Competitive bidders for oil and gas production assets seek to divide shares of "pies" of unknown value that each asset represents. Unlike with real pies, however, bidders' strategies can easily imply an expected negative share and the seller can reap more than 100% of the unknown asset values.

Keywords:
natural logarithm, bidding, bid factor, upstream oil & gas, lohrenz, bidder, variance, competitor, frequency, probabilistic simulation methodology
Subjects:
Reserves Evaluation, Asset and Portfolio Management
Copyright 1991, Society of Petroleum Engineers
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