We will apply a single bidding system selected from those listed in this section to each tract included in an OCS lease sale. The following table lists bidding systems, the bid variables, and characteristics. ------------------------------------------------------------------------For the bidding system The bid variable is And the characteristics
(a) Cash bonus bid Cash bonus, The highest responsible
with a fixed royalty qualified bidder will
rate of not less than pay a royalty rate of
12.5 percent, not less than 12.5
percent at the beginning
of the lease period. We
will specify the royalty
rate for each tract
offered in the Notice of
OCS Lease Sale published
in the Federal Register.(b) Royalty rate bid Royalty rate, We will specify the fixed
with fixed cash amount of cash bonus the
bonus, highest responsible
qualified bidder must
pay in the Notice of OCS
Lease Sale published in
(1) We will calculate the
with a sliding royalty rate the highest
royalty rate of not responsible qualified
less than 12.5 bidder must pay using
percent at the either:
beginning of the (i) A sliding-scale
lease period, formula, which relates
the royalty rate to the
adjusted value or volume
of production, or
(ii) A schedule that
establishes the royalty
rate that we will apply
to specified ranges of
the adjusted value or
volume of production.
(2) We will determine the
adjusted value of
production by applying
an inflation factor to
the actual value of
production.
(3) If you are the
successful high bidder,
your lease will include
the sliding-scale
formula or schedule and
will specify the lowest
and highest royalty
rates that will apply.
(4) You will pay a
royalty rate of not less
than 12.5 percent at the
beginning of the lease
period.
(5) We will include the
sliding-scale royalty
formula or schedule,
inflation factor and
procedures for making
the inflation adjustment
and determining the
value or amount of
production in the Notice
of OCS Lease Sale
published in the Federal
(1) If we award you a
with fixed share of lease as the highest
the net profits of no responsible qualified
less than 30 percent, bidder, you will
determine the amount of
the net profit share
payment to the United
States for each month by
multiplying the net
profit share base times
the net profit share
rate, according to 30
CFR 1220.022. You will
calculate the net profit
share base according to
30 CFR 1220.021.
(2) You will pay a net
profit share of not less
than 30 percent.
(3) We will specify the
capital recovery factor,
as described in 30 CFR
1220.020, and the net
profit share rate, both
of which may vary from
tract to tract, in the
Notice of OCS Lease Sale
published in the Federal
(1) We may suspend or
variable royalty defer royalty for a
rate(s) during one or period, volume, or value
more periods of of production.
production, Notwithstanding
suspensions or
deferrals, we may impose
a minimum royalty. The
suspensions or deferrals
may vary based on prices
or price changes of oil
and/or gas.
(2) You may pay a royalty
rate less than 12.5
percent on production
but not less than zero
percent.
(3) We will specify the
applicable royalty
rates(s) and suspension
or deferral magnitudes,
formulas, or
relationships in the
Notice of OCS Lease Sale
published in the Federal
Register.(f) Cash bonus with Cash bonus, We will base the royalty
royalty rate(s) based rate on formula(s) or
on formula(s) or schedule(s) specified in
schedule(s) during the Notice of OCS Lease
one or more periods Sale published in the
of production, Federal Register.(g) Cash bonus with a Cash bonus, Except for periods of
fixed royalty rate of royalty suspension, you
not less than 12.5 will pay a fixed royalty
percent, at the rate of not less than
beginning of the 12.5 percent. If we
lease period, award to you a lease
suspension of under this system, you
royalties for a must calculate the
period, volume, or royalty due during the
value of production, designated period using
or depending upon the rate, formula, or
selected schedule specified in
characteristics of the lease. We will
extraction, and with specify the royalty
suspensions that may rate, formula, or
vary based on the schedule in the Notice
price of production, of OCS Lease Sale
published in the Federal
Register.------------------------------------------------------------------------