PRT: terminal liftings - allocation of oil sold under ‘Period of Entitlement’ and term contracts (Regulation 5)
Regulation 5 outlines the modified allocation rules to determine how oil sold under POE and other term contracts is to be allocated across a company’s field interests that deliver into those contracts.
The same formula and principles as outlined for regulations 4 and 6 above apply, except that the C figure in the formula will only be the sum of the participator’s B figures for field interests covered by the contract in question.
Scavenger Ltd has an interest in 3 fields in Sporting blend - Dog, Duck and Waders.
Scavenger Ltd has a term contract with Major UK Ltd. The contract covers Scavenger’s oil production from its interests in both Dog and Duck fields, but not its interest in Waders field.
In Month M Scavenger’s entitlements from the 3 fields are as follows:
Major UK Ltd lifts 40,000 bbl of oil under the term contract with Scavenger on 10th M. How is this allocated across Scavenger’s fields?
A = 40,000 bbl (that is, the amount lifted and sold under the contract in question)
|Dog’s B =||50,000 bbl|
|Duck’s B =||30,000 bbl|
So, C = 80,000 bbl
Dog’s allocation = 40,000 (A) x 50,000 (B) / 80,000 (C) = 25,000 bbl
Duck’s allocation = 40,000 (A) x 30,000 (B) / 80,000 (C) = 15,000 bbl
Production from Waders will in all likelihood be sold under another term / POE contract. If it is the only field under the contract then lifting of oil by the purchaser under this contract will be allocated to Waders alone.