OCS revenues generated from lease sales are composed of bonus bids and rent from awarded leases and royalty on producing leases. In this chapter, we examine the revenue components of OCS leasing from recent sales to understand their cash-generating capacity and as an introduction to the program structure of the 5-year lease plans. A large number of factors are involved in revenue generation, and so “understanding” consists largely in knowing the connections between various factors and their relationships. The purpose of this discussion is to make transparent the most important relations. Historic analysis of bonus bids, lease sales, and production is combined with basic models to understand how revenue is generated and the factors that impact its determination.
KeywordsRoyalty Rate Primary Term Deepwater Drilling Royalty Revenue Rent Revenue
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