U.S. Gulf Lease Sale Generates Less than $47 Million

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Written by Paul Wiseman for IIR News Intelligence (Sugar Land, Texas)

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Summary

The second lease sale under 2025's One Big Beautiful Bill Act received 38 bids from 13 companies for 25 blocks.

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Diminished Interest

The second Gulf of Mexico (GOM) oil lease sale under 2025's One Big Beautiful Bill Act, dubbed "One Big Beautiful Gulf (BBG2)," received 38 bids totaling nearly $47 million. These came from 13 companies and covered 25 blocks, amounting to about 141,000 acres in federal waters.

This is 84% less than the $279.4 million received in BBG1 on December 10, 2025, and the 38 bids this time are almost 83% less than the 219 received in December. It also is the lowest lease sale response in about 10 years.

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In the most recent sale, 181 blocks were sold, covering 80 million acres. BP's $21 million bid for a Green Canyon block was by far the highest bid, singularly accounting for almost half the total. Second was Chevron's $11 million high bid for three other blocks.

Others who secured leases include Shell Offshore (Walker Ridge blocks), Talos Energy (some mid-size blocks), Beacon Offshore Energy (Green Canyon), Houston Energy (several small leases) and Arena Energy (shelf and shallow blocks). Others offering smaller bids included LLOG Exploration, Walter Oil & Gas, Woodside Energy, Red Willow Offshore, Navitas Petroleum, CL&F Offshore, Focus Exploration and Renaissance Offshore.

BBG1 and BBG2 were the first two sales to use the reduced 12.5% royalty rate for both shallow and deepwater leases mandated by One Big Beautiful Bill Act (OBBBA), which was signed into law last year. This is the lowest royalty rate since 2007.

In April 2022, then-President Joe Biden's Department of the Interior had set rates to 16.67%-18.75% for shallow and deepwater leases. It applied to that administration's first lease sale, with the rate hike reasoning being a balance between the need to reduce gasoline prices vs. environmental concerns from fossil fuels.

Biden had halted all offshore lease sales in 2021 shortly after taking office, but a Louisiana judge had ruled that lease sales are required by law, and that Biden had no legitimate reason for halting them.

The OBBBA requires 30 GOM lease sales by 2040, and six in Alaska's Cook Inlet through 2032.

March 18 was the first Cook Inlet lease offering, for 5.5 million acres. It received no bids.

By the Numbers

• $47 Million: Bid totals for this week's GOM Auction
• $279.4 Million: Bid totals in December, 2025 GOM Auction
• $0: Bid totals for March 18 Alaska auction

Possible Reasons for Low Turnout

Current oil prices are elevated due to the war with Iran, leading some to expect greater lease activity. Tuesday was the deadline to submit bids and the sale results were announced the following day. But GOM assets can take 10 years to develop, long after today's oil prices would be history. Since recent market prices were more often in the $60 per barrel range, some feel that the industry is expecting those to return after the conflict is over.

Also, in recent years oil companies have generally left the "drill, baby, drill" frenzy of the years around 2015, instead turning to capital discipline and shareholder payouts, investing less in production growth. Nine drilling rigs are active in the GOM, a number that has been relatively flat for some time. Most of the rigs that are active are focused on short-cycle projects, tiebacks and infills rather than large-scale exploration.

At the top of some experts' list, however, is "auction fatigue." They note that the earlier offering produced much greater results, musing that this and the Alaska auction followed too closely for producers to properly plan. Historically, these lease sales have been no more than once or twice a year.

Gulf's Oil Production Role is Still Significant

Spanning about 160 million acres, the Gulf's Outer Continental Shelf's undiscovered, technically recoverable oil reserves are estimated at 29.59 billion barrels, and natural gas is estimated at 54.84 trillion cubic feet (Tcf), based on Bureau of Ocean Energy Management (BOEM) figures.

In fiscal year 2025, offshore output totaled 677.2 million barrels. At about 1.86 million barrels per day (BBL/d), that put the Gulf second to the Permian Basin's 6.6 million BBL/d among U.S. producing regions. Number three is the Bakken, which averaged 1.2 million BBL/d in 2025.

Key Takeaways

• The March GOM auction received the fewest bids and dollars in about 10 years.
• Some believe the auctions mandated by 2025's One Big Beautiful Bill Act are too often, diluting the industry's ability to keep up.
• Price volatility and fiscal restraint by Gulf producers are other likely reasons for the low numbers.

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About IIR News Intelligence
IIR News Intelligence is a trusted source of news for the industrial process and energy markets, powered by Industrial Info Resources' Global Market Intelligence (GMI).

About Industrial Info Resources
Industrial Info Resources (IIR News Intelligence) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 250,000 current and future projects worth $30.2 trillion (USD).