The amount of activity in US Gulf of Mexico Lease Sale 259 surpassed the previous lease sale spend, demonstrating optimism for the region, said Wood Mackenzie analysts. The region-wide sale held Mar. 29 attracted 353 bids from 32 companies, with high bids totaling $264 million (OGJ Online, Mar. 29, 2023).
A few highlights of the sale are of note. In the sale, high bids increased by $72 million (38%) compared with total lease sale spend in 2021 and the high bid amount was the highest since 2019. A total of 313 blocks received bids, only 5 more than the prior sale. The number of deepwater blocks receiving bids increased by 30%. Bids/acre for deepwater blocks increased 22% to $216/acre, and a total of 98 blocks on the shelf received bids, with ExxonMobil bidding on 69 of them.
“Lease Sale 259 was more optimistic than the prior sale, with 30 blocks receiving competitive bids,” said Justin Rostant, principal research analyst at Wood Mackenzie. “The majors participated in a big way at the lease sale, bidding on 70% of the 313 blocks and their high bids were 77 % of the total. We expected to see an uptick in the activity as it has been almost 18 months since the last lease sale.”
Chevron was the most aggressive bidder with $104 million in high bids, more than all the other majors combined, Rostant noted. The operator also had the highest bid of the lease sale, spending $15 million on Block KC 96—an area containing the Gibson discovery lies and one over which it previously served as operator. Chevron outbid bp, the previous partner in the block. Chevron also stood out in the Atwater Valley protraction area, bidding on 28 blocks, Rostant continued.
“ExxonMobil added 69 blocks on the shelf, adding to the 98 blocks it acquired at the last lease sale. The major has plans for a carbon capture and storage (CCS) project in the Houston Ship Channel area and these bids are likely in support of this project, but the regulatory process for using oil and gas leases for carbon storage is uncertain,” Rostant said.
