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Posts Tagged ‘Lease Sale BBG2’

Lease Sale BBG2 decision matrix; BOEM’s KC Block 828 bid rejection is interesting

Posted in energy policy, Gulf of Mexico, Offshore Energy - General, tagged , , , , , , , , on June 24, 2026| Leave a Comment »

The Buckskin field (LLOG) is located in Keathley Canyon blocks 785, 828, 829, 830, 871, and 872 in 6,800 ft (2,073 m) of water. The KC 828 lease expired last year and LLOG’s bid for that block at the BBG2 sale was rejected.

BOEM’s Decision Information Matrix for Sale BBG2 is attached. As previously noted, 2 of the 25 high bids were rejected: Keathley Canyon Block 828 ($1,101,202) and Atwater Valley Block 63 ($650,018).

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
AT 63LLOG1$650,018$2,400,000$1,800,000
KC 828LLOG1$1,101,202$24,000,000$23,000,000
MROV=Mean of the Range-of-Value; LBCI=Lower Bound Confidence Interval

In the case of Keathley Canyon 828, BOEM’s valuation is more than 20 times the high bid. BOEM valued this block far higher than any other block in the sale.

KC 828 had been previously leased and that lease expired on 9/3/2025. The lease block was part of LLOG’s Buckskin field. Apparently, the lease expired due to inactivity given that the last well reached total depth more than a year prior to the expiration date. LLOG wanted the lease back. BOEM’s rejection sends a message that the price went up (by a lot 😉).

Finally, why didn’t any other company bid on KC 828, a block that has been publicly reported as being part of the Buckskin field?

BBG2-Phase-2-Decision-MatrixDownload

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Lease Sale BBG2 now two blocks smaller; “sweet spot” leases awarded

Posted in Offshore Energy - General, Gulf of Mexico, energy policy, tagged , , , , , , , , on May 20, 2026| Leave a Comment »

BBG2 – Big Beautiful Gulf, small lease sale

BOEM has completed their Sale BBG2 bid evaluations, and 2 of the 25 high bids were rejected, further shrinking the sale’s already small footprint. That’s a high rejection rate when compared with Sale BBG1 (3 of 181 bids rejected).

Although BOEM’s decision matrix has not yet been posted, a comparison of the acceptances with the bids submitted tells us that the Keathley Canyon Block 828 ($1,101,202) and Atwater Valley Block 63 ($650,018) bids were rejected.

Both of the rejected bids were submitted by LLOG, partnering with 4 other companies on the Atwater Valley block. LLOG’s high bids on 3 other blocks were accepted, so their rejection rate was 40%. Interestingly, 2 of the 3 BBG1 rejected bids were also submitted by LLOG.

There is no shame in bid rejections, which are part of the legislated leasing process. Why pay more than you have to (or think a block is worth)? A bid rejection may attract future competition, but otherwise the only downside is that you don’t get a lease that you can possibly acquire at another sale if desired (an advantage of regular, predictable lease sales).

BOEM is charged with making fair market value determinations and their process and decisions are publicly available. Of course, opinions differ on the value of an unexplored lease. We will see what the bidding on the BBG1 and BBG2 rejections looks like in future sales.

BOEM did accept the the high bids for the BBG2 “sweet spot” blocks (red in map below; also see the table) in the Green Canyon Area of the Gulf. These 4 blocks accounted for 17 of the sale’s 38 bids (45%) and $32.8 milion of the sale’s $47 million in high bids (70%). BP’s $21 million bid for GC 404 was by far the sale’s highest bid.

red=blocks receiving bids at BBG2; blue=BBG1 and Sale 261 leases; green=active leases issued prior to Sale 261
Green Canyon
Block No.		No. of biddersHigh BidderBid
4045BP$21,009,990
4052BP$885,990
4485Chevron$4,967,067
4925Chevron$5,887,188

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