Royalty Regulations

N.S. Reg. 71/1999

Nova Scotia — Regulations

This consolidation is unofficial and is for reference only.

For the official version of the regulations, consult the original documents on file with the Office of the Registrar of Regulations , or refer to the Royal Gazette

Part II .

Regulations are amended frequently.

Please check the list of Regulations by Act to see if there are any recent amendments to these regulations filed with our office that are not yet included in this consolidation.

Although every effort has been made to ensure the accuracy of this electronic version, the Office of the Registrar of Regulations assumes no responsibility for any discrepancies that may have resulted from reformatting.

Offshore Petroleum Royalty Regulations

made under

Section 23 of the

Offshore Petroleum Royalty Act

S.N.S. 1987, c. 9

O.I.C. 1999-337 (effective June 17, 1999), N.S. Reg. 71/1999

amended to O.I.C. 2007-89 (effective February 19, 2007), N.S. Reg. 55/2007

Please note: this table of contents is provided for convenience of reference and does not form part of the regulations.

Click here to go to the text of the regulations .

Short title

Part I - Mandatory Provisions

Interpretation and application

Abandonment Cost

Abandonment Loss

Allowed Cumulative Field Costs

Asset Proceeds Balance

BTU content of Gas

Buyout Payment

Canada-Nova Scotia Benefits

Calculation of sale proceeds

Calculation of sale price

Return allowances

Dates of Field payout

Fair Market Value

Gross Revenue

Cumulative Gross Revenue

LTBR

Net Revenue and Net Loss

Petroleum Royalty Meter

Reservoir Performance Risk Amount

Tariff Balance

Non-Arm’s-Length Persons

Determining Fair Market Value

Method of payment of Royalty

Payment in kind

Estimates

Calculating costs

Anti-avoidance rule

Royalty Returns and Assessments

Books and records

GAAP

Confidentiality of records

Audits

Refunds

Interest

Penalty

Application of payments

Waiver of penalty or interest

Notices

Assignments of working interest in the Field

Assignment of working interest in Field Assets

Assignment of Assets Proceeds Balance

Adjustment of Royalty Consequences

Further rules for determining costs and revenues

Unrecovered Assistance

Cost allocated among Field(

s) Cost respecting assets not used in the Field

Assets deemed to be in use

Amount received or receivable

Deemed Allowed Operating Cost and Allowed Capital Cost

Deemed acquisition

Double counting

Leasing an asset

Smoothing of costs

Consuming Petroleum Produced

General

Part II - Further Provisions

Application of

Part II

Interpretation

Allowed Capital Costs

Allowed Netback Costs

Allowed Operating Costs

Allowed Predevelopment Costs

Commercial Production

Disallowed Costs

Field

Field Area

Field Asset

Tariff Amount

Non-recognition transactions

Determining Fair Market Value

Rulings

Prescribed Royalty

Referral of disputes

Short title

1 These regulations may be cited as the Offshore Petroleum Royalty Regulations.

Part I - Mandatory Provisions

Interpretation and application

(1) In these regulations

(a) “Abandonment Cost” has the meaning set forth in

Section 3;

(b) “Abandonment Loss” has the meaning set forth in

Section 4;

Resources Accord Implementation Act (Canada);

(d) “ Accord Act (Nova Scotia) ” means the Canada-Nova Scotia Offshore

Petroleum Resources Accord Implementation (Nova Scotia) Act ;

(e) “Act” means, unless the context otherwise requires, the Offshore Petroleum

Royalty Act ;

(f) “Allowed Cumulative Field Costs” has the meaning set forth in

Section 5;

(g) “Arm’s Length” has the meaning set forth in

Section 22;

(h) “Arm’s-Length Transaction” means, subject to subsection 22(3), any

transaction between Persons that are dealing at Arm’s Length;

(i) “Assessment” means an assessment made by the Minister pursuant to

Section 9 of the Act;

(j) “Asset Proceeds Balance” has the meaning set forth in

Section 6;

(k) “Assistance” in relation to a cost, expense or other amount means any

amount that is a reimbursement, compensation or other payment from a

government, municipality or other public authority in respect of the cost,

expense or other amount, including any amount of related assistance, or

reimbursement or benefit whether as a grant, subsidy, forgivable loan,

investment allowance, tax credit or any other form of assistance, not

including

(

i) any resource allowance or a replacement or successor provision

under the Income Tax Act (Canada) ,

(ii) any deduction in computing income or taxable income that is not in

excess of net cost, or

(iii) any similar allowance, provision or deduction under a provincial

income tax statute;

(l) “Average BTU Production Content” has the meaning set forth in subsection

7(1);

(m) “Average BTU Sale Content” has the meaning set forth in subsection 7(2);

(n) “Avoidance Transaction” has the meaning set forth in

Section 28;

(o) “Board” means the Canada-Nova Scotia Offshore Petroleum Board;

(p) “Business Day” means a day on which chartered banks are open for

business in both Calgary, Alberta and Halifax, Nova Scotia;

(q) “Buyout Payment” has the meaning set forth in

Section 8;

(r) “Canada-Nova Scotia Benefits” has the meaning set forth in

Section 9;

(s) “Commercial Discovery” means a commercial discovery as that term is

used in the Accord Act (Nova Scotia) ;

(t) “Condensate” means a hydrocarbon other than crude oil that is in liquid

form at the time of being measured by the relevant Petroleum Royalty Meter

and that may contain LPG, excluding impurities;

(u) “Condensate Produced” means the volume of Condensate produced from

the Field excluding any Condensate that is or will become LPG Produced

from the Field , as measured by the relevant Petroleum Royalty Meter,

adjusted to include Condensate that is Waste;

(v) “Condensate Sale Price” has the meaning set forth in subsection 11(1);

(w) “Condensate Sale Proceeds” has the meaning set forth in subsection 10(1);

(x) “Crude Oil” means

(

i) crude oil, regardless of gravity, produced at a well head in liquid

form, excluding impurities,

(ii) any other hydrocarbons except Condensate, Gas and LPG, and

without limiting the generality of the foregoing, includes liquid

hydrocarbons that may be extracted or recovered from deposits of oil

sand, bitumen, bituminous sand, oil shale or from any other types of

deposits on the surface or subsurface or the seabed or its subsoil of

the Offshore Area, excluding impurities;

(y) “Crude Oil Produced” means the volume of Crude Oil produced from the

Field as measured by the relevant Petroleum Royalty Meter, adjusted to

include Crude Oil that is Waste;

(z) “Crude Oil Sale Price” has the meaning set forth in subsection 11(2);

(aa) “Crude Oil Sale Proceeds” has the meaning set forth in subsection 10(2);

(ab) “Cumulative Final Return Allowance” has the meaning set forth subsection

12(6);

(ac) “Cumulative Gross Revenue” has the meaning set forth in

Section 16;

(ad) “Cumulative Primary Return Allowance” has the meaning set forth in

subsection 12(2);

(ae) “Cumulative Secondary Return Allowance” has the meaning set forth in

subsection 12(4);

(af) “Fair Market Value” has the meaning set forth in

Section 14;

(ag) “Final Date of Field Payout” has the meaning set forth in subsection 13(3);

(ah) “Final Return Allowance” has the meaning set forth in subsection 12(5);

(ai) “Force Majeure” means an event including, without limiting the generality

of the foregoing,

an act of God,

an act of the public enemy, war, revolution,

insurrection, arrest, civil disturbance, blockade, riot, epidemic, strike, a

lockout or other industrial disturbance, fire, lightning, earthquake, storms,

floods, tsunami, washout, ice-flow, icebergs, high seas, fog, explosion,

breakage or accident, shortage of or inability to obtain labour or materials or

government restraint, action, delay or inaction, which the Interest Holder

was unable to prevent or provide against by the exercise of reasonable

diligence at a reasonable cost;

(aj) “GAAP” means Canadian generally accepted accounting principles and all

relevant accounting procedures and conventions of the Interest Holder

provided that such policies are in accordance with Canadian generally

accepted accounting principles;

(ak) “Gas” means natural gas and includes all hydrocarbon substances, other

than Crude Oil, Condensate, LPG and impurities, produced in association

with gas;

(al) “Gas Produced” means the volume of Gas produced from the Field

excluding any Gas that is or will become LPG Produced from the Field, as

measured by the relevant Petroleum Royalty Meter adjusted to include Gas

that is Waste;

(am) “Gas Sale Price” has the meaning set forth in subsection 11(3);

(an) “Gas Sale Proceeds” has the meaning set forth in subsection 10(3);

(ao) “Gross Revenue” has the meaning set forth in

Section 15;

(ap) “Included Risk” for a Field means a risk relating to Field Assets, including

the design, construction and assembly of Field Assets, or activities occurring

in the Nova Scotia Area and that occur within, or in furtherance of activities

within, the Field Area, other than activities in respect of Petroleum

Produced that is downstream of the relevant Royalty Valuation Point,

excluding political risks, abandonment other than risk related to the conduct

of the abandonment work, business interruption or change in applicable

Royalty;

(aq) “ Income Tax Act (Canada)” means the Income Tax Act , R.S.C. 1985, First

Supplement as amended from time to time, except as noted in subsection

22(1);

(ar) “Incremental Asset” means, subject to any agreement in writing between the

Interest Holder and the Minister, the interest of the Interest Holder in any

asset or any part thereof to the extent that that interest was acquired for use

in respect of Petroleum other than Petroleum Produced from the Field, and

where an asset would otherwise be a Field Asset, the Interest Holder may

elect that the asset be deemed to be an Incremental Asset, provided that the

result of the election may not reasonably be expected to result in a

significant overall reduction in Royalty payable in respect of the Field or

any Other Field;

(as) “Incremental Cost” means any cost that is

(

i) incurred in respect of a Field Asset where the cost is a betterment

under GAAP, to the extent that the cost is incurred for the purpose of

use in respect of Petroleum other than Petroleum Produced from the

Field, or

(ii) the cost of an Incremental Asset;

(at) “Independent Auditors’ Report” means a report by the independent auditors

of an Interest Holder or of the operator of a Field or any Field Asset, in

respect of a Royalty Return for a Period, stating that, in their opinion, the

Royalty Return of the Interest Holder for the Period presents fairly, in all

material respects, the amount of Royalty payable by the Interest Holder for

the Period in accordance with these regulations and any agreement in

writing between the Interest Holder and the Minister;

(au) “Interest Holder” for a Field or an area that is subsequently determined to be

a Field means

(

i) a holder of a share in a Production Licence in respect of the Field or

a portion of the Field or a former holder of a share in a Production

Licence that has expired, or

(ii) where a Production Licence has not been issued in respect of the

Field or a portion of the Field, a holder of a share in an exploration

licence or Significant Discovery licence in respect of the Field or a

portion of the Field;

(av) “LPG” means hydrocarbons that are composed principally of hydrocarbons

that are heavier than methane but lighter than pentane and which are

extracted from Condensate or Gas and sold as liquid or compressed ethane,

butane or propane, or a mixture of such hydrocarbons;

(aw) “LPG Produced” means, where LPG is extracted by or on behalf of the

Interest Holder from Condensate or Gas that has been produced from the

Field, the volume of LPG so extracted as measured by the relevant

Petroleum Royalty Meter, adjusted to include LPG that is Waste;

(ax) “LPG Sale Price” has the meaning set forth in subsection 11(4);

(ay) “LPG Sale Proceeds” has the meaning set forth in subsection 10(4);

(az) “LTBR” has the meaning set forth in

Section 17;

(ba) “Month” means a calendar month, except that where a Period is deemed to

begin or end at a particular time under

Section 40, the first or last Month of

that Period may be a portion of a calendar month, and the first Month shall

be the calendar month in which the Field Commencement Date occurs;

(bb) “Month of Cessation” means the Month in which Commercial Production

from the Field ceases, other than where it may reasonably be considered that

the cessation is only for a temporary period;

(bc) “Net Loss” has the meaning set forth in subsection 18(2);

(bd) “Net Revenue” has the meaning set forth in subsection 18(1);

(be) “Non-Technical Costs” means personnel costs, expenses or other amounts

in respect of advertising, public relations, community liaison or legal

services, other than in respect of the regulatory process or as required by or

under any Canadian federal or provincial enactment, financial services,

financial accounting, financial auditing, executive search consultants,

human resources, clerical staff, charitable donations, general management

consulting, or management consulting in relation to any of the foregoing

matters but does not include a cost, expense or other amount described in

subclauses (ck)(

i) or (ii);

(bf) “Noon Day Rate” for a particular Month or day in a Month in respect of a

particular foreign currency means the exchange rate quoted by the Bank of

Canada as its noon day rate for converting foreign currency into Canadian

dollars utilizing the same method as that used by the Interest Holder for

accounting purposes in converting foreign currency into Canadian dollars,

except that if the method is contrary to industry standards, another

reasonable method shall be used that is not contrary to industry standards

and is acceptable to the Minister;

