PRT: the nomination scheme: allocating nomination excesses to fields
Allocating nomination excesses to fields
Regulation 10 SI 2006 No. 3312 determines how a nomination excess is allocated between a company’s field interests.
Excess from non-equity deliveries disregarded:
It also ensures, where all or part of a relevant delivery is sourced from non-equity oil, that only the proportion, if any, of the excess that relates to equity oil is allocated across a company’s field interests, and brought into charge to PRT, CT and SC.
How it works:
In respect of the relevant delivery the company should use the allocation rules in Regulation 4 SI 2006 no. 3312 (see OT05850) to determine how much of that relevant delivery is allocated to each of the company’s field interests.
Determine the total volume of the relevant delivery
For each of the company’s field interests in the blend:
Divide Step 1 by Step 2
Multiply the result of Step 3 to establish the proportion of the nomination excess to allocate to each field interest.
Spinner Ltd has a relevant delivery of 600,000 bbls for a month.
The proportion of that relevant delivery allocated to each of its field interests under Regulation 4 is as follows:
Field A 100,000 bbls
Field B 200,000 bbls
Field C 100,000 bbls
The other 200,000 bbls were derived form non-equity sources.
The company has a nomination excess of £1.2m in respect of that relevant delivery.
What proportion of that excess is attributable to Field B?
Find field B’s proportion of the relevant delivery - 200,000 bbls
Find total volume of relevant delivery - 600,000 bbls
Divide Step 1 by Step 2 - 200,000\600,000 = 0.33
Multiply nomination excess by result of Step 3 - £1.2m x 0.33 = £400k
So Field B’s share of the nomination excess is £400k
Field A and C’s shares would be £200k each.
The company would include these respective excess shares, together with any others arising in the chargeable period in the relevant gross profit from each of their fields (A, B and C) for the chargeable period. This share will also be brought into account for the purposes of SC and CT (see OT05250).
Therefore that proportion of the excess (£400k) that does not relate to a relevant delivery of equity oil will not be brought into account for PRT or SC and CT.