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Posts Tagged ‘bid rejections’

Sale BBG1 bidding outcomes: rejections, close calls, differences in valuations, and other interesting outcomes

Posted in energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , , , , on April 2, 2026| Leave a Comment »

Companies seeking to acquire OCS leases are not only competing with each other, they are also competing with BOEM’s tract evaluations. In that regard, the bidders fared well at Sale BBG1. Only 3 of the 181 high bids were rejected by BOEM. and those rejections appear to be warranted.

The rejected bids were significantly below both BOEM’s Mean of the Range-of-Value and Lower Bound Confidence Interval for these single bid tracts (table below).

Block No.Companyno. of bidsbidMROVLBCI
EW 921LLOG1$505,777$2,900,000$2,200,000
MC 587KUSA1$700,000 $3,300,000$2,200,000
MC 588LLOG1$613,008$6,100,000$4,600,000
MROV=Mean of the Range-of-Value; LBCI=Lower Bound Confidence Interval; KUSA=Karoon (Australia) Energy USA; EW=Ewing Bank; MC=Mississippi Canyon

LLOG submitted 9 other high bids (alone or with partners) that were accepted. KUSA did not submit any other bids. We’ll see if the rejected bids for these blocks are exceeded in future sales.

Nine other high bids (table below) were less than the MROV, but all were greater than the LBCI. Those bidders “beat the house,” acquiring leases for <MROV. In that regard, Equinor led the pack with no rejections even though 3 of their 7 bids were below MROV. Similarly, 2 of Beacon’s 4 bids were <MROV, with no rejections.

Block No.Companyno. of bidsbidMROVLBCI
GC 345Beacon1$5,302,358$5,400,000$4,200,000
GC 346Beacon1$1,102,358$1,500,000$900,000
GC 547Equinor1$3,200,067$4,500,000$2,600,000
GC 549Equinor1$899,967$1,500,000$576,000
AT 64LLOG1$7,997,018$8,300,000$6,700.000
KC 386Oxy2$3,000,505$3,500,000$2,800,000
KC 429Oxy1$600,505$910,000$470,000
KC 431Woodside1$904,547$1,200,000$840,000
WR 56Equinor1$904,547$1,200,000$576,000
MROV=Mean of the Range-of-Value; LBCI=Lower Bound Confidence Interval; AT=Atwater Valley, GC=Green Canyon, KC=Keathley Canyon, WR=Walker Ridge

Perhaps most interesting were the blocks that were highly valued by industry, but not by BOEM. Each of these blocks (table below) received multiple bids and high bids >$10 million. Conversely, BOEM valued the blocks at only $576,000, which (per the terms of the sale) equates to the minimum acceptable bid of $100/acre.

Block No.high bidderhigh bidother bidsMROV
GC 845Beacon$11,802,358LLOG: $613,008$576,000
KC 25Chevron$18,592,086BP: $11,507,770
Shell: $753,029		$576,000
WR 443Woodside$15,204,547Chevron $1,596,189$576,000
WR444Woodside$12,204,547BP: $4,593,770
Chevron $1,482,378		$576,000
MROV=Mean of the Range-of-Value; LBCI=Lower Bound Confidence Interval; GC=Green Canyon, KC=Keathley Canyon, WR=Walker Ridge


All of this demonstrates yet again that:

  • the govt is leasing exploration and development opportunities, not confirmed resources,
  • commercial discoveries are far from certain,
  • informed assessments differ (I.e. great minds, and their computers, don’t always think alike 😀),
  • corporate priorities differ, and
  • exploration strategies evolve.

Superstition, tactic, AI, coded or subliminal message? 😉

  • All 58 BP bids end with 770. Examples: $1,707,770 and $807,770. (At Sale BBG2, all 5 BP bids ended with 990.)
  • All 18 Shell bids ended with 029. (At Sale BBG2, all 6 Shell bids ended with 240.)
  • 13 of 15 Anadarko bids ended with 505, the other 2 ended with 101.
  • All 9 Woodside bids ended with 547.
  • All 3 Eni bids ended with 001.
  • All 4 Arena bids ended with 912.
  • All 12 Talos bids ended with 986.
  • All 3 Beacon bids ended with 358.

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Correction

Posted in Gulf of Mexico, Offshore Energy - General, tagged , , on April 12, 2024| Leave a Comment »

The table in the Sale 259 bid rejections post has been corrected below. That table incorrectly reported that subsequent bids for Keathley Canyon Blocks 745 and 789 were rejected at Sale 261. Those bids were in fact accepted. Houston Energy was identified as the submitter rather than Beacon Offshore Energy, the company that, per the bidding data, had the largest ownership share. (See the bidding partnership pasted below.)

