Two Gulf of Mexico blocks on the cards for U.S. player thanks to oil & gas lease sale
Houston-based oil and gas producer W&T Offshore is the apparent high bidder on two shallow water blocks in the recent Gulf of Mexico (GOM) lease sale, which was held by the Bureau of Ocean Energy Management (BOEM).
BOEM held Lease Sale 259 on 29 March 2023 for acreage in federal waters in the Gulf of Mexico, which gathered over $263.8 million in high bids for 313 tracts covering 1.6 million acres. The lease sale offered approximately 13,600 unleased blocks, around 73 million acres, in the Gulf’s Western, Central and Eastern Planning Areas and W&T Offshore was one of the 32 companies, which participated in the lease sale. However, the biggest chunk of high bids during the lease sale was submitted by Chevron, ExxonMobil, BP, and Shell.
On Tuesday, 4 April 2023, W&T Offshore confirmed that it was the apparent high bidder in the most recent GOM lease sale on two shallow water blocks, Eugene Island South Addition block 371 and Eugene Island South Addition block 387, which cover a total of approximately 10,000 gross acres. If this acreage is awarded to the U.S. player, it will pay approximately $340,000 in total for the awarded leases combined, which reflects a 100 per cent working interest in the acreage.
According to the company, the two blocks have a lease term of five years and an 18.75 per cent royalty. Despite submitting the apparent high bid on these leases, BOEM still reserves the right not to award the blocks based on their minimum bidding criteria. Due to this, W&T Offshore expects to receive the final award results over the next 90 days.
Tracy W. Krohn, W&T Offshore’s Chairman and Chief Executive Officer, remarked: “We appreciate the opportunity to once again bid on blocks in the GOM and will continue to invest in this outstanding basin where our extensive experience and track record of success differentiates W&T. We look forward to utilizing our properties and infrastructure to maximize opportunities in the GOM for many years to come.”
Currently, the U.S. firm has under lease approximately 625,000 gross acres – 457,000 net acres – spanning across the outer continental shelf off the coasts of Louisiana, Texas, Mississippi and Alabama, with approximately 8,000 gross acres in Alabama State waters, 458,000 gross acres on the conventional shelf and approximately 159,000 gross acres in the deepwater.
As of 31 December 2022, W&T Offshore holds working interests in 47 offshore fields in federal and state waters: 45 fields producing and two fields capable of producing, which include 39 fields in federal waters and eight in state waters.
When it comes to W&T Offshore’s activities, it is worth reminding that the U.S. player consolidated its ownership of shallow-water assets in the Gulf of Mexico in April 2022, following the acquisition of remaining interests.