Capex and Opex tabulations should be subdivided into:

 Pre-Project Costs (Seismic, Exploration Drilling, Appraisal Drilling, Studies:

money of the day costs are acceptable here)
 Drilling Capex.
 Facilities Capex.
 Decommissioning expenditure.
 Field Opex, excluding Tariffs.
 Tariff Opex.
The information on tariffs should include:
 Total fixed and variable costs for the use of Facilities or Pipelines, phased
annually.
 Base cost per barrel, escalation factors, and escalation lags.
The information on Gas Contracts should include:
 Base gas price (pence/therm), the escalation factors, the lag period, the base
values for escalation factors and the contract duration.
Field economic limit criteria
This section should include a detailed analysis of:
 Definition of economic limit.
 Determination of cut-off rates and timing.
 Cash flow over the period up to this economic limit and approximately 2 years
beyond.
 It is important to include detailed information on any factors that would advance
or postpone the economic limit so that the Department can form a view as to the
main sensitivities and uncertainties involved.
 The costs and any revenues associated with CoP itself (capital and operating
expenditures and any residual value of field assets).
 The form and costs of abandonment if these affect the timing of the economic
limit.
CANADA:

http://laws-lois.justice.gc.ca/eng/acts/C-8.5/index.html

Inflation rate 3.3% as of March 2011

3.26% between 1915-2010

Canada bank interest rate – 1%

Expected to be 1.75-2% by year end

Canada mainly trades with WTI marker crude – inferred from graph depicting WTI crude price
linked to Canadian dollar.

WTI Oil price as of 12th May 2011 - $96.06

PRESCRIBED ROYALTY

3. (1) The prescribed royalty reserved to Her Majesty under subsection 55(1) of the Act from
each interest holder is

(a) in respect of petroleum produced from project lands in a month preceding the month of
payout

(i) beginning with the first production month and ending with the eighteenth production
month, one per cent of the gross revenues of the interest holder from that petroleum,

(ii) beginning with the nineteenth production month and ending with the thirty-sixth
production month, two per cent of the gross revenues of the interest holder from that
petroleum,

(iii) beginning with the thirty-seventh production month and ending with the fifty-fourth
production month, three per cent of the gross revenues of the interest holder from that
petroleum,

(iv) beginning with the fifty-fifth production month and ending with the seventy-second
production month, four per cent of the gross revenues of the interest holder from that
petroleum, and

(v) beginning with the seventy-third production month and ending with the last
production month preceding the month of payout, five per cent of the gross revenues of
the interest holder from that petroleum, or

(b) in respect of petroleum produced from project lands in the month of payout or any
month thereafter, the greater of

(i) thirty per cent of the net revenues of the interest holder from that petroleum, and

(ii) five per cent of the gross revenues of the interest holder from that petroleum.
(c) [Repealed, SOR/2008-96, s. 4]

(2) Subject to subsection (3), the royalty payable for a month is equal to the amount
obtained from the following formula:
 A+B-C

where

A 
is the prescribed royalty reserved for the month as calculated under subsection (1);
B 
is the deferred royalty that is payable in the month in accordance with subsection 6.1(2);
and
C 
is the amount of royalty deferred in the month in accordance with section 6.

(3) The royalty payable is further reduced by a credit equal to the lesser of the amount
calculated under subsection (2) and the investment royalty credit balance.

(4) Royalties are payable on petroleum that is transported from the project lands by a
transportation facility or, subject to section 4, consumed, lost or wasted.

Canadian oil and gas businesses pay taxes and royalties to all levels of government. In 2009
corporate income taxes were levied on resource profits at a rate of 19% at the federal level
(scheduled to decline to 15% by 2012) and at provincial rates of 10% (Alberta and British
Columbia), 12% (Saskatchewan), 14% (Newfoundland and Labrador), and 16% (Nova
Scotia).5 Similar to the treatment of other industries, deductions from income are provided for
depreciation, inventory, borrowing, and other costs incurred to extract resources, including
provincial royalty payments. Exploration and development costs are also deducted from profits
— expensed in the case of exploration costs, and written off at a 30% declining balance rate
for development costs. In the Atlantic region, the oil and gas sector, similar to other primary,
resource, and manufacturing industries, is eligible for the 10% federal Atlantic investment tax
credit for qualifying depreciable expenditures.