Fiscal Regime

Guyana initiated a new top-quartile fiscal regime to encourage exploration. After commercial production begins, the Licensee is allowed to recover all capital and operating costs from "cost oil," which for the first three years is up to 75% of production and thereafter up to 65% of production. The Licensee's share of the remaining production or "profit oil," for the first five years is 50% of the first 40,000 barrels of oil/day and 47% for additional production; and thereafter 45% in full satisfaction of all income taxes and royalties. Using full-cycle economics, including recovery of capital and operating costs, the Licensee's share of gross revenue is estimated to be 63%.