Last week, the MMS held the Central and Eastern GOM lease sales, with the CGOM sale breaking records in terms of the dollar amount bid for the leases. Given the importance of the Central GOM lease sale, this week's Offshore Rig Review will focus on the details and trends related to that sale. We'll be examining some of the key statistics regarding the sale and how it compares to CGOM lease sales of the past.
Blocks with Bids
In this most recent CGOM Lease Sale, a total of 615 blocks received bids. That is the 7th largest number of blocks receiving bids in a CGOM lease sale in the last 25 years. At the same time, a total of 5,569 blocks were offered, which is the 11th largest number of blocks offered in a CGOM lease sale. In order to bring these two data points together, it helps to look at the percentage of blocks that received bids. For CGOM lease sale 206, 11% of the blocks on offer received bids.
Central GOM Lease Sales 1983-2008
So how does that compare with previous years? Starting with the CGOM lease sale held in 2001, an average of 11.8% of the blocks on offer have received bids. So, this year's 11% rate is close to, just slightly below, the level of interest shown in the previous 7 CGOM lease sales. Looking back further at the history of CGOM lease sales, there was a low of just 2% of blocks receiving bids in 1986 and a high of 20.4% of blocks receiving bids in 1997. The all-time average for CGOM lease sales is 9.9% of blocks receiving bids.
This year's 11% is slightly above par for the last 25 years, but slightly below par for the last 7 years. More broadly, the blocks up for lease in the most recent CGOM lease sale had a broader appeal than CGOM lease sales of the past, although the bidding focus was slightly narrower than during the last 7 years.
Bids per Block
With an average of 1.72 bids per block that received bids, this most recent CGOM lease sale was the 4th most competitive CGOM lease sale, just behind the 1.73 bids in 1997, the 1.75 bids in 2006, and the 1.98 bids in 2007. This is about 13% higher than the historical average of 1.52 bids per block in all previous CGOM lease sales.
Thus, this most recent CGOM lease sale generated a significantly higher amount of interest and competition than other CGOM lease sale have historically.
Of course, when inflation is taken into account, the current lease sale still falls far short of the 1983 record. The inflation-adjusted value of the 1983 high bids is $7.37 billion in 2008 dollars, which is essentially twice the amount bid in 2008.
Looking at the average high bids, this lease sale was even more remarkable. The average high bid for CGOM Lease Sale 206 was $5.98 million. That was nearly 50% higher than the average high bid from the previous CGOM lease sale in October 2007, and the 2008 average high bid was more than 7 times the average high bid from the previous 10 years before that ($839,000 from 1996 to 2006).
The average high bid of $5.98 million in the most recent CGOM lease sale was also the first to surpass the record average high bid of $5.29 million set in 1983. That represents a 13% increase over the previous record average high bid from 1983. Again, taking inflation into account sets the 1983 average high bid well above this most recent sale, but the fact still remains that CGOM lease sale 206 was record-setting.
By all of these marks, this was an exceptional lease sale that shows the level of interest that the Gulf of Mexico still holds.
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