United States Department of the Interior BUREAU OF SAFETY AND ENVIRONMENTAL ENFORCEMENT Gulf of Mexico OCS Region 1201 Elmwood Park Boulevard ‘New Orleans, LA 70123-2394 In Reply Refer To: GE 973E JUN 14 2016 ‘Ms. Amanda Thompson TOPCO Offshore, LLC 5858 Westheimer Road, Suite 115 Houston, Texas 77057 Dear Ms. Thompson: . By eter dated March 6, 2018, with additional information provided via emails dated April 2 through May 18, 2018, TOPCO Offshore, LLC (TOPCO) submitted a royalty relief application, Pursuant to 30 CFR 203.80, for a development project on Lease OCS-G 34802, Veriton Block 153. ‘The Bureau of Safety and Environmental Enforcement (BSEE) has reviewed TOPCO’s pplication and concluded thatthe project is uneconomic without royalty relief, By letter dated January 26, 2018, BSEE also informed TOPCO that its project satisfied atleast we ofthe five characteristics identified by 30 CFR 203.80, as required. Royalty relief is hereby granted, under the authority and for the purposes set forth in 30 CFR 203.1(b). Royalty paid on liquid hydrocarbon and gas production from the proposed development well on Lease OCS-G 34802 will be reduced from 18.75 Percent to 8.07 percent. The following conditions apply: I. The reduction in royalties only applies to liquid hydrocarbons and gas produced from the fa 8 7a ne, bment well. All future projects and other production from the lease are subject 7 1o au 18:75 porcent coyaity rate unless a separate royalty relief application for that other project is submitted to BSE and approved. moval tlie willbe suspended, andthe full royalty amount based on the 18.75 percent royalty rate will be owed on both liquid hydrocarbons and gas, in any calendar year should the 12-month (January to December) NYMEX Henry Hub average Price of gas exceed the gas price threshold of $3.47/mmbt. 3. Royalty relief will terminate six months after the date of fist production should capital expenditures, including platform and drilling and completion costs, be less than $18,080,672. ‘TOPCO must submit the actual capital costs to BSEE within 90 days of completing the well,4. Royalty relief will terminate automatically ifthe proposed well does not begin production Within one year of the date of this letter, unless an extension to this condition is granted by the BSEE Gulf of Mexico OCS Region, Office of Production and Development. For assistance with reports and payments, call ONRR Reporting Services, Ms. Mary Dietrick (royalty) at (800) 525-0309, extension 3218 or at mary.dietrick @onrr.gov, or Mr. Sonny Betancourt (production) at (800) 525-7922, extension 3628 or at sonny. betancour@onrr-g0V. If you have any questions, you may contact Mr. Richie Baud at (504) 736-2675 or at richie-baud @bsee.gov. Sincerely, Las hl Lars Herbst Regional Director