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Crack spread is a term used on the oil industry and futures trading for the differential between the price of crude oil and petroleum products extracted from it. The spread approximates the profit margin that an oil refinery can expect to make by " cracking " the long-chain hydrocarbons of crude oil into useful shorter-chain petroleum products.
The original owner of an oil and gas lease will sometimes retain an overriding royalty as part of a farmout agreement. For any oil and gas property, the total working interests must add up to 100%. The sum of the net revenue interests, royalty interests, and overriding royalty interests, must also add up to 100%.
The state can agree with the licensees to take it in kind or in cash. This arrangement applies to both crude oil and to natural gas, both in concessionary and contractual license systems. Production shares. The body of a production sharing contract layouts the production share between the contractor(s) and the state or its state-owned oil ...
The Crude Oil Windfall Profit Tax Act of 1980 (P.L. 96-223) was enacted as part of a compromise between the Carter Administration and the Congress over the decontrol of crude oil prices. [1] The Act was intended to recoup the revenue earned by oil producers as a result of the sharp increase in oil prices brought about by the OPEC oil embargo.
The royalty tax is an indirect tax, and has been historically the most important mineral tax. [1] When the production starts, the tax is due. That generates up-front revenues for the government. A different approach of the royalty tax is, to impose it as a factor payment for extraction of minerals. [4]
Royalty relief may be applied to either active leases or to newly offered leases directly in their fiscal terms. The primary MMS royalty relief programs include those that were required for Gulf of Mexico deepwater leases (located in water depth greater than 200 meters or 656 feet) issued in 1996–2000 under the DWRRA. After certain sunset ...
Flaring a flow test, the first outward indication of a new oil or gas discovery, which has the potential to qualify for reserves assessment. Oil and gas reserves denote discovered quantities of crude oil and natural gas (oil or gas fields) that can be profitably produced/recovered from an approved development. Oil and gas reserves tied to ...
The oil company bears the mineral and financial risk of the initiative and explores, develops and ultimately produces the field as required. When successful, the company is permitted to use the money from produced oil to recover capital and operational expenditures, known as "cost oil".