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Oil companies bid big bucks for Gulf of Mexico drilling rights

Oil and gas companies pledged ~$872M for drilling rights in the Gulf of Mexico during today's high-stakes auction that demonstrated plenty of enthusiasm for offshore development in both shallow and deep water.

BP, which had been forced to sit out the last three auctions under a government contract suspension, won 24 of its 31 bids for drilling leases in the central Gulf, including territory near its failed Macondo well.

The highest single bid came from Freeport McMoRan (FCX), which pledged $69M and beat out five other companies for the rights to drill a tract in the Atwater Valley leasing area, home to at least five discoveries.

FCX won 16 of its 17 bids with a $321M price tag, more than three times as much as the next-biggest spender, Chevron (CVX), which scored $103M in high bids; Murphy Oil (MUR) was no. 3 with 16 bids totaling nearly $50M.

Cobalt Energy (CIE) was the most aggressive bidder, winning 44 of 46 offers worth $26M.

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Comments (13)
  • Debutant
    , contributor
    Comments (2607) | Send Message
    "Demonstrated plenty of enthusiasm for offshore development in both shallow and deep water".


    He he heeeeee!


    My SDRL or ESV should name one of their new drillers "I Told You So!".
    19 Mar 2014, 03:35 PM Reply Like
  • long_on_oil
    , contributor
    Comments (1281) | Send Message
    I am glad you redirected me to this article. Thanks
    These oil companies are not going to lease these tracts and just leave them sit for any length of time. I think I read somewhere about they have to drill in the block within a specific time frame or the block reverts back and the lease ends. Anyone know anything about this?
    19 Mar 2014, 04:34 PM Reply Like
  • wigit5
    , contributor
    Comments (4280) | Send Message
    I believe there are always time constraints as the leasee is expecting royalties for amounts removed... if no drilling/pumping is being done the leasee has less to show for it's leased out property.


    I remember reading similar stuff about natural gas wells.
    19 Mar 2014, 04:38 PM Reply Like
  • Debutant
    , contributor
    Comments (2607) | Send Message
    @ long_on_oil


    It was in one of the posts by Saratogahawk yesterday or the day before.
    19 Mar 2014, 04:45 PM Reply Like
  • Craig Cooper
    , contributor
    Comments (2489) | Send Message
    The initial lease term for Federal OCS blocks (i.e. Outer Continental Shelf) is either 5 or 10 years. Deepwater blocks are typically 10 year initial lease term.
    19 Mar 2014, 07:58 PM Reply Like
    , contributor
    Comments (1158) | Send Message


    I would add (HERO) for this as they have a large footprint in shallow water drilling. as a side note to (SDRL) I would add to (DRYS) and perhaps (FCX) for the longer term play on it's move to diversify from mining into oil assets.


    19 Mar 2014, 03:45 PM Reply Like
  • deercreekvols
    , contributor
    Comments (6909) | Send Message
    (BP) goes 24 for 31 in its bids.


    Where is SA author "The Specialist" to comment on this?


    Only comes out of the ground when seemingly negative news on (BP) is present. Never seems to cover all sides of the company...oh well.


    For those of us long (BP), this is wonderful news.
    19 Mar 2014, 04:10 PM Reply Like
  • wigit5
    , contributor
    Comments (4280) | Send Message
    Yeah I thought Oil drillers werent interested in offshore drilling anymore... hence the huge drop in (SDRL) shares lol
    19 Mar 2014, 04:26 PM Reply Like
  • Debutant
    , contributor
    Comments (2607) | Send Message
    This was only one of the many news today that is related to offshore drilling.


    Those who really want to follow the sector should read about RDS (Shell)'s oil find offshore Malaysia, as well as its offshore projects for Ghana. They are not here on SA.


    The "offshore drilling sector is dead" crowd can ignore the news and continue to follow their favorite authors and commentators instead.
    19 Mar 2014, 05:20 PM Reply Like
  • deercreekvols
    , contributor
    Comments (6909) | Send Message
    At what point does Judge Barbier try to stop (BP) from winning these bids?


    He has to be seething.
    19 Mar 2014, 07:48 PM Reply Like
  • glf4mny
    , contributor
    Comments (464) | Send Message
    One would think this is good ($$$) for BP but apparently the market sees it differently as it's share price continues on a downward track for the past 10 days.
    deercreekvols: good comments above....I'm thinking that maybe The Specialist is a briefing attorney working in Barbier's court and he's busy right now writing a new, yet to be released, opinion involving BP and their bids.
    20 Mar 2014, 12:06 PM Reply Like
  • oil services guy2011
    , contributor
    Comments (128) | Send Message
    Here are the high bids if anyone is interested in more details:

    20 Mar 2014, 09:46 PM Reply Like
  • Stocks-Options
    , contributor
    Comments (782) | Send Message
    As the oil wells are sunk, Seadrill's price will rise.


    Long SDRL
    21 Mar 2014, 01:10 AM Reply Like
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