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COPYRIGHT 2005 Hart Publications, Inc.
What do a major international energy company, a small independent from Dallas, an ex-federal-judge-turned-oilman in Tulsa, and a $10-billion investment fund out of London have in common? In the past year they, like thousands of other companies and individuals, have participated in acquiring or selling oil and gas properties through an auction process.
By the mid-1990s the energy industry recognized that the auction had become a widely used tool for buying and selling properties in the U.S. domestic market. Many companies adapted in the mid-1980s to low oil and gas prices through a strategy of asset rationalization. This systematic sale of less profitable and/or noncore properties created the need for a more efficient way to sell properties. The stage was set for the emergence of the auction.
The process matured professionally and technically, and is now regarded as a transaction ex-change rather than a marketing technique. The most notable improvements in the last decade include: the expansion of technical services to increase the quality of land, commercial and technical data available for buyer evaluation; an increase in Internet use for hybrid live/Internet auctions and dissemination of data; the enhancement of data-room utility; and development of a sophisticated market portfolio analysis.
Despite wide acceptance--total gross auction sales are currently estimated to range from $400--to $500 million a year--the auction is under-utilized for oil and gas asset sales, based on an analysis of The Oil...
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