Big Beautiful Gulf 1 lease sale shows "targeted" approach in new leasing era

The US Bureau of Ocean Energy Management (BOEM) concluded the Big Beautiful Gulf 1 (BBG1) on December 10, 2025. The sale attracted just over $300 million in bids, with the number of bids down 37.8% compared to the most recent lease sale 261.

Commenting on the results of this latest round, Caitlin Shaw, research director – head of Gulf of America and Canada for Wood Mackenzie, said: “Overall, activity was in line with our expectations, and it was muted compared to the most recent lease sale. It was a very focused lease sale, and companies were targeting specific blocks that they knew they wanted.”

Targeted bidding drives higher per-acre costs

Deepwater high bid per acre increased to US$310/acre, up 23% versus the prior lease sale. Only about 1% of available acreage was bid on, but companies bid firmly for high-confidence blocks.

Miles Sasser, senior research analyst at Wood Mackenzie, explained: "A lot of the acreage was bid with very large seven, sometimes even eight-figure bids for blocks that companies felt contained some of the largest potential future projects."

BP and Chevron lead spending; Woodside surprises

• BP topped all bidders with over US$60 million for 51 blocks – the first time BP has led a Gulf lease sale in 13 years
• Chevron came in second with US$52 million for 24 blocks, including the sale's highest single bid: US$18.6 million for Keathley Canyon 25
• Woodside was the third-largest spender at US$38.1 million, significantly exceeding expectations 

Paleogene play dominates for high-impact exploration

Many bids were focused near infrastructure and adjacent to existing acreage positions, but a trend of companies concentrating bids on the emerging 20K Paleogene play continued from LS261. Three locations stood out:

• Keathley Canyon 25: Chevron's US$18.6 million winning bid, 31 kilometers north of BP's Kaskida project
• Walker Ridge: Woodside and Repsol spent over US$30 million for three blocks containing the Novak prospect
• Sigsbee Escarpment: BP spent US$6.3 million for six blocks in the outboard Paleogene play 

Partnerships signal collaborative strategies

• Repsol partnered with Woodside, Talos, and LLOG across multiple joint bids
• Private capital joined operators including LLOG, Murphy, and Talos to secure exploration positions

Looking ahead

Sasser added: "With the exception of two of the larger players, most other major operators bid both more money and on more blocks, than they had in the previous sale."

He noted that Shell and Oxy pulled back, but after being two of the top three bidders in 2023, still hold significant exploration opportunities.

Shaw emphasized the long-term significance of the lease sale: "Seeing these companies using this opportunity to refill those exploration hoppers is really, really exciting because that means in the 2030s we could see some meaningful production come back based on the success of that exploration activity."

With the Gulf of America approaching peak production in 2026-2027 at approximately 2.6 million barrels of oil equivalent per day, and a typical six-to-ten-year lead time from lease acquisition to production, the exploration acreage secured in BBG1 won't impact production until the early-to-mid 2030s.