The acceptance of those 2 bids significantly increases the net gain to the government as a result of the Sale 259 bid rejections. See the corrections in red to the table:

area and blockSale 259 rejected high bid – companySale 261 high bidbid acceptedgovt gain (loss*)
DC 6222,101,836 – Shell615,628 – Shellyes(1,486,208)
GC 173307,107 – Woodsideno bidNA(307,107)
GC 5471,783,498 – Chevronno bidNA(1,783,498)
GC 5911,291,993 – Chevronno bidNA(1,291,993)
GC 642605,505 – Anadarkono bidNA(605,505)
GC 777583,103 – bpno bidNA(583,103)
AT 51,551,130 – Anadarko5,215,628 – Shellyes3,664,498
AT 133607,107 – Woodsideno bidNA(607,107)
KC 745707,777 – Beacon2,422,222 – Beacon Houstonno yes(2,422,222)
1,714,445
KC 789707,777 – Beacon2,143,299 – Beacon Houstonno yes(2,143,299)
1,435,522
WR 794724,744 – Beacon1,487,624 – Beaconyes762,880
WR 795774,242 – Beacon5,301,107 – Woodsideyes4,526,865
WR 796774,242 – Beacon3,310,107 – Woodsideyes2,535,865
WR 750724,744 – Beacon1,498,555 – Beaconyes773,811
total govt. gain1,032,877
8,748,365

More on the Sale 261 bidding next week.

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Sale 259 bid rejections: how did the govt fare?

Posted in CCS, energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , , , , on April 2, 2024| Leave a Comment »

14 of the high bids at Gulf of Mexico Lease Sale 259 were rejected. Did those tracts receive bids at sale 261? What was the net gain or loss of revenue? See the summary bullets and table below

  • 6 of the 14 tracts received no bids whatsoever
  • 5 of the 14 tracts received higher bids that were accepted.
  • 2 tracts received substantially higher bids that were again rejected
  • 1 tract received a lower bid that was accepted
  • net bonus revenue gain to the govt from the bid rejections (pending re-offering at future sales): $1,032,877
  • net bonus revenue gain = 0.27% of the total high bids at sale 261
  • net loss in future rental and royalty payments: ????

For a net bonus revenue gain to date of only 1/4 of one per cent, 8 of the 14 sale 259 tracts with rejected high bids remain closed to exploration. The timing of any future sales is very much in doubt given the minimalist 5 year leasing plan and the associated legal challenges.

Current bid evaluation practices only make sense if regular lease sales are held on a predictable schedule, as has historically been the case.

Meanwhile, 100% of the improper CCS bids (199/199) were accepted at the last 3 oil and gas lease sales.

area and blockSale 259 rejected high bid – companySale 261 high bidbid acceptedgovt gain (loss*)
DC 6222,101,836 – Shell615,628 – Shellyes(1,486,208)
GC 173307,107 – Woodsideno bidNA(307,107)
GC 5471,783,498 – Chevronno bidNA(1,783,498)
GC 5911,291,993 – Chevronno bidNA(1,291,993)
GC 642605,505 – Anadarkono bidNA(605,505)
GC 777583,103 – bpno bidNA(583,103)
AT 51,551,130 – Anadarko5,215,628 – Shellyes3,664,498
AT 133607,107 – Woodsideno bidNA(607,107)
KC 745707,777 – Beacon2,422,222 – Beaconno(2,422,222)
KC 789707,777 – Beacon2,143,299 – Beaconno(2,143,299)
WR 794724,744 – Beacon1,487,624 – Beaconyes762,880
WR 795774,242 – Beacon5,301,107 – Woodsideyes4,526,865
WR 796774,242 – Beacon3,310,107 – Woodsideyes2,535,865
WR 750724,744 – Beacon1,498,555 – Beaconyes773,811
total govt. gain1,032,877
*Loss based on rejected sale 261 high bid. If no sale 261 bid, loss based on sale 259 high bid. These tracts could receive bids at a future sale.

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How did the govt fare on the Sale 259 bid rejections?

Posted in energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , , , , , , , on January 2, 2024| Leave a Comment »

Keathley Canyon and Walker Ridge bids at Sale 259: blue=1 bid, red=2 bids, green=3 bids

Based solely on a comparison of the bids (Sale 261 vs. Sale 259), the Sale 259 rejections were, on balance, to the benefit of the public (table below). On the plus side:

  • Assuming all of the high Sale 261 bids are accepted, the net gain to the US Treasury is $8,749,365
  • Of the 14 tracts with rejected high bids at Sale 259, 8 received bids at Sale 261
  • Seven of those 8 bids were higher than the Sale 259 high bids, and 5 of those 7 were more than $1 million higher.
  • The Sale 259 bid rejections in the Keathley Canyon and Walker Ridge areas proved to be 100% beneficial. All 6 of those tracts received much higher bids at Sale 261.
  • The best BOEM decisions were the rejections of the Sale 259 bids for AT 5 and WR 795 and 796. The Sale 261 high bids on these 3 tracts were $10.8 million higher than the Sale 259 bids.
  • WR 795 and 796 were single bid tracts at Sale 259.
  • AT 5 received 3 bids at Sale 259. BOEM rejected the high bid despite the competitive bidding. That proved to be the right call given that the Sale 261 high bid was $3.5 million higher.

