Back in October 2007, before oil tripped into triple-digit territory, the fervent demand for deepwater exploration blocks in the Gulf of Mexico was underlined by the largest lease sale in more than a decade. I dubbed this phenomenon the deepwater dance marathon.
The oilpatch boogie really heated up in March 2008, with another gale force Central Gulf lease sale. This time, total high bids (auctioned by the Minerals Management Service) touched a record $3.68 billion, with folks such as Marathon Oil (NYSE:MRO) and Anadarko Petroleum (NYSE:APC) offering astounding sums for choice exploration leases.
Well, this week saw another Central Gulf sale, and given where oil prices sit today, it ought to surprise no one that the clamor for choice exploration claims has quieted considerably. High bids for the leases barely topped $700 million, with 70 companies bidding roughly $934 million in total.
Royal Dutch Shell loomed fairly large this time around, with more than $150 million in high bids -- roughly double that of second-place bidder BP (NYSE:BP). Scanning down the list, I couldn't help noticing the international flavor of this round. ExxonMobil (NYSE:XOM) and Chevron (NYSE:CVX) were two of only four U.S. players among the top 10.
In a similar vein, folks such as Anadarko and Devon Energy (NYSE:DVN) were nearly invisible this time around, leaving Noble Energy (NYSE:NBL) as the only independent to make much of a splash.
It may be tempting to point to looming taxation changes as a reason for bidders' hesitancy here. That's an important subject, and one that I intend to address in the coming days. But when it comes to shelling out for exploration acreage today, I think strained budgets and commodity price uncertainty are the prime culprits behind this cautionary round.
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