Merak Fiscal Model Library

A world-class collection of standardized fiscal models

South Africa R/T (1997)

Fiscal Term Description
Fiscal Regime Type Royalty Tax.
Mineral Act (1991), Income Tax Act (1963) as amended, Model Agreement (1997), Mineral and
Governing Legislation
Petroleum Resource Development Act (2002) and the Revenue Laws Amendment Bill (11/2006).
• PetroSA’s participation varies in each field up to 10% (0% model default).
State Participation
• Assumed participation both Revenue and Cost (i.e. no carried interest).
Signature Bonus None.
Training Fee Training Fee is $150,000/yr for the first 4 years of the lease.
Surface Rental is negotiable. In some contract areas there is a required non-refundable pre-paid
amount for the rental fee. The following table is an example for the Surface Rental schedule,
Surface Rental
Period
($/Year)
Surface Rental
Initial Period 250,000
1st Renewal Period 250,000
2nd Renewal Period 200,000
3rd Renewal Period 100,000

Royalty Royalty is levied on Gross Revenue; rate is negotiable (assumed 0.5%).

• Income Tax Rate is 30% until October 2006; starting November 2006, a tax rate of 29% is
applied. If not a resident company, the tax rate is specified as a value not exceeding 32.8%
(User should change Tax Rates settings to modify resident company scenario).
• Royalty is not deductible for Income Tax Calculation.
• All Pre-Production Costs are uplifted 12% for offshore blocks (6% onshore) compounded
Income Tax annually until the start of production. This uplift is valid until October 2006.
• All costs are expensed.
• Effective November 2006, additional uplift allowances can be used as deductions for income tax
calculations. 100% additional deduction is allowed for Exploration Investment and 50%
deduction is allowed for Development Investment.
• Losses can be carried forward indefinitely.
Withholding Tax A Withholding Tax Rate of 5% is effective starting November 2006.
Around company’s upstream petroleum operations; 10% of the excess losses to be used as an
Ring Fencing
offset against other forms of income (Not modeled).
Schlumberger Information Solutions
Merak Fiscal Model Library is licensed and supported by Schlumberger Information Solutions (SIS). SIS is an operating unit of Schlumberger that
provides consulting, software, information management and IT infrastructure services to support the core operational processes of the oil and gas

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 South Africa R/T (1997)

industry. SIS enables oil and gas companies to drive their business performance and realize the potential of the digital oilfield. SIS is on the Internet at
www.sis.slb.com 04-IS-171

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