IC 8609 Offshore Petroleum Studies - Nomograph For Estimating Hydrocarbon Lease Bonus Bids In The Gulf Of Mexico - Supplement To Information Circular 8557

The objective of this Bureau of Mines publication Is to present a nomograph that provides a fast, convenient method for estimating hydrocarbon lease bonus bids for offshore acreage in the Gulf of Mexico. Discounted cash flow analyses were computed from a model derived to show the costs necessary to explore, acquire, develop, produce, and abandon a 5,000-acre block of offshore acreage, and the estimated income from the sale of the hydrocarbons produced from the block. The range of the variables in the financial analyses used to construct the nomograph are prices of oil, $2.50 to $5.00; recoverable hydrocarbon reserves, 44,651,476 to 127,575,645 barrels; and discounted cash flow (DCF) rates of return, 5.0 to 57.2 percent. A total of 1,234 sets of DCF data were used to construct the nomograph. The range of bonus bids shown on the nomograph is from 2 to 90 million dollars ($400 to $18,000 per acre).