GOM Lease Sale Attracts $382 Million in High Bids

Twenty-six companies participated in what was the last GOM lease sale scheduled until 2025.

Major oil companies were the most active bidders in GOM Lease Sale 261.

The previously delayed US Gulf of Mexico Oil and Gas Lease Sale 261 was held in New Orleans this week and generated just over $382 million in high bids on 311 tracts covering 1.7 million acres in federal waters off the Gulf Coast.

A total of 26 companies participated in the lease sale, submitting 352 bids totaling almost $442 million. The high bid activity was dominated by major oil companies with the top five being Shell, Occidental, Repsol, Chevron, and BP.

The sale was originally scheduled for 27 September, then 8 November, in response to judicial orders. An appeals panel stayed a preliminary injunction granted earlier to plaintiffs, the American Petroleum Institute, State of Louisiana, and Chevron, who petitioned the court to have the sale move forward.

The block attracting the most bids was Mississippi Canyon block 389. Five bids were placed on this tract, which was won by Occidental for a high bid of $25.5 million. The Oxy bid was also the highest single bid of the sale. The bid bested offerings from LLOG ($1.88 million), BP ($1.16 million), Hess ($1 million), and Shell ($803,628).

The block was previously owned by Stone Energy and held their Kuskulana prospect, which according to previous disclosures was estimated to hold up to around 70 million BOE of recoverable reserves.

Other blocks that attracted healthy high bids included Green Canyon 188 ($21 million from Hess), Green Canyon 151 ($18 million from Hess), Green Canyon 723 ($17.2 million from Oxy), and Green Canyon 116 ($14 million from Hess).

Shell placed high bids on the most tracts in the sale. The operator placed high bids of just over $69 million on a total of 65 blocks. Oxy was second with $74.2 million in high bids on 49 tracts.

The company that placed the highest sum of high bids was Hess, which placed around $88.3 million in high bids on just 20 tracts. Oxy’s $74.2 million was the second-highest sum of high bids.

Pursuant to a ruling from the US States Court of Appeals for the Fifth Circuit, the US Bureau of Ocean Energy Management included lease blocks that were previously excluded due to potential impacts to the Rice’s whale population from oil and gas activities.

Revenues received from offshore oil and gas leases (including high bids, rental payments, and royalty payments) are directed to the US Treasury, certain Gulf Coast states (Texas, Louisiana, Mississippi, and Alabama) and local governments, the Land and Water Conservation Fund, and the Historic Preservation Fund.

Lease Sale 261 offered 13,482 unleased blocks on 72.7 million acres in the Gulf’s Western, Central and Eastern Planning Areas.

The last GOM lease sale, Sale 259 held in March, attracted $263.8 million in high bids for 313 tracts covering 1.6 million acres in federal waters. A total of 32 companies participated in the lease sale, which drew $309.8 million in total bids.

In September, the Biden administration issued a new 5-year program for offshore leasing that included just three lease sales over the period, the lowest number of lease sales in the history of the program.