reality, page-29

In some jurisdictions where they are trying to encourage O&G drillings, it is allowable for royalty payments to be clawed back against exploration drilling elsewhere in the same jurisdiction (ie country).

I don't think it applies in NZ or Aust, but I am sure it applies like this in Indonesia and across many other similar countries trying to encourage more drilling.

You have the choice of doing more drilling or just paying across the royalty. This is why they so readily farmed in with SPC on the drilling.

Think about it from the country's point of view. More exploration gets done, more oil gets discovered, potential royalty stream increases and also the money spent on the drilling - some of that will be spent locally in that country re costs etc.