There is a 10% royalty provision in the PSC.
Costs are recoverable through cost oil. Cost oil is limited to 50% of gross production. Costs are recoverable in the following order: operating costs, unrecovered exploration costs, unrecovered development costs, abandonment costs. All unrecovered costs are carried forward to the next period. All recoverable costs incurred in the Milo Block are recoverable from revenues from the Milo Block only.
Remaining volumes after cost oil is allocated are considered profit oil.
Profit oil rates shall be determined based on daily total production rates for the contract
area. The profit oil rates are as follows:
Increments of daily Hannan government Total WI
Total production rates share share
0 - 10,000 BOPD 50% 50%
10,001 - 25,000 BOPD 55% 45%
25,001 - 50,000 BOPD 60% 40%
50,001 - 100,000 BOPD 70% 30%
Above 100,000 BOPD 80% 20%
Determine volume allocations for August.
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