(bg) “Notice” means any notice, consent, request and other document authorized

or required to be given pursuant to these regulations or any agreement

between the Minister and the Interest Holder entered into pursuant to the

Act;

(bh) “Nova Scotia Area” means collectively the Offshore Area and the

geographical area of the Province to the inner limit of the Offshore Area;

(bi) “Offshore Area” means the lands and submarine areas within the limits

described in

Schedule I of the Accord Act (Nova Scotia) ;

(bj) “Payout Statements” means the payout statements to be filed with a Royalty

Return;

(bk) “Period” for an Interest Holder means a period of 12 consecutive Months

ending on the last day of the fiscal period of the Interest Holder for financial

reporting purposes, or such other date as is acceptable to the Minister,

except that

(

i) the following periods:

(

A) the first Period (which shall start on the Field Commencement

Date),

(

B) the last Period (which shall end when the Interest Holder may

no longer incur Abandonment Costs), and

(

C) a Period that commences or ends by virtue of an assignment

pursuant to

Section 40,

may each be less than 12 Months in duration, and

(ii) the Minister may permit a lesser number of Months in any Period

pursuant to a request by an Interest Holder;

(bl) “Person” means a natural person, corporation, association, union,

government or government agency and includes a partnership or trust;

(bm) “Petroleum” means a hydrocarbon that is Condensate, Crude Oil, Gas or

LPG;

(bn) “Petroleum Produced” means, subject to

Section 55, collectively

(

i) Condensate Produced,

(ii) Crude Oil Produced,

(iii) Gas Produced, and

(iv) LPG Produced,

and a “Component of Petroleum Produced” means any one of the types

listed in subclauses (

i) to (iv);

(bo) “Petroleum Royalty Meter” for a Field means a device used to measure

volume of Petroleum that is located as provided in

Section 19;

(bp) “Petroleum Sale Price” means any or all of the Condensate Sale Price,

Crude Oil Sale Price, Gas Sale Price or LPG Sale Price;

(bq) “Pool” means a natural underground reservoir containing or appearing to

contain an accumulation of Petroleum that is separated or appearing to be

separated from any other such accumulation;

(br) “Primary Date of Field Payout” has the meaning set forth in subsection

13(1);

(bs) “Primary Return Allowance” has the meaning set forth in subsection 12(1);

(bt) “Production Licence” means a licence issued by the Board to produce

Petroleum from a Field or Other Field or portion of a Field or Other Field;

(bu) “Production Startup Date” for a Field means the later of the Field

Commencement Date and the first day of the Month in which Commercial

Production first occurs;

(bv) “Related” and “Related Persons” have the meanings set forth in

subsection 22(2);

(bw) “Relevant BTU Adjustment Factor” has the meaning set forth in subsection

7(3);

(bx) “Reservoir Performance Risk Amount” has the meaning set forth in

Section

20;

(by) “Royalty” means, subject to any agreement in writing between the Minister

and the Interest Holder, the royalty payable in respect to a Field pursuant to

these regulations;

(bz) “Royalty Benefit” means a reduction, avoidance or deferral of Royalty or

other amount payable under these regulations or an increase in a refund of

the Royalty or other amount;

(ca) “Royalty Consequences” to a Person means the Royalty or other amount

related to Royalty payable by or refundable to a Person under these

regulations;

(cb) “Royalty Paying Month” of an Interest Holder for a Field means a Month

for which Royalty is payable by the Interest Holder;

(cc) “Royalty Return” means the return to be filed with the Minister pursuant to

Section 29;

(cd) “Royalty Valuation Point” means a place at which the Petroleum first leaves

the Field Area;

(ce) “Secondary Date of Field Payout” has the meaning set forth in subsection

13(2);

(cf) “Secondary Return Allowance” has the meaning set forth in subsection

12(3);

(cg) “Short Term Rate” means the minimum rate, from time to time, at which

the Bank of Canada makes short term Canadian dollar advances to members

of the Canadian Payments Association;

(ch) “Significant Discovery” means significant discovery as that term is used in

the Accord Act (Nova Scotia) ;

(ci) “Support Facility” means a facility located in the Nova Scotia Area

including an office, railspur line other than a railspur line that was acquired

or constructed primarily for the purpose of transporting Petroleum

downstream of the relevant Petroleum Royalty Meter, weather station,

helicopter pad, warehousing facility, pipeyard facility or other facility

constructed in accordance with a requirement by a government or

government authority that is used or intended to be used to provide services

or support functions in respect of

(

i) Petroleum Produced, or

(ii) activities that occur either within or outside the Nova Scotia Area and

that are in regard to the Field, the Field Assets or Petroleum

Produced,

other than services or support functions in respect of Petroleum that has

passed downstream of the relevant Royalty Valuation Point;

(cj) “Tariff Balance” has the meaning set forth in

Section 21;

(ck) “Technical Costs” means

(

i) costs, expenses or other amounts in respect of engineers, geologists,

geophysicists and other scientists, field personnel, environmental

health and safety experts, all experts reasonably required in

conjunction with the regulatory process (including public affairs,

community liaison and consultants) and management consulting in

relation to any of the foregoing matters,

(ii) charges of all regulatory bodies and agencies, excluding fines and

penalties, and

(iii) any other costs of personnel which are not Non-Technical Costs;

(cl) “Third Party Costs” means, subject to the provisions of any agreement in

writing between the Minister and the Interest Holder, any costs, expenses or

other amounts incurred with a Person that deals at Arm’s Length with the

Interest Owner and each Other Interest Holder other than

(

i) an amount arising under a back-to-back arrangement which is

indirectly payable to a Person that does not deal at Arm’s Length

with the Interest Holder or any Other Interest Holder of the Field,

(ii) salaries, wages, remuneration, fees or related benefits of an individual

who is employed by, or who performs services primarily for and is

akin to a contract employee of the Interest Holder, the operator of the

Field or any Field Asset or an Other Interest Holder of the Field or a

Person that is Related to any such Person, and

(iii) costs of temporary replacement of an individual described in

subclause (ii), such as for vacation, sickness, disability, bereavement,

maternity leave or paternity leave;

(cm) “Transaction” includes any arrangement or event, and a “Series of

Transactions” includes any related Transactions completed in contemplation

of the series; and

(cn) “Waste” means Petroleum that has been produced, saved and recovered

from the Field Area (other than Petroleum that has passed through the

relevant Petroleum Royalty Meter) that meets each of the following tests:

(

i) it is waste within the ordinary meaning of that term or as understood

in the oil and gas industry,

(ii) it arises as a result of Gross Negligence, and

(iii) it is attributable to one or more of the following:

(

A) drilling, equipping, completing, operating or producing of any

well in a manner that causes the unnecessary or excessive loss

or destruction of Petroleum after being produced, saved and

recovered (excluding blowouts),

(

B) inefficient storage of Petroleum above ground or underground,

(

C) production of Petroleum in excess of available storage,

transportation or marketing facilities, or

(

D) the escape or flaring of Gas that could be economically

recovered or economically injected into an underground

reservoir.

(2) Additional

definitions are found in

Part II of these regulations, and, subject to

subsection (3), will apply together with the

definitions in subsection (1).

(3) Except as may otherwise be agreed between the Minister and an Interest Holder,

Parts I and II of the regulations apply together in determining the obligations and

liabilities of the Interest Holder and the Minister in respect of Royalty and other

matters relating to a Field Area.

Abandonment Cost

(1) Subject to subsection (2), the Abandonment Cost of an Interest Holder for a Field

shall be

(

a) a cost, expense or other amount incurred in closing down,

decommissioning, abandoning, or removing, in whole or in part, a Field

Asset, including ongoing repair, maintenance, monitoring or keeping a Field

Asset in a safe condition following the cessation of the use of that Field

Asset in contemplation of abandonment of that Field Asset within the time

frame contemplated by clause (2)(c), restoration of land or seabed in which

a Field Asset is or was located and consulting in respect of, or obtaining

approval to, any of the foregoing; or

(

b) a Buyout Payment made by the Interest Holder, in connection with liabilities

relating to a Field Asset, to a Person with whom the Interest Holder deals at

Arm’s Length, and where a Buyout Payment has been received by an

Interest Holder in respect of a Field Asset, any amount incurred by the

Interest Holder and otherwise falling within clause (

a) in respect of the Field

Asset shall be reduced, after taking into account the applicable Overhead

Uplift, by the amount of the Buyout Payment attributable to the Field Asset,

adjusted to reflect the intervening time period between the end of the Month

in which the Buyout Payment was received and the end of the Month in

which the Abandonment Cost under clause (

a) is incurred, using the LTBR

applicable at the end of the Month in which the Buyout Payment was

received, and if such reduction is greater than the actual aggregate

Abandonment Costs under clause (

a) that are incurred in respect of the Field

Asset, the difference shall be included in the Asset Proceeds Balance of the

Interest Holder who received the Buyout Payment for the Month in which

the final Abandonment Costs in respect of the Field Asset were incurred or

the Month of Cessation, whichever is earlier.

(2) A cost, expense or other amount shall constitute an Abandonment Cost only to the

extent that

(

a) in the case of an amount that is not a Buyout Payment, it is a cost, expense

or other amount that is

(

i) required to be incurred by statute, regulation, rule or binding order of

the Board or other applicable regulatory authority,

(ii) incurred in accordance with prudent and desirable industry practices,

(iii) approved by the Minister for inclusion as an Abandonment Cost; or

(

b) in the case of a Buyout Payment made by the Interest Holder, it is a cost,

expense or other amount that may reasonably be expected to be

(

i) required to be incurred at a later time by statute, regulation, rule or

binding order of the Board or other applicable regulatory authority,

(ii) incurred in accordance with prudent and desirable industry practices,

(iii) approved by the Minister for inclusion as an Abandonment Cost,

and that would have been an Abandonment Cost of the Interest Holder

making the Buyout Payment if it were incurred by that Interest Holder at the

later time referred to in subclause (i); and

(

c) it is incurred

(

i) prior to the end of the Month of Cessation or within 3 years after the

end of the Month of Cessation, or

(ii) in accordance with a decision made by the Interest Holder within 2

years after the end of the Month of Cessation to abandon the relevant

Field Assets and the abandonment of those Field Assets is completed

as soon as reasonably practicable after the decision is made, and in

particular without any intentional material delay for the purposes of

earning amounts that are of the type described in clause 21(

a) respecting Tariff Balance.

Abandonment Loss

4 The Abandonment Loss of an Interest Holder for a Field at the end of the Month shall be

(

a) where the Month is the Month of Cessation or any previous Month, the

lesser of

(

i) the Net Loss for that Month, taking into account any Net Loss

brought forward under subsection 27(3) as an addition to Allowed

Capital Costs, or

(ii) the aggregate of the Abandonment Costs incurred in that Month and

the Abandonment Costs included in any Net Loss from the previous

Month brought forward to that Month under subsection 27(3),

inclusive in each case of Overhead Uplifts and taking into account

any reductions to such Abandonment Costs under subsection 44(8),

where the Abandonment Costs included in any Net Loss from the

previous Month brought forward to that Month under

subsection 27(3) means the lesser of

(

A) the Net Loss from the previous Month, or

(

B) the aggregate of the Abandonment Costs incurred in the

previous Month and any Abandonment Costs included in a Net

Loss brought forward to the previous Month under

subsection 27(3), computed in accordance with this paragraph,

inclusive in each case of Overhead Uplifts and taking into

account any reductions to such Abandonment Costs under

subsection 44(8);

(

b) where the Month is after the Month of Cessation, the aggregate of

(

i) the amount determined in clause (

a) at the end of the Month of

Cessation, and

(ii) the aggregate of all Abandonment Costs, inclusive of Overhead

Uplifts, incurred after the Month of Cessation by the Interest Holder

in respect of the Field Assets, taking into account any reductions

thereto under subsection 44(8).

Allowed Cumulative Field Costs

5 The Allowed Cumulative Field Costs of an Interest Holder for a Field as at the end of

any Month shall be the aggregate of

(

a) Allowed Predevelopment Costs of the Interest Holder incurred on or before

the end of the Month;

(

b) Allowed Capital Costs of the Interest Holder incurred on or before the end

of the Month, excluding any amount added to Allowed Capital Costs for a

Month under subsection 27(3) or 27(4);

(

c) Allowed Operating Costs of the Interest Holder incurred on or before the

end of the Month;

(

d) Royalty payable by the Interest Holder for all previous Months; and

(

e) the Royalty that would be payable for the Month if the Royalty were

calculated using the formula for calculating Royalty that was applicable in

determining the Royalty payable for the immediately preceding Month,

minus

(

f) the aggregate of the Tariff Balance and Asset Proceeds Balance of the

Interest Holder, determined at the end of the Month but reduced to take into

account any reduction in Tariff Balance or Asset Proceeds Balance as a

result of the reduction under subsection 44(8) to Allowed Operating Costs

or Allowed Capital Costs incurred during the Month.

