Exxon Corporation - Page 6




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          average bid price with respect to the remaining 14 areas that               
          were available under the auction was less than �1.2 million.2               
               At the time, in the 1960's and early 1970's, the United                
          Kingdom concluded that the financial terms of the discretionary             
          North Sea licenses that it issued to Exxon and to other oil and             
          gas companies were appropriate for the particular circumstances             
          of the United Kingdom, which at the time had virtually no                   
          indigenous oil and gas production and which was in competition              
          with other countries for resources that the oil industry would              
          allocate to the North Sea.                                                  
               After the fourth license round in 1971 in which the United             
          Kingdom had experimented with an auction licensing system, the              
          United Kingdom has continued to use, with limited exceptions, a             
          discretionary licensing system.  The United Kingdom and most                
          major oil-producing countries other than the United States rely             
          primarily on discretionary licensing systems with regard to the             
          recovery of petroleum resources.                                            
               Generally, under the discretionary licenses issued by the              
          United Kingdom for exploitation of North Sea petroleum resources,           
          terms of the licenses required licensees to pay to the United               
          Kingdom up-front fees based on the size of the areas subject to             

          2    In these cases, the parties generally refer to U.K. pounds,            
          without providing U.S. dollar equivalents.  We, therefore, in               
          this opinion also use U.K. pounds, and we leave for the Rule 155            
          computation questions relating to proper exchange rates between             
          U.K. pounds and U.S. dollars.                                               





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