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management in Brazil. Therefore, if the qualified bidder is a foreign company, it must incorporatea Brazilian company in accordance with the applicable laws.In Brazil, the criteria used to determine the winning bidders in the Bidding Rounds conducted byANP are: (i) local content (concessionaire's commitment to purchase goods and services fromlocal suppliers); (ii) the minimum exploration program (investments in geology and geophysicalsurvey and drilling); and (iii) the signature bonus (minimum amount, set out in the tender notice,payable upon execution of the concession contract).When a concession is granted, the concessionaire must conduct exploration activities at its ownrisk and expense and, if successful, produce oil or natural gas in a certain block/field. Under aconcession agreement, the federal government grants the concessionaire the exclusive right tocontrol the entire process – from exploration to sales – within a fixed area and for a certain periodof time (usually 20 to 30 years). As a result, the concessionaire will have the ownership of the oilonce it passes through the measuring point, and will pay the respective government's takes.The last Bidding Rounds of Blocks for Exploration and Production of Oil and Natural Gas underconcession contracts were conducted by the ANP in May and November of 2013, the 11 th andthe 12 th Bidding Rounds, respectively. The 11 th Bidding Round offered 289 blocks (123 onshoreand 166 offshore), stretching over an area of 155.8 thousand km² and located in 11 sedimentarybasins, both mature and on new frontier areas, namely: Barreirinhas, Ceará, Espírito Santo, Fozdo Amazonas, Pará-Maranhão, Parnaíba, Pernambuco-Paraíba, Potiguar, Recôncavo, Sergipe-Alagoas and Tucano Sul. 71 companies expressed interest in this bidding round, 64 of whichwere enabled to participate in it and 30 were successful – 12 Brazilian and 18 foreign ones. Theyacquired 142 blocks in 22 sectors of the 11 sedimentary basins offered, totaling 100,372 km².The 12 th Bidding Round, in its turn, offered 240 onshore exploration blocks with potential forexploration of natural gas. 110 of these blocks are located in new frontier areas in the basins ofAcre, Parecis, São Francisco, Paraná and Parnaíba. 130 are located in the mature basins ofRecôncavo and Sergipe-Alagoas. 26 companies expressed interest in this bidding round, 21were enabled to participate in it and 12 were successful – 8 Brazilian and 4 foreign ones. Theyacquired 72 blocks, totaling 47,427.60 km².24.6. Government and Third Parties' TakesGovernment and third parties' takes include (i) a signature bonus; (ii) royalties; (iii) a specialparticipation; (iv) payment for area occupation and retention; and (v) payment to landowners.Royalties are a financial compensation payable by concessionaires per field, on a monthly basis,according to the amount of production. They range from 5% to 10%.123