NTL 2003-N06 - Supplemental Bond Procedures - June 17, 2003

The Minerals Management Service (MMS) is issuing this NTL to update the criteria MMS uses to determine when a supplemental bond is required to cover potential lease abandonment liability. The NTL has been revised to: 1) increase the allowable cumulative lease abandonment liability amount of a lessee as a percentage of its net worth provided other financial criteria are met; 2) remove the current ratio from the criteria used to determine the financial strength of a lessee; 3) allow a lessee to request the MMS to consider a percentage of a lessee’s proved producing reserves in the calculation of its net worth; 4) reduce the initial payment amount a lessee is required to contribute to a lease-specific abandonment escrow account; and 5) extend the time for a lessee to meet supplemental bond requirements after notice from the MMS.