(i) Differentiation between “disposal” and “disposed

• Disposal: In the context of chargeable oil, disposal refers to the delivery, without sale, of chargeable oil by an oil company, which typically occurs when oil is sent to another party.
• Disposed of: This term refers to chargeable oil that has been delivered, again without sale, but specifically to a refinery or an adjacent storage tank for refining by the company.

(ii) Discussion

• Intangible Drilling Costs (2 Marks): These costs are expenditures related to labor, repairs, maintenance, hauling, and materials (excluding well cement casing or fixtures) necessary for drilling, cleaning, deepening, or preparing wells. They encompass:
  • Determination of well locations, geological surveys, and studies preparatory to drilling;
  • Drilling, shooting, testing, and cleaning wells;
  • Land clearing, road building, laying foundations;
  • Erection of rigs and assembly of necessary infrastructure for drilling operations.
• Oil Mining Lease (1 Mark): An oil mining lease is a lease granted under the Minerals Act to a company, permitting it to extract petroleum from a specified area or to assign the lease to another party.