How would increasing royalty rates impact the US Gulf of Mexico?
The Biden Administration kicked off its clean energy agenda with executive orders that have halted leasing on Federal lands and waters. We expect more fiscal and regulatory policy changes to follow after a review of the federal oil and gas leasing program is released in the summer. This insight quantifies the impact of a potential increase to the royalty rate of unleased blocks. We have stress-tested post-tax rate of return (IRR) at royalty rates ranging from the current rate of 18.75% to 58.75%.