By Reuters 2015-08-19 14:43:40
A U.S. government sale of oil and gas drilling leases in the western Gulf of Mexico attracted the lowest number of bids on record on Wednesday as slumping oil prices kept producers from plowing money into expensive offshore prospects.
The yearly sale, held by the Bureau of Ocean Energy Management (BOEM), attracted $22.7 million in high bids, the smallest in the western Gulf since 1983 when leases were first broken down into regions, the BOEM said, reaping just one fifth of the value of last year’s offers.
“The continuing drop in oil prices and low natural gas prices obviously affect industry’s short-term investment decisions,” BOEM Director Abigail Ross Hopper said in a statement, also stressing the long term potential of Gulf of Mexico oil and gas production.
“While this sale reflects today’s market conditions…it underscores a steady, continued interest in developing deep water federal offshore oil and gas resources.”
U.S. oil prices have slumped over the past year due to oversupply, from over $107 a barrel in June 2014 to $40 on Wednesday, denting oil producers’ profits and leading to thousands of industry job cuts. Even cheaper onshore developments have stalled as companies reassess their yearly budgets.
In Wednesday’s sale, five companies submitted 33 bids on 33 tracts covering 190,080 acres (76,923 hectares) in the western region, BOEM said.
Australia’s BHP Billiton was the most active with 26 bids. BP made one bid, Colombia’s Ecopetrol made four, three of which were made jointly with Anadarko Petroleum, and Houston-based Peregrine Oil and Gas made two.
Last year saw 93 bids on 81 tracts totaling $110 million in high bids. In 2012, when oil prices fluctuated between $100 and $80 a barrel, there were 131 bids on 116 tracts, with high bids hitting $133 million, a BOEM spokesman said.