NTL 2004-G12 - Clarification of Deep Gas Royalty Suspension Provision in Lease Instrument Relating to Sidetrack Completions - June 21, 2004

For shallow-water leases issued from 2001 through 2003, the royalty suspension provisions in the lease instrument define deep gas as any gas production from a completion in a new gas reservoir (one not previously produced on any current lease) with the top of the perforated interval 15,000 feet or greater subsea. The reference to “completion” in this definition includes completions in both new and sidetrack wells. Accordingly, the lease instrument grants a 20 BCF royalty suspension volume (RSV) not only to new wells, but also to sidetrack wells.