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Block 9 Illustrative Service Contract Structure
o
Contracts with 100% take or pay
o
50% of deemed revenue is allocated for
cost recovery
o
Service fee on dollar per boe basis,
independent of oil price
o
Service fee is based on R-factor, the $/boe
fee gradually decreases once revenue is
greater than expenditures
o
Southern Oil Company offtake of
crude/gas produced
o
“Paid-in-kind” in crude cargoes unless
South Oil company elects for it to be paid
in cash
o
Increases payment and financing flexibility
Deemed Revenue
(Export oil price X net oil prod’n, plus 50% of export
oil price X net gas prod’n)
Cost Recovery
(Opex, Capex, past cost unrecovered)
Remuneration Fee
(1)
(R factor dependent)
Contractor Revenue less gov’t charges
Up to 50% available
Tax of 35% applied to recovered
Remuneration fee
Up to 30% X (deemed revenue -
cost recovered)
Add’l payments to the gov’t
(Signature bonus, infrastructure fund contribution, training fee)
=
(1) Remuneration fee of $1.25-6.24/boe, based on R factor.
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Iraq Licence Overview: Lower Oil Price Risk