Yesterday’s Western Gulf of Mexico Lease Sale 174 brought inonly about one-sixth the amount of high bids the previous westernGulf sale garnered last year; however, a spokeswoman for oneindustry group downplayed the lackluster results.

“The low-price environment has played a role in what [companies]have budgeted as far as spending. This one was small in comparisonto last year’s,” said Laura Smith of the National Ocean IndustriesAssociation (NOIA), which represents all segments of the U.S.offshore oil and gas industry. “This year was dominated byindependents as last year’s was. That seems to be a trend in leasesales.

“There really weren’t a lot of surprises from our perspective.We don’t take this as a bad sign or a sign of any kind of downturnin the Gulf of Mexico at all. This doesn’t bode poorly for what’sgoing on in the Gulf of Mexico.”

Bids in Sale 174, held in New Orleans, totaled $104.212 million,and the sum of high bids was $94.649 million from 41 participatingcompanies. There were 3,547 blocks offered and 153 received anaverage of 1.16 bids, 177 bids in total. Last year’s Western GulfSale 171, held on Aug. 26 received 486 bids on 402 blocks. A totalof 3,778 blocks were offered, and $553.436 million in high bids wasreceived.

“The results of this sale are about what we expected,” saidMinerals Management Service (MMS) Gulf of Mexico Regional DirectorChris Oynes. “It is reflective of the large inventory of tractsalready under lease. This sale was dominated by the independents,Kerr-McGee Oil & Gas Corp., Coastal Oil & Gas, andSpinnaker Exploration Co. in particular.”

As was the case last year, blocks in depths of 200 meters orless and those in depths of 800 meters or more saw the mostactivity. In depths of 200 meters or less, 67 blocks received atotal of $26.297 million in high bids. In depths of 800 meters orgreater, 64 blocks received a total of $61.611 million in highbids. In depths between 200 and 400 meters, nine blocks received atotal of $2.267 million in high bids, and in depths between 400 and800 meters, 13 blocks received a total of $4.475 million in highbids.

The deepest block receiving a bid was Keathley Canyon 842 at adepth of 3,049 meters.

Kerr-McGee made the highest bid on a block, $11.283 million forGarden Banks 877. Kerr-McGee also had the greatest total number ofhigh bids, 36, and the greatest sum of high bid amounts, $33.211million.

“The deepwater Gulf of Mexico is one of Kerr-McGee’s core areasfor exploration and production activities as this area offers thepotential for large discoveries,” said Kerr-McGee CEO Luke R.Corbett. “The growth of deepwater technology and infrastructureallows for cost effective developments in this province. Kerr-McGeewill continue to focus on building its inventory of deepwaterblocks to provide additional opportunities for exploration anddevelopment.”

Kerr-McGee said it will operate 29 of the 36 high-bid blocks andhas an 87% average working interest in the blocks. With theadditional blocks, Kerr-McGee will hold interests in more than 500Gulf blocks, of which more than 275 blocks are in water depthsgreater than 1,000 feet.

Following Kerr-McGee in total number of high bids were Coastal,18; Union Oil Co. of California, 15; Spinnaker, 11; MurphyExploration & Production Co., 7; The Houston Exploration Co.,7; Exxon Corp., 7; Ocean Energy Inc., 7; Samedan Oil Corp., 6; andAmerada Hess Corp., 6.

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