This bill would restrict oil and natural gas companies from obtaining new drilling leases in the Gulf of Mexico unless they renegotiate their existing leases to include price-based royalty payments. Currently, some older leases granted between 1996 and 2000 allow companies to avoid paying royalties when oil and gas prices fall below certain thresholds, effectively giving them free production rights during low-price periods. The bill closes this loophole by requiring companies with these favorable legacy leases to agree to pay royalties when prices exceed specified thresholds before they can acquire any new leases in federal waters. The new pricing terms would take effect on October 1, 2026. The legislation applies to any company that holds, controls, or benefits from these covered leases, and affects oil and gas operators doing business in the Gulf of Mexico.
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