Property acquisitions-2: How to bid successfully in a changed marketplace

The first part of this article discussed typical discount rates for winning bids in today's environment (OGJ, Oct. 29, 2001, p. 42). This demonstrated far lower economic returns of 10-12% net present value (NPV) for high quality properties than levels perceived 15-20 years ago.In this concluding part of the article we attempt to define just how successful bidders arrive at their bids and why the marketplace has changed.Arriving at high bidsTo understand the answer to this question, a number of topics need to be examined. Among these are the following:Perceived cost of capital.The role of commodity price hedging.The role of lower confidence reserves.The impact of technological advances...

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