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Oil Rights
Auctions...
In the real business of oil, oil companies must first buy
the oil rights from the government to explore for and produce oil in
certain areas. The
government usually divides its oil-prone lands into sections,
assigns certain legal rights for each of these sections, and then puts them up for
auction. The oil company with the highest bid wins the right to
produce oil on that location.Similar to the real world,
OilFinancier also auctions its 400 oil rights to the highest bidders.
When an oil right is bought, the owner has control when and how a well
is drilled on this oil right for the next 30
OF Days, but it is possible
to extend this duration.
Drilling on Right
Once a financier has acquired a right, he has the right to a well on that right’s
location. But he must first form a partnership.
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Controlling Your
Destiny
When you have an oil right, you are in control of
that oil right's development. If you don't like the
deal being offered to develop it, it stays undeveloped
until other financiers come to your terms. But don't
sit on your oil rights too long: it had cost you money to
buy it, and you should get this money working for you ASAP.
Owning ten or twenty oil rights means the other
financiers will have to deal with you closer to your
terms. Owning more oil rights means owning more opportunities.
When an oil right becomes hot property, you can set
up an auction for other financiers to pay the entire
drilling costs. You select the financier who wants the
lowest share of the revenue (you get the rest).
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The Auction
In each OF day, one new oil right, which
is selected from the voteposting
process, will be put up for auction. Financiers
have seven OF days to submit a bid for this right. The highest
bid wins the right. The successful financier owns the right
up to the expiry date,
but can extend ownership by paying the extension fees.
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A Reasonable
Starting Bid
I have done a financial analysis on what would
be a good bid for exploration oil rights. I would bid
$25,000 for conventional exploration rights. Winning
exploration oil rights at these bids provides enough
negotiating room and
profit. If other financiers want to pay more, let them
take the rights. But I recommend you eventually set up
a spreadsheet to do your own analysis. See the next
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Making Sound Bids
Not all oil rights are equal:
- Exploration oil rights with a 20% chance of
success should go for less than development oil
rights with a 100% chance of success.
- Development
shallow, intermediate, and deep fields have
different economics.
- Conventional and
hostile areas have different economics.
- Rights that likely won't be drilled for another
100 days should go for less than rights that could be
drilled soon.
- The bids you want to make will also be dependant
on the discount rate
you are using.
To determine a financially sound bid for an oil
right, you should do a
financial analysis.
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When a new right is put up for auction or a financer wins an oil right, the administrator makes changes on
the seminar map.
The First Bid—and only the First Bid
Please note that the OF administrator will take only the first bid any
financier makes. So when making your bid,
consider it carefully as there are no changes or withdrawals allowed.
Running in the Red
Financiers can submit bids for any right on auction if they have a
positive bank balance. If the financier goes in the red later, that
bid is still valid. If that financier wins the right, he just goes
further in the red.
Financiers in the red cannot submit bids.
Trading Rights
Any two financiers can trade or sell their oil rights. Both parties
have to fill out this agreement and send it to the
administrator.
Extending Oil Rights
In OilFinancier, the oil rights expire every 30 days. But at this
time, a financier can renew these rights by paying a small fee. See:
Expiry of Oil Rights for
more details.
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