By OGJ editors
HOUSTON, Mar. 17 -- Central Lease Sale 190 for federal oil and natural gas leases off Louisiana, Mississippi, and Alabama drew top bids totaling $368.8 million out of total offerings of $636.8 million by 83 companies Wednesday in New Orleans.
The sale drew 829 bids on 557 of the 4,324 tracts offered, comprising nearly 23 million acres in the Gulf of Mexico. "The fact that this was the highest number of bids received in a Central Sale in the past 6 years is a clear indication of the industry's continued confidence in the gulf as a source of energy for the nation," said Johnnie Burton, director of the US Department of Interior's Minerals Management Service, which conducted the sale.
A large number of tracts drawing bids were in ultradeep waters. However, MMS officials said 60% of the bids were for tracts on the outer continental shelf. "We believe this reflects definite industry interest in deep gas in shallow waters in response to royalty relief offered as part of MMS's deep gas initiative," said Burton. The final rule on that program was announced earlier this year.
Amerada Hess Corp. submitted the highest single bid of the sale, nearly $35.3 million for Green Canyon Block 468. That was one of 17 high bids submitted by that company for a total $40.7 million, putting it at the top of the list for the total amount of high bids submitted. Other companies on that list included BHP Billiton Petroleum (Deepwater) Inc., 32 bids totaling $18.5 million; Stone Energy Corp., Lafayette, La., 8 bids, $15.5 million; Pogo Producing Co., Houston, 15 bids, $12.6 million; Tana Exploration Co. LLC, Corpus Christi, Tex., 10 bids, $12.1 million.
When the leases are officially awarded, Pogo will be sole owner of each of the 15 leases on which it was apparent high bidder, out of a total of 20 tracts for which it submitted offers.
Companies submitting the largest number of high bids included Magnum Hunter Production Inc., Irving, Tex., 55 bids totaling $8.3 million; BHP Billiton, 32, $18.5 million; Chevron USA Inc., 29, $10 million; Remington Oil & Gas Corp., Dallas, 25 $4.6 million; BP Exploration & Production Inc., 24, $8.2 million.
The second highest bid of the day was $31.1 million for Green Canyon Block 512, submitted by a group that included Nexen Petroleum Offshore USA Inc., Calgary; Anadarko Petroleum Corp., Houston; Union Oil Co. of California; and BHP Billiton.
Along with its partners, Kerr-McGee Oil & Gas Corp., Oklahoma City, the largest independent operator and producer in the deepwater Gulf of Mexico, was high bidder on 8 shelf and 14 deepwater leases in Wednesday's sale 190. The company's net total exposure for all high bids was about $9 million. Pending MMS approval of the sale, Kerr-McGee will be designated operator of at least 95% of the high-bid leases, with an average working interest of approximately 91%.
"These new leases will strengthen our shelf and deepwater portfolio, adding acreage in our existing core areas and several new opportunities," said Dave Hager, Kerr-McGee senior vice-president responsible for oil and gas exploration and production.
Spinnaker Exploration Co., Houston, submitted apparent high bids on 15 blocks, including 7 on the shelf and 8 in the deep water, out of 24 tracts on which it bid. Its bids for shallow-water tracts were primarily related to deep shelf gas prospects, officials said. Spinnaker's net exposure on its high bids is about $9.2 million.