This is from the most recent report: http://www.rangeresources.com.au/fileadmin/user_upload/research_Reports/Research_Note_-_May_2007.pdf
The broad lines of the Production Sharing Agreement are as follows: 1) Royalty: from 4% below 25,000 bopd to 10% above 100,000 bopd. In our simulation, the effective global rate of royalty extends from 4% in the first year to a maximum of 9%. 2) Cost oil: all costs and capital expenditure to be recovered against sales. In our model, “desaturation” will take place in the fourth year of production. 3) Profit oil: basically a 50% tax in kind or in cash on the monies after royalty and costs have been duly recovered. In itself, this contract, which allows a 50% intake for the company should be considered as fair. It is not among the most generous (e.g. as in Gabon) given that, in our view, the country has been out of the world oil scene for over fifteen years and would appear normally to be obliged to offer sweeteners to re-attract operators into an area that is not devoid of risk.
RRS Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
