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ALBERTA NATURAL GAS AND NGL ROYALTY CHANGES

J://gasgroup/keg/mrt/economics.ppt. 2. ROYALTIES IN ALBERTA TODAYCHANGES BEING IMPLEMENTED - WHAT, WHEN

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ALBERTA NATURAL GAS AND NGL ROYALTY CHANGES

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    1. ALBERTA NATURAL GAS AND NGL ROYALTY CHANGES Economics Society of Calgary Luncheon February 24, 2000

    2. J://gasgroup/keg/mrt/economics.ppt 2 ROYALTIES IN ALBERTA TODAY CHANGES BEING IMPLEMENTED - WHAT, WHEN & HOW WHY ISSUES TO BE DEALT WITH (HAVEN’T THOUGHT OF THEM ALL) IMPLICATIONS

    3. J://gasgroup/keg/mrt/economics.ppt 3 THE CROWN LEASES THE RIGHT TO PRODUCE CRUDE OIL, NATURAL GAS AND NATURAL GAS LIQUIDS (NGL’S) BUT MAINTAINS ITS OWNERSHIP RIGHT ROYALTY IS THE PORTION OF THE RESOURCE THAT BELONGS TO THE CROWN THROUGH ITS OWNERSHIP RIGHTS ROYALTY SYSTEMS NEED TO DETERMINE THREE THINGS: CROWN’S SHARE OF THE PRODUCT THE VALUE OF THE SHARE COSTS TO BE “PAID” BY THE CROWN FOR PROCESSING IT’S SHARE

    4. J://gasgroup/keg/mrt/economics.ppt 4 CURRENT AVERAGE ALBERTA ROYALTY RATES: CRUDE OIL x% - TAKEN IN KIND AND MARKETED BY AGENTS NATURAL GAS 17% - CASH (SLIDING SCALE) (includes ethane and coastituent NGL’s) NGL’S 30% - CASH (FLAT RATE) (propane, butane)

    5. J://gasgroup/keg/mrt/economics.ppt 5 WHAT ? THE CHANGES AFFECT THE MANNER IN WHICH THE CROWN CALCULATES THE ROYALTY SHARE AND VALUE OF NATURAL GAS AND NGL’S IDENTIFY ETHANE AS A DISTINCT RESOURCE RECOGNIZE ETHANE AND OTHER NGL’S IN RESIDUE GAS CALCULATE ROYALTY AND ALLOWABLE COSTS ON NGL’S EXTRACTED AT STRADDLE PLANTS PROVIDES THE GOVERNMENT WITH THE OPTION TO BE ABLE TO COLLECT ALBERTA’S SHARE OF GAS AND NGL’S AS ROYALTY-IN-KIND (AS IT CURRENTLY DOES FOR OIL)

    6. J://gasgroup/keg/mrt/economics.ppt 6 WHAT ? (con’t) THE CHANGES ARE TO BE IMPLEMENTED IN TWO PHASES, WITH THE FIRST PHASE TO BE COMPLETED BY JULY 2001 ROYALTY-IN-KIND IMPLEMENTATION IS PHASE 2 WILL NOT BE IMPLEMENTED PRIOR TO NOV 2003 TWO YEAR NOTICE PROVISION

    7. J://gasgroup/keg/mrt/economics.ppt 7 PHASE 1 SCHEDULE

    8. J://gasgroup/keg/mrt/economics.ppt 8

    9. J://gasgroup/keg/mrt/economics.ppt 9

    10. J://gasgroup/keg/mrt/economics.ppt 10

    11. J://gasgroup/keg/mrt/economics.ppt 11

    12. J://gasgroup/keg/mrt/economics.ppt 12

    13. J://gasgroup/keg/mrt/economics.ppt 13

    14. J://gasgroup/keg/mrt/economics.ppt 14

    15. J://gasgroup/keg/mrt/economics.ppt 15

    16. J://gasgroup/keg/mrt/economics.ppt 16

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