LONDON (Alliance News) - Range Resources Ltd Monday said it has managed to reduce the royalty rates paid to the state-owned oil company of Trinidad & Tobago, but said the deal will have minimal benefit until production grows.
The company has signed the agreement with the Petroleum Co of Trinidad & Tobago Ltd to reduce the overriding royalty rates paid by Range on the producing Morne Diablo, Beach Marcelle and South Quarry fields in Trinidad.
The new royalty rates will only come into effect when the oil price received by Range for the crude extracted from those fields is below USD50 a barrel. The new rates will be backdated and cover all sales from February 1 onwards.
"Assuming a WTI price of USD45 per barrel, this change would have minimal net revenue benefit to Range at current production levels. However, the impact will progressively increase at higher production levels with the net revenue benefit estimated to be approximately 7% at 2,500 barrels of oil per day, assuming the same oil price," said Range in a statement.
WTI was trading a smidgen below USD47 a barrel on Monday morning, and net revenue refers to the company's gross revenue after government royalties and overriding royalty payments.
Range also said the Minister of Finance for Trinidad & Tobago, Colm Imbert, has said the government plans to review the level of supplemental petroleum tax that is paid by producers on crude oil prices "moderately higher" than USD50 per barrel. Range said that review on tax is expected to be completed by September this year.
Range shares were up 5.6% to 0.460 pence per share on Monday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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