Deepwater Statistical Report

RMOTC takes on increasingly important role in low-cost RSS development.

Julie Wilson, Wood Mackenzie

The 2007 US Gulf of Mexico Western Lease Sale attracted great interest, with bids concentrated in the deepwater region. This was the first sale covering the revised Western Planning Area following the extension of the Central Planning Area both westwards and eastwards.

The deepwater attracted two-thirds of all the apparent high bids with the Lower Tertiary play accounting for 64% of deepwater apparent high bids. The shelf continued to show a decline in new leases, but enough pockets of interest still exist to keep some buoyancy in bid levels.

The companies bidding in Lease Sale 204 employed a variety of strategies. In the deepwater, Statoil was the biggest spender, putting up $139 million in apparent high bids to gain 36 blocks, albeit at the expense of leaving a substantial $73 million on the table. BP’s strategy was to venture lower bids but on a greater number of blocks, resulting in the most gains. The company received 72 apparent high bids in the deepwater from a stake of $28 million. However, it missed out on the most competitive areas.

Historic western lease sale activity, based on the revised planning areas, shows increased interest in deepwater leases.

In the deepwater Western Gulf, after analyzing the revised Planning Area, 2007 proved to be the most popular sale of recent years, driven by the large amount of newly available acreage. While the number of apparent leases gained almost doubled, compared to 2006, the total apparent successful bid amount of $249 million is nearly four times that of the previous year. This emphasizes the greater attractiveness of the area, particularly the Lower Tertiary play where the majority of the more fervent bidding took place.

In contrast, on the shelf both apparent high bid amounts and leases gained were the lowest in recent years. Apparent high bid amounts were around 25% lower than in 2006 under the new Western Planning Area. While the shelf does still hold some interest for some companies, it is a mature area in decline, where forays into new deeper plays have yet to provide very encouraging results.