- 20 Marks
OGMT – Feb 2020 – L1 – Q3 – Unitization and Redetermination
Explain the concepts of unitization and redetermination in the context of petroleum operations.
Question
a) Explain the following concepts
i. Unitization; and
ii. Redetermination.
b) ABC Limited has 40% and 30% interest in Costal Reef Petroleum Agreement and Deep Sea Petroleum Agreement respectively. The contract areas of the two Petroleum Agreements have been unitised for joint operation. It has been determined that the hydrocarbon present in the unitised area is in the proportion of 40% and 60% for the Costal Reef Contract Area and Deep Sea Contract Area respectively.
Gross production of crude oil in the unitised area in 2018 year is 500,000,000 barrels. The average price of crude oil that year is $50 per barrel.
Required:
Compute the gross income of ABC Limited for the 2018 year of assessment.
Find Related Questions by Tags, levels, etc.
- Tags: Crude Oil Price, Gross Income, Hydrocarbon Allocation, Petroleum Agreement, Unitization
- Level: Level 1
- Topic: Taxation of Revenue and Cost Streams
- Series: FEB 2020
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