CONTRACT TYPES : THE BASICS
CONTRACT TYPE |
|
DESCRIPTION |
|
PAYMENTS TO THE STATE |
|
PAYMENTS TO THE CONTRACTOR |
PSC |
� |
After payment of a royalty , the “ contractor ” parties retain a share of production to cover their accumulated costs |
� |
A monthly “ quota ” ( rental payment ) during the exploration period |
� |
Share of hydrocarbons as cost recovery pursuant to the Ministry of Finance rules |
�
�
The remaining production is shared between the contractor parties and the State in accordance with the PSC
Contractor parties can market their shares of hydrocarbon production independently
� |
The State ’ s share of production is marketed by |
|
|
an agent appointed by CNH , and Mexico ’ s petroleum fund receives the proceeds from the sale of such production |
LICENCE |
� |
The contractor parties own the hydrocarbons |
|
|
once extracted |
�
�
�
Royalties on production once production begins ( which increases with oil price )
Variable percentage share of production in cash or kind , based on “ operating profit ” ( value of hydrocarbons less contractor parties ’ cost recovery less royalties paid )
An upfront signing bonus determined by the Ministry of Finance
� A monthly “ quota ” ( rental payment ) during the exploration period
�
�
Royalties on production once production begins
Compensation based on either operating profit or the value of the hydrocarbons produced
�
�
Variable percentage share of production based on “ operating profit ” ( value of hydrocarbons less contractor parties ’ cost recovery less royalties paid )
Investor may take all the hydrocarbons in-kind at the wellhead
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