CENTRAL GULF OF MEXICO LEASE SALE DRAWS WEAK INDUSTRY RESPONSE

A.D. Koen
Gulf Coast News Editor

Interest in oil and gas leases in the Gulf of Mexico continued spiraling downward at the latest Minerals Management Service offshore sale.

Companies participating in Outer Continental Shelf Sale 139 last week in New Orleans offered 196 bids for 151 blocks in the central Gulf of Mexico. MMS offered 5,213 blocks for lease.

The number of tracts receiving bids was the fewest at a central gulf lease sale since 114 tracts garnered high bids totaling $146.4 million at Sale 104 in April 1986.

Apparent high bids in Sale 139 totaled $56,195,552, and all bids offered totaled just $65,300,864. Both bidding totals were the lowest in a Gulf of Mexico lease sale since MMS began area-wide gulf leasing at Sale 72 in May 1983.

Only 64 of 93 qualified companies participated in Sale 139. Fifty-five companies offered apparent winning bids.

By comparison, 123 companies at central gulf lease Sale 131 in March 1991 offered 637 bids totaling $320.5 million for 464 tracts. Apparent high bids last spring totaled $259.9 million (OGJ, Apr. 6, 1991, p. 28).

At central gulf lease Sale 123 in March 1990, high bids totaled $427.4 million for 538 tracts. In that sale, BP Exploration Inc. led all bidders, exposing $78 million in 79 high bids, including 60 for deepwater tracts (OGJ, Apr. 2, 1990, p. 26).

Since then, interest in deepwater tracts has waned in part because of sagging oil and gas prices as U.S. operators sought bigger prospects outside the U.S. Ironically, Sale 139 was dominated by the U.S. subsidiary of an Italian holding company.

SALE 139 HIGHLIGHTS

Agip Petroleum Co. Inc., Houston, a subsidiary of Agip SpA, Milan, led all bidders in Sale 139.

Agip made the two largest apparent winning bids with offers of $3.525 million for Sabine Pass Block 11 and $1.8 million for East Cameron South Addition Block 279. Agip bid for 100% interest in both tracts.

Agip's bid on Sabine Pass 11 averaged $705.01/acre, highest in the sale.

Agip participated in 11 apparent winning offers with a combined net exposure of more than $7.5 million. That winning bid net exposure also led Sale 139.

Marathon Oil Co. recorded the second highest net exposure in Sale 139. The company participated in seven apparent high bids with a total net exposure of nearly $5.2 million. Four of Marathon's winning offers were among Sale 139's top 10.

Marathon had 100% interests in apparent winning bids of $1.75 million on Mississippi Canyon Block 972, $1.3 million on Ship Shoal South Block 319, and $1.2 million on Mississippi Canyon Block 928. Marathon, Amerada Hess Corp., and Anadarko Petroleum Corp. each owned one third interest in an apparent $1.27 million winning offer for South Marsh Island South Block 193.

Shell Offshore Inc. offered the largest individual apparent winning bid by a U.S. company, $1.76 million for South Marsh Island Block 40. Shell participated in nine apparent winning bids for a total net exposure of more than $3.5 million, third highest at the sale.

OTHER TOP COMPANIES

Another U.S. subsidiary of a state owned non-U.S. oil company, Petrobras America Inc., shared interests in two other apparent winning offers that cracked Sale 139's list of top 10 bids.

The subsidiary of Brazil's Petroleo Brasileiro SA held a two-thirds interest and Hardy Oil & Gas U.S.A. Inc. one-third in a $1.4 million bid for Eugene Island Block 148. Petrobras America also held a 20% interest, Sun Operating Ltd. Partnership 45%, and BHP Petroleum (Americas) Inc. 35% in a $1.28 million offer for Mississippi Canyon Block 620.

Petrobras and Sun were listed among Sale 139's top 10 companies in terms of net exposure. Petrobras exposed nearly $2.2 million with participation in 12 apparent winning bids and Sun more than $2 million with shares of 10 high bids.

Petrobras and Mobil Oil Exploration & Producing Southeast Inc. each participated in 12 apparent winning bids to lead the sale in that category.

CNG Producing Co., with five apparent high bids totaling more than $1.62 million net exposure, and ARCO, with 10 apparent winning bids totaling more than $1.6 million, finished just out of the top 10 bidders.

Among independents most active in Sale 139 were Hardy Oil & Gas, with a net exposure of more than $1 million in seven apparent winning bids, and Zilkha Energy Co., with eight apparent high bids that also totaled more than $1 million.

Two tracts in the East Cameron planning area each received four bids, tops in the sale. Shell apparently won East Cameron Block 51 with a bid of $873,720, edging out Agip, ARCO, and Zilkha. An offer by Amerada Hess of $403,000 was the apparent wining bid for East Cameron Block 188.