- 5 Marks
Question
Nananom Petroleum Ghana Ltd produced 3,000,000 barrels of oil per month. The crude oil was sold at $70 per barrel. Royalty due is 5%, Carried Interest of 11%, and Additional Interest of 3.75%.
Required:
Compute the state or government take in the following:
i) Royalty
ii) Carried interest
iii) Additional participation interest
Answer
) Royalty:
- Calculation:
- Royalty percentage: 5%
- Total production per month: 3,000,000 barrels
- Royalty in barrels: 5% × 3,000,000 = 150,000 barrels
- Monetary value of royalty: 150,000 barrels × $70 per barrel = $10,500,000
ii) Carried Interest:
- Calculation:
- Carried Interest percentage: 11%
- Net production after royalty: 3,000,000 – 150,000 = 2,850,000 barrels
- Carried Interest in barrels: 11% × 2,850,000 = 313,500 barrels
- Monetary value of carried interest: 313,500 barrels × $70 per barrel = $21,945,000
iii) Additional Participation Interest:
- Calculation:
- Additional Interest percentage: 3.75%
- Net production after royalty: 2,850,000 barrels
- Additional Interest in barrels: 3.75% × 2,850,000 = 106,875 barrels
- Monetary value of additional interest: 106,875 barrels × $70 per barrel = $7,481,250
Total Government Take:
- Royalty: $10,500,000
- Carried Interest: $21,945,000
- Additional Participation Interest: $7,481,250
- Total: $39,926,250
(5 marks evenly spread using ticks)
- Tags: Additional Interest, Carried Interest, Government Take, Petroleum Operations, Royalty
- Level: Level 3
- Topic: Petroleum operations
- Series: NOV 2023
- Uploader: Theophilus