Release updates
New models
The Merak Fiscal Model Library 2020.3 release includes the following new models.
Congo PSC (2016)
The Congo PSC (2016) model is added to the library based on Hydrocarbons Code Law no. 28-2016. The highlights of the model are:
- The national oil company has the option to participate in the block. There is no maximum limit, and the minimum participation obligation by the national oil company in each block is 15%.
- Bonus and Fees: Payable upon signature of the production sharing agreement by the contractor.
- Hydrocarbons Royalty: Allocated to the State for payment of the production royalty—15% for crude oil (down to 12% minimum for technically challenging areas such as the Cuvette inland basin and presalt deep water) and 5% for gas.
- One percent of gross revenue paid by the contractor to the government every year as Provision for Investment Diversified while 0.05% of the net production is assigned to Emergency Intervention Fund.
- The share of production allocated to the contractor after payment of the royalty shall not exceed 50% of the net available production (or up to 70% for a limited period of time for expensive or technically challenging operations such as deep water or the Cuvette inland basin.)
- Profit oil is split between the State and contractor based on a sliding scale mechanism of cumulative production. However, in a calendar year, the share of the State cannot be less than 35% of the profit oil for that year.
- The contractor pays the equivalent amount of income tax in barrels from its profit share to the government. The income tax rate is 30% for the regime.
Kenya PSC (2017)
The Kenya PSC (2017) model is added to the library based on Petroleum (exploration, development and production) Bill, 2017. The highlights of the model are:
- The National Oil Company of Kenya has the right to participate with up to 10% at the approval of development plan.
- Bonus and Fees: A one-time payment is made upon signing of the production sharing agreement by the contractor, while fees depend on the different phases i.e., exploration and production lifecycle of the project defined by the government in the contract.
- Hydrocarbons Royalty: There is no royalty paid for hydrocarbons in the regime.
- The share of revenue allocated to the contractor for cost recovery shall not exceed 60% of the net available revenue.
- The contractor shall commence booking accruals for plugging and abandonment and decommissioning costs in the first calendar quarter in which the ratio of cumulative production to overall recoverable reserves reaches r50%, or 10 years before the expiry of the production permit, whichever is earlier.
- The profit oil is split between the state and contractor based on an R-factor mechanism, which is calculated quarterly. The profit share rate varies with the R-factor on a sliding scale mechanism defined in the contract.
- The tax rate is 30% for the resident and 37.5% (branch tax) for the non-resident. There is 10% withholding tax on dividends.
Updated models
The Merak Fiscal Model Library 2020.3 release includes the following fiscal updates to models.
Canada Alberta Oil Sands R/T (2009)
- The the Canada Alberta Oil Sands R/T (2009) model is updated to incorporate the Job Creation Tax Cut, where the provincial tax rate is reduced from 10% to 8% post 1 July 2020. Furthermore, the federal and provincial tax calculation period has changed to a monthly basis from the earlier annual basis.
- A bug is fixed where all the marker prices related to the Canada Alberta Oil Sands R/T model were saved as an index in the database rather than the price file name. Previously, the economic calculations were not correct if any specific marker file was replaced or deleted in the database as it was saved as an index.
Canada Alberta R/T (2009)
- The the Canada Alberta R/T (2009) model is updated to incorporate the Job Creation Tax Cut, where the provincial tax rate is reduced from 10% to 8% post 1 July 2020. Furthermore, the federal and provincial tax calculation period has changed to a monthly basis from the earlier annual basis.
Canada Alberta R/T (2016)
- The Canada Alberta R/T (2016) model is updated to incorporate the Job Creation Tax Cut, where provincial tax rate is reduced from 10% to 8% post 1 July 2020. Furthermore, the federal and provincial tax calculation period has changed to a monthly basis from the earlier annual basis.
Canada Saskatchewan R/T (2009)
- A bug is fixed where previously, the gas cost allowance (GCA) was not escalated by the opcost escalation rate for the other land when Escalate GCA by opcost Escalation Rate settings was enabled from the OLE Control Extension (OCX) side.
- In addition, an enhancement is made in the OCX to apply GCA deduction, always for crown and freehold land.