Asset Proceeds Balance

(1) Subject to

Section 40, the Asset Proceeds Balance of an Interest Holder at any time

during a Month shall be the amount, if any, by which

(

a) subject to subsection (2), the aggregate of all amounts, each of which is an

amount that is receivable or has been received by the Interest Holder on or

before that time, including any deemed proceeds of disposition under

Sections 41 or 48, for the sale, lease, licence or other disposition of Field

Assets, to the extent of the amount of the cost of the assets, including

Overhead Uplift, and taking into account any reduction of the cost for

Assistance or increase to the cost under

Section 45, that have been included

as Allowed Predevelopment Costs or Allowed Capital Costs of the Interest

Holder in respect of the Field, before any reduction under subsection 44(8),

excluding

(

i) any consideration received or receivable on a transaction to the extent

that the consideration is for the sale or grant of a working interest,

overriding royalty interest, carried interest, net profit interest, penalty

associated with acquiring a carried interest or any similar interest in

the Field, and

(ii) any insurance proceeds referred to in clause 18(1)(

b) respecting Net

Revenue, reading that clause without reference to the reductions

contemplated by it,

exceeds the aggregate of

(

b) the aggregate amount by which the Allowed Operating Costs or Allowed

Capital Costs incurred in all previous Months have been reduced under

clauses 44(8)(a), (b), or (f); and

(

c) where the time is after the Month of Cessation, the amount included in Net

Revenue for the Month of Cessation pursuant to subclause 18(1)(d)(i).

(2) For the purposes of clause (1)(a), the proceeds received or receivable by an Interest

Holder for the disposition of a Field Asset shall be reduced by any amount that the

Interest Holder pays to the purchaser or to another Person, under or concurrently

with the disposition of the Field Asset, in consideration for the purchaser agreeing

to assume the obligations of the Interest Holder in respect of Abandonment Costs

in respect of the disposed Field Asset.

BTU content of Gas

(1) The Average BTU Production Content of the Interest Holder in a particular Month

for Gas Produced shall be determined by dividing the total heating value of the

share of Gas Produced of the Interest Holder that is measured by the relevant

Petroleum Royalty Meter in that Month, by the total volume of the share of Gas

Produced of an Interest Holder, expressed in such units as are consistent with the

units used to determine the Average BTU Sale Content of the Interest Holder in a

particular Month for Gas Produced.

(2) The Average BTU Sale Content of the Interest Holder in a particular Month for

Gas Produced shall be determined by dividing the total heating value of the share

of Gas Produced of the Interest Holder that is disposed of by the Interest Holder in

that Month, by the total volume of the share of Gas Produced of the Interest

Holder, expressed in such units as are reasonable in the circumstances.

(3) The Relevant BTU Adjustment Factor in a particular Month for Gas Produced

shall be determined by dividing the Average BTU Production Content in that

Month by the Average BTU Sale Content in that Month, and despite the foregoing,

if in a particular Month there has been no sale of Gas Produced in that Month, the

Relevant BTU Adjustment Factor for Gas Produced in that Month shall be deemed

to be 1.

Buyout Payment

(1) Subject to subsections (2) and (3), a Buyout Payment shall be,

(

a) an amount that an Interest Holder of a Field pays to another Person to

assume in whole or in part the liabilities of an Interest Holder for

Abandonment Costs in respect of a Field Asset of that Field, other than

under or concurrently with a Transaction governed by

Section 40 or other

Transaction involving a disposition of that Field Asset, where the Interest

Holder no longer proposes to use the asset for the purposes of any Field;

(

b) an amount that an Interest Holder of a Field receives from an Interest Holder

of an Other Field in consideration for assuming in part the liabilities of the

Interest Holder of the Other Field for Abandonment Costs in respect of a

Field Asset of the Other Field, other than under a transaction governed by

Section 40 or other transaction involving a disposition of that Field Asset,

where the payor no longer proposes to use the Field Asset in whole or in

part for the purposes of the Field or any Other Field and the recipient

proposes to use the asset for the purposes of the Field; or

(

c) a cost of insurance in respect of liabilities for Abandonment Costs, which

cost of insurance is not an Allowed Operating Cost, but would be an

Allowed Operating Cost if the definition of Included Risk in clause 2(1)(ap)

were read without reference to the words “abandonment other than risk

related to the conduct of the abandonment work”.

(2) A Buyout Payment made by an Interest Holder of a Field, or the portion of a

Buyout Payment that reasonably relates to a particular Abandonment Cost, shall be

deemed to have been made on the later of

(

a) the day that it is actually made; or

(

b) the earlier of the last day of the Month of Cessation and the last day of the

Month in which the related abandonment cost was incurred.

(3) Where a Buyout Payment is actually made before the end of the Month of

Cessation, the amount of the Buyout Payment shall be adjusted to reflect the

intervening time period between the end of the Month in which the Buyout

Payment was actually made and the date on which it is deemed to have been made

by this definition, using the Short Term Rate if the intervening period is not more

than 3 years, and otherwise using the LTBR, applicable at the end of the Month in

which the Buyout Payment was actually made.

Canada-Nova Scotia Benefits

9 Canada-Nova Scotia Benefits shall be costs, expenses or other amounts incurred by or on

behalf of the Interest Holder in respect of research, development, training or any other

matters that contribute to the economy, people or government of the Province that are

approved by the Minister for inclusion as Canada-Nova Scotia Benefits.

Calculation of sale proceeds

(1) The Condensate Sale Proceeds of an Interest Holder in a particular Month shall be

the sum of

(

a) the aggregate actual sale or other proceeds of Condensate Produced that is

disposed of in that Month by the Interest Holder in an Arm’s-Length

Transaction, adjusted for Allowed Netback Costs pursuant to these

regulations or an agreement in writing between the Minister and the Interest

Holder; and

(

b) where Condensate Produced is disposed of by an Interest Holder otherwise

than in a Transaction that is an Arm’s-Length Transaction, or is delivered by

the Interest Holder to another Person in satisfaction of any obligation of the

Interest Holder, the amount determined to be the Fair Market Value of the

Condensate at the Royalty Valuation Point; and, for greater certainty, the

Fair Market Value determined under this clause shall be adjusted, if

necessary, for Allowed Netback Costs pursuant to these regulations or an

agreement in writing between the Minister and the Interest Holder.

(2) The Crude Oil Sale Proceeds of an Interest Holder in a particular Month shall be

the sum of

(

a) the aggregate actual sale or other proceeds of Crude Oil Produced that is

disposed of in that Month by the Interest Holder in an Arm’s-Length

Transaction, adjusted for Allowed Netback Costs pursuant to these

regulations or an agreement in writing between the Minister and the Interest

Holder; and

(

b) where Crude Oil Produced is disposed of by an Interest Holder otherwise

than in a Transaction that is an Arm’s-Length Transaction, or is delivered by

the Interest Holder to another Person in satisfaction of any obligation of the

Interest Holder, the amount determined to be the Fair Market Value of the

Crude Oil at the Royalty Valuation Point; and for greater certainty, the Fair

Market Value determined under this clause shall be adjusted, if necessary,

for Allowed Netback Costs pursuant to these regulations or an agreement in

writing between the Minister and the Interest Holder.

(3) The Gas Sale Proceeds of an Interest Holder in a particular Month shall be the sum

(

a) the aggregate actual sale or other proceeds of Gas Produced that is disposed

of in that Month by the Interest Holder in an Arm’s-Length Transaction,

adjusted for Allowed Netback Costs pursuant to these regulations or an

agreement in writing between the Minister and the Interest Holder; and

(

b) where Gas Produced is disposed of by an Interest Holder otherwise than in a

Transaction that is an Arm’s-Length Transaction, or is delivered by the

Interest Holder to another Person in satisfaction of any obligation of the

Interest Holder, the amount determined to be the Fair Market Value of the

Gas at the Royalty Valuation Point; and for greater certainty, the Fair

Market Value determined under this clause shall be adjusted, if necessary,

for Allowed Netback Costs pursuant to these regulations or an agreement in

writing between the Minister and the Interest Holder.

(4) The LPG Sale Proceeds realized by an Interest Holder in a particular Month for a

particular type of LPG shall be the sum of

(

a) the aggregate actual sale or other proceeds of LPG Produced of that type

that is disposed of in that Month by the Interest Holder in an Arm’s-Length

Transaction, adjusted for Allowed Netback Costs pursuant to these

regulations or an agreement in writing between the Minister and the Interest

Holder; and

(

b) where LPG Produced of that type is disposed of by an Interest Holder

otherwise than in a Transaction that is an Arm’s-Length Transaction, or is

delivered by the Interest Holder to another Person in satisfaction of any

obligation of the Interest Holder, the amount determined to be the Fair

Market Value of the LPG at the Royalty Valuation Point; and for greater

certainty, the Fair Market Value determined under this clause shall be

adjusted, if necessary, for Allowed Netback Costs, pursuant to these

regulations or an agreement in writing between the Minister and the Interest

Holder.

Calculation of sale price

(1) The Condensate Sale Price of an Interest Holder in a particular Month shall be

determined by dividing the Condensate Sale Proceeds for that Month by the

volume of Condensate Produced that is disposed of in that Month by the Interest

Holder, and where there are no Condensate Sale Proceeds for the Month, the

Condensate Sale Price shall be equal to the Fair Market Value at the Royalty

Valuation Point of the share of the Condensate Produced of the Interest Holder in

the Month, divided by the volume of that share.

(2) The Crude Oil Sale Price of an Interest Holder in a particular Month shall be

determined by dividing the Crude Oil Sale Proceeds for that Month by the volume

of Crude Oil Produced that is disposed of in that Month by the Interest Holder, and

where there are no Crude Oil Sale Proceeds for the Month, the Crude Oil Sale

Price shall be equal to the Fair Market Value at the Royalty Valuation Point of the

share of the Crude Oil Produced of the Interest Holder in the Month, divided by

the volume of that share.

(3) The Gas Sale Price of an Interest Holder in a particular Month shall be determined

by dividing the product of the Gas Sale Proceeds for that Month multiplied by the

Relevant BTU Adjustment Factor, by the volume of Gas Produced that is disposed

of in that Month by the Interest Holder, and where there are no Gas Sale Proceeds

for the Month, the Gas Sale Price shall be equal to the Fair Market Value at the

Royalty Valuation Point of the share of the Gas Produced of the Interest Holder in

the Month, divided by the volume of that share.

(4) The LPG Sale Price of an Interest Holder in a particular Month for a particular type

of LPG shall be determined by dividing the LPG Sale Proceeds for that Month for

that type of LPG by the volume of LPG Produced of that type that is disposed of in

that Month by the Interest Holder, and where there are no LPG Sale Proceeds for

that type of LPG for the Month, the LPG Sale Price for that type of LPG shall be

the Fair Market Value at the Royalty Valuation Point of the share of the LPG

Produced of that type of the Interest Holder in the Month, divided by the volume of

that share.

Return allowances

(1) The Primary Return Allowance of an Interest Holder for a Field for a particular

Month, commencing with the Month in which the Field Commencement Date falls

to and including the Month immediately preceding the Month in which the

Primary Date of Field Payout occurs, shall be the product obtained by multiplying

(a) (X + LTBR) ÷ 12

where X is 0.05 or such other amount as may be specified in the provisions

of an agreement in writing between the Interest Holder and the Minister, or

if no such provisions exist, by the Governor in Council, in respect of the

Field or a class of Fields to which the Field belongs and LTBR is expressed

as a fraction,

(

b) the amount at the end of the particular Month by which the Allowed

Cumulative Field Costs exceed Cumulative Gross Revenue of the Interest

Holder for the Field.

(2) The Cumulative Primary Return Allowance of an Interest Holder for a Field in

respect of any Month shall be the aggregate of the Primary Return Allowances for

all Months that precede that Month.

(3) The Secondary Return Allowance of an Interest Holder for a Field for a particular

Month, commencing with the Month in which the Field Commencement Date falls

to and including the Month immediately preceding the Month in which the

Secondary Date of Field Payout occurs, shall be the product obtained by

multiplying

(a) (Y + LTBR) ÷ 12

where Y is 0.20 or such other amount as may be specified in the provisions

of an agreement in writing between the Interest Holder and the Minister, or

if no such provisions exist, by the Governor in Council, in respect of the

Field or a class of Fields to which the Field belongs and LTBR is expressed

as a fraction,

(

b) the amount at the end of the particular Month by which the Allowed

Cumulative Field Costs exceed Cumulative Gross Revenue of the Interest

Holder for the Field.

(4) The Cumulative Secondary Return Allowance of an Interest Holder for a Field in

respect of any Month shall be the aggregate of the Secondary Return Allowances

for all Months that precede that Month.

(5) The Final Return Allowance of an Interest Holder for a Field for a particular

Month, commencing with the Month in which the Field Commencement Date

falls to and including the Month immediately preceding the Month in which the

Final Date of Field Payout occurs, shall be the product obtained by multiplying

(a) (Z + LTBR) ÷ 12

where Z is 0.45 or such other amount as may be specified in the provisions

of an agreement in writing between the Interest Holder and the Minister, or

if no such provisions exist, by the Governor in Council, in respect of the

Field or a class of Fields to which the Field belongs and LTBR is expressed

as a fraction,

(

b) the amount at the end of the particular Month by which the Allowed

Cumulative Field Costs exceed Cumulative Gross Revenue of the Interest

Holder for the Field.

