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US Gulf of Mexico oil, gas lease sale raises $244.3M in high bids

The U.S. Bureau of Ocean Energy Management said March 20 that its latest lease sale in the Gulf of Mexico raised $244.3 million in high bids, up $66 million, or 37%, from the last sale in August 2018.

A total of 13 bids out of 257 bids were ranked as the highest by the bureau, or BOEM. Hess Corp., Equinor ASA's subsidiary Equinor Gulf of Mexico LLC and TOTAL SA's subsidiary Total E&P USA Inc provided the three single highest bids at $10.1 million, $24.5 million and $9 million, respectively. Royal Dutch Shell PLC's subsidiary Shell Offshore Inc. had the most bids on the list with three reported in the top 13, which were for $8.2 million, $7.2 million and $4.1 million, respectively.

Other high bidders included Kosmos Energy Gulf of Mexico Operations LLC, Anadarko Petroleum Corp.'s subsidiary Anadarko US Offshore LLC, Chevron Corp.'s subsidiary Chevron U.S.A. Inc., Murphy Oil Corp.'s subsidiary Murphy Exploration & Production Co. and Talos Resources LLC.

The lowest bid was provided by W&T Offshore Inc. at $8,000.

In all, a total of 30 companies participated in the lease sale.

"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," Wood Mackenzie senior research Analyst William Turner said March 20.

"The number of companies participating has thinned out, with the only notable absence being [Exxon Mobil Corp.] It seems those left in the Gulf of Mexico are committed to the region and taking this opportunity to quietly strengthen their prospect inventory," he said.

"One of the most interesting details of the sale were unique partnerships between majors and smaller players," Turner said, pointing to Kosmos partnering with Equinor, Fieldwood Energy LLC teaming with Chevron, LLog Exploration Offshore LLC working with BP PLC and Talos partnering with Ecopetrol SA. "This demonstrates a shrinking pool of partners, but also an increased willingness of the majors to partner with these more nimble players," he said

Shell had the most bids and was the highest spender but "went at it alone, picking up acreage across the entire region," Turner said.

The lease sale included approximately 14,699 unleased blocks located from three miles to 231 miles offshore in the Gulf's Western, Central and Eastern planning areas in water depths ranging from three meters to more than 3,400 meters. It was also the fourth offshore sale under the 2017-2022 National Outer Continental Shelf Oil and Gas Leasing Program.

The U.S. Interior Department in February said revenues received from the Outer Continental Shelf leases, which include high bids, rental and royalty payments, will be directed to the U.S. Treasury, certain Gulf Coast states, the Land and Water Conservation Fund and the Historic Preservation Fund.