Fair Market Value

Assuring receipt of Fair Market Value (FMV) on OCS lands is mandated by the OCS Lands Act and is a critical responsibility of the Resource Evaluation program.  After each lease sale, BOEM will analyze tract-specific geological and geophysical data and assess the oil and gas potential for each OCS tract that receives a bid.  BOEM also develops and maintains discounted cash flow models that provide a stochastic analysis of the net present value (NPV) of lease sale tracts.  Decisions to accept or reject a bid on an OCS block are based in part on these analyses.

BOEM uses a two-phase post-sale bid evaluation process to assess the adequacy of bids received for the lease sales. To assure receipt of FMV, Phase 1 is designed to accept those high qualified bids on confirmed and wildcat tracts for which Government data and analysis indicate they do not contain a viable prospect. All other high bids on tracts not accepted in Phase 1 are evaluated in Phase 2, where they are subject to a full-scale resource and economic evaluation using a discounted cash flow model. The FMV process is typically completed within 90 days of the sale date.

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