On the other hand:

  • None of the 5 Green Canyon rejections received any bids at Sale 261.
  • The high bid for GC 777 was rejected twice (Sales 257 and 259) at a cost of $1.8 million, the BP/Talos high bid at Sale 257. At sale 259, BP was the sole bidder for GC 777, and their bid was only $583,000, less than 1/3 of their Sale 257 bid. GC 777 received no bids at Sale 261.
  • The worst BOEM Sale 259 decisions were the rejections of the DC 622, GC 547, and GC 591 bids at a cost of $4.6 million ($5.2 if the Sale 261 bid for DC 622 is rejected).
  • This is not to say that the tracts with rejected bids will not ultimately be leased. However, the uncertainty regarding future sales changes the historic GoM leasing dynamic. The next opportunity for purchasing unleased tracts is a troubling unknown. Absent leasing and exploration, their resource and revenue potential will never be known.
area and blockSale 259 high bid – companySale 261 high bidgovt gain (loss)
DC 6222,101,836 – Shell615,628* – Shell(1,486,208)
GC 173307,107 – Woodsideno bid(307,107)
GC 5471,783,498 – Chevronno bid(1,783,498)
GC 5911,291,993 – Chevronno bid(1,291,993)
GC 642605,505 – Anadarkono bid(605,505)
GC 777583,103 – bpno bid(583,103)
AT 51,551,130 – Anadarko5,215,628* – Shell3,664,498
AT 133607,107 – Woodsideno bid(607,107)
KC 745707,777 – Beacon2,422,222 – Beacon1,714,445
KC 789707,777 – Beacon2,143,299 – Beacon1,435,522
WR 794724,744 – Beacon1,487,624 – Beacon762,880
WR 795774,242 – Beacon5,301,107 – Woodside4,526,865
WR 796774,242 – Beacon3,310,107 – Woodside2,535,865
WR 750724,744 – Beacon1,498,555 – Beacon773,811
*The BOEM sale 261 bid summary misidentifies the DC 622 and AT 5 bids as being for MC 622 and GC 5 respectively. The corrected identification above is based on the “Blocks Receiving Bids” file correlated with the block number and company code.

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Lease Sale 259: bid rejections and interesting outcomes

Posted in Gulf of Mexico, Offshore Energy - General, tagged , , , , , , on July 20, 2023| Leave a Comment »

As previously posted, 14 of the 244 (not counting the 69 CCS bids) Sale 259 high bids were rejected. BOEM has published their bid evaluations for all of the tracts, and the 14 rejections are listed below.

lease #blockhigh bid ($)BOEM MROV ($)no. of bids
G37496DC 6222,101,8369,100,0001
G37515GC 173307,1071,300,0001
G37534GC 5471,783,49812,000,0001
G37538GC 5911,291,9935,200,0001
G37543GC 642605,5053,400,0001
G37548GC 777583,1034,200,0001
G37562AT 51,551,1304,700,0003
G37565AT 133607,1072,600,0001
G37616KC 745707,7773,600,0001
G37617KC 789707,7772,100,0001
G37647WR 750724,7443,500,0001
G37646WR 794724,7443,200,0001
G37648WR 795774,2425,000,0001
G37649WR 796774,2424,000,0001
MROV – Mean of the Range-of-Value

Observations:

  • Keathley Canyon (KC) Block 96, the tract receiving the highest bid in the entire sale ($15,911,947 by Chevron), had a BOEM MROV of only $576,000. Clearly, Chevron and the government have a very different view of the value of this tract. BP was the second bidder for KC 96, and their bid ($4,003,103) was also considerably higher than BOEM’s MROV. This one will very interesting to follow.
  • The only bid that was rejected in Sale 257 was the BP/Talos bid of $1.8 million for Green Canyon Block 777. BOEM’s MROV in the Sale 257 evaluations was $4.4 million. BP again bid on GC 777 in Sale 259, but their bid was only $583,000 (even though BOEM’s Sale 257 evaluation was public information). BOEM’s MROV was reduced only slightly to $4.2 million, and they again rejected BP’s bid. We’ll see what happens in the next sale.
  • 51 of the 230 accepted bids were >$1 million, all for deepwater tracts. All of the rejected bids were for deepwater tracts, and a higher percentage (4/14) were >$1 million. This makes sense given that the higher potential prospects are in deepwater.
  • These results demonstrate again that resource evaluation is far from an exact science. BOEM is not selling barrels of oil and cubic feet of gas. BOEM is evaluating prospects, and companies are bidding on the opportunity to explore these prospects.
  • Bidding strategies differ; the more companies participating, the better the long-term prospects for the OCS program.

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Lease Sale 259: 14 high bids rejected!

Posted in Gulf of Mexico, Offshore Energy - General, tagged , , , on July 5, 2023| Leave a Comment »

This is a surprisingly high number of rejections given that only one Sale 257 bid was rejected and all 69 of the carbon sequestration bids were accepted (even though such bidding was not authorized).

Specifics on the Sale 259 rejections have not yet been posted, but one of the rejections was bp’s bid for Green Canyon Block 777. This is not terribly surprising given that the bp/Talos GC 777 bid was the sole Sale 257 rejection, and bp’s sale 259 bid was less than 1/3 of their Sale 257 bid.

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