Lease sale attracts $337.6 million in high bids

boemlogoThe Department of the Interior's Bureau of Ocean Energy Management announced that its Western Gulf of Mexico Oil and Gas Lease Sale 218, held today in New Orleans, attracted $337,688,341in high bids. Twenty companies submitted 241 bids on 191 tracts comprising over a million acres offshore Texas. The sum of all bids received totaled $712,725,998. This announcement is consistent with steps President Obama announced in May 2011 to expand domestic oil and gas production safely and responsibly.

"Today's lease sale, the first since the tragic events of Deepwater Horizon, continues the Obama administration's commitment to a balanced and comprehensive energy plan," said Secretary of the Interior Ken Salazar, who attended the sale and provided opening remarks. "Offshore drilling will never be risk free, but over the last 19 months we have moved quickly and aggressively with the most significant oil and gas reforms in U.S. history to make it safer and more environmentally responsible. Today's sale is another step in ensuring the safe and responsible development of the nation's offshore energy resources."

Sale 218, the last remaining Western Gulf Planning Area sale scheduled in the 2007-2012 Outer Continental Shelf (OCS) Oil and Natural Gas Leasing Program, made available 3,913 unleased blocks covering more than 21 million acres – equal to an area the size of South. The blocks are located from nine to about 250 miles offshore, in water depths ranging from 16 to more than 10,975 feet (5 to 3,346 meters).

Lease terms included escalating rental rates to encourage faster exploration and development of leases and include shorter lease terms for shallower water in order to encourage timely development. BOEM has increased its minimum bid requirement to $100 per acre, up from $37.50 in previous sales, after historical analysis which showed that leases that received high bids of less than $100 per acre have experienced virtually no exploration and development activities. Lessees will also have to comply with a series of environmental stipulations, including requirements that operators protect biologically sensitive features, as well as marine mammals and sea turtles, and employ trained observers to ensure compliance and restrict operations when conditions warrant.

Each high bid on a tract will go through a strict evaluation process within BOEM to ensure the public receives fair market value before a lease is awarded.

The highest bid received on a tract was $103,200,000 submitted by ConocoPhillips Company for Keathley Canyon, Block 95. ConocoPhillips Company was the apparent high bidder on 75 blocks, the most for any company, and had the most in bonus bids, $157,816,740.

Sale statistics for Western Sale 218 are available at:
http://www.boem.gov/Oil-and-Gas-Energy-Program/Leasing/Regional-Leasing/Gulf-of-Mexico-Region/Lease-Sales/218/Western-Planning-Area-Lease-Sale-218-Information.aspx

Want more? Subscribe now!

News from NASDAQ