A Study of Strategies for Oil and Gas Auctions

Oil and gas auctions help transact billions of dollars in property sales in the US each year. Value is lost by participants with ineffective strategies. Federal lease auctions have been investigated from public data, but research in this narrow area peaked in the 1980s. Private property auctions did not emerge as a transaction force until nearly a decade later; however, today they dwarf federal lease sales in volume and value. This is the first study to publish research on private auctions and the first to consolidate historical lease research findings with private auction strategies. This dissertation reviews past research, interviews industry professionals, analyzes case histories, conducts game experiments, and synthesizes these views for strategic application. Findings from these efforts include the following: Reducing uncertainty increases bid values; Federal lease bid values tend to be log normal; Aggressive bidding results in a poor portfolio performance; Increasing competition increases bid values; Inexperience increases aggressive bidding; A significant group of companies do not follow consistent auction strategies; Top winning bid drivers are aggressive 3P reserves and commodity prices; Top value risks are commodity prices, capital, and operating expenses; Properties with upside value receive higher bids using sealed-bid auctions; Auction players can bid significantly less and sustain a high win probability; More money is left on the table in federal lease sales than private auctions; Poor data is primary reason auctions fail to complete the transaction; Profit taking is primary reason for selling properties though an auction; Market metrics are useful in valuation analysis; Producing properties receiver higher bids than undeveloped properties with same common knowledge including total proved reserves; Oral auctions receive higher bids than sealed-bid auctions with same common knowledge; Competition increases bid values in sealed-bid auctions; Reserve size does not increase relative value in sealed-bids with same common knowledge other than a magnitude of volume

Uniform Bias Study and Bahadur Representation for Local Polynomial Estimators of the Conditional Quantile Function

This paper investigates the bias and the Bahadur representation of a local polynomial estimator of the conditional quantile function and its derivatives. The bias and Bahadur remainder term are studied uniformly with respect to the quantile level, the covariates and the smoothing parameter. The order of the local polynomial estimator can be higher that the differentiability order of the conditional quantile function. Applications of the results deal with global optimal consistency rates of the local polynomial quantile estimator, performance of random bandwidths and estimation of the conditional quantile density function. The latter allows to obtain a simple estimator of the conditional quantile function of the private values in a first price sealed bids auctions under the independent private values paradigm and risk neutrality.Bahadur representation, Conditional quantile function, Local polynomial estimation, Econometrics of auctions

Trustee: Full Privacy Preserving Vickrey Auction on top of Ethereum

The wide deployment of tokens for digital assets on top of Ethereum implies the need for powerful trading platforms. Vickrey auctions have been known to determine the real market price of items as bidders are motivated to submit their own monetary valuations without leaking their information to the competitors. Recent constructions have utilized various cryptographic protocols such as ZKP and MPC, however, these approaches either are partially privacy-preserving or require complex computations with several rounds. In this paper, we overcome these limits by presenting Trustee as a Vickrey auction on Ethereum which fully preserves bids' privacy at relatively much lower fees. Trustee consists of three components: a front-end smart contract deployed on Ethereum, an Intel SGX enclave, and a relay to redirect messages between them. Initially, the enclave generates an Ethereum account and ECDH key-pair. Subsequently, the relay publishes the account's address and ECDH public key on the smart contract. As a prerequisite, bidders are encouraged to verify the authenticity and security of Trustee by using the SGX remote attestation service. To participate in the auction, bidders utilize the ECDH public key to encrypt their bids and submit them to the smart contract. Once the bidding interval is closed, the relay retrieves the encrypted bids and feeds them to the enclave that autonomously generates a signed transaction indicating the auction winner. Finally, the relay submits the transaction to the smart contract which verifies the transaction's authenticity and the parameters' consistency before accepting the claimed auction winner. As part of our contributions, we have made a prototype for Trustee available on Github for the community to review and inspect it. Additionally, we analyze the security features of Trustee and report on the transactions' gas cost incurred on Trustee smart contract.Comment: Presented at Financial Cryptography and Data Security 2019, 3rd Workshop on Trusted Smart Contract

Price Discovery in Emissions Permit Auctions

Auctions are increasingly being used to allocate emissions allowances (“permitsâ€) for cap and trade and common-pool resource management programs. These auctions create thick markets that can provide important information about changes in current market conditions. This paper reports a laboratory experiment in which half of the bidders experienced unannounced increases in their willingness to pay for permits. The focus is on the extent to which the predicted price increase due to the demand shift is reflected in sales prices under alternative auction formats. Price tracking is comparably good for uniform-price sealed-bid auctions and for multi-round clock auctions, with or without end-of-round information about excess demand. More price inertia is observed for “pay as bid†(discriminatory) auctions, especially for a continuous discriminatory format in which bids could be changed at will during a pre-specified time window, in part because “sniping†in the final moments blocked the full effect of the demand shock.auction, greenhouse gases, price discovery, cap and trade, emission allowances, laboratory experiment

Bidding for concessions

Privatization of infrastructure ventures in sectors such as energy, telecommunication, transport, and water has become popular over the last decade. Often- for good or bad reasons - private firms are given monopoly franchises under some type of long-term concession agreement, for example"Build-Operate-Transfer"schemes. The article surveys the issues arising in designing specifications as well as incentive and risk-sharing parameters comprehensively and consistently both to achieve efficient performance by the concessionaire and to minimize post-award renegotiations. Concession award should as a rule be made competitively, unless special requirements of speed, innovation, or excessive transaction cost argue otherwise. Typically, competitive concession award is made by first price sealed bids. There are strong arguments, however, to consider open auctions more seriously in a number of cases. Auctions may also be re-awarded by way of auction. However, somewhat arbitrary bid preferences may have to be set. Auctioneers for complex concession contracts should operate at arms-length from all interested parties, including politicians. It may be sensible to let independent agencies that regulate the concession scheme run the auction.Decentralization,Environmental Economics&Policies,Markets and Market Access,International Terrorism&Counterterrorism,Economic Theory&Research,International Terrorism&Counterterrorism,Environmental Economics&Policies,Access to Markets,Markets and Market Access,Economic Theory&Research

Multi-Unit Auctions to Allocate Water Scarcity Simulating Bidding Behaviour with Agent Based Models

Multi-unit auctions are promising mechanisms for the reallocation of water. The main advantage of such auctions is to avoid the lumpy bid issue. However, there is great uncertainty about the best auction formats when multi-unit auctions are used. The theory can only supply the structural properties of equilibrium strategies and the multiplicity of equilibria makes comparisons across auction formats difficult. Empirical studies and experiments have improved our knowledge of multi- unit auctions but they remain scarce and most experiments are restricted to two bidders and two units. Moreover, they demonstrate that bidders have limited rationality and learn through experience. This paper constructs an agent-based model of bidders to compare the performance of alternative auction formats under circumstances where bidders submit continuous bid supply functions and learn over time to adjust their bids to improve their net incomes. We demonstrate that under the generalized Vickrey, simulated bids converge towards truthful bids as predicted by the theory and that bid shading is the rule for the uniform and discriminatory auctions. Our study allows us to assess the potential gains from agent-based modelling approaches in the assessment of the dynamic performance of multi-unit procurement auctions. Some recommendations on the desirable format of water auctions are provided.Multi-unit auctions, Learning, Multi-agent models, Water allocation