How bids work....in the NWT
Not sure for sure but .....
I think the best explanation is provided in the following document....read pages 13 to 16.
https://www.ainc-inac.gc.ca/nth/og/pubs/ann/ann2009/ann2009-eng.pdf
IFR is partner with Husky on the two wells referenced in the 2009 summary. I believe the bidder or partners need to post 25% of work bid as submitted. Not sure if IFR would go it alone or enter into a arrangement prior to submitting the bid. My feeling is IFR would go it alone but then farm out a portion into a JV or farm-in on someones land.
So assume the bid for the exploration licence is $20 MM. 25% would make the the bond $5 MM and a 10% farm-in interest in the exploration licence would be $500,000. So the $7 MM kitty has lots of potential in a farm-in arrangement. However these wells are pricey. Husky as operator spent $24 MM on one well in 2009 so a 10% interest is $2.4 MM. The successful bidder must meet the bid work commitment within the defined work period.
Feel free to correct me if I've got it wrong.
Farm-in definition
An arrangement whereby one oil operator "buys in" or acquires an interest in a lease or concession owned by another operator on which oil or gas has been discovered or is being produced. Often farm-ins are negotiated to assist the original owner with development costs and to secure for the buyer a source of crude or natural gas. See Farm-out Agreement.
Regards,