BHP Acquires Interest in 50 Blocks in Central GOM Lease Sale

BHP Billiton reports that it was the apparent high bidder on 50 blocks in the Outer Continental Shelf, Central Gulf of Mexico Lease Sale 185. This sale was conducted by the Minerals Management Service (MMS), a bureau of the U.S. Department of the Interior, on March 19, 2003. The company submitted bids on a total of 65 blocks, achieving a 77 percent success rate.

Completion of the sale is expected within the next few months, pending bid review and approval by the MMS. BHP Billiton's winning bids, both the net amount in partnership arrangements and as a 100 percent interest-holder, are valued at approximately $12.2 million, or nearly $245,000 per block, net to BHP Billiton.

The company submitted 29 bids on deepwater acreage, being the successful bidder on 17 blocks. These are primarily deep, subsalt prospects along the Atwater Foldbelt play fairway. BHP Billiton holds a 100 percent interest on 11 of these leases, while holding equity interests between 50 and 67 percent in the remaining six. All 17 deepwater blocks complement BHP Billiton's current leasehold positions in existing play fairways.

In addition to play fairways where the company has already built a strategic acreage position, BHP Billiton also pursued new opportunities for natural gas discoveries in the expanding deep shelf gas play. In partnership with Newfield Exploration Company, BHP Billiton bid on 35 blocks, submitting successful bids on 33 blocks in the West Cameron, East Cameron, Vermilion and South Marsh Island protraction areas. These are located in shallow waters, and BHP Billiton is the designated operator with a 55 percent working interest in each block.

"Our geoscientists have identified several significant prospects closer to shore that are deep targets and tend to be gas prone," said Bernie Wirth, Vice President of Exploration and Appraisal for the Gulf of Mexico. "They are located in the middle of existing infrastructure close to the robust gas market of the United States, which can provide attractive margins with shorter cycle times than exploration in deeper waters."

All of the blocks BHP Billiton successfully bid on in Lease Sale 185 are eligible for royalty relief on oil and natural gas production as outlined by the MMS.