W&T Offshore submits high bids for two Gulf of Mexico blocks

Houston-based oil and gas company W&T Offshore was the apparent high bidder on two blocks in the Gulf of Mexico Lease Sale 254 held by the Bureau of Ocean Energy Management (BOEM) on March 18, 2020.

Illustration; Image: W&T Offshore

W&T said on Monday that it was the apparent high bidder on the deepwater Garden Banks block 782, and the shallow water Eugene Island Area South Addition block 345.

Tracy W. Krohn, W&T’s chairman and CEO, said: “We are pleased to be the apparent high bidder on two new attractive leases in the most recent federal lease sale. We utilized our proprietary seismic to determine the blocks we felt complemented our current acreage.

“These blocks are not far from existing production infrastructure which allows for more economic development of potential discoveries. While we are investing our cash flow more judiciously in 2020, we believe these blocks are a cost-effective way to increase longer-term drilling opportunities.”

These two blocks cover a total of approximately 10,760 acres and, if awarded, the company will pay approximately $708,500 for the awarded leases combined, which reflects a 100 percent working interest in the acreage.

The shallow water block has a five-year lease term and 12.5 percent royalty, while the deepwater block has a seven-year lease term and an 18.75 percent royalty.

It is worth noting that, despite submitting the apparent high bid on these leases, the BOEM reserves the right not to award the blocks based on its minimum bidding criteria.

According to the company, W&T expects to receive the final award results over the next 90 days.

To remind, the Gulf of Mexico Lease Sale 254 generated over $93 million in high bids for 71 tracts across 397,285 acres.

A total of 22 companies participated in the lease sale, submitting over $108 million in total bids. Lease Sale 254 included 14,594 unleased blocks located from 3 – 231 miles offshore, in the Gulf’s Western, Central, and Eastern Planning Areas in water depths ranging from 3 – 3,400 meters.

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