Canada Oil and Gas Land Regulations (C.R.C., c. 1518)

• 79. (1) Subject to subsection (2), where, after the first year of an oil and gas lease, commercial exploitation has not begun but oil or gas has been found in commercial quantity, the Minister may order the reduction of the rental payable under that oil and gas lease.

• (2) Notwithstanding subsection (1), the rental shall not be reduced pursuant to subsection (1) for any year following a year in which commercial exploitation begins.

80. Subject to sections 81 and 82, the rental shall be reduced by,

• (a) in the case of an oil and gas lease issued pursuant to section 54, the amount of allowable expenditure made by the lessee prior to the date of the oil and gas lease, on the permit area within which the oil and gas lease is located, in excess of the deposits set out in Schedule II for the periods prior to the date of the oil and gas lease, and

• (b) the amount of expenditure, as determined by the Chief, that has been made by the lessee for exploratory work on the lease area after the date of the oil and gas lease and before commercial exploitation begins,

but the rental for any particular year shall not be reduced pursuant to this section by more than one-half.

• 81. (1) In this section, “expenditure” means the amount referred to in paragraph 80(b).

• (2) At the end of the first year of an oil and gas lease and at the end of each year of the oil and gas lease thereafter, the Chief shall determine the amount of expenditure made by the lessee that is to be credited to the rental of the oil and gas lease for the year next following.

• (3) Every lessee shall, at least 30 days before the end of each year of his oil and gas lease, send to the Chief a statement, in triplicate, of the amount expended by the lessee for exploratory work on the lease area.

• (4) Every statement referred to in subsection (3) shall be verified by a statutory declaration and shall include

  • (a) the items of expenditure;

  • (b) the number of the lease area on which the work was done;

  • (c) the specific purpose for which each item of expenditure was made; and

  • (d) three copies of all reports, photographs, maps and data referred to in section 53 concerning work for which expenditure is claimed.

• 82. (1) Subject to subsection (2), where any part of the amount referred to in paragraph 80(a) or (b) is not or cannot be credited to the rental for the year next following, the rental for any subsequent year shall be reduced by the amount of that part.

• (2) Notwithstanding subsection (1), the rental shall not be reduced pursuant to section 80 for any year following a year in which commercial exploitation has begun.

• 83. (1) Expenditure referred to in paragraph 80(a) or (b) that is made on any lease area that has been grouped pursuant to subsection 90(1) and that is made during the period of the grouping shall, at the request of the lessee, be applied to one or more of the lease areas within the group.

• (2) Where an expenditure is applied to a lease area pursuant to subsection (1), that expenditure shall not be transferred to any other lease area.