Total proposed sale

4,366 unleased blocks; 23.07 million acres

1,290 blocks subject to deep gas incentive (first 20 BCF)
213 blocks with no automatic royalty relief
406 blocks subject to 9 MMBOE relief
2,457 blocks subject to 12 MMBOE relief

• Applies to all new leases in 0 to 199 meters of water.
• Eliminates royalty for first 20 Bcf of gas production from the lease at greater than 15,000 foot depth.
• Does not apply to oil production.
• Ends after 20 Bcf of gas production.
• Ends for a year if prices reach trigger limit of $3.50 per million BTU’s (in Year 2000 dollars).

• Uses an application process.
• Applicant must drill a subsalt well during the original 5 year lease term in order to apply for the 2 year extension.
• Applies to new leases issued in areas of 0 to 399 meters water depth (1,362 blocks)

Deepwater Royalty Relief

• Previous deepwater relief given for new leases under DWRR Act of 1995 has expired.
  (Leases issued during 1996-2000 continue to have this relief).
• This new deepwater relief applies only to leases issued in water depths of 800 to 1,599 meters of water (first 9 MMBOE of production is royalty free) and for leases in 1,600 meters or greater water depth (first 12 MMBOE of production is royalty free).
• This royalty relief is provided on a lease basis.
• If a new lease from this sale is combined with a field under the 1995 DWRR provisions it still gets its own relief of either 9 or 12 MMBOE.

-MMS-GOM-
MMS's Website Address: http://www.mms.gov