(6) The Cumulative Final Return Allowance of an Interest Holder for a Field in

respect of any Month shall be the aggregate of the Final Return Allowances for all

Months that precede that Month.

Dates of Field payout

(1) The Primary Date of Field Payout of an Interest Holder for a Field shall be the last

day of the first Month in which Cumulative Gross Revenue is, at the end of that

Month, equal to or greater than the sum of the Allowed Cumulative Field Costs

and the Cumulative Primary Return Allowance.

(2) The Secondary Date of Field Payout of an Interest Holder for a Field shall be the

last day of the first Month in which Cumulative Gross Revenue is, at the end of

that Month, equal to or greater than the sum of the Allowed Cumulative Field

Costs and the Cumulative Secondary Return Allowance.

(3) The Final Date of Field Payout of an Interest Holder for a Field shall be the last

day of the first Month in which Cumulative Gross Revenue is, at the end of that

Month, equal to or greater than the sum of the Allowed Cumulative Field Costs

and the Cumulative Final Return Allowance.

Fair Market Value

14 Subject to any agreement in writing between the Minister and the Interest Holder, the

Fair Market Value of any cost, expense, price, proceeds of disposition or other amount

receivable or payable that arises in a Transaction that is not an Arm’s-Length

Transaction shall be, the amount thereof computed in accordance with subsection 22(5)

and, in the case of a deemed disposition at a particular time of an asset by an Interest

Holder under these regulations or any agreement in writing between the Interest Holder

and the Minister, the “Fair Market Value” of the asset shall be the proceeds of

disposition that would reasonably be expected to arise if the asset had actually been

disposed of by the Interest Holder to another Person at that time under a Transaction

between Persons dealing at Arm’s Length, with neither Person under a compulsion to

enter into the Transaction.

Gross Revenue

15 Subject to an agreement in writing by the Minister and the Interest Holder, the Gross

Revenue of an Interest Holder for a Field for any Month shall be the aggregate of the

following amounts:

(

a) the product obtained when the share of the volume of the Condensate

Produced in that Month from the Field of the Interest Holder is multiplied

by the Condensate Sale Price;

(

b) the product obtained when the share of the volume of the Crude Oil

Produced in that Month from the Field of the Interest Holder is multiplied

by the Crude Oil Sale Price;

(

c) the product obtained when the share of the volume of the Gas Produced in

that Month from the Field of the Interest Holder is multiplied by the Gas

Sale Price; and

(

d) if LPG has been extracted by or on behalf of the Interest Holder from

Condensate or Gas that was produced from the Field, for each type of LPG

so extracted, the product obtained when the share of the volume of the LPG

Produced of that type in that Month from the Field of the Interest Holder is

multiplied by the LPG Sale Price for LPG of that type.

Cumulative Gross Revenue

16 The Cumulative Gross Revenue of an Interest Holder for a Field as of the end of a

Month shall be the aggregate of

(

a) Gross Revenue for that Month and all previous Months;

(

b) all amounts included in clause 18(1)(

b) respecting Net Revenue for that

Month and all previous Months; and

(

c) Miscellaneous Amounts for that Month and all previous Months.

LTBR

(1) The LTBR in respect of a Month shall be the average annual yield of securities

immediately preceding that Month and maturing in over 10 years, as published by

the Bank of Canada in the publication entitled the “Bank of Canada Review”.

(2) If the rate described in subsection (1) is not available, the LTBR shall be

(

a) a similar rate determined pursuant to the provisions of an agreement in

writing between the Minister and the Interest Holder;

(

b) if the provisions described in clause (

a) do not exist, a similar rate agreed to

in writing by the Minister and the Interest Holder; or

(

c) in the absence of an agreement in writing, a similar rate reasonably specified

by the Minister.

(3) Where it is necessary to apply the LTBR for purposes of these regulations or any

agreement in writing between the Interest Holder and the Minister, other than to

determine the Final Return Allowance, Primary Return Allowance or Secondary

Return Allowance, each of which shall be calculated on a basis that does not

involve any compounding, the LTBR shall be compounded with the same

frequency as that used by the Bank of Canada in preparing the publication referred

to in subsection (1) or by such alternative source as applicable.

Net Revenue and Net Loss

(1) The Net Revenue of an Interest Holder for a Month shall be determined by the

amount, if any, by which the aggregate of

(

a) Gross Revenue for the Month;

(

b) any amount receivable or deemed by subsection 44(6) to be receivable in

the Month as proceeds under a policy of insurance to the extent and only to

the extent that the insurance premiums on the policy have been included as

an Allowed Operating Cost, Allowed Predevelopment Cost or Allowed

Capital Cost of the Interest Holder for the Field, and proceeds included

under this clause shall be reduced by

(

i) reasonable costs of claiming and collecting the proceeds, and

(ii) the amount

(

A) incurred within one year of the date the proceeds are received

or become receivable, or

(

B) where it is yet to be incurred, as agreed to in writing by the

Minister

to replace or repair or otherwise remedy the incident for which the

insurance proceeds were received or are receivable, provided in either

case to the extent that amounts so incurred reduce the proceeds

pursuant to this clause, the amounts so incurred shall not be included

in Allowed Capital Costs or Allowed Operating Costs except for the

purposes of computing Overhead Uplifts;

(

c) any Miscellaneous Amounts for the Month; and

(

d) where the Month is the Month of Cessation, the aggregate of

(

i) the Asset Proceeds Balance, and

(ii) the Tariff Balance,

in each case determined at the end of the Month and reduced by the amount

of any reductions under subsection 44(8) to costs incurred in the Month,

exceeds the aggregate of

(

e) the Allowed Capital Costs and the Allowed Operating Costs incurred during

the Month; and

(

f) the amount if any by which the Tariff Balance is less than zero immediately

before the end of the Month.

(2) The Net Loss of an Interest Holder for a Month shall be the amount, if any, by

which the aggregate of the amount determined in clauses (1)(

e) and (

f) for the

Month exceeds the aggregate of the amounts determined under clauses (1)(

a) to (

d) for the Month.

(3) Where the Interest Holder receives, after the Month of Cessation, any insurance

proceeds that would have been included in Net Revenue pursuant to clause (1)(

b) but for the fact that they are received after the Month of Cessation, the Interest

Holder and the Minister shall negotiate in good faith to determine by agreement the

share of the Minister of the insurance proceeds.

(4) If the Interest Holder and the Minister are unable to reach an agreement pursuant to

subsection (3) within 180 days of receipt by the Interest Holder of the insurance

proceeds, the matter, subject to an agreement in writing between the Minister and

the Interest Holder, shall be referred to a Board or Committee pursuant to

Section

Petroleum Royalty Meter

(1) Subject to an agreement in writing between the Minister and the Interest Holder,

Petroleum Royalty Meters for the Field shall be selected by the Interest Holder and

approved by the Minister, and placed at a location or locations selected by the

Interest Holder and approved by the Minister that, unless otherwise agreed in the

case of LPG Produced, shall be at or near the Royalty Valuation Point, recognizing

there may be different Petroleum Royalty Meters for Condensate, Crude Oil, Gas

or particular types of LPG.

(2) The approvals by the Minister of the meter or meters and their locations pursuant

to subsection (1) shall not be unreasonably withheld.

Reservoir Performance Risk Amount

(1) Subject to subsections (2) and (3), the Reservoir Performance Risk Amount of an

Interest Holder in respect of a Field shall be any amount that the Interest Holder is

required to pay to another Person other than a government or government agency,

to the extent that the amount

(

a) is computed based on the amount or value of production from the Field or

any part thereof, whether the amount is determined by reference to a

specific period of time or otherwise;

(

b) can reasonably be regarded as being for the acquisition of Field Assets or

services provided within or in respect of activities within the Field Area;

and

(

c) is, or would be, but for any limitation relating to the treatment of a

Reservoir Performance Risk Amount as a Disallowed Cost, an Allowed

Predevelopment Cost, Allowed Capital Cost or Allowed Operating Cost of

the Interest Holder for the Field.

(2) Despite subsection (1), an amount under subsection (1) shall be a Reservoir

Performance Risk Amount only in situations where a contractor assumes financial

risk relating to the performance of the underlying Pools by becoming a quasi

working interest holder of the Field in economic terms.

(3) For greater certainty, the fact that a cash incentive payable by an Interest Holder is

based on achievement of startup, construction or operating cost targets, completion

or commencement of production within a specified time limit or performance or

capacity of constructed facilities, as opposed to the underlying Pools, being of or in

excess of a certain capacity, shall not in and of itself cause the incentive to be

regarded as a Reservoir Performance Risk Amount.

Tariff Balance

21 The Tariff Balance of an Interest Holder at any time during a Month shall be the positive

or negative amount equal to the aggregate of

(

a) the aggregate of all amounts, each of which is a Tariff Amount that is

receivable or has been received by the Interest Holder on or before the

earlier of that time and the end of the Month of Cessation, and if an Interest

Holder makes a payment to or receives a payment from a Person to amend

or terminate an agreement in writing under which there are amounts that

would otherwise arise before the end of the Month of Cessation and be

included under this clause, the portion of the payment that reasonably relates

to such amounts shall be deemed to give rise to a negative amount or a

positive amount, as applicable, under this [ sub ]clause immediately before

the end of the Month in which the payment or receipt arises;

(

b) any Post-Production Net Tariff Amounts; and

(

c) any amount deducted in computing Net Revenue under clause 18(1)(

f) respecting the definition of Net Revenue for any previous Month,

minus the aggregate of

(

d) the aggregate amount (ignoring effects upon Overhead Uplift) by which the

Allowed Operating Costs or Allowed Capital Costs (including

Abandonment Costs) incurred in all previous Months have been reduced

under clauses 44(8)(c), (

d) and (e); and

(

e) where the time is after the Month of Cessation, the amount included in the

calculation of Net Revenue for the Month of Cessation under subclause

18(1)(d)(ii).

Non-Arm’s-Length Persons

(1) In this Section, a reference to the Income Tax Act (Canada) means the Act as

amended to September 1, 1998, as the Act applies to taxation years that include

September 1, 1998.

(2) In these regulations, the provisions of the Income Tax Act (Canada) of general

application together with paragraph 80(2)(

j) of that Act shall apply, with the

necessary changes in details as the circumstances require, in determining whether 2

Persons are Related Persons or whether 2 or more Persons are dealing at Arm’s

Length, except that in applying the definition of “related persons” in

subsection 251(2) of the Income Tax Act (Canada), “controls” or “controlled” shall

be understood as meaning controls, or controlled, directly or indirectly in any

manner whatever and 2 Persons are “Related” for the purposes of these regulations

if they are Related Persons.

(3) Where a transaction involves the sale, lease, licence or other disposition or

acquisition of an asset or the provision of a service

(

a) from or by the operator of a Field or any Field Assets of a Field to the

operator of an Other Field or any Field Assets of an Other Field; or

(

b) from or by the operator of an Other Field or any Field Assets of an Other

Field to the operator of a Field or any Field Assets,

in each case on behalf of the Interest Holders of the respective Field or Other Field

as applicable, the sale, lease, licence, disposition, acquisition of the asset or

provision of the service shall prima facie be deemed to arise under an Arm’s-Length Transaction unless the working interests of the Person or Persons, including

for this purpose working interests of any Persons who do not deal at Arm’s Length

with the Persons, who are Interest Holders in the Field or Field Assets differs from

the working interests of the Person or Persons, including for this purpose working

interests of any Persons who do not deal at Arm’s Length with the Persons, who

are Interest Holders of the Other Field by less than a 25% working interest in the

Field, Field Assets or Other Field.

(4) In determining whether any 2 or more Persons are dealing at Arm’s Length in

respect of a Field Area as a matter of fact, regard shall be given to all of the

relevant circumstances, including Transactions in respect of and directly relevant to

the activities carried on or to be carried on in connection with the Field Area and

where it may reasonably be considered that one of the primary purposes of a

Transaction or of the terms under which a Transaction is entered into was to cause

2 or more Persons to not deal at Arm’s Length in order to reduce the amount of a

Tariff Amount that would otherwise arise, those Persons shall be deemed to deal at

Arm’s Length for the purposes of determining the amount of the Tariff Amount.

