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Frontier Lands Petroleum Royalty Regulations (SOR/92-26)

Regulations are current to 2021-09-11 and last amended on 2008-04-03. Previous Versions

Certification of an Abandonment and Restoration Royalty Trust (continued)

  •  (1) If a person (in this section referred to as the successor) acquires, by purchase or otherwise, from an interest holder (in this section referred to as the predecessor) a share in an interest in relation to a project that has not reached the month of payout, the successor’s cumulative costs in relation to that share in respect of the month of acquisition are, subject to subsection (3), an amount equal to the product of

    • (a) the aggregate of

      • (i) the amount, if any, by which the predecessor’s cumulative costs in relation to that project in respect of the month immediately preceding the month of acquisition exceed the predecessor’s cumulative gross revenues in relation to that project in respect of the month immediately preceding the month of the acquisition, and

      • (ii) the predecessor’s return allowance in relation to that project in respect of the month immediately preceding the month of acquisition, and

    • (b) the ratio that the share of the interest acquired by the successor bears to the share of the interest held by the predecessor immediately before the disposition.

  • (2) The predecessor’s cumulative costs in a share in an interest in relation to a project in respect of the month of acquisition shall be reduced by the same amount determined for the successor in accordance with subsection (1).

  • (3) If the amount calculated under subsection (1) or (5) exceeds the cost of the acquisition, the successor’s cumulative costs or allowed capital costs, as the case may be, in a share in an interest in relation to that project in respect of that month are the cost of the acquisition.

  • (4) If the successor is currently an interest holder of a production licence in relation to a project and either the predecessor or successor has not reached the month of payout for their interest in the project, the cumulative costs, cumulative gross revenues and royalties payable for the acquired interests held by the successor in the project shall continue to be determined separately until all interests held by the successor in relation to the project have reached the month of payout.

  • (5) If a share of an interest in relation to a project is acquired in a month after the month of payout, and the predecessor has allowed capital costs in that month by virtue of subsection 2(2), a portion of those allowed capital costs shall be allocated to the successor in proportion to the share of the interest being acquired, and the predecessor’s allowed capital costs in that month shall be commensurately reduced.

  • (6) If a project is comprised of more than one production licence, and the successor’s interest in relation to a project does not include the interests or a share in the interests in all production licences held by the predecessor in relation to the project, the amounts to be allocated to the successor and predecessor, in accordance with subsections (1) to (3) and (5) shall be allocated on a reasonable basis.

  • SOR/2008-96, s. 6

Return Allowance

  •  (1) A return allowance of an interest holder of a production licence in relation to a project shall be calculated for the month in which the project commencement date falls and for every month after that date, up to but not including the month of payout, if

    • (a) the interest owner or the representative of the interest owner has notified the Minister of the month in which the interest owner proposes to commence production for the purpose of sale; and

    • (b) that month is consistent with the development plan.

  • (2) [Repealed, SOR/2008-96, s. 7]

  • (3) Subject to subsections (4) and (5), the return allowance of an interest holder in relation to a project in respect of any month for which a calculation is required by subsection (1) shall be equal to the product of

    • (a) (1.1 + X)1/12 - 1, where X equals the long term government bond rate

    and

    • (b) the amount by which the interest holder’s cumulative costs in relation to the project in respect of that month exceed the interest holder’s cumulative gross revenues in relation to the project in respect of that month.

  • (4) Subject to subsection (5), where production of petroleum from project lands for the purpose of sale does not begin on or before the proposed month referred to in subsection (1), the return allowance of an interest holder for each month in the period beginning with the month immediately following the proposed month and ending with the month immediately preceding the month in which such production begins shall be equal to the product of

    • (a) the result obtained by subtracting 1 from the ratio that the inflation index for the month bears to the inflation index for the immediately preceding month, and

    • (b) the amount by which the interest holder’s cumulative costs in relation to the project in respect of that month exceed the interest holder’s cumulative gross revenues in relation to the project in respect of that month.

  • (5) For the purpose of calculating the return allowance of an interest holder for a month, each allowed capital cost of the interest holder shall be adjusted as follows:

    • (a) where the cost was incurred before the project commencement date, it shall be multiplied by the ratio that the inflation index for the month in which the project commencement date falls bears to the inflation index for the month in which the allowed capital cost was incurred; and

    • (b) where the cost is a qualified frontier exploration expense, it shall be reduced by the amount of any credit that has been deducted under subsection 3(3) to determine the royalty payable in a preceding month if that credit includes an investment royalty credit that is calculated on the basis of that expense.

  • (6) For the purpose of paragraph (5)(b), if the credit deducted under subsection 3(3) is less than the amount of the investment royalty credit balance in respect of the month in which the royalty is payable, the credit shall be considered to be calculated on the basis of expenses in the order in which they were incurred.

  • SOR/2006-87, s. 2
  • SOR/2008-96, s. 7

Certification of Qualified Frontier Exploration Expenses

  •  (1) An interest holder may make an application to the Minister, in the prescribed form, for the certification of qualified frontier exploration expenses.

  • (2) The interest holder shall file the application with the Minister not later than one year after the year in which the expenses are incurred.

  • (3) If the application is filed within the required time period, the Minister shall, if the Minister determines that the expenses are qualified frontier exploration expenses, certify those expenses as qualified frontier exploration expenses.

  • SOR/2008-96, s. 8

Reports and Returns

  •  (1) Each interest holder of a production licence in relation to a project shall file with the Minister, in the prescribed form,

    • (a) a pre-project commencement cost statement for that interest in the month of the project commencement in respect of allowed capital costs and allowed operating costs for that interest incurred prior to the month of the project commencement; and

    • (b) a royalty return for that interest for the month of the project commencement and for every month after that whether a royalty is payable for that month or not.

  • (2) The interest holder shall file the pre-project commencement cost statement and the royalty return not later than the last day of the second month after the months referred to in paragraphs (1)(a) and (b).

  • SOR/2008-96, s. 9
  •  (1) Each interest holder of a production licence in relation to a project shall file with the Minister a payout statement, in the prescribed form, in respect of the project for each six month period, beginning with the period that starts with the month in which the project commencement date falls and ending with the period that includes the month of payout.

  • (2) The payout statement shall be filed not later than the last day of the second month after the six-month period to which it relates.

  • SOR/2008-96, s. 10
  •  (1) If the interest owner of a production licence in relation to a project consists of only one interest holder, the holder shall file with the Minister and, if the interest owner of a production licence in relation to a project consists of two or more interest holders, the representative of the interest owner shall file with the Minister, in the prescribed form,

    • (a) a proposed production commencement date statement; and

    • (b) a production and cost statement for the month in which the project commencement date falls and for every month after that month in respect of the volumes or quantities of petroleum from the project that are produced, consumed or transported from project lands in the month, the project costs for the month and the portion of any petroleum or costs that is attributed to the respective interest holders for the month.

  • (2) The statement referred to in paragraph (1)(a) shall be filed not later than the 15th day of the month after the month in which the project commencement date falls, and the statement referred to in paragraph (1)(b) shall be filed not later than the 15th day of the second month after the month to which it relates.

  • SOR/2008-96, s. 11
 
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