Net Profit Royalty Program
The net profit royalty program (NPRP) promotes the development of high-risk oil and natural gas resources that are otherwise unlikely to be developed.
This program allows producers to pay lower royalty rates in the initial stages of a project in exchange for higher royalty rates once the producers have recovered their capital costs.
Offered by Ministry of Energy and Climate Solutions
Amount
Lower royalty rates in the initial stages of a project: 2% of gross revenue in the pre-payout tier, then the greater of 5% of gross revenue and 15% (Tier 1), 20% (Tier 2) or 35% (Tier 3) of net revenue
Quick eligibility check
Who can apply
Applicants must be producers
About the funding
This program allows producers to pay lower royalty rates in the initial stages of a project in exchange for higher royalty rates once the producers have recovered their capital costs.
Tier Royalty Pre-payout tier 2% of gross revenue Tier 1 Greater of 5% of gross revenue and 15% of net revenue Tier 2 Greater of 5% of gross revenue and 20% of net revenue Tier 3 Greater of 5% of gross revenue and 35% of net revenue We determine the gross revenue monthly. Gross revenue is equal to the sum of the values of the oil, marketable gas and natural gas by-products produced in a month. Net revenue is also determined monthly and is equal to the gross revenue for a month minus the eligible operating and capital costs incurred during the month. If the eligible operating and capital costs exceed revenue in a month after a project has reached tier 1, 2 or 3, the difference is carried forward to future months. An NPRP project cannot go back to a lower tier.
Historical costs are allowed capital and operating costs incurred in the 60 months prior to, and including, the month the producer submits an application for approval under the NPRP. For a list of allowed costs, see the Net Profit Royalty Project Allowed Cost Order of the Administrator.
Eligibility criteria for allowable costs are set out in the Net Profit Royalty Project Allowed Cost Order. Allowable costs must be directly attributable to the project, incurred by the producer, reasonable in the circumstances, not recovered from another party and not specifically excluded.
Similar programs
| Program | Type | Amount | Status |
|---|---|---|---|
| Deep-Well Royalty Program | Royalty | Royalty credits covering a portion of drilling and completion costs: Tier 1 deep wells from a minimum of $440,000 (for a well with a deep-well depth of 2,500 metres) to a maximum of $2.81 million (for wells 5,500 metres or deeper) | Open |
| Low Productivity Well Royalty Reduction | Royalty | No fixed amount | Open |
| Royalty Program for Marginal Gas Wells | Royalty | No fixed amount | Open |
| Ultra-marginal Well Royalty Reduction | Royalty | No fixed amount | Open |
