US Gulf of Mexico Lease Sale 259 results show industry optimism

Offshore staff

NEW ORLEANS – The US Gulf of Mexico region-wide Lease Sale 259 held today attracted 353 bids from 32 companies, with high bids totaling nearly $264 million. The amount of activity surpassed the previous lease sale spend in 2021, demonstrating optimism for the region, according to Wood Mackenzie analysts.

Highlights from Lease Sale 259 included:

• High bids increased by $72 million (38%) compared to total lease sale spend in 2021
• A total of 313 blocks received bids, only five more than the prior sale 
• The number of deepwater blocks receiving bids increased by 30% 
• The high bid amount was the highest since 2019
• Bids/acre for deepwater blocks also increased 22% to $216/acre
• A total of 98 blocks on the shelf received bids, with ExxonMobil bidding on 69 of them.

Commenting on the results, Justin Rostant, principal research analyst at Wood Mackenzie, said:

“Lease Sale 259 was more optimistic than the prior sale, with 30 blocks receiving competitive bids. 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.” 

According to Rostant, Chevron was the most aggressive bidder with $104 million in high bids, more than all the other majors combined. Chevron also had the high bid of the lease sale, spending $15 million on block KC 96, which it previously operated and has the Gibson discovery. Chevron beat out BP in a competitive bid, who was previously the partner in the block. Chevron also stood out in the Atwater Valley protraction area, bidding on 28 blocks.

Added Rostant: “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 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.”

03.29.2023