Recent shallow-water leases have royalties of 12.5%, the legal minimum, with an 18.75% royalty for deepwater leases — those in more than 200 metres (656 feet) of water. The agencies are providing a new, bigger potential break for shallow-water wells. The big change is a larger interest rate, called a discount rate, used to compute the value of expected income and spending for shallow-water wells. The previous rate was 15% for all wells; the new 25% rate applies only to those in shallow water. “Increased shallow water drilling increases production, which increases federal royalty payments, and creates more American and Louisiana jobs,” he said at the time.

Source: thestar November 21, 2019 10:30 UTC