Oil and gas companies entered 105 bids totaling $135 million for exploration leases in the Gulf of Mexico Nov. 18, with Royal Dutch Shell PLC offering the most overall and Equinor ASA taking the costliest single prize.
In Bureau of Ocean Energy Management (BOEM) Lease Sale 256, winning bids totaled more than $120 million, the competition moderately active as 23 companies offered bids despite a pandemic severely reducing corporate cash flows.
BOEM Acting Director Walter Cruickshank, talking to reporters after the sale, summarized the bidding activity by saying companies these days are entering fewer bids and being more selective while demonstrating continued interest.
“The past year has been tough, but the noted increase in winning bids and number of bids on tracts demonstrates the continued resilience of the US Gulf of Mexico,” said Erik Milito, president of the National Ocean Industries Association, in a statement released after the results were announced.
Close to Monument discovery
Norway’s Equinor teamed up with Spain’s Repsol SA for the highest winning bid, just $21 dollars shy of $12 million for Walker Ridge block 365.
Mike Celata, director for BOEM’s Gulf of Mexico region, explained the high bid by noting the block was a little east of Monument field discovery. Equinor, with Repsol as one of its partners, announced the Monument discovery in April (OGJ Online, Apr. 6, 2020).
Top bidders were Shell, offering $28.4 million for 22 blocks (won 21); Chevron Corp., offering $22.5 million for 13 blocks (won 10), Equinor, offering $22.1 million for 7 blocks (won 7), and BP PLC, offering $19.3 million for 13 bids (won 10).
Shell especially showed an interest in the Alaminos Canyon region, where it snapped up 9 tracts.
Most of the interest was in deepwater blocks, as has been usual for many years. Of the 93 blocks receiving bids, 81 were in deepwater, with 18.75% royalty rates, and 12 were in shallow water (less than 200 m), with $12.5% royalty rates.