ConocoPhillips Makes Highest Bid in Sale of Gulf Oil Leases
Stock Chart for ConocoPhillips (COP)
ConocoPhillips (COP) submitted the highest bid among $337.7 million in the first sale of leases for oil production in the Gulf of Mexico since BP Plc’s spill last year, Interior Secretary Ken Salazar said.
The sale showed “great interest” among energy companies in developing tracts in the western Gulf off Texas’s coast, Salazar said today during a New Orleans news conference. Houston-based ConocoPhillips bid about $103 million to drill on a site in a region known as Keathley Canyon.
The auction was the first to test interest among oil companies in the Gulf since the Interior Department set stricter rules for energy exploration after BP’s disaster, the worst U.S. marine spill.
The sale “continues the Obama administration’s commitment to a balanced and comprehensive energy plan,” Salazar said in a statement.
The auction drew 241 bids from 20 oil and gas companies that offered $712.7 million for access to 191 offshore tracts in an area as big as South Carolina, Salazar said.
ConocoPhillips holds the most high bids with 75 valued at more than $158.8 million. Irving, Texas-based Exxon Mobil Corp. (XOM) offered 50 top bids for $63.3 million, the second-highest.
“Our participation in the lease sale demonstrates our belief that exploration plays a key role in enabling ConocoPhillips to enhance its asset portfolio and work toward achieving long-term organic growth,” Davy Kong, a ConocoPhillips spokeswoman, said today in an e-mail.
ConocoPhillips’s bidding in the auction reflects its plan to increase its holdings in the Gulf, Philip Weiss, an analyst at Argus Research in New York who has a “buy” rating on the shares and owns none, said in a telephone interview today.
“They’ve said that in order to grow their resources they’re more interested in adding acreage than properties that are already discovered or developed because you pay less for it, so there’s bigger upside,” Weiss said.
BP, based in London, submitted 11 high bids valued at $27.5 million.
While Salazar said U.S. oversight has been improved since the spill, environmental groups sued in Washington yesterday to block the sale, saying regulators had yet to adequately consider production risks.
The companies bid on blocks in federal waters from 9 miles (15 kilometers) to more than 250 miles offshore, in depths of about 16 feet (5 meters) to more than 10,975 feet, according to the Bureau of Ocean Energy Management, a division of the Interior Department.
The agency estimates that the sale could result in production of about 222 million to 423 million barrels of oil and 1.49 trillion to 2.65 trillion cubic feet of natural gas.
Companies that participated were required to submit a minimum bid of $100 per acre, up from $37.50 in previous sales.
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