The Bureau of Ocean Energy Management (BOEM) completed its required evaluation to ensure that the public receives fair market value for tracts leased as part of Central Gulf of Mexico oil and gas lease sale 227, which was held on March 20, 2013.
After extensive economic analysis, BOEM has awarded 307 leases on tracts covering 1,648,831 acres to the successful high bidders who participated in the sale, which made 7,299 unleased blocks covering about 38.6 million acres available offshore Louisiana, Mississippi and Alabama. The accepted high bids are valued at $1,199,052,037.
The terms of Sale 227 continued a range of incentives to encourage diligent development and ensure a fair return to taxpayers — including an increased minimum bid for deepwater tracts, escalating rental rates and tiered durational terms with relatively short base periods followed by additional time under the same lease if the operator drills a well during the initial period.
BOEM increased its minimum bid requirement in deepwater to $100 per acre, up from $37.50 in Central Gulf of Mexico lease sales prior to 2012. Rigorous historical analysis showed that leases that received high bids of less than $100 per acre have experienced virtually no exploration and development activities.
During the sale, 52 companies submitted 407 bids totaling $1,595,397,446 on 320 tracts. A total of $1,214,675,536 was received in high bids. BOEM rejected thirteen high bids, totaling $15,623,499 after determining that the value of those bids was insufficient to provide the public with fair market value for the tracts.
BOEM will reoffer these tracts as part of the next Central Gulf of Mexico sale, which is currently scheduled for March of 2014.
The highest bid accepted was $81,787,999, submitted by Samson Offshore, and Statoil Gulf of Mexico for Walker Ridge, Block 271. The tract is at depths greater than 5,249′ (1600 m.) and received two bids.
For more information on Sale 227 go to www.boem.gov/sale-227.