Assume that the maximum value of Cost Recovery Crude Oil is limited to 50% of gross production, with costs to be recovered in the following order:

1. Production, Administration, and services expenditures.
2. Exploration costs (paid entirely by Contractor)
3. Development costs (paid entirely by contractors).

Royalty is 20% of gross production and is to be paid in-kind.

Any excess production remaining after cost recovery becomes profit oil and shall be shared between Government of Belize and Contractor (25% for Government of Belize and the remaining for contractor)

 For the first round of production assume the following:

• Recoverable production, administration and services expenditures total $8, 00,000.
• Exploration expenditures (unrecovered to date) total $15,000,000.
• Development expenditures (unrecovered to date) total $350,000,000.
• Any expenditures not recovered in the current round may be carried forward to be recovered in future rounds.
• The daily production was 25,000 barrels (bbl.) of oil.
• The duration of this production round was 50 days
• The agreed-upon price is $100/bbl.

Answer rating: 100% (QA)

Allocate the production between government of Belize and Contractor First lets calculate the total gross production Total Gross Production Daily Produ... View the full answer