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 # | block | high bid ($) | BOEM MROV ($) | no. of bids |
| G37496 | DC 622 | 2,101,836 | 9,100,000 | 1 |
| G37515 | GC 173 | 307,107 | 1,300,000 | 1 |
| G37534 | GC 547 | 1,783,498 | 12,000,000 | 1 |
| G37538 | GC 591 | 1,291,993 | 5,200,000 | 1 |
| G37543 | GC 642 | 605,505 | 3,400,000 | 1 |
| G37548 | GC 777 | 583,103 | 4,200,000 | 1 |
| G37562 | AT 5 | 1,551,130 | 4,700,000 | 3 |
| G37565 | AT 133 | 607,107 | 2,600,000 | 1 |
| G37616 | KC 745 | 707,777 | 3,600,000 | 1 |
| G37617 | KC 789 | 707,777 | 2,100,000 | 1 |
| G37647 | WR 750 | 724,744 | 3,500,000 | 1 |
| G37646 | WR 794 | 724,744 | 3,200,000 | 1 |
| G37648 | WR 795 | 774,242 | 5,000,000 | 1 |
| G37649 | WR 796 | 774,242 | 4,000,000 | 1 |
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.
Bud's Offshore Energy (BOE) 