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| Impact of Hebron flat royalty at prices below US$50 click to go to 2015 post |
Oil from the Newfoundland and Labrador offshore sells for Brent prices.
If it is down, then government makes less. Bit of an offset potentially in the exchange rate but they key thing is that when oil is worth less, the government makes less.
WTI price is important because it affects payment of a super-royalty on some projects that
have already hit pay-out.
With oil
prices lower across the board, the
provincial government takes in less money.
Month-to-month that might not be a lot but over time it can add up.
Watch out
for the impact of lower oil revenues on the 2019 fiscal year, just coming to
an end on 31 March.
... and...
Watch out
for the forecast for oil prices in the 2020 budget.
The provincial government already forecast a deficit next year of about $800 million (accrual). That’s about 50% higher than the forecast deficit in 2019, once you take out the accounting for the Hibernia royalty transfer deal that keeps getting called the Atlantic Accord.
The provincial government already forecast a deficit next year of about $800 million (accrual). That’s about 50% higher than the forecast deficit in 2019, once you take out the accounting for the Hibernia royalty transfer deal that keeps getting called the Atlantic Accord.
