Gulf Offshore Auction Could Lift Helo Operators

 - August 17, 2017, 11:13 AM

Yesterday's offshore rights auction in the Gulf of Mexico, conducted by the U.S. Bureau of Ocean Energy Management (BOEM), could signal a resurgence in deepwater oil drilling projects and a return of demand for helicopter service companies to support them. Major oil producers—including Chevron, Exxon Mobil, Shell, Total, BP, Murphy, Anadarko, and Statoil—bid $121.1 million for drilling rights in 508,000 acres out of almost all 76 million acres offered.

That bid amount represents a sevenfold increase from the $18 million the BOEM collected from an Outer Continental Shelf Auction last summer and follows a robust $275 million auction on offshore blocks this past March. The auction included reduced royalty rates on shallow water blocks “to encourage exploration and production under current market conditions.”

In Wednesday's auction, 27 companies made 99 bids on 90 blocks, including deepwater blocks, 5,250 feet deep, in the Alaminos Canyon. Ironically, Royal Dutch Shell bid for the highest number of blocks, 19, valued at $25 million, scattered across Alaminos, the Mississippi Canyon, and the Keathley Canyon, less than a month after company CEO Ben Van Beurden publicly expressed doubt about the future of gasoline fueled automobiles and said worldwide demand for oil could peak within 10 years.

The aggressive bidding in the Gulf seems to corroborate remarks made to analysts earlier this month by helicopter services company ERA Group CEO Chris Bradshaw, who said, “What we are observing, for the first time in a long while, is a clear upward trajectory in activity levels among our oil and gas customers in the U.S. This is expected to result in higher utilization of the existing contracted fleet, as well as additional helicopters being placed on contract beginning the third quarter and continuing into the fourth quarter.” Bradshaw said the increase was not large, but it was beyond normal seasonal variations.