Offshore staff
NEW ORLEANS – Lease Sale 254 generated $93,083,453 in high bids for 71 tracts covering 397,285 acres (621 sq mi) in federal waters of the Gulf of Mexico, according to the Bureau of Ocean Energy Management (BOEM).
Twenty-two companies submitted 84 bids that totaled $108,587,185.
BP Exploration & Production Inc. submitted 16 high bids totaling $10,354,017. The company had one of the top 10 highest single bids.
Chevron U.S.A. Inc. submitted 15 high bids totaling $24,673,435. The company had three of the top 10 highest single bids.
Shell Offshore Inc. submitted seven high bids totaling $18,453,270. The company had three of the top 10 highest single bids.
BHP Billiton Petroleum (Deepwater) Inc. submitted six high bids totaling $19,988,200. It and the sale’s highest bid, $11,114,050, was for Green Canyon block 80. The company had two of the top 10 highest single bids.
Equinor Gulf of Mexico LLC submitted five high bids totaling $3,617,380.
TOTAL E&P USA INC. submitted five high bids totaling $3,420,824.
Talos Energy Offshore LLC submitted four high bids totaling $1,062,819.
Juneau Oil & Gas LL submitted four high bids totaling $631,108.
Houston Energy L.P. submitted three high bids totaling $483,725.
EnVen Energy Ventures LLC submitted two high bids totaling $3,970,387. The company had one of the top 10 highest single bids.
Beacon Offshore Energy Exploration submitted two high bids totaling $440,353.
CSL Exploration LP submitted two high bids totaling $377,445.
W&T Offshore Inc. submitted two high bids totaling $708,500.
Ridgewood Energy Corp. submitted one high bid totaling $374,888.
Red Willow Offshore LLC submitted one high bid totaling $2,018,028.
LLOG Bluewater Holdings L.L.C. submitted one high bid totaling $738,888.
LLOG Exploration Offshore L.L.C submitted one high bid totaling $611,116.
Talos Resources LLC submitted one high bid totaling $581,234.
Murphy Exploration & Production Co. submitted one high bid totaling $374,888.
Focus Exploration LLC submitted one high bid totaling $137,731.
CL&F Offshore LLC submitted one high bid totaling $62,840.
Walter Oil & Gas Corp. submitted one high bid totaling $2,379.
Mfon Usoro, senior research analyst with Wood Mackenzie’s Gulf of Mexico upstream team, said: “With the recent drop in oil price, it came as no surprise that bidding dollar amount was significantly lower – this is the first time the total high bid amount came in at below $100 million since the region-wide lease sales began in 2017.”
Although bidding activity was muted, the majors took part, accounting for more than 60% of the high bid amount, confirming their commitment to the region. Competition ensued among Shell, Chevron, BP and Total for blocks that recently-expired in Green Canyon and Garden Banks. If the winning bids are not rejected by BOEM, the winners will acquire the blocks at a fraction of previous lease bonuses paid, Usoro pointed out. A notable block was GB 963, a stone’s throw from Total’s North Platte project, which expired in October 2019. Total and Shell went toe to toe on that block, with Total winning it with a $1 million bid, a fraction of the $22 million that was paid to pick up the block in 2012.
According to Usoro, bidding close to infrastructure continues to be a recurring theme as companies look to weather the storm of another downturn. Infrastructure-rich Mississippi Canyon, Green Canyon and Garden Banks accounted for over half of the bids and were the only areas that received competitive bids. Only Shell and Chevron ventured out to the more remote Atwater Valley.
“While most Independents stayed away from the lease sale amidst budget cuts, BHP bucked the trend and placed the highest bid of $11 million for the second lease sale in a row,” Usoro said.
“The block (GC 80) is adjacent to GC 124 which BHP snagged with the highest bid of $22 million in the last lease sale in August 2019. BHP also bid on a cluster of blocks in Alaminos Canyon to bolt onto its existing acreage in the region where it is currently evaluating results of the ocean bottom node seismic.”
She added: “We think more lease sales are still in the cards, but higher oil prices will be required for bid amounts to climb back to historical norms. Otherwise this sale result will continue with even lower bidding activity.”
National Ocean Industries Association President Erik Milito said the sale “shows how important long-term offshore energy production is. While bidding did take a tough hit, it could have been substantially worse due to the unprecedented near-term financial constraints created by the COVID-19 virus and the oil price war between Saudi Arabia and Russia. Long-term projections for energy demand, including oil and natural gas, show strong growth for the foreseeable future. Offshore projects are undertaken with the long-term outlook in mind.
“We should also remember that lease sales are just the start of the offshore investment window. Companies will spend millions of dollars exploring, evaluating and, hopefully, producing from many of today’s lease blocks.”
The sale included 14,594 unleased blocks located from 3 to 231 mi (5 to 372 km) offshore, in the Gulf’s Western, Central and Eastern Planning Areas in water depths ranging from 9 to more than 11,115 ft (3 to 3,400 m).
Lease Sale 254, livestreamed from New Orleans, was the sixth offshore sale held under the 2017-2022 National Outer Continental Shelf Oil and Gas Leasing Program.
03/18/2020
