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The Bureau of Ocean Energy Management (BOEM) held its Western Gulf of Mexico (GOM) Lease Sale 233 on August 28, 2013, which raised $102.4 million in high bids. The event auctioned 3,873 tracts from nine to 250 miles offshore, in water depths ranging from 16 to more than 10,975 feet. By comparison, the Central Gulf of Mexico Lease Sale netted $1.2 billion from 307 tracts covering 1.6MM acres.

A total of 61 bids were received from 12 respective companies on 53 offshore leases, representing 20.7 million acres. Just six of the bids focused on ultra-deep water acreage. Out of the 12 companies bidding for acreage, 10 companies were winners, including:

  • Anadarko Offshore Corporation (ticker: APC)
  • Apache Shelf Corporation (ticker: APA)
  • Castex Offshore, Inc.
  • Chevron U.S.A. Inc. (ticker: CVX)
  • ConocoPhillips Company (ticker: COP)
  • EnVen Energy Ventures, LLC
  • Hess Corporation (ticker: HES)
  • Maersk Oil Gulf of Mexico Two LLC (ticker: MAERSK-B)
  • Shell Offshore, Inc. (ticker: RDS.B)
  • Statoil Gulf of Mexico LLC (ticker: STO)

The lowest per acre cost was $90.86 and the highest was $5,309.65 per acre. The highest bid on a single tract was $30,583,560 submitted by ConocoPhillips for Alaminos Canyon Block 475. ConocoPhilips also submitted the highest total amount in bonus bids, totaling $50,323,180 on 29 tracts.

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BOEM estimates that Lease Sale 233 could lead to the production of up to 200 million barrels of oil and 938 billion cubic feet of natural gas. It is the third of 12 GOM sales under the Obama Administration’s new Outer Continental Shelf Oil and Gas Leasing Program for 2012-2017, and the second of five Western GOM lease sales that will be held under the program.

OAG360 Comments:

The Western Gulf of Mexico Lease Sale 233 is considerably lower than last year’s Western GOM Lease Sale 229, which raised $134MM in bids on 116 leases. The results from this year’s Western Gulf sale compared to last years could be attributed to two things: Lease Sale 229 was delayed several months by the 2010 Macondo (Mississippi Canyon 252) oil spill and resulted in artificially high demand; or, companies have more acreage than they know what to do with in the Western Gulf of Mexico.

The next Gulf auction is tentatively scheduled for 2014 and will focus on the Eastern GOM.

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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. 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.