Offshore staff
HOUSTON — The total high bids of $382 million under the US’ latest Gulf of Mexico region lease sale 261 was 45% ($118 million) higher than for the previous lease sale this March, according to Wood Mackenzie.
This was mainly down to increased bidding activity (up by 26%) for deepwater blocks. The total lease spend of $645 million is the highest since 2015, the consultant added.
Oxy placed the highest bid of $25.5 million for MC 389, in between the Na Kika and Appomattox developments.
Wood Mackenzie principal analyst Mfon Usoro said, “This was the last chance for companies to bolster regional portfolios outside of farm-in deals and swaps until the next sale in 2025 and, unsurprisingly, companies took advantage.
"While the number of blocks receiving bids remained flat compared to the last lease sale, bidding activity shifted to deepwater blocks (water depth of 400 m and deeper). Deepwater blocks accounted for 83% of the blocks attracting bids compared to 66% in the last lease sale.”
While Chevron and Hess’ merger has yet to complete, the two companies led the field with combined high bids of $114 million. Hess placed the second highest bid for a single block of $21 million for GC 188, 15 miles west of the Talos-operated Phoenix and Tornado fields.
Other major producers in the region, which include Shell, bp and Equinor, were also active but less aggressive. The four majors (including Hess) spent $223.5 million in total.
However, with fewer lease sales in future, companies will need to re-think their leasing strategies, Usoro claimed, with more flexibility in their exploration budgets to secure material acreage in future sales.
12.21.2023
