ACCESS NUMBER: 30951-16806 

STUDY TITLE: Changing Patterns of Ownership and Control in the Petroleum Industry: 

Implications for the Market for Oil and Gas Leases in the Gulf of Mexico OCS Region, 

1983-1999 

REPORT TITLE: Changing Patterns of Ownership and Control in the Petroleum 

Industry: Implications for the Market for Oil and Gas Leases in the Gulf of Mexico OCS 

Region, 1983-1999 

CONTRACT NUMBER: 14-35-0001-30951-16806 

SPONSORING OCS REGION: Gulf of Mexico 

APPLICABLE PLANNING AREA: Western, Central, Eastern 

FISCAL YEAR(S) OF PROJECT FUNDING: 2000, 2001, 2002 

COMPLETION DATE OF REPORT: July 2003 

COST(S): FY 2000: $16,358.68; FY 2001: $49,350.74; FY 2002: $1,549.48; 

CUMULATIVE PROJECT COST: $67,258.90 

PROJECT MANAGER: A.G. Pulsipher 

AFFILIATION: Louisiana State University, Center for Energy Studies 

ADDRESS: Energy, Coast, and Environment Building, Nicholson Extension, Baton 

Rouge, Louisiana, 70803 

PRINCIPAL INVESTIGATOR(S): A.G. Pulsipher, O.O. Iledare, D.V. Mesyanzhinov 

KEY WORDS: Gulf of Mexico; petroleum industry; ownership; econometric analysis; 

outer continental shelf. 

BACKGROUND: Over the past century, the structure, composition, and organization of 

the oil and gas industry have changed repeatedly. The purpose of this research is to 

examine some of the possible impacts of corporate consolidation and reorganization on 

petroleum resource allocation in the Gulf of Mexico OCS region. This study applies 

theoretical and empirical tools in anti-trust, market and industrial structure, organization, 

and performance to describe the changes that have taken place. 

OBJECTIVES: To determine if consolidation of ownership and control in the petroleum 

industry has reduced the extent of competition for or lowered the value of oil and gas 

leases on the Gulf of Mexico OCS. 

DESCRIPTION: While regulatory authorities have analyzed the possible effects of 

mergers and ordered divestitures, their attention has been focused on retail or 
ACCESS NUMBER: 30951-16806 

wholesale markets for petroleum products. The focus of this study is different; our 

interest is the possible effects of mergers and acquisitions on the U.S. Treasury as the 

recipient of royalties and bonuses paid by companies to explore for and produce oil and 

gas from reserves on the OCS. 

Descriptive and econometric analyses were applied to data on lease sales in the U.S. 

Gulf of Mexico OCS region during the period 1983-1999. The analyses were limited to 

these years to correspond to the period since the area-wide leasing policy began. The 

study’s unit of analysis is primarily the sale of each lease with the participants in, or 

bidders for, the lease divided into different groups. For some analyses, leases were 

divided into three groups depending on whether the firm or group of firms submitting the 

winning bid included: 

1) Firms with merger and acquisition experience at the time of the bid, 

2) Firms who would be involved in mergers or acquisitions in the future, or 

3) Firms who were without such experience during the study period. 

Comparisons were made to see if there were significant differences among the three 

groups, and this grouping was used in econometric analyses. 

SIGNIFICANT CONCLUSIONS: We find that neither aggregate measures used to 

analyze concentrated market and industry structures, nor patterns of joint bidding 

among firms active in the offshore Gulf of Mexico suggest a decrease or deficiency in 

the competitiveness of the lease sales held by the U.S. Minerals Management Service. 

Further, an analysis of patterns of bidding by those firms on MMS’ Restricted Bidders 

List does not suggest noncompetitive behavior. 

STUDY RESULTS: In this study, we find that none of the measures of industrial 

concentration indicate that the characteristics of the offshore lease auction/market 

exceed criteria used to characterize concentrated or potentially uncompetitive 

industries. Our econometric analyses do not reveal a negative association between the 

size of firms and average winning bids. Indeed, the association is either statistically 

insignificant or positive, suggesting larger firms submit higher average bids when other 

contextual variables are incorporated into the analysis. 

However, the variables measuring whether or not firms have participated in mergers or 

acquisitions before the time of the lease sale consistently show a modest negative 

relationship between average high bids and merger and acquisition experience or 

history. Such an association could be interpreted as evidence that firms who have 

participated in mergers or acquisitions have, in some way, either acquired a degree of 

oligopsonistic market power or tend to be better informed or more experienced, and, 

thus, more efficient bidders. We find the latter possibility a more plausible conjecture. 

STUDY PRODUCTS: Pulsipher, A.G., O.O. Iledare, and D.V. Mesyanzhinov. Changing 

Patterns of Ownership and Control in the Petroleum Industry: Implications for the 

Market for Oil and Gas Leases in the Gulf of Mexico OCS Region, 1983-1999. 
ACCESS NUMBER: 30951-16806 

Prepared by the Center for Energy Studies, Louisiana State University, Baton Rouge, 

Louisiana. A final report for the U.S. Department of the Interior, Minerals Management 

Service, Gulf of Mexico OCS Region, New Orleans, Louisiana. Contract No. 14-35-

0001-30951-16806. 96 pp.