Kuwait Energy
EL-12-211107
97
Royalty: the rate varies depending on average production rates as follows:
Block 5
Block 43
Production Rate
(Mbopd)
Royalty Rate
(%)
Production Rate
(Mbopd)
Royalty Rate
(%)
< 25.0
5.0
< 12.5
3.0
25.0 – 50.0
7.5
12.5 – 25.0
4.0
50.0 – 75.0
10.0
25.0 – 50.0
6.0
75.0 – 100.0
15.0
50.0 – 100.0
8.0
≥ 100
20.0
≥ 100
10.0
Cost Recovery Limit: 27.5% of production before deduction of royalty in
Block 5; 50% of production net of royalty in Block 43.
Cost Recovery Depreciation: for Block 5, exploration, development and
operating costs to be recovered in the year incurred; for Block 43,
exploration and development costs to be recovered over two years at a rate
of 50% p.a., operating cost to be recovered in the year incurred, all subject
to the Cost Recovery Limit. Any allowable costs unrecovered in a year may
be carried forward for recovery in the following year or years. For the
purpose of these assessments, gross unrecovered cost balances at
31
st
May, 2014 of US$0.91 MM for Block 5 and US$8.83 MM for Block 43
have been used, as advised by KE.
Production Sharing based on an incremental sliding scale as follows:
Block 5
Block 43
Production Rate
(Mbopd)
Contractor Share
(%)
Production Rate
(Mbopd)
Contractor Share
(%)
< 25
27.5
< 25
30.0
25 – 50
25.0
25 – 50
27.5
50 – 75
22.5
50 – 75
25.0
75 – 100
20.0
75 – 100
22.5
100 - 125
15.0
≥ 100
20.0
125 - 150
12.5
-
-
≥ 150
10.0
-
-
Bonuses for Block 5:
o
US$1.0 MM when production reaches 25 Mbopd (already paid);
o
US$2.0 MM when production reaches 50 Mbopd (already paid);
o
US$3.0 MM when production reaches 75 Mbopd; and
o
US$4.0 MM when production reaches 100 Mbopd.
Bonuses for Block 43:
o
US$1.0 MM when production reaches 25 Mbopd;
o
US$2.0 MM when production reaches 50 Mbopd; and
o
US$3.0 MM when production reaches 100 Mbopd.
Annual payments for Block 5:
o
Training Fee of US$0.2 MM; and
o
Institutional back-up contribution of US$0.2 MM.