(5) Subject to subsection (6) and to the rules for computing and characterizing of

Tariff Amounts, where an Interest Holder of a Field and another Person with

whom the Interest Holder does not deal at Arm’s Length are participants in a

Transaction, or a Series of Transactions that is or may be relevant to the

determination of any amount payable under these regulations, and

(

a) the terms or conditions made or imposed, in respect of the Transaction or

Series of Transactions, between any of the participants in the Transaction or

Series of Transactions differ from those that would have been made

between Persons dealing at Arm’s Length; or

(

b) the Transaction or Series of Transactions would not have been entered into

between Persons dealing at Arm’s Length and can reasonably be considered

not to have been arranged primarily for bona fide purposes other than to

obtain a Royalty Benefit or to obtain a reduction, avoidance or deferral of

income tax under applicable income tax legislation which, if achieved,

would result in a misuse of the provisions of the relevant income tax

legislation or an abuse having regard to the provisions of the relevant

income tax legislation, read as a whole, unless the transaction may

reasonably be considered to have been undertaken or arranged primarily for

bona fide purposes,

any amounts that, but for this

Section and

Section 28, would be determined for the

purposes of these regulations in respect of the Interest Holder, and the nature of

such amounts, shall be adjusted or recharacterized to the quantum or nature of the

amounts that would have been determined if

respect of the Transaction or Series of Transactions, between the

participants in the Transaction or Series of Transactions had been those that

would have been made between Persons dealing at Arm’s Length; or

(

d) where clause (

b) applies, the Transaction or Series of Transactions entered

into between the participants had been the Transaction or Series of

Transactions that would have been entered into between Persons dealing at

between Persons dealing at Arm’s Length.

(6) Despite anything otherwise provided in this Section, in determining the amount of

the Royalty payable in respect of a Field by an Interest Holder, the Minister shall

be entitled to use the actual amount of any amount other than a Tariff Amount that

is a cost, price or other amount, other than an insurance cost, arising in a

Transaction that is not an Arm’s-Length Transaction, irrespective of whether the

Minister uses the actual amount or Fair Market Value of the amount for the

purpose of determining the amount of any Royalty payable by any other Person,

where either

(

a) the Interest Holder so requests and the Minister agrees; or

(

b) the Interest Holder reported an amount other than the Fair Market Value in a

deliberate attempt to evade or avoid Royalties payable by the Interest Holder

or by any other Person in respect of the Field or an Other Field.

Determining Fair Market Value

23 In determining the Fair Market Value of any Petroleum Produced or share of Petroleum

Produced, regard may be given to any of the following matters:

(

a) the grade of the Petroleum Produced;

(

b) the points of disposition and delivery of the Petroleum Produced;

(

c) the state and nature of the market for the Petroleum Produced being sold at

the relevant time;

(

d) the terms of relevant contracts or sales agreements and the quantities

specified therein;

(

e) the provisions of the contracts or sales agreements relating to the variation

or renegotiation of prices;

(

f) prices paid to producers of similar petroleum products in Arm’s-Length

Transactions;

(

g) any provisions in joint venture operating agreements that relate to

Transactions between Related Persons; or

(

h) such other matters as are relevant in the circumstances.

Method of payment of Royalty

(1) An Interest Holder for a Field shall make payments to the Board to the credit of the

Receiver General of Canada on account of Royalty arising in a Period in the

following manner:

(

a) subject to

Section 25, by the end of each Month that follows a Royalty

Paying Month in the Period, an amount equal to the aggregate Royalty

owing for each Royalty Paying Month in the Period as estimated under

Section 26, divided by the number of Royalty Paying Months for the Period

as estimated under

Section 26; and

(

b) within 3 Months after the end of the Period, the balance of the Royalty

owing for each Month in the Period.

(2) Any payments required to be made by an Interest Holder in respect of Royalty for a

particular Field shall not be reduced other than by way of claims for adjustments in

amounts payable under these regulations or any agreement in writing between the

Minister and the Interest Holder in respect of the Field.

(3) Subject to

Section 46 of the Accord Act (Nova Scotia) , where any Royalty, interest

or other amount payable under these regulations in respect of a Field is due and

payable to the Board, the amount owed is a debt due to Her Majesty in Right of the

Province.

(4) Payment of an amount to the Board shall be deemed to be payment jointly to the

Board and Her Majesty in Right of the Province.

(5) Her Majesty in Right of the Province shall have a first and prior charge on the

share of the Interest Holder of all unsold Petroleum Produced from the Field but

not on Petroleum Produced that has been sold and on the share of the Interest

Holder of the proceeds from the sale of any Petroleum Produced from the Field.

(6) In addition to any legal remedy available to Her Majesty in Right of the Province

in respect of the Royalty, interest or other amount payable under these regulations,

but subject to any agreement in writing between the Minister and the Interest

Holder in respect of the Field, the Minister may, upon 1 week’s Notice to each of

(

a) the Interest Holder who is in default, or is reasonably expected to be in

default within 30 days, in payment of any Royalty, interest or other amount

payable under these regulations referred to in this subsection as the

“Affected Interest Holder”;

(

b) the operator of the Field or any Field Asset; and

(

c) all Other Interest Holders of the Field,

take immediate possession of the unsold Petroleum Produced of the Affected

Interest Holder at the relevant Petroleum Royalty Meters or at such other location

downstream of the relevant Petroleum Royalty Meter as is specified by the

Minister and is reasonable in the circumstances or of the proceeds of disposition of

Petroleum Produced of the Affected Interest Holder, where the Minister determines

that it is necessary to do so in order to ensure that the Royalty, interest or other

amount will be paid.

(7) Except as provided in

Section 25, Royalty or amounts payable under these

regulations on account of Royalty shall be paid in Canadian dollars.

Payment in kind

(1) Despite

Section 24, the Minister may require a payment under clause 24(1)(

a) to be

made in whole or in

part in kind at the relevant Petroleum Royalty Meter, in

accordance with subsection (4), out of the share of the Interest Holder of such type

or types of Petroleum Produced as may be specified by the Minister in accordance

with subsection (3).

(2) Where the Minister requires that a payment be paid in kind pursuant to subsection

(1), the Minister shall provide, in respect of a 12-Month period commencing on the

first day of November or such other date as the Minister and the Interest Holder

may agree, 6 Months prior Notice to the Interest Holder of the type or types of

Petroleum Produced in respect of which the payments under clause 24(1)(

a) are to

be made in kind during the 12-Month period and, subject to any agreement in

writing between the Minister and the Interest Holder in respect of the Field, may

specify such conditions as are reasonable in the circumstances.

(3) Where the Minister gives a Notice under subsection (2) and the Interest Holder is

entitled to a share of more than 1 type of Petroleum Produced from the Field, the

Notice shall

(

a) specify the types of Petroleum in respect of which the payment under clause

24(1)(

a) is to be made in kind pursuant to subsection (1) during a 12-Month

period commencing on November 1 of a year or such other date as the

Minister and the Interest Holder may agree;

(

b) require that, subject to subsection (6), Petroleum of the types specified, be

delivered in kind as calculated and determined pursuant to subsection (4);

and

(

c) require that the payments in kind pursuant to subsection (1) in respect of the

12-Month period to which the Notice relates shall be made during the

Royalty Paying Month in either of the ways prescribed in subsection (4).

(4) Payments in kind made pursuant to this

Section shall be made in either of the

following ways:

(

a) for each type of Petroleum Produced from the Field to which the Interest

Holder is entitled to a share and that is a type of Petroleum in respect of

which a payment in kind is required to be made, payment shall consist of

Petroleum of that type with a value equal to

T x P/R

where

(

i) T is the total amount of the payment that is required to be made at

that time,

(ii) P is the estimated amount included in Gross Revenue for Petroleum

of that type for the corresponding Royalty Paying Month, and

(iii) R is the estimated Gross Revenue for the corresponding Royalty

Paying Month,

and P, R and T shall be based upon the estimates for the Period under

Section 26; or

(

b) in such other manner as may be agreed upon by the Minister and the Interest

Holder.

(5) The balance, if any, of the payment under subsection 24(1) shall be made in cash.

(6) The obligation of an Interest Holder to pay in kind under this

Section shall be

subject to the following conditions:

(

a) the Interest Holder shall not be required to make any payment in kind to the

extent that it is unable to do so due to Force Majeure; and

(

b) where there is a cutback or curtailment in production from the Field other

than a cutback or curtailment that is entered into voluntarily primarily for

the purpose of reducing Royalty payable in respect of the Field, the amount

payable in kind under subsection (4) shall be reduced, pending any revision

of the relevant estimates under

Section 26, on a pro-rata basis in accordance

with the amount of the cutback or curtailment in production.

(7) For the purposes of subsections (4) and (5), the value of each type of Petroleum

included in the payment in kind shall be determined by using the corresponding

Petroleum Sale Price for that type of Petroleum upon which the estimates for the

Period under

Section 26 are based.

(8) For the purpose of valuing a payment in kind in order to determine Net Revenue or

Gross Revenue, the applicable Petroleum Sale Price, for the Month in which the

payment in kind is made, shall be used.

(9) Where Petroleum Produced is to be delivered to the Minister as a payment of

Royalty in kind and the Petroleum Produced is handled, stored, transported or

processed by the Interest Holder, or using the capacity rights of the Interest Holder,

downstream of the relevant Petroleum Royalty Meter to the point of delivery to the

Minister, the Minister shall pay a fair and reasonable fee for the handling, storage,

transportation and processing, determined on commercial terms, and that fee shall

be paid in cash.

Estimates

(1) An Interest Holder for a Field shall provide to the Minister, in respect of each

Period, written good faith estimates of the amount of the aggregate Royalty

payable to the Board to the credit of the Receiver General of Canada and the

number of Royalty Paying Months for the Period.

(2) The estimates shall be provided to the Minister not later than 30 days before the

first day of the relevant Period except that, in the case of the 1st Period and any

other Period that commences before production from the Field first occurs, the

estimates shall be provided by the later of

(a) 60 days after the day on which these regulations come into effect; or

(b) 90 days before any production from the Field is reasonably expected to first

occur.

(3) Subject to subsection (4), if in the opinion of the Minister, it may reasonably be

considered that the estimates made pursuant to this

Section were not made in good

faith or where it appears there is manifest error in the estimates, the Minister shall

so advise the Interest Holder and the Interest Holder and the Minister shall use

reasonable efforts to prepare revised good faith estimates.

(4) The Minister and the Interest Holder shall have 30 Business Days from the date on

which the Minister advises the Interest Holder under subsection (3) to revise the

estimates made pursuant to this Section.

(5) The Minister may, at any time, require revised good faith estimates for a Period for

which estimates have been prepared or are to be prepared by the Interest Holder

where the Minister believes that the estimates previously made may be materially

inaccurate.

(6) Where the Interest Holder believes that estimates previously submitted may be

materially inaccurate, whether due to a change or an error in the initial estimates or

to subsequent events including without limitation, material changes in Petroleum

prices, other costs or in production levels or schedules, the Interest Holder may

submit revised estimates to the Minister.

(7) The Minister shall duly consider the revised estimates prepared pursuant to

subsections (5) and (6) and the other subsections of this

Section shall apply with

the necessary changes in detail in the event that the Minister disagrees with the

revised estimates.

(8) Where the Minister and the Interest Holder are not able to agree on revised

estimates prepared pursuant to this Section, or the Interest Holder fails to provide a

revised estimate within 30 days of being required to under subsection (4), the

estimates of the Minister will prevail.

Calculating costs

(1) Except as provided for in these regulations or in any agreement in writing between

the Interest Holder and the Minister, GAAP, including any accounting principles or

conventions that are in accordance with GAAP and have been adopted by the

Interest Holder or operator of the Field or any Field Asset, will be applied in

determining when a cost, expense or other amount has been incurred or whether a

cost, expense or other amount is capital or operating in nature.

(2) All costs, expenses and other amounts shall be deemed to arise at the time that they

were incurred.

(3) The Net Loss of an Interest Holder, exclusive of any portion of an Abandonment

Loss that is carried back under subsection (4), for any Month that is

(

a) subsequent to the Secondary Date of Field Payout; and

(

b) prior to the Month of Cessation,

shall be carried forward to the next Month by treating the Net Loss as an Allowed

Capital Cost incurred in the next Month for the purpose of calculating the Net

Revenue of the Interest Holder from the Field.

(4) Where the Month of Cessation is subsequent to the Month in which the Secondary

Date of Field Payout occurs, and where at the end of a particular Month that is or

is subsequent to the Month of Cessation the Abandonment Loss of the Interest

Holder is greater than zero, the Abandonment Loss at the end of the particular

Month shall be carried back in whole or in part to one or more previous Months,

by treating the Abandonment Loss or a portion thereof as an Allowed Capital Cost

incurred in the previous Month or Months for the purpose of calculating the Net

Revenue of the Interest Holder from the Field for the previous Month or Months,

provided that

(

a) the Abandonment Loss at the end of the particular Month shall be carried

back to earlier Months in reverse chronological order, starting with the

Month of Cessation or, where the particular Month is the Month of

Cessation, starting with the immediately preceding Month, and shall be

applied to reduce or eliminate Net Revenue in each Month to the greatest

extent possible, but not to a negative amount, before carrying the

Abandonment Loss back to an earlier Month;

(

b) no portion of the Abandonment Loss may be carried back to a Month that is

prior to the Month in which the Secondary Date of Field Payout occurs;

(

c) the aggregate amount carried back under this subsection to all previous

Months in respect of the Abandonment Loss at the end of the particular

Month shall not exceed the amount of such Abandonment Loss; and

(

d) where at the end of each particular Month after the Month of Cessation up

to and including the 36th Month after the Month of Cessation, the Asset

Proceeds Balance of the Interest Holder is greater than zero, the Asset

Proceeds Balance at that time shall be carried back to reduce the

Abandonment Loss at the end of that particular Month, and any loss

carrybacks previously allowed under this subsection shall be readjusted

accordingly and a payment or refund of any resulting amount owing by the

Interest Holder on account of Royalty shall be made by the end of the 3rd

Month following the particular Month.

