Our plan was deliberate and focused with key milestones and targets regarding acreage capture through a phased approach in each of the Gulf of Mexico Lease Sales 200, 205, and 206. While the plan was aggressive and the competition fierce, as a team we were set to deliver our vision. In late 2005 and early 2006, our plan was in place…..ready for execution.

Sale 200 – August 2006
The 2006 Western Gulf of Mexico Lease Sale (Sale 200) served as Cobalt’s entry point into this prolific basin. In this, our first lease sale, Cobalt was the 3rd highest successful bidder, spending some US $33 million to acquire 24 blocks consisting of 138,240 gross acres (135,360 net acres). We established our foundation, a first step in the delivery of our long term business model.

Sale 205 – October 2007
In the 2007 Central Gulf of Mexico Lease Sale (Sale 205), Cobalt reinforced its position as the new exploration company in the province. Not only did we bid on more blocks than any company at the sale, we submitted winning bids on a total of 53 blocks consisting of 302,150 gross acres (241,094 net acres) at a cost of more than US $211 million.

When analyzing the results of Sale 205, J.P. Morgan noted the strong historical correlation between competitive bidding on a block, the chance of drilling success, and the size of discoveries. Looking at the blocks where there were four or more bidders, the research concluded that Cobalt had won the highest number of competitive blocks in the sale at the second lowest average cost per block.
Sale 205 established Cobalt as a serious competitor in one of the world’s most attractive exploration basins.

Sale 206 – March 2008
In the 2008 Central Gulf of Mexico Lease Sale (Sale 206), Cobalt was very successful in further deepening our GOM exploration portfolio. Cobalt was the apparent high bidder on 36 deepwater blocks. Sale 206, which set an all-time record, both in exposure and successful bids in the Gulf of Mexico, attracted industry high bids totaling some $3.68 billion on 615 blocks. Cobalt exposed US $451 million on 65 blocks and spent US $389 million in apparent high bids.

Cobalt was the third most active bidder in terms of number of blocks bid and placed second in terms of total spend at Sale 206. Cobalt’s high bid blocks are largely concentrated in the Green Canyon, Garden Banks, Keathley Canyon and Walker Ridge Areas in water depths exceeding 3000 ft. The award of these blocks is subject to final approval by the Minerals Management Service.

When these newly acquired leases (from Sale 206) are added to Cobalt’s current Gulf of Mexico inventory, Cobalt will hold working interests in 144 deepwater leases consisting of over 828,000 gross acres (580,000 net acres) at a cost of approximately US $633 million. In terms of highly contested blocks, Cobalt has acquired more blocks than any other company when the results of both sales are combined.


While successfully partnering on certain prospects with major North American and International energy companies, Cobalt has steadfastly retained a significant equity position in all of our prospects (average working interest of 70%). Acquiring a very high, controlling working interest at the access phase is an essential element of our business model. This high working interest will allow us great influence and control as we move these exploration prospects through discovery, appraisal, development and ultimately production!

Cobalt will now move forward rapidly to prove the prospectivity of its Gulf of Mexico portfolio acreage position through a focused drilling program. No differently than our acreage acquisition plan, our drilling plan is deliberate and focused with key milestones and targets. Cobalt has accessed a 6th generation deepwater drilling rig under long term contract to execute our plan.

The combined results of the record breaking Sale 206 and the prior Sales 200 and 205 have placed Cobalt’s exploration portfolio firmly among the industry’s best and has established Cobalt as a major player in the Gulf of Mexico for years to come.