Merak Fiscal Model Library
A world-class collection of standardized fiscal models
Kurdistan PSC (2006)
Fiscal Term Description
Fiscal Regime Type Production Sharing Contract.
Governing Legislation • Kurdistan Model Production Sharing Contract
State Participation • KEPCO shall have a direct working interest in Petroleum Operations
Signature Bonus • Bonus due if contract area contains proved reserves
• Production bonuses due when daily production exceeds a threshold value for more
than ninety days.
Prod (BOE/d) Bonus (MM$)
Production Bonus 25,000 Negotiable
50,000 Negotiable
100,000 Negotiable
Production Bonuses are paid Quarterly
Training Fee • Negotiable (Fixed amount each contract year)
Surface Rental Fee • Negotiable
• Oil Royalty is levied on an incremental sliding scale based on production rate (bbl/d) and API
Density (oAPI).
• Royalty is applied to petroleum produced less petroleum used in operations, flared, re-
injected or otherwise un-useable.
• Minimum Oil Royalty rates are in the table below; all other production tiers are negotiable.
API API API
Oil Density Density Density
Production Degrees Degrees Degrees
Royalty (Bbl/d) 0.0 20.0 30.0
>1 7.5 % 8.5 % 10.0 %
Note: API Density should be Entered on the Products Tab for Oil
• Gas royalty is levied on incremental sliding scale based on gas production rate (Mcf/d)
• Minimum Gas Royalty Rate is 5%; all other production tiers are negotiable
Gas Production (Mcf/d) Royalty (%)
>1 5.0
• Abandonment costs are accrued over the last 10years of the life of the asset or a longer
negotiated period.
Abandonment Fund
• Abandonment Fund is cost recoverable
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Kurdistan PSC (2006)
Fiscal Term Description
• Cost recovery limit depends on API Density (oAPI)of the crude oil:
Degrees API CRL
<14 70%
14 – 20 65%
20 – 30 60%
>30 55%
Note: API Density should be Entered on the Products Tab for Oil
Cost Recovery
• Cost recovery limit for gas is 70%
• Revenue for cost recovery is Project Sales Revenue less Royalty.
• Operating, Development & Exploration costs are expensed for cost recovery.
• Order of Cost Recovery: 1) Operating, 2) Exploration, 3) Development & 4) Other Costs.
• Un-recovered costs are carried forward indefinitely.
• Costs incurred between time of MOU and Effective date may be recoverable. These costs
are not included in R-factor calculation
• Profit oil is defined as remaining production after royalty and cost recovery. It is shared
between State and Contractor according to and R-Factor scale as follows:
R-Factor Contractor Share (%)
0 – 1.5 70
1.5 – 2.0 60
Profit Sharing 2.0 – 2.5 50
> 2.5 40
Note: R Factor values are assumptions as the thresholds are negotiable
Where R Factor = ________________Cost Oil + Profit Oil_____________
Exploration Capital + Development Capital + Operating Costs
• Income tax rate is a fixed rate determined by the governing petroleum tax law.
• Subject to an agreement in any year Income tax is paid on behalf of the contractor from the
Income Tax government’s share of profit oil
• If tax rate is entered, model will estimate value of Tax in Barrels for reserves (for US
companies).
Withholding Tax None
Periodicity Semi-Annual
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provides consulting, software, information management and IT infrastructure services to support the core operational processes of the oil and gas
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www.sis.slb.com 04-IS-171
October 2006 Page 2 of 2
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