Oil royalties

Oil producers receive royalty invoices each month for each well event or tract in a Production Entity (PE) they have an interest in that is producing or reporting sales. The amount owing is determined using the information reported in Petrinex by producers, purchasers and facility operators.

Visit Petrinex to learn more about what information must be reported.

Calculating royalties

Royalties are calculated monthly. Once the monthly royalty rate has been established for the well or tract, the royalty is calculated based on:

• Ownership interest for each producer 
• Monthly sales volumes and values 
• Monthly production volumes 

The gross royalty payable is reduced by any exemptions or credits that the producer is entitled to claim. For more information about calculating your royalties, refer to sections 4.0 and 7.0 of the Oil and Gas Royalty Handbook (PDF, 1.4MB).

Royalty rate

A royalty rate is calculated monthly for each well event, or each tract in a Production Entity (PE). The royalty rate can be up to 40% of the value of the oil produced and is based on:

• The volume of oil produced by the well or tract
• Whether the oil is produced from Crown land or freehold land
• The oil vintage: new oil, old oil, third tier oil, or heavy oil

Reduce your royalties

Oil producers may reduce their royalties if they qualify for the:

• Discovery well exemption
• Infrastructure credits (e.g. road credits)
• Summer drilling program