OT05920 | PRT: terminal liftings - allocation of oil sold under ‘Period of Entitlement’ and term contracts (Regulation 5)

Regulation 5 outlines the modified allocation rules to determine how oil sold under POE and other term contracts is to be allocated across a company’s field interests that deliver into those contracts.

The same formula and principles as outlined for regulations 4 and 6 above apply, except that the C figure in the formula will only be the sum of the participator’s B figures for field interests covered by the contract in question.

Example:

Scavenger Ltd has an interest in 3 fields in Sporting blend - Dog, Duck and Waders.

Scavenger Ltd has a term contract with Major UK Ltd. The contract covers Scavenger’s oil production from its interests in both Dog and Duck fields, but not its interest in Waders field.

In Month M Scavenger’s entitlements from the 3 fields are as follows:

Dog 50,000 bbl

Duck 30,000 bbl

Waders 50,000 bbl

Major UK Ltd lifts 40,000 bbl of oil under the term contract with Scavenger on 10th M. How is this allocated across Scavenger’s fields?

A = 40,000 bbl (that is, the amount lifted and sold under the contract in question)

Dog’s B = 50,000 bbl

Duck’s B = 30,000 bbl

So, C = 80,000 bbl

Dog’s allocation = 40,000 (A) x 50,000 (B) / 80,000 (C) = 25,000 bbl

Duck’s allocation = 40,000 (A) x 30,000 (B) / 80,000 (C) = 15,000 bbl

Production from Waders will in all likelihood be sold under another term / POE contract. If it is the only field under the contract then lifting of oil by the purchaser under this contract will be allocated to Waders alone.