Abstract
Oil and gas auctions were relatively uncommon before 1987. Since then the auction market has grown at a rate of almost forty percent annually, and auctions have become a useful and accepted method of buying and selling producing interests. Thousands of properties, totaling almost $200 million, are anticipated to be committed to auctions in 1997.
Auctions provide advantages to both sellers and buyers. For sellers, they offer a quick and convenient means of "rationalizing" lower value, non-operated or geographically dispersed interests. For buyers, bids are transparent, against other willing bidders. Titles pass the day of the auction, eliminating the delays inherent in negotiated sales.
Disadvantages exist. Lack of time or data for sufficient due diligence increase the risks of mistakes. Nevertheless, for many buyers the opportunity to acquire good properties at reasonable costs outweigh concerns.
