November 18th marked the end US Bureau of Ocean Energy Management’s (BOEM) lease sale no. 256. This was the first lease sale since March of this year and the results provide a positive long-term outlook for the offshore oil and gas industry in the US GOM.
With broad participation, the results of the lease were significantly better that anticipated. In all, 23 companies placed 105 bids for acreage in 93 blocks. This compares to 84 bids across 71 blocks in the March lease sale. Additionally, while the regional director of the BOEM for the Gulf Region had hoped to achieve $100 million in winning bids, totals eclipsed $120 million with over 90% of those bids on blocks in the deepwater. In comparison, during the March lease sale, total winning bids only totalled $93 million.
Among the three most active bidders were BP and Shell which bodes well for continued US Gulf activity in the years to come. It is generally anticipated that new lease deepwater purchases can take anywhere from five to ten years to produce first oil and his timeline can be reduced for blocks that are near existing field infrastructures. This will likely be the case for much of the recent leases by both BP and Shell. More to come on this as we see the new leases come online.