C* Calculation
Alberta's Modernized Royalty Framework (effective for wells spud after January 1, 2017 or early opt-in participants) emulates a revenue minus cost royalty structure across all hydrocarbons (oil, natural gas and non-project oil sands).
The Drilling and Completion Cost Allowance (C*), is a proxy for completed well costs. The C* is a calculated value based on vertical depth, lateral length and the amount of proppant placed. The same C* formula is used regardless of hydrocarbon target. It determines the allowable revenue after which individual well sites begin paying higher royalty rates.
A company will pay a flat royalty of 5% on a well’s early production until the well’s total revenue, from all hydrocarbon products, equals C*. Afterwards, the company will pay higher royalty rates (Post C*) that vary depending on the resource and reference price of the commodity. Royalty rates decrease to match declining production rates when the well reaches a maturity threshold.
This calculator is not a royalty or royalty rate calculator, but rather, it can be used to estimate the C* value of a well. See Royalty Overview for more information.
Note: The ACCI for the following production year is published by the department in an Information Letter at the end of July. Following its release, this calculator will be updated to include the new ACCI value. If you do not see the new ACCI in this calculator by August 1st, you may need to clear the cache of your browser.
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