Ann: $15m raised to fund Well Test & Cabora Bassa Operations, page-408

Will be interesting to see which country its modelled on. South Africa doesn't have an onerous one in terms of royalty etc but they get 10% of the pie during exploration and option to buy in an additional 10% e.g.

Fiscal Terms
South African Oil & Gas Fiscal Terms
The key provisions are:
An annual exploration fee, royalty and income tax, state participation, BEE participation in production and an annual contribution to the Upstream Training Trust.

Annual Exploration Fee:
- Onshore rights - starts at R1/hectare with a minimum of R1000 and escalates in 50c/hectare increments each year.
- Offshore right - starts at R200 000/sq degree pro rata with a minimum of R50 000 and escalates annually in line with the South African Consumer Price Index (CPI).

Royalty
Royalty is payable in terms of the Mineral and Petroleum Resources Royalty Act. The rate is variable based on profitability with a minimum rate of 0.5% and a maximum of 5% per annum.

Income Tax is payable
Income tax is payable in terms of the Income Tax Act, Schedule 10 of which contains additional provisions applicable only to the upstream petroleum sector, and will not exceed 28%. All expenditure and losses incurred will be allowed as deductions. In addition, a further 100% of all capital expenditure incurred for exploration and 50% in respect of post exploration is allowed as a deduction for the purposes of calculating income tax liability. This amounts to 150% of capital expenditure for exploration and post exploration. All allowable costs (both operational and capital) may be immediately expensed for income tax purposes.

Guarantees
Both the Income Tax Act and the Mineral and Petroleum Royalty Act make provision for the Minister of Finance to enter into a contract guaranteeing that for the duration of the right (including any production right flowing from an exploration right, but excluding renewal of a production right) the terms of the Tenth Schedule and Royalty Act will be no more stringent than at date of signature.

Customs Duties and Exchange Control
The Customs and Excise Act makes provision for the full rebate of customs duties on imported goods and equipment for use in the upstream sector. Oil and gas companies are also exempt from the normal restrictions on operating Customer Foreign Currency Accounts.

State Participation and BEE Participation Interest
State participation of 10% at the production stage, carried through exploration, will be through PetroSA. A further 10% interest will be made available on commercial terms for participation by BEE companies (Black Economic Empowerment companies). This may be taken up by PetroSA in the absence of any BEE participants.

Annual Upstream Training Trust Donation
Onshore rights:-
R1/ hectare with a minimum of R1000.

Offshore rights:-
US$100 000 for the initial period and each subsequent renewal.