Offshore Petroleum Exploration: Work Program Bidding in Australia, 1985-99

Cross sectional factors such as basin, maturity, area specific prospectivity and number of bidders accounts for about 90 per cent of the variability in work program bids for specific exploration areas. Time series factors such as expected future oil prices and measures of macroeconomic activity account for the remaining 10 per cent of variability. Competitive work program bidding may lead to large bids for individual exploration areas at the cost of overall take-up rates. Refined work program auction systems may produce better tradeoffs.