29 August 2011

Nalcor Royalties: yet more information

Nalcor estimates the company will pay anticipated royalties to the provincial government totalling  $2.06 Billion dollars.

That’s from the second post in what has become a miniseries.

Nalcor followed up with some further information on how much oil they estimate is involved and how much they estimate the gross revenues will be.

Here’s the verbatim paragraph from Nalcor’s e-mail:

Nalcor Energy's total anticipated royalty payments of at $2.06 Billion dollars is included in a total projected gross revenue of $7.58 Billion.  These revenues are expressed in nominal terms meaning they are the sum of un- discounted cash flows.  The calculation uses the "PIRA Brent Reference" pricing issued November 2010.  Each project has a different oil price project owing to its differences in crude quality.  As an approximation, $92/bbl [$92 per barrel] in 2010 [dollars] can be used escalated thereafter. Total Nalcor Energy reserve volumes used for the calculation was 52.8 million barrels (proven and probable).

Nalcor may not have to pay any royalties from Hebron even though Nalcor’s projection assumes it will.

Under the Hebron financial agreement, the provincial government can exempt Nalcor from paying any royalties at all on its 4.9% interest.

The escalation is two percent per year.

- srbp -