Three independent producers led the way in making bids in the Western Gulf of Mexico Lease Sale 184, and two other independents had the highest bids in the sale held Wednesday by the Minerals Management Service (MMS) in New Orleans. The sale attracted $151 million in high bids, and 40 companies participated in bidding for 4,102 offshore oil and gas tracts. The sale covered approximately 22.3 million acres offshore Texas and Louisiana. Kerr-McGee Oil & Gas Corp. submitted the most bids at 53, followed by Amerada Hess with 52 and Pioneer Natural Resources with 42.

“Sale 184 was clearly a success; the number of tracts bid on ranks fourth in the last 10 Western Gulf sales,” MMS Director Johnnie Burton said. “This sale saw spirited bidding activity by the independent oil and gas companies.” Burton noted the “deeper water area in what is termed Alaminos Canyon experienced a great deal of bidding by several companies. We also saw bidding that was in response to our deep gas initiative in shallow water.”

The highest bid received on a block was $8.3 million, submitted by Dominion Exploration and Production Inc. along with Nexen Petroleum Offshore USA Inc. for Garden Banks Block 337. Approximately 39% of the tracts receiving bids are in ultra-deep water (more than 800 meters). The deepest tract that received a bid was Alaminos Canyon Block 902, in 2,996 meters of water. The MMS received 391 bids on 323 tracts, and the total of all bids was $181.5 million. The high bid on a block will go through an evaluation process to ensure the public receives market value before a lease is awarded.

Kerr-McGee and its partners captured bids for 45 of the leases they bid on, and 38 are in deepwater. The company’s net total exposure for all high bids was approximately $13 million. Kerr-McGee will be designated operator of 100% of the high-bid leases with an average working interest of about 81%.

“These new leases enhance our Gulf of Mexico acreage position, which is consistent with our strategy to build core operating areas in high-potential trends,” said Kenneth W. Crouch, senior vice president of exploration and production. “The leases provide opportunities that allow us to further high-grade our drilling activities and continue our successful exploration and development program in the Gulf.”

With this lease sale, Kerr-McGee maintains its position as the largest independent leaseholder in the Gulf of Mexico and the largest independent producer and leaseholder in the deepwater Gulf. Including these leases, Kerr-McGee will hold interests in 656 leases in the Gulf, and will operate more than 70% of these leases with an average working interest of 55%. Award of the 45 new leases would increase the company’s total lease holdings in the Gulf by about 259,200 gross acres to more than 3.4 million gross undeveloped acres.

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