deepwater projects.

“While today’s sale shows that the Gulf of Mexico is still a fundamental basin for energy production and economic growth for the US, it also underscores that the Gulf of Mexico is still the only offshore basin available in the US in which U.S. companies may bid. As the global offshore energy recovery heats up, the US must recognize that we are not the only player at the offshore table. Other basins in the Western Hemisphere, includingGuyana, Brazil, and Mexico (not to mention onshore US production) have become magnets for investment dollars. Part I of a recent IHS Markit report confirms that our current federal fiscal structure has rendered the rate of return for US offshore projects, particularly in deepwater areas, less attractive than rates of return in other regions. Policymakers should take note and find new ways to attract and retain global investment dollars in the US Gulf of Mexico, an area that has a long history as the gold standard of offshore energy production.”

03/20/2019