Oil company Byron Energy has been awarded Eugene Island blocks 62, 63, 76, and 77 at the Gulf of Mexico OCS Lease Sale 250 by the U.S. Bureau of Ocean Energy Management (BOEM).
Byron said on Tuesday, June 12 that the blocks were awarded to Byron Energy Inc., a wholly owned subsidiary of the company, on Wednesday, March 21.
The company bid $253,000 for each block for a total of $1,012,000 for all four blocks as the lease bonus amount.
With the recently reduced royalty rates in place for new shelf leases in the Gulf of Mexico, Byron will now receive an 87.5 percent net revenue interest, previously 81.25 percent, for its 100 percent working interest in the four blocks. Final payment for the four leases and first-year lease rentals are due on June 26, 2018.
The EI 63 and 76 leases were previously held by the company before being relinquished in January 2018.
Byron added that its latest in-house mapping indicated a total gross prospective resource of 308 bcf of gas and 12,600 mbo of oil for all four blocks.
Eugene Island Blocks 62, 63, 76, and 77 were designated as the Eugene Island 77 Field in the 1960’s and have produced 362 billion cubic feet of gas and 6.5 million barrels of oil from sands trapped by the Eugene Island 77 salt dome. Initial production from the field began in 1957. There is no production on these blocks currently.
In 2014, Byron undertook proprietary reverse time migration (RTM) utilizing WesternGeco over the entire Eugene Island 77 field.
Byron has identified a number of exploration and exploitation opportunities using the RTM seismic data. Many of these prospects are in an updip position to previous oil and gas production and are considered to be low to moderate risk drilling opportunities.
To remind, Byron was also the apparent high bidder for three other blocks at Sale 250. Those blocks, South Marsh Island 70, Vermillion 232, and Vermilion 251 have not yet been awarded.
BOEM has 90 days from the March 21 sale date to finish its evaluation of submitted bids, unless BOEM extends the deadline.
Byron CEO, Maynard Smith, said: “We are very pleased to announce that our bids for EI 62, 63, 76 and 77 have been accepted by BOEM. Our proprietary RTM data has identified a very good mix of exploitation type opportunities which follow up older wells drilled on all four blocks and some high potential exploration opportunities in other parts of the blocks.
“Our team of experienced professionals has worked this dataset thoroughly and folded historical production data into our analysis to identify these prospects which will grow in value as oil and natural gas prices strengthen.
“The continued, steady production and cash flow from our operated SM71 oil project will provide a financial foundation as we move toward the drilling phase of the Eugene Island project with a goal of re-establishing production within the old EI 77 field.
“Acquiring these leases with a 100% working interest over an entire productive salt dome and with no obligation to joint venture or farm-out partners adds significant optionality to our portfolio of projects beyond SM71, SM74, and Bivouac Peak.”