(5) The Primary Date of Field Payout, Secondary Date of Field Payout and Final Date

of Field Payout for a Field shall not be affected by the operation of subsection

(3) or (4), or subject to the operation of

Section 54, by any subsequent events.

Anti-avoidance rule

(1) Where a Transaction is an Avoidance Transaction as defined in this Section, the

Royalty Consequences to a Person shall be determined as is reasonable in the

circumstances in order to deny a Royalty Benefit that, but for this Section, would

result, directly or indirectly, from that Transaction or from a Series of Transactions

that includes that Transaction.

(2) An Avoidance Transaction shall be any Transaction

(

a) that, but for this Section, would result, directly or indirectly, in a Royalty

Benefit, unless the Transaction may reasonably be considered to have been

undertaken or arranged primarily for bona fide purposes other than to obtain

the Royalty Benefit; or

(

b) that is part of a Series of Transactions, which Series of Transactions, but for

this Section, would result, directly or indirectly, in a Royalty Benefit, unless

the Transaction may reasonably be considered to have been undertaken or

arranged primarily for bona fide purposes other than to obtain the Royalty

Benefit.

(3) For the purposes of subsection (2), where one of the primary purposes of entering

into a Transaction or Series of Transactions was to obtain a benefit under

applicable income tax legislation that, if achieved, would result in a misuse of the

provisions of the relevant income tax legislation or abuse having regard to the

provisions of the relevant income tax legislation, read as a whole, the Transaction

shall be deemed to be an Avoidance Transaction.

(4) For greater certainty, a Transaction is not an Avoidance Transaction where it may

reasonably be considered that the Transaction would not result directly or indirectly

in a misuse of the provisions of these regulations or an abuse having regard to the

provisions of these regulations, other than this Section, and any agreement in

writing between the Interest Holder and the Minister relating to Royalty read as a

whole.

(5) The fact that an Interest Holder has taken Royalty Consequences or the reduction,

avoidance or deferral of income tax into account may not of itself justify a finding

that a particular Transaction is an Avoidance Transaction or a misuse of the

provisions of these regulations or income tax legislation or an abuse having regard

to the provisions of these regulations or income tax legislation.

(6) Without restricting the generality of subsection (1),

(

a) any amount included in computing Allowed Capital Costs, Allowed

Netback Costs, Allowed Operating Costs or Allowed Predevelopment Costs

or otherwise applied to reduce Net Revenue or Gross Revenue may be

allowed or disallowed in whole or in part;

(

b) the amount of any relevant balance, including the Allowed Cumulative

Field Costs, Tariff Balance or Asset Proceeds Balance of the Interest Holder

may be revised;

(

c) the nature of any payment or other amount may be recharacterized; or

(

d) the Royalty Consequences that would otherwise result from the application

of these regulations may be ignored,

in determining the Royalty Consequences to a Person as is reasonable in the

circumstances in order to deny a Royalty Benefit that would, but for this Section,

result, directly or indirectly, from an Avoidance Transaction.

(7) Despite any other provision of these regulations or any agreement between the

Minister and an Interest Holder, the Royalty Consequences to any Person

following the application of this

Section shall only be determined through an

Assessment delivered pursuant to these regulations involving the application of this

Section to that Person.

(8) Where an Assessment involving the application of subsection (1) with respect to a

Transaction has been sent to a Person, any other Person shall be entitled, within

180 days after the delivery of the Assessment, to request in writing that the

Minister make an Assessment applying subsection (1).

(9) On receipt of a request by a Person made under subsection (8), the Minister shall,

with all due dispatch, consider the request and an Assessment with respect to that

Person may be made under this subsection only to the extent that it may reasonably

be regarded as relating to the Transaction referred to in subsection (8).

Royalty Returns and Assessments

(1) An Interest Holder for a Field shall file with the Minister a Royalty Return for the

Field for each Period

(

a) ending after the Field Commencement Date until the later of the [ the ]

Month of Cessation and the last Month in which Abandonment Costs are

incurred by the Interest Holder; and

(

b) ending after the later of the Month of Cessation and the last Month in which

Abandonment Costs are incurred by the Interest Holder in which proceeds

of insurance that are required to be included in Net Revenue are received by

the Interest Holder.

(2) The Royalty Return shall be filed on or before the later of 3 Months from the end

of the Period to which the Royalty Return relates and the date on which these

regulations come into force.

(3) A Royalty Return shall contain the following information in respect of each Month

in the Period to which the return relates that is, or is prior to, the Month of

Cessation:

(

a) the respective total volumes of the share of the Interest Holder of Crude Oil

Produced, Gas Produced, Condensate Produced and LPG Produced of each

type;

(

b) the respective total volumes of the share of the Interest Holder of Crude Oil

Produced, Gas Produced, Condensate Produced and LPG Produced of each

type sold;

(

c) the respective total volumes of the share of the Interest Holder of Crude Oil

Produced, Gas Produced, Condensate Produced and LPG Produced of each

type disposed of otherwise than by way of sale;

(

d) with respect to each of clauses (

b) and (c), the respective amounts that arose

in Transactions that were not Arm’s-Length Transactions;

(

e) the Crude Oil Sale Price, Average Gas Sale Price, Gas Sale Price and

Condensate Sale Price and the LPG Sale Price for each type of LPG

Produced;

(

f) the amounts described in each of

Section 15 respecting Gross Revenue and

Section 16 respecting Cumulative Gross Revenue;

(

g) the Allowed Predevelopment Costs, Abandonment Costs, Allowed Capital

Costs and Allowed Operating Costs actually incurred in the Month and the

amount of the costs that are deemed to have been incurred in the Month

under

Section 54;

(

h) the Allowed Netback Costs incurred during the Month;

(

i) the Abandonment Loss as at the end of the Month;

(

j) the Net Loss as at the end of the Month;

(

k) the Royalty payable in respect of the Month;

(

l) the amount of the Asset Proceeds Balance and the Tariff Balance at the end

of the Month, adjusted to take into account any reduction in Asset Proceeds

Balance or Tariff Balance as a result of a reduction under subsection 44(8)

to Allowed Operating Costs or Allowed Capital Costs incurred during the

Month; and

(

m) a Payout Statement for the Month, unless the Month is after the Final Date

of Field Payout, providing the following information:

(

i) the Cumulative Primary Return Allowance, Cumulative Secondary

Return Allowance and Cumulative Final Return Allowance,

(ii) the amount, if any, by which the sum of Allowed Cumulative Field

Costs and Cumulative Primary Return Allowance exceeds

Cumulative Gross Revenue,

(iii) the amount, if any, by which the sum of Allowed Cumulative Field

Costs and Cumulative Secondary Return Allowance exceeds

Cumulative Gross Revenue,

(iv) the amount, if any, by which the sum of Allowed Cumulative Field

Costs and Cumulative Final Return Allowance exceeds Cumulative

Gross Revenue,

(

v) whether any contracts are subsisting to which the Interest Holder is a

party or by which the Interest Holder is bound that have or may give

rise to a Reservoir Performance Risk Amount becoming payable by

the Interest Holder and if so whether

(

A) any such amount became so payable, and

(

B) any such contracts have been entered into or amended in the

Month,

(vi) whether any insurance policies have been placed, maintained or

materially amended, in respect of Included Risks during the Month,

by the Interest Holder or any Person that does not deal at Arm’s

Length with the Interest Holder,

(vii) whether any claims relating to an Included Risk have been made by

the Interest Holder during the Period and any events have occurred

that could give rise to such a claim during the Period under a policy

of insurance,

(viii) whether any contracts for the sale of Petroleum have been entered

into under which Petroleum Produced may be delivered 60 days or

more after the date that the Petroleum Produced is paid for by the

purchaser,

(ix) whether there is a material change or difference in the accounting

practices or principles used by the Interest Holder from those used in

the immediately preceding Period, and

(

x) whether the accounting practices or principles used by the Interest

Holder in each of the Months of the Period are the same as for the

other Months of the Period.

(4) A Royalty Return shall contain the following information in respect of each Month

in the Period to which the return relates that is after the Month of Cessation:

(

a) the Abandonment Costs incurred in the Month;

(

b) the Abandonment Loss as at the end of the Month and a calculation of any

resulting carrybacks under subsection 27(4); and

(

c) the Tariff Balance and Asset Proceeds Balance at the end of the Month after

reducing any Abandonment Costs incurred in the Month under

subsection 44(8).

(5) The information required to be provided in a Royalty Return shall be in the

prescribed form or in such other form as may be agreed to by the Minister and the

Interest Holder.

(6) A Royalty Return shall be accompanied by an Independent Auditors’ Report or in

the event that it is in the process of being prepared, the Independent Auditors’

Report shall be submitted as soon as possible thereafter but in any event within 6

Months after the end of the Period.

(7) Where a payment, other than a payment in kind pursuant to

Section 25, is made

pursuant to these regulations or any agreement in writing between the Minister and

the Interest Holder, the Interest Holder shall file a remittance statement with the

Minister at the time of payment.

(8) The Royalty Return shall include a certificate by an officer, director or other

Person employed by the Interest Holder who has the requisite authority to make the

certificate, stating that the Person signing the certificate has examined the Royalty

Return, including accompanying schedules and statements, and that the

information given in the Royalty Return is, to the best of the knowledge of such

Person, correct and complete.

(9) The Minister shall examine a Royalty Return and assess the Royalty payable for

each Month in a Period and any related interest or penalties with all due dispatch

following the receipt of a Royalty Return for the Period.

(10) An Assessment shall be delivered by the Minister to the Interest Holder and shall

include information pertaining to Gross Revenues, Abandonment Costs, Allowed

Capital Costs, Allowed Operating Costs, Allowed Netback Costs, status of payout

points, Net Revenue, Net Loss, Royalty, Tariff Balance, Asset Proceeds Balance,

Abandonment Loss and interest or penalties payable in respect of each Month of

the Period.

(11) The Royalty Return filed by the Interest Holder for the Period in which the Month

of Cessation falls shall disclose all pending or outstanding insurance claims to the

knowledge of the Interest Holder that may give rise to the receipt of insurance

proceeds pursuant to clause 18(1)(

b) respecting Net Revenue, but for the fact that

the insurance proceeds will be received after the Month of Cessation.

Books and records

(1) An Interest Holder for a Field shall keep or cause to be kept all of the books,

records, accounts, documents and other information of the operator pertaining to

costs, expenses and other amounts attributable to the Field or any Field Asset at the

head office of the Interest Holder or the operator of the Field or any Field Asset in

Canada, or at such other place as may be provided for in an agreement in writing

between the Minister and the Interest Holder, or as the Minister may permit.

(2) An Interest Holder for a Field shall keep or cause to be kept all of its books,

records, accounts, documents and other information that are not maintained by the

operator of the Field or any Field Asset pertaining to

(

a) costs, expenses and other amounts attributable to the Field or the Field

Assets or otherwise relevant to the calculation of Royalty;

(

b) revenues relating to Petroleum Produced;

(

c) other amounts received or receivable that are relevant to the calculation of

Royalty; and

(

d) Allowed Netback Costs,

at the head office of the Interest Holder in Canada or at such other place as may be

provided for in an agreement in writing between the Minister and the Interest

Holder, or as the Minister may permit.

(3) An Interest Holder shall not destroy any records referred to in subsections (1) or

(2) without prior written approval by the Minister.

(4) Approval under subsection (3) shall not be unreasonably withheld, having regard to

outstanding matters or issues relating to Royalty payable, in respect of requests to

destroy records relating to Months that are at least 7 years prior to the time that the

request is made.

(5) Where an Interest Holder or operator of a Field or any Field Asset maintains any of

the materials referred to in subsection (1) outside the Province, the Interest Holder

shall, at its election, either

(

a) reimburse the Minister for all reasonable expenditures necessary for or

incidental to verification of the amount of Royalty paid or payable and the

information contained in the Royalty Return, including reasonable travel of

Persons authorized by the Minister to examine the books, records, accounts,

documents and other information at the location where they are maintained

(but limited to the additional expenditure incurred by or on behalf of the

Minister due to the information being located outside the Province); or

(

b) provide access to the materials within the Province for that purpose.

(6) The Minister will use reasonable efforts to minimize the need for and costs of

travel pursuant to subsection (5) and in selecting auditors shall take into

consideration whether the auditors have audit personnel with the requisite

expertise in the Province and the province where the books are maintained.

