It's hard to know what to believe about the offshore oil and gas market. Some analysts say that things will begin to improve in the third or fourth quarter. Others believe that oil prices will remain around $50 bbl. with little upward potential in the near- to medium-term. Two recent reports from Wood Mackenzie (Wood Mac) are in the latter camp. The first report discusses the initial round of Mexico's licensing sale in the Gulf of Mexico, which resulted in the awarding of only two of the 14 exploration blocks up for bid in the shallow waters of the Bay of Campeche. The Mexican government had expected to award four to six blocks. There were four unsuccessful bids for other blocks, three of which failed to meet the government's minimum acceptable profit share. While the sale was disappointing, Wood Mac noted that it is a buyer's market for new exploration leases, which does not favor secret minimum bid requirements. If Mexico adjusts the minimums, analysts believe a second round of lease sales might prove more successful.
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