RE:RE:RE:RE:RE:RE:anyone think CJ will announce a dividend on Nov 4 2021 ? Calculating and collecting oil sands royalties
Each oil sands project is unique with revenues and costs that are specific to the project. The amount of royalty paid is based on:
- whether it is an approved Royalty Project or is paying royalties based on the royalty rates for conventional oil
- whether the Royalty Project is in the pre-payout or post-payout period of production
- the price of oil, since royalty rates are set on a sliding scale
- the quality of the project's crude bitumen, which can impact the market price
- a project's unique revenues and costs
- audits and adjustments by the provincial government
Sliding scale
The ability for royalty rates to change based on the price of oil is sometimes referred to as a 'sliding scale.' The government has designed royalty rates to change based on the price of oil, so the risk and reward is shared between industry and government. When prices are high the royalty rates are higher, and when prices are low the royalty rates are lower.
Pre-payout and post-payout phase
Royalty rates can be different, depending on whether the Royalty Project is in the 'pre-payout' or 'post-payout' phase. The pre-payout phase is the period before an oil sands project has reached payout. Royalty rates are lower to account for high initial investment costs and long construction times.
Project payout occurs when a project’s cumulative revenues first equal or exceed its cumulative costs. Royalties are typically higher in the post-payout phase. Once a project achieves payout it remains in the post-payout phase.
Pre-payout
During the pre-payout period, a Royalty Project pays royalty based on a percentage of its gross revenues, ranging from 1% to 9%, depending on the price of oil.
Royalty rates fluctuate based on the price of oil, which is determined by the West Texas Intermediate (WTI) price benchmark for oil, converted into Canadian dollars.
During the pre-payout period the royalty rate is 1% of gross revenues at prices up to $55/barrel. When the price of oil increases to $120/barrel or more, the royalty rate is 9% of gross revenues. The royalty rate increases from the minimum to the maximum between $55/barrel and $120/barrel (see Figure 1).
Figure 1: Gross revenue royalty rates
Appears to be a sliding scale and each Companies site has an individual Royalty agreement...Normaly based on net profit...