Tract 570

Bidd ding for Trac 570 r ct

After a lo delay following the blowout on BP's Deepw ong water Horizon drilling rig the United n g, d States go overnment ha again ope as ened an area in the Gulf o Mexico fo potential d of or deepwater o oil explorati and prod ion duction. Follo owing its customary sale procedure the gover es es, rnment will b be putting se everal areas up for lease but one are is of parti e, ea icular interes Tract 570 Tract 570 st, 0. comprise 15,000 acr that is ge es res enerally belie eved to hold substantial deposits of oil and gas. d Rights to explore for and extract oil and gas on Tract 570 will be auc o r o 0 ctioned in tw weeks, in the wo n usual “bo onus plus roy yalty” forma A percent at. tage royalty, in this case 7.5%, will b paid to th , e be he governm on all revenues accru ment uing from sa of oil an gas. The b ales nd bonus will be paid up fro ont by whoev wins the auction by submitting th highest se ver s he ealed bid. A numbe of oil com er mpanies are considering bidding on T c b Tract 570, bu the numbe that will ut er actually submit a bid is hard to predict. The best guess yo can make is that three companies (in s d b ou e e s addition to yours) wi submit bid All poten ill ds. ntial bidders have had ac ccess to geol logic data on the n rbon-holding structures underneath th ocean’s s g u he surface, inclu uding the res sults of test w wells hydrocar drilled by the govern y nment. You know, howev that the thousands o pages of d from the k ver, of data e wells and seismic tes d sting will be interpreted differently b the bidder In additio to the geo by rs. on ologic uncertain nties, there is uncertainty over the co of drillin and extrac s y osts ng ction. Depen nding on how w deep the deposits are actual cost can vary considerably from best ca estimate Even mor e, ts ase es. re importan will be diff nt fferences of opinion on future prices for the oil a gas produ o fu and uced and sol ld. Your in-h house valuat tion team ha been work...