Hungary R/T (2008)
- A bug is fixed such that net operating losses now can be carried forward for more than 52 periods. Earlier, if the number of periods entered was more than 52 periods in the “Carry Forward Losses” text box in the income tax add-in settings, the add-in was not calculating.
Norway RT (1975)
- The Norway RT (1975) model is updated to incorporate the temporary petroleum changes in the law. E&P companies are allowed a direct expense of development capex with effect for the 56% special tax basis for the year 2020 and 2021. For the 22% corporate tax basis, the current 6-year straight-line depreciation is continued.
- Additionally, the Special Petroleum Tax (SPT) allowance uplift rate is increased from 20.8% (constituting 5.2% per year over four years) to 24%, which is expensed entirely for the year 2020 and 2021.
United Kingdom R/T (1982)
- A bug is fixed such that net operating losses now can be carried forward for more than 52 periods. Earlier, if the number of periods entered was more than 52 periods in the “Carry Forward Losses” text box in the income tax add-in settings, the add-in was not calculating.
- An enhancement is made where the number of years for Income Tax setting. The “Company Not Taxable Until” is increased from the year 2040 to 2099.
- An enhancement is made where carry forward losses (number of periods) is equal and greater than 1, then the “Losses Carried Forward” text box is now disabled.
- Furthermore, a bug is fixed such that the “Losses Carried Forward” text box always displays the sum of loss carried forward values entered in the Historical Tax Losses settings dialog box.
U.S. Model Default
- State income tax rates are updated for the model.
Merak Fiscal Model Library 2020.3 add-on library enhancements and fixes:
Slb.Merak.Fml.PeepAddin.Canada_OilSandsRoyalty.dll
- A bug is fixed where all the marker prices related to the Canada Alberta Oil Sands model were saved as an index in the database rather than the price file name. Previously, the economic calculations were not correct if any specific marker file was replaced or deleted in the database as it was saved as an index.
Slb.Merak.Fml.PeepOcx.Canada_SkRoyalty.dll
- A bug is fixed where previously, the GCA was not escalated by opcost escalation rate for the other land when Escalate GCA by opcost Escalation Rate settings were enabled from the OCX side.
- In addition, an enhancement is made in the OCX to apply GCA deduction, always for crown and freehold land.
FML__Hungary_IncomeTax.dll
- A bug is fixed such that net operating losses now can be carried forward for more than 52 periods. Previously, if the number of periods entered was more than 52 periods in the “Carry Forward Losses” text box in the income tax add-in settings, the add-in was not calculating.
FML__UK_IncomeTax.dll
- A bug is fixed such that net operating losses now can be carried forward for more than 52 periods. Previously, if the number of periods entered was more than 52 periods in the “Carry Forward Losses” text box in the income tax add-in settings, the add-in was not calculating.
- An enhancement is made where the number of years for Income Tax setting. The “Company Not Taxable Until” is increased from the year 2040 to 2099.
- An enhancement is made where carry forward losses (number of periods) is equal and greater than 1, then the “Losses Carried Forward” text box is disabled now.
- Furthermore, a bug is fixed such that the “Losses Carried Forward” text box always displays the sum total of loss carried forward values entered in the Historical Tax Losses setting dialog box.
FML__Ecuador_PriceQualityAdj
- The user interface is modified where previously, the quality correction coefficient (K) got chopped when oil deg API was defined in the settings box.
FML__Ecuador_PSQualityAdj
- The user interface is modified where previously, the quality adjustment (Y) got chopped when oil deg API was defined in the settings box.
FML_TariffReceipts.dll
- A bug is fixed for the Default Price Escalation value present in the tariff settings for the Norway R/T (1975) model, which was earlier rounded to two decimal points despite the fact that the Number of Decimals for Value is set to more than two decimal values in the settings dialog box.
- A bug is fixed for Default Price Escalation, Default Allowance per period and Default Self Interest percent values present in the tariff settings for the model United Kingdom R/T (1982), which were rounded to two decimal points despite the Number of Decimals for Value being set to more than two decimal values in the settings dialog box.
