Will More Oil Companies Jump Into GoM Action?

Private-equity-backed players, expiring leases, existing infrastructure, resource potential and stabilizing oil prices could mean slightly more bidding action during the upcoming lease sale for federal blocks in the U.S. Gulf of Mexico (GoM).

This is according to analysts who have been keeping eyes on the offshore region where economics have become competitive with onshore shale plays as operators gain efficiency and lower break-evens.

“Gulf of Mexico deepwater development, generally speaking, is in some of the best shape it can be to compete. It’s very competitive with onshore, and it’s attracting investment dollars,” William Turner, senior GoM research analyst for Wood Mackenzie, told Hart Energy. “I would suspect the majors’ activity to be on par with what they have been—not more, not less. But I think the growth in bidding activity this round will be driven by the smaller independents and private-equity-backed companies like Kosmos, Fieldwood, LLOG—to name a few.”

The Aug. 15 Lease Sale 251 makes available all unleased areas in the GoM—some 14,622 blocks located from three to 231 miles offshore in water depths ranging from 3 m (9 ft) to more than 3,400 m (11,115 ft).