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On December 3, 2013, the Bureau of Ocean Energy Management (BOEM) announced the Eastern Gulf of Mexico oil and gas lease sale 225 will take place on March 19, 2014. The sale is the first proposed for the Eastern Planning Area of the Gulf of Mexico (GOM) under President Obama’s 2012 to 2017 outershelf program, and will be the first to offer acreage for sale since March 2008.

Proposed Sale 225 will consist of 134 whole or partial unleased blocks covering 465,200 acres. All blocks are at least 125 miles offshore and range in water depth from 2,657 feet to 10,213 feet.

A full schedule of upcoming lease sales under the 2012 to 2017 plan can be seen on BOEM’s site.

egom224_bidsPages from Proposed NOS 225 Package

BOEM estimates the proposed lease sale could result in the production of 710 million barrels of oil and 162 billion cubic feet of natural gas. Of the 134 blocks available in this sale, 93 are located in the same area offered in 2008’s Eastern Planning Area Sale 224.

Recap of 2008 Eastern Planning Area Sale 224

The 224 sale offered 118 blocks, 38 of which received bids totaling more than $64 million in proceeds. Winning companies included Anadarko Petroleum (ticker: APC), Murphy Oil (ticker: MUR) and Royal Dutch Shell (ticker: RDS-B).

Recap of the First Three Sales under the 2012-2017 Plan and the Future Potential of the Gulf Lease Sales

Date Lease Sale Location (GoM) Blocks/Sold Proceeds (MM) Participating Companies Highest Bid/ Block (MM)
11/28/2012 229 Western 116/116 $133 13 $17
3/20/2013 227 Central 307/320 $1,215 52 $82
8/28/2013 233 Western 53/53 $102 12 $30

 

The Outer Continental Shelf Oil and Natural Gas Leasing Program is scheduled to run until 2017 and includes up to 15 lease sales in the GOM and Alaska. The first three sales under the five year program offered more than 79 million acres for development and garnered $1.4 billion in high bids. OAG360 notes the size of GOM sale 227 was delayed several months by the 2010 Macondo (Mississippi Canyon 252) oil spill and resulted in artificially high demand. In total, two sales will occur on the eastern GOM, five in the central, and five in the western division.

The Gulf of Mexico contributes about 25 percent of U.S. domestic oil and 11 percent of domestic gas production, providing the bulk of the $14.2 billion in mineral revenue disbursed to Federal, state and American Indian accounts from onshore and offshore energy revenue collections in Fiscal Year 2013. That was a 17 percent increase over FY 2012 disbursements of $12.15 billion, due primarily to $2.77 billion in bonus bids received for new oil and gas leases in the Gulf of Mexico

Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. The company or companies covered in this note did not review the note prior to publication. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.

Credit Agricole

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