(WoodMac, 21.Aug.2019) — Capital discipline remains key for offshore operators, judging by the results of today’s US Gulf of Mexico region-wide lease sale.
Lease Sale 253 attracted 165 bids from 27 companies, with high bids totalling US$159.4 million. While this is a decrease of about $85 million (35%) from the last region-wide lease sale in March 2019, total 2019 lease high bids were the most since 2015.
Commenting on the results, Michael Murphy, research analyst at Wood Mackenzie, said: “With the total price per acre remaining relatively flat and an overall decrease in spend compared to the previous lease sale, capital discipline remains at the forefront in the Gulf of Mexico.”
A notable participant was Anadarko, fresh from being acquired by Occidental Petroleum, with the top five by number of bids, leasing acreage in the Lower Tertiary trend. Equinor and BP continued to build on their potential Lower Tertiary and Norphlet inventory in the East Breaks and Lloyd Ridge protraction areas, respectively.
“While we saw companies pick up acreage near remote areas, the infrastructure-rich Mississippi Canyon was the bid engine of the sale, capturing roughly 25% of total bids. Infrastructure-led exploration continues to be a theme that companies are playing into.
“The highest bid of the round came from BHP with US$22.5 million. The block (GC 124) was previously bid on by Equinor for US$1.2 million in the prior lease sale but was rejected by BOEM. BHP also bid on a cluster of blocks in the Garden Banks protraction area, close to the Anadarko-operated Gunnison facility and the Kosmos/BP Resolution prospect.”