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Lloyds List: Western Gulf sale attracts surge of strong bids

Published: Aug 22, 2006

HIGH oil and gas prices and increasing interest in deepwater exploration led to robust bidding on the latest Gulf of Mexico lease sale, writes Martyn Wingrove.

The US Minerals Management Service secured $340m in high bids from 62 companies for oil and gas leases in federal waters in the 200th sale of this kind.

The agency received 541 bids for 381 exploration tracts in the Western Gulf lease sale 200 with the total value of bids 38% higher than last year at $462.7m.

‘Sale 200 is the best western sale in terms of the number of bids in the past nine years and the best in eight years for the amount of money bid,’ said MMS’ Gulf of Mexico regional director Chris Oynes.

‘The level of activity underscores the Gulf of Mexico’s importance to domestic energy production and the oil industry’s interest in expanding their deepwater operations.’

Bidding activity was led by interest in the deepwater Garden Banks and Keathley Canyon areas, which attracted half of the total bids. This was due to the high number of new tracts made available for the first time in these areas.

Interest in deepwater exploration continues to grow with 67% of all tracts receiving bids in water depths of more than 400m, said the MMS. There was also good interest in shallow water blocks, where deep gas prospects are the targets for explorers.

Brazilian state oil firm Petrobras, which has an aggressive growth strategy in the region, was top bidder in terms of money pledged and the number of accepted high bids. In total it bid almost $45.5m for 34 tracts.

BP was the second best with $37.5m and 31 high bids, while New York-based Hess Corp pledged $16.8m for 30 tracts and Shell $35.4m for 28 blocks.

US independent Cobalt International surprised the market as the fourth largest investor, with $33m in total high bids for 24 tracts. Keathley Canyon block 58 secured the highest of all bids with $21m from BP.

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