This excerpt taken from the SU 6-K filed Nov 6, 2009.
East Coast Canada Royalties
The previous table contains forward-looking information and users of this information are cautioned that actual Crown royalty expense may vary from the percentages disclosed in the table. The percentages disclosed in the table were developed using the following assumptions: current agreements with the Government of Newfoundland and Labrador, current forecasts of production, capital and operating costs, and the forward estimates of commodity prices and exchange rates described in the table.
The following risk factors could cause actual royalty rates to differ materially from the rates contained in the foregoing table:
In the third quarter of 2009, East Coast Canada royalties averaged 28% of gross revenue. Terra Nova production was subject to a Tier I royalty of 30% of net revenue and a Tier II royalty of an incremental 12.5% of net revenue. White Rose production was subject to a Tier I royalty of 20% of net revenue and a Tier II royalty of 10% of net revenue. The royalty rate on Hibernia production increased from 5% of gross revenue to 30% of net revenue during 2009 based on the terms of the Hibernia Royalty Agreement and a Memorandum of Understanding. In addition, Hibernia production was subject to a federal government net profits interest of up to 10% of net revenue.
A planned shutdown at our Terra Nova facility commenced in mid September, and was completed ahead of schedule in early October, affecting overall production in the third and fourth quarters of 2009.
A twelve-day shutdown planned for October at the Hibernia facility has been deferred to 2010.
Production from White Rose continued to be impacted during August and September after completion of the planned turnaround, as the South Drill Center remained shut-in until early October for a planned tie-in of the North Amethyst extension, affecting overall production in the third and fourth quarters of 2009.