GAAP

(1) Except where otherwise expressly provided in these regulations, or as otherwise

agreed to in writing by the Minister and the Interest Holder, GAAP shall be

adhered to by an Interest Holder in the keeping and filing of all books, records,

accounts, documents and other information under these regulations.

(2) The accounting principles referred to in subsection (1) shall be applied on a

consistent basis from Month to Month and from Period to Period unless the

following conditions are met:

(

a) any changes are desirable or required under GAAP;

(

b) any changes are implemented on a prospective rather than a retroactive

basis; and

(

c) any changes are made in a manner that does not create any leakage of Net

Revenue, Gross Revenue or other amount that is relevant to the calculation

of Royalty in the transition from the previous method of accounting to the

revised method of accounting.

Confidentiality of records

(1) The Minister and any representatives of the Minister shall keep confidential all

information and records obtained pursuant to these regulations or any agreement in

writing between the Minister and the Interest Holder, but these confidentiality

requirements shall not apply to any information and records that

(

a) are in the public domain at the time they are obtained;

(

b) come into the public domain after they have been obtained other than by

virtue of a breach of the provisions of this subsection;

(

c) are available to the Province on a non-confidential basis from a source other

than an Interest Holder if the source is entitled to disclose the information;

(d) [ that ] are required by law to be disclosed, but only to the extent so required.

(2) Despite subsection (1), the Minister may disclose or provide information and

records to any Person on a need-to-know basis for the purpose of enforcing or

furthering any investigation under the Act or these regulations and any Person to

whom a disclosure is made shall be considered to be a representative of the

Minister for the purposes of this Section.

(3) All representatives of the Minister or their employers, other than governmental

employees, shall, at the request of the Interest Holder, execute and deliver to the

Interest Holder a confidentiality agreement prior to any information and records

being made available to them by or on behalf of the Interest Holder.

(4) Subject to the terms of any agreement in writing between the Minister and the

Interest Holder, the confidentiality agreement shall be in the prescribed form or in

such form as is reasonably satisfactory in form and substance to the Interest

Holder, provided that the approval of the Interest Holder to the form and substance

of the confidentiality agreement shall not be unreasonably withheld.

Audits

(1) An Interest Holder for a Field shall, for the purpose of an audit or examination

made in accordance with this Section,

(

a) make the books, records, accounts, documents and other information of the

Interest Holder available at all reasonable times to any Person authorized by

the Minister for the purpose and shall provide the Person with copies of

documents requested by the Person that are reasonable for the purposes of

the audit;

(

b) make available copies of any contracts that have been entered into or

amended during the Period and that may give rise to a Reservoir

Performance Risk Amount becoming payable by the Interest Holder, at all

reasonable times to any Person authorized by the Minister for the purpose;

(

c) make available copies of all insurance policies placed or maintained by the

Interest Holder in respect of Included Risks, including any amendments to

the insurance policies;

(

d) make available copies of any joint operating agreement or agreements

between operators, and between operator or operators and other Interest

Holders, at all reasonable times to any Person authorized by the Minister for

the purpose; and

(

e) give all reasonable assistance to a Person authorized by the Minister to carry

out the audit or examination, provide access to all relevant sites and answer

orally or in writing all questions relating to the audit or examination in each

case at such times, upon such Notice and under such supervision by or on

behalf of the Interest Holder as is reasonable in the circumstances.

(2) The attendance by an authorized Person pursuant to clause (1)(

e) shall be at the

expense of the Minister, and the Interest Holder may require, as a condition of

attendance, that the Person comply with any applicable safety or other

requirements of the Interest Holder that are consistent with normal industry

practices.

(3) The Minister shall be entitled to commence an audit of a Royalty of an Interest

Holder arising in a Period and any related interest and penalties at any time

following the date on which the Royalty Return for the Period was required to be

filed, provided that the audit is commenced

(

a) within 2 years, or 3 years where the Period ends on or before December 31

of the 6 th year following the year in which the Production Startup Date

occurs, after the later of the day on which the Royalty Return was required

to be filed and the day on which the Independent Auditors’ Report is filed,

where

(

i) the Minister has no reasonable basis to believe that the Interest

Holder has made a misrepresentation that is attributable to neglect,

carelessness or wilful default or has committed any fraud in filing the

Royalty Return for the Period or in supplying any information under

these regulations or any agreement in writing between the Interest

Holder and the Minister, and

(ii) the Interest Holder has not filed a waiver with the Minister; and

(

b) at any time, where the Minister has a reasonable basis to believe that

(

i) the Interest Holder has made a misrepresentation that is attributable

to neglect, carelessness or wilful default or has committed any fraud

in filing the Royalty Return for the Period or in supplying any

information under these regulations or any agreement in writing

between the Interest Holder and the Minister, or

(ii) the Interest Holder has filed a waiver with the Minister which has not

been revoked on at least 60 days prior Notice.

(4) Except as provided in subsection (7), the Minister shall give at least 30 days’

Notice to an Interest Holder for a Field of the intention of the Minister to conduct

an audit or examination.

(5) The audit or examination shall be conducted in a prompt and timely manner and

once commenced shall be diligently pursued.

(6) At the conclusion of the audit or examination, the Minister and the Interest Holder

shall endeavour to resolve any outstanding matters.

(7) The Minister shall not be required to give any Notice of an audit where the

Minister has reasonable cause to believe that the Interest Holder for a Field has

made any misrepresentation that is attributable to neglect, carelessness, or wilful

default, or has committed any fraud in filing a Royalty Return for any Period or in

supplying information required under these regulations.

(8) Where the Minister is conducting an audit or examination pursuant to this Section,

the Interest Holder shall make available to the Minister such additional or other

information or documentation requested by the Minister as is necessary to assess or

verify the accuracy and completeness of the information contained in the Royalty

Return including, without limiting the generality of the foregoing, the computation

of the Royalty.

(9) The Minister shall, within 6 Months following the conclusion of an audit, provide

a written report to the Interest Holder of any questions or exceptions arising from

the audit.

(10) The Interest Holder shall reply to the questions and exceptions referred to in

subsection (9) in writing within 3 Months, or such longer period as the Minister

permits, from the date of receipt of the written report.

(11) The Minister and an Interest Holder shall make reasonable efforts to resolve the

questions and exceptions referred to in subsection (9) within 3 Months following

the date of receipt of the reply of the Interest Holder, and where the question or

exception has been resolved, the adjustments permitted by the Minister and the

Interest Holder shall be rectified promptly.

Refunds

(1) The Minister shall refund, or apply against any other amounts owing by the

Interest Holder under these regulations, any overpayment made on account of

Royalty or other amount arising under these regulations or any agreement in

writing between the Minister and the Interest Holder where

(

a) there are reasonable grounds for concluding that an overpayment has been

made, including an overpayment that arises as a result of the application of

subsection 27(4);

(

b) there are reasonable grounds for concluding that Royalties or other amounts

were remitted in error; or

(

c) it is evident from the Royalty Return, supported by the Independent

Auditors’ Report, that for any Period the Royalty payment pursuant to

clause 24(1)(

a) and subsection 25(1) exceeds the amount of the Royalty.

(2) The Minister shall effect a refund of any overpayment by making a payment in

Canadian dollars regardless of whether the overpayment arose as a result of

payments in cash or in kind.

Interest

(1) Where an Interest Holder for a Field fails to make all or any portion of any

payment required under these regulations by the day on which the payment is due,

the Interest Holder shall pay to the Board to the credit of the Receiver General of

Canada interest on the outstanding amount at the daily rate determined under

subsection (6), calculated and payable in arrears from and including the date that

the payment became due to the day before the day it is paid.

(2) Subject to subsection (3), where the Minister is required under subsection 34(1) to

refund or apply an overpayment of Royalty or other amounts, Her Majesty in Right

of the Province shall pay interest on the amount of the overpayment at the daily

rate determined under subsection (6), calculated and payable in arrears from and

including the latest of the day that is

(a) 30 days after the day of receipt by the Minister of a Royalty Return for the

Period;

(b) 15 days after the day of receipt by the Minister of the Independent Auditors’

Report for the Period; and

(

c) the date that the overpayment arose,

to the day before the day on which the refund is paid or applied.

(3) Where an overpayment of Royalty for a particular Month arises as a result of the

application of subsection 27(4) to an Abandonment Loss of the Interest Holder that

arises in a particular Month

(

a) except to the extent provided in clause (b), clause (2)(

a) shall be applied as

if “day of receipt by the Minister of a Royalty Return for the Period” were

replaced with “day of receipt by the Minister of a Royalty Return for the

Period containing the Month in which the Abandonment Loss arose,

containing a written request that subsection 27(4) be applied to the

Abandonment Loss, or any later date on which such a request is made by

the Interest Holder to the Minister”; and

(

b) where

(

i) all or part of the Abandonment Loss at the end of a particular Month

that is after the Month of Cessation is carried back under

subsection 27(4) to any previous Month that is contained in any

earlier Period, and

(ii) the Interest Holder files the Royalty Return and Independent

Auditors’ Report for the Period that contains the particular Month

within the respective times required under

Section 29,

interest on the refund resulting from carrying back the Abandonment Loss

to such previous Month shall be calculated from the end of the particular

Month to but not including the date of payment of the refund by Her

Majesty in right of the Province.

(4) Where the Minister and the Interest Holder disagree on revised estimates and the

estimate of the Minister prevails in accordance with subsection 26(8) and the

Interest Holder overpays the Royalty in an amount greater than 10% of the

aggregate Royalty payable for the Period, the Minister shall pay interest to the

Interest Holder, in addition to the interest payable under subsection (2), on the

excess of the amount greater than 110% of the aggregate Royalty payable for the

Period.

(5) In each case, the interest payable under subsection (4) shall be calculated from and

including the date of the particular payment under subsection 24(1) or

Section 25

to but not including the first day in respect of which the Minister is required to pay

interest under subsection (2) or the day on which the Minister makes a refund or

application of the overpayment under subsection 34(1) in respect of the

overpayment, whichever is earlier.

(6) For the purpose of these regulations and Sections 4 and 14 of the Act, the

prescribed daily interest rate for any day in any Month is the Short Term Rate

divided by 365.

(7) Interest under this

Section shall be compounded Monthly.

(8) Where the aggregate Royalty payable by an Interest Holder for all Months in the

Period is more than 110% of the amount paid by the Interest Holder pursuant to

the estimate or estimates for the Period, the Interest Holder shall pay to the Board

to the credit of the Receiver General of Canada, interest pursuant to subsection

(6) on the amount in excess of 110% of the aggregate Royalty payable actually paid.

Penalty

(1) Where an Interest Holder fails to file a Royalty Return on or before the day

required by these regulations in a form that is complete or substantially complete,

the Interest Holder shall pay to the Board to the credit of the Receiver General of

Canada, a penalty equal to the greater of either $2000 or 1% of the amount of

Royalty for the Period that is not paid by the time it became due and an additional

1% for each Month or part of a Month on the amount of the Royalty that remains

unpaid at the beginning of the Month, and the penalty shall be due on the day that

the Royalty Return was required to be filed.

(2) Where the amount claimed by an Interest Holder as an Allowed Operating Cost or

an Allowed Capital Cost in respect of insurance costs for a Period under an

insurance policy (other than a policy that was issued in an Arm’s-Length

Transaction and not reinsured in whole or in part as part of the same Series of

Transactions with a Person who does not deal at Arm’s Length with the Interest

Holder), is more than 120% of the Fair Market Value of the insurance costs, the

Interest Holder shall pay to the Board to the credit of the Receiver General of

Canada, a penalty equal to 10% of the difference between the amount claimed and

the Fair Market Value.

(3) A penalty under subsection (2) shall be due on the day that is 30 days after an

Assessment is issued by the Minister in respect of the penalty.

Application of payments

37 Payments made by an Interest Holder pursuant to these regulations shall be applied

(

a) first, on account of any penalties due and not paid;

(

b) second, on account of any interest due and not paid; and

(

c) third, on account of Royalty due and not paid.

Waiver of penalty or interest

38 The Minister may waive in whole or in part any penalty or interest payable by an Interest

Holder under these regulations.

Notices

(1) For the purposes of these regulations, subject to any agreement in writing between

the Minister and the Interest Holder, any Notice shall be in writing and shall be

delivered by hand or by courier, sent by prepaid double registered mail or be

transmitted by facsimile.

(2) Any Notice

(

a) delivered by double registered mail shall be deemed to be given to and

received by the Person to whom it is addressed, at noon, Atlantic Standard

Time, on the earlier of the actual date of receipt and the 5 th Business Day

following the date on which it is mailed;

(

b) delivered by hand or by courier shall be deemed to be given to and received

by the Person to whom it is given at the time of delivery;

(

c) transmitted by facsimile shall be deemed to be given to and received by the

Person to whom it is addressed at 10:00 a.m. (local time of the recipient) on

the next Business Day following the day on which it is transmitted and

received; or

(

d) sent by such other manner as may be provided for in an agreement in

writing between the Minister and the Interest Holder shall be deemed to be

given to and received by the Person to whom it is addressed on the date

provided for under the agreement.

