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.
| Green Canyon Block No. | No. of bidders | High Bidder | Bid |
| 404 | 5 | BP | $21,009,990 |
| 405 | 2 | BP | $885,990 |
| 448 | 5 | Chevron | $4,967,067 |
| 492 | 5 | Chevron | $5,887,188 |
Bud's Offshore Energy (BOE) 