Net Profit Royalty Project RFA Template
PROJECT NAME:
______________________________________________
PRODUCER LEGAL NAME:
________________________________________
JOINT APPLICANT(S):
__________________________________
___________________________________
Contact Name: ___________________ Phone Number: __________
Email Address: ________________
Please review the RFA Section D - Application Instructions for details for RFA
submission.
Please note all questions containing a check box (
corner of a table must be completed.
) in the right hand
FOR EVALUATION CRITERIA
ORGANIZATION PROFILE
1. Description of Organization
Please provide an overview of your organization including mission, objectives and
expertise.
Please provide:
PROJECT DETAILS
2. Description of Project
Please provide a detailed description of the project. The description should include
an exploitation plan for the drilling and completion of wells and the construction of
project infrastructure over 5 years, 10 years, 15 years and the life of the project.
Specifics described in the plan should include:
- details on land interests and tenure status
- information on plans for drilling and completion of wells, including drilling density
- information on well authorizations approved or any other applications/approvals
from the Oil and Gas Commission
- details of seismic information and the drilling and production performance
expected for the project for the area, reservoir, and/or pool(s)
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a description of the drilling and completion technologies that will be used to
develop the project
a description of the construction plan for building the project infrastructure
details of water-related issues e.g. available water sources for fracing, volumes
required, recycling ability, description of available water sources for injection and
zones for water disposal
Please provide:
3. Reserves, Production Profile and Gas Composition
Please provide:
- a list of the primary and secondary zones within the proposed project
- actual or expected gas analysis, reserves and pressure data for each zone
within the proposed project
- production profiles of type wells used in determining production volume for the
project
- data on historical and expected production of oil and natural gas from wells
already drilled or to be drilled within the proposed project and specified zone
- the expected recovery percentage of the initial oil or natural gas in place
- well production profiles used for economic analysis
Note: The MEMPR Net Profit Model allows for 5 different type curves. If your
project has more than 5 type curves, please provide this further information.
Please provide:
4. Project Cost Information
Please provide:
-
an itemized historical cost breakdown for the proposed project (5 year
maximum, if available), including seismic costs, allowed capital costs (net of
government incentive payments), allowed operating costs and land
acquisition costs (note that land acquisition costs are not eligible costs under
the Net Profit Royalty Program but is being requested for analysis purposes).
-
an itemized capital cost budget for the proposed project (e.g. this could
include seismic, exploration drilling, exploration completions, development
drilling, development completions; and all costs of design, construction,
engineering, financing, approvals, materials and installation, and any other
applicable costs).
-
an itemized operating cost forecast for the proposed project, including all
costs associated with production, gathering, processing and transporting the
products from the project to market (e.g. fixed costs, cost per well, cost per
unit of production).
2
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an itemized budget for allowed capital and operating costs outside of the ring
fence.
Note: The Ministry does not accept contingency, GST, administration and
overhead costs as part of the cost estimates. Please refer to the Net Profit
Allowable Cost Order of the Administrator for further clarification of costs. (See
Appendix B)
Please provide:
5. Market Information
Please provide the following:
-
Provide price forecasts for natural gas (at plant gate), oil and natural gas
liquids in real (2009) dollars (or provide an inflation forecast if you wish to
present in nominal (as spent) dollars).
-
Describe the destination and/or markets for the products and detail your
plans to ensure access to markets for products produced by wells within
the project, e.g. pipelines, plants, capacity availability, etc.
Please provide:
PROJECT BUSINESS CASE
6. Project Internal Rate of Return (Please use the MEMPR Net Profit Model
provided in Appendix A)
6.1: Please provide the project's internal rate of return (to the producer after
royalties and taxes) under the following two scenarios:
Scenario 1: The project is approved as a net profit royalty project and royalty
payments to the Province of British Columbia are based on the net profit royalty
structure outlined in the Net Profit Royalty Regulation.
Project internal rate of return under net profit
_________
Scenario 2: The project is not approved as a net profit royalty project and royalty
payments to the Province of British Columbia are based on the existing British
Columbia royalty programs outlined in the Petroleum and Natural Gas Royalty and
Freehold Production Tax Regulation.
Project internal rate of return without net profit
Notes:
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_________
The Scenario 1 and Scenario 2 internal rate of return calculations are to be
based on a risked net present value cash flow model (using price forecasts
provided in the MEMPR Net Profit Model)
(ii) Royalty programs to be considered should include the infrastructure, deep and
summer drilling credit programs, the marginal and ultra-marginal royalty rate
reduction programs and 100% Crown participation in the Producer Cost of
Service allowance.
(i)
6.2: Please clearly explain how the project fits within the capital plan of your
company or companies.
Please explain:
6.3: Please provide an explanation of the applicant company’s economic
hurdle rate (rate of return) or any other economic or financial method(s) used
to determine a project’s economic viability. Please explain and fill in the
blank below:
Provide Company(s) hurdle rate
________
Please explain:
6.4: Please clearly indicate the likelihood of the project and its timing in the
event the project was approved as a net profit royalty project versus not
being approved as a net profit royalty project. Demonstrate the degree and
timing of whether or when the project would or would not proceed without a
net profit royalty project approval.
Please indicate:
7. Other Benefits Attributable to the Province
7.1: Please identify how the proposed project “opens up” new areas of
British Columbia.
Please identify:
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7.2: Please clearly explain how the proposed project helps reduce footprint
(e.g. by providing access to more than one producer in the area; by
combining various producers potential applications; by using existing capacity
in existing facilities; etc).
Please explain:
7.3 Please identify the benefits to British Columbia residents and local
residents in the region in which the project will be located, if it is proximal to a
populated area.
Please identify:
7.4: Please identify other potential benefits.
Please identify:
8. Risks and Significant Issues
8.1: Please provide risk information on the chance of success (COS)
assumptions on various components of the project, e.g. geological risk and
economic risk.
Please provide:
8.2: Please identify external risks and significant issues that may delay or
pose a hindrance in commencing the proposed project (e.g. cost increases,
environmental issues, First Nations consultations, insurance, poor drilling
outcomes, changes in corporate focus and capital budgets, scope revision,
staff changes, etc.).
Please identify:
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8.3: Please provide details on consultations with First Nations, landowners
and stakeholders within or proximal to the proposed project area. If
consultations are ongoing, please provide a summary showing meetings
held, issues identified, issues resolved and issues yet to be resolved.
Please provide:
8.4: Please provide details on consultations with the Oil and Gas Commission
regarding logistics of the project.
Please provide:
8.5: Please provide any further examples of risk and mitigation (if applicable):
Please provide:
BEFORE YOU SUBMIT, PLEASE CHECK:
HAVE YOU INCLUDED IN YOUR RFA SUBMISSION …..
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Cover Page, signed as instructed?
Cover Letter?
Net Profit Royalty Project RFA Template?
Proposed Development Schedule?
MEMPR Net Profit Model?
Geological?
Mapping?
I hereby attest that all the above information contained in the RFA submission is
true and correct:
______________________________________________
Signature of Authorized Signatory of Designated Applicant
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