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ARTICLE · 05 NOVEMBER 2015

Newfoundland And Labrador's New Royalty Regime

Osler, Hoskin & Harcourt LLP
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The Province of Newfoundland and Labrador introduced a new generic offshore oil royalty regime on November 2, 2015.

CanadaEnergy and Natural Resources
Simon Baines
Simon Baines
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The Province of Newfoundland and Labrador introduced a new generic offshore oil royalty regime on November 2, 2015. The new royalty regime is intended to apply to all projects going forward, including those to whom exploration and significant discovery licenses have already been issued.

High-level details of the new royalty regime can be found here [PDF]. Generally speaking, under the new royalty regime rates will increase as a project becomes more profitable with the highest rate (50%) being payable by projects that have returned $3 for every $1 spent.

The new regime is subject to the development of regulations under the Petroleum and Natural Gas Act (the Act), which the Province expects will be completed in early 2016.

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