(3) All Notices shall be sent to,

(

a) in the case of the Minister:

Minister Responsible for the Petroleum Directorate

Nova Scotia Petroleum Directorate

PO Box 2664, Suite 400

Bank of Montreal Building

5151 George St.

Halifax, Nova Scotia

B3J 3P7

Facsimile: 902-424-0528

(

b) in the case of an Interest Holder, the address provided for under an

agreement in writing between the Minister and the Interest Holder or, if no

address is so provided for, the address shown in the most recent exploration

licence or Production Licence issued to the Interest Holder for the Field.

(4) An Interest Holder may change its address for the receipt of Notices or change or

provide a facsimile number for the receipt of Notices at any time by giving Notice

of the change to the Minister in accordance with this Section, and the Minister may

change the address of the Minister for the receipt of Notices or change or provide a

facsimile number for the receipt of Notices at any time by giving Notice of the

change to the Interest Holder in accordance with this Section.

Assignments of working interest in the Field

(1) This

Section shall apply where one Person, referred to in this

Section and Sections

41 and 42 as the “New Interest Holder”, has acquired, from another Person who

was at that time an Interest Holder, referred to in this Section, Sections 41 and 42,

and subsection 45(4) as the “Former Interest Holder”, all or a portion of the

working interest in a Field of the Former Interest Holder or in an area that is

subsequently determined to be a Field, the interest so acquired being referred to in

this

Section and Sections 41 and 42 as the “Acquired Interest”, subject to the

provisions of an agreement in writing between the Former Interest Holder and

Minister, and the effective date of acquisition shall be the effective date as agreed

to between the New Interest Holder and the Former Interest Holder.

(2) The New Interest Holder shall, for the purpose of determining Royalties arising

and due in respect of the Acquired Interest after the effective date of the

acquisition, be deemed to have incurred all costs, expenses or other amounts

incurred or deemed to have been incurred by or on behalf of the Former Interest

Holder and to have received or to have receivable all amounts that were received

or receivable or deemed to have been received or receivable by the Former Interest

Holder, including any Assistance giving rise to a reduction in an Allowed

Predevelopment Cost, Allowed Capital Cost, Allowed Netback Cost or Allowed

Operating Cost that was received or receivable or deemed to have been received or

receivable by the Former Interest Holder or by any Person claiming by, through or

under the Former Interest Holder at the time the amounts were incurred, deemed to

have been incurred, received, receivable or deemed to have been received or

receivable by the Former Interest Holder or other Person as applicable, to the

extent that the amounts arose on or before the effective date of the acquisition and

are or were reasonably attributable to the Acquired Interest, to production from the

Acquired Interest or to the ownership, design, purchase, construction, installation,

operation or disposition of Field Assets pertaining to the Acquired Interest, and the

amounts referred to in this subsection are “Acquired Interest Amounts”.

(3) Where the Former Interest Holder has retained a working interest in the Field,

referred to in this

Section as the “Retained Interest”, the Former Interest Holder

shall be deemed not to have incurred, deemed to incur, received or have receivable,

as applicable, any of the Acquired Interest Amounts for the purposes of computing

the Royalty obligations of the Former Interest Holder in respect of the Retained

Interest after the effective date of the acquisition of the Acquired Interest by the

New Interest Holder.

(4) Subsections (2) and (3) shall continue to apply to successive transfers of a working

interest or part of a working interest.

(5) For the purposes of computing the Royalty in respect of the Acquired Interest,

including the application of

Section 54 to the New Interest Holder and the Former

Interest Holder,

(

a) a Period shall be deemed to end for the Former Interest Holder and a new

Period shall be deemed to begin at the beginning of the day that is the

effective date of the acquisition; and

(

b) the new Period for the New Interest Holder shall end on the last day of the

fiscal period for financial reporting purposes of the New Interest Holder or

such other date as is acceptable to the Minister.

(6) This

Section shall not impose any obligation on the New Interest Holder in respect

of Royalty or in respect of an obligation to make a payment pursuant to these

regulations or any agreement in writing between the Minister and the Former

Interest Holder in connection with Royalty that arose or accrued prior to the

effective date of the acquisition of the Acquired Interest, subject to any obligation

of the New Interest Holder to obtain a certificate in respect of the acquisition as

contemplated by subsection 18(1) of the Act.

(7) Where the New Interest Holder has acquired a portion but not all of the Acquired

Interest, in consideration for incurring costs in respect of the Acquired Interest and

the Retained Interest, the costs shall be deemed to have been incurred by or on

behalf of the New Interest Holder in respect of the Acquired Interest, and by or on

behalf of the Former Interest Holder in respect of the Retained Interest, in such

portions as reflect the relative percentage working interests represented by the

Acquired Interest and the Retained Interest, immediately after the acquisition.

Assignment of working interest in Field Assets

(1) This

Section applies where, concurrent with an acquisition of an Acquired Interest,

a New Interest Holder does not acquire a working interest in a particular Field

Asset, or acquires a working interest in the particular Field Asset, referred to in this

Section as the “FA Portion”, that is a different percentage than the percentage

interest in the Field acquired by the New Interest Holder, referred to in this

Section as the “WI Portion”.

(2) Where the New Interest Holder does not acquire a working interest in the Field

Asset, the Former Interest Holder shall be deemed to have disposed, immediately

before the effective date of the acquisition referred to in subsection 40(1), of the

WI Portion of the Field Asset for proceeds of disposition in an amount equal to the

portion of the Fair Market Value at that time of the WI Portion of the Field Asset

that is reasonably attributable to,

(

a) where the Former Interest Holder may not reasonably be expected to

dispose of the relevant portion of the Field Asset until at least 3 years after

the Month of Cessation, future use on or before the end of the Month of

Cessation; or

(

b) in any other case, future use on or before the day that is 3 years after the end

of the Month of Cessation.

(3) The Former Interest Holder shall be deemed to have immediately reacquired the

WI Portion of the Field Asset at a cost equal to the same amount.

(4) The deemed cost to the Former Interest Holder of the reacquisition of the WI

Portion of the Field Asset shall be deemed to be an Incremental Cost and the WI

Portion of the Field Asset shall be deemed to be an Incremental Asset from the

effective date of the deemed reacquisition.

(5) Where the FA Portion is less than the WI Portion, the New Interest Holder shall be

deemed to have acquired the WI Portion of the Field Asset in an acquisition

subject to

Section 40.

(6) The Former Interest Holder shall be deemed to have disposed, immediately before

the effective date of the acquisition referred to in subsection 40(1), of a portion of

the Field Asset equal to the difference between the WI Portion and the FA Portion,

referred to in this

Section as the “Differential Portion”, for proceeds of disposition

in an amount equal to the portion of the Fair Market Value at that time of the

Differential Portion of the Field Asset that is reasonably attributable to,

(

a) where the Former Interest Holder may not reasonably be expected to

dispose of the relevant portion of the Field Asset until at least 3 years after

the Month of Cessation, future use on or before the end of the Month of

Cessation; or

(

b) in any other case, future use on or before the day that is 3 years after the end

of the Month of Cessation.

(7) The Former Interest Holder shall be deemed to have immediately reacquired the

Differential Portion of the Field Asset at a cost equal to the same amount.

(8) The deemed cost to the Former Interest Holder on the reacquisition of the

Differential Portion of the Field Asset shall be deemed to be an Incremental Cost

and the Differential Portion of the Field Asset shall be deemed to be an

Incremental Asset from the effective date of the deemed reacquisition.

(9) Where the FA Portion is greater than the WI Portion, the Former Interest Holder

shall be deemed to have disposed of the WI Portion of the Field Asset in an

acquisition subject to

Section 40 and to have separately disposed of the

Differential Portion of the Field Asset to the New Interest Holder, in each case

immediately before the effective date of the acquisition referred to in subsection

40(1), for proceeds of disposition equal to the Fair Market Value of the Differential

Portion.

(10) The cost to the New Interest Holder of the Differential Portion shall be deemed to

be an Incremental Cost and the Differential Portion of the Field Asset shall be

deemed to be an Incremental Asset of the New Interest Holder.

(11) Where the Former Interest Holder and the New Interest Holder deal at Arm’s

Length and they agree in writing on the Fair Market Value of the WI Portion or the

Differential Portion of the Field Asset or any portion of the Fair Market Value, the

amount so agreed upon shall be prima facie evidence as to the Fair Market Value

or portion.

Assignment of Assets Proceeds Balance

42 Where a New Interest Holder acquires a working interest in an acquisition governed by

Sections 40 or 41, the Asset Proceeds Balance of the Former Interest Holder and the

New Interest Holder shall be computed as follows:

(

a) no adjustment shall be made to the Asset Proceeds Balance of the Former

Interest Holder in respect of any proceeds of disposition arising under the

portion of the acquisition made pursuant to

Section 40;

(

b) where any of subsections 41(1) to (10) apply, the Asset Proceeds Balance of

the Former Interest Holder shall be adjusted to reflect the disposition by the

Former Interest Holder that is deemed to occur under the applicable

subsection; and

(

c) where the relevant portion of the Asset Proceeds Balance of the Former

Interest Holder at the effective date of the acquisition referred to in

subsection 40(1) is greater than zero, after reducing any costs incurred

before the effective date of the acquisition, the adjustment shall be carried

over for the purposes of computing the Asset Proceeds Balance of the New

Interest Holder.

Adjustment of Royalty Consequences

43 Where

Section 41 applies and the resulting Royalty Consequences would not be

reasonable in the circumstances, the Royalty Consequences shall be adjusted to such

Royalty Consequences as are reasonable in the circumstances.

Further rules for determining costs and revenues

(1) Where a cost is denominated in a currency other than Canadian dollars, the

amount shall be converted into Canadian dollars using the Noon Day Rate for the

applicable Month, before applying

Section 54.

(2) Where an amount received or receivable is denominated in a currency other than

Canadian dollars, the amount shall be converted into Canadian dollars at the Noon

Day Rate for the applicable Month .

(3) All revenues, costs, expenses and other amounts shall be determined on a basis that

excludes taxes paid, payable or collected under

Part IX of the Excise Tax Act

(Canada) by or on behalf of the Interest Holder or any refundable sales taxes

except, in the case of taxes paid or payable by

Document details

Collection	Nova Scotia — Regulations
Citation	N.S. Reg. 71/1999
Date	1999-01-01
Type	regulation
Volume / chapter	just regulations regs oprregs.htm
Language	en
Format	htm
Source	PROVINCIAL
Identifier	de809dace4acc0ae89a0b6ca790c18436199bdc1

Source file is stored in the law ingest library (htm).

Royalty Regulations

Part II .

Section 23 of the

Table of Contents

Short title

Part I - Mandatory Provisions

Interpretation and application

Part II - Further Provisions

Part II

Interpretation

Short title

Part I - Mandatory Provisions

Interpretation and application

Section 3;

Section 4;

Section 5;

Section 22;

Section 9 of the Act;

Section 6;

Section 28;

Section 8;

Section 9;

Section 16;

Section 14;

Section 15;

Section 17;

Section 40, the first or last Month of

Schedule I of the Accord Act (Nova Scotia) ;

Section 40,

Section 55, collectively

Section 19;

Section

Section 29;

Section 21;

Part II of these regulations, and, subject to

Section 40, the Asset Proceeds Balance of an Interest Holder at any time

Section 45, that have been included

Section 40 or other

Section 40 or other transaction involving a disposition of that Field Asset,

Section

Section and

Section 28, would be determined for the

Section 25, by the end of each Month that follows a Royalty

Section 26, divided by the number of Royalty Paying Months for the Period

Section 26; and

Section 46 of the Accord Act (Nova Scotia) , where any Royalty, interest

Section 25, Royalty or amounts payable under these

Section 24, the Minister may require a payment under clause 24(1)(

Section shall be made in either of the

Section 26; or

Section shall be

Section 26, on a pro-rata basis in accordance

Section 26 are based.

Section were not made in good

Section shall apply with

Section 54, by any subsequent events.

Section shall only be determined through an

Section to that Person.

Section 15 respecting Gross Revenue and

Section 16 respecting Cumulative Gross Revenue;

Section 54;

Section 25, is made

Section 29,

Section 25

Section shall be compounded Monthly.

B3J 3P7

Section shall apply where one Person, referred to in this

Section as the “Retained Interest”, the Former Interest Holder

Section 54 to the New Interest Holder and the Former

Section shall not impose any obligation on the New Interest Holder in respect

Section applies where, concurrent with an acquisition of an Acquired Interest,

Section as the “FA Portion”, that is a different percentage than the percentage

Section as the “WI Portion”.

Section 40.

Section as the “Differential Portion”, for proceeds of disposition

Section 40 and to have separately disposed of the

Section 40;

Section 41 applies and the resulting Royalty Consequences would not be

Section 54.

Part IX of the Excise Tax Act