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Striking Oil on Untapped Royalty Credits

by DMA Staff | May 31, 2016
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Our client, one of Canada’s largest integrated oil and gas companies, pays significant Crown Royalties in Alberta and qualifies for a variety of Royalty Incentives. This client, whose downstream business refines, supplies, trades and ships crude oil worldwide, also manufactures and markets a range of products, including fuels, lubricants, bitumen and liquefied petroleum gas. Similar to many other large companies, this company employed in-house Royalty experts who were considered to be some of the best and most experienced individuals in the industry.

DMA was asked to review the client’s internal Crown Royalty filings to determine if there were opportunities for efficiencies or cost recovery. The review was primarily focused on Gas Cost Allowance filings but also included other Royalty Incentives. While DMA found that the company was conducting their filings completely and efficiently, DMA was successful in uncovering substantial opportunities for savings relating to Gas Cost Allowance filings. Additionally, DMA found that the Province of Alberta had made an error and denied the original application for royalty credits on a number of oil wells. DMA reviewed the application and appealed the denied wells to the Department of Energy. Upon receiving the corrected information, Alberta Energy determined that our client should have received the appropriate Royalty credits that had previously been denied.

Through DMA’s review, our client saved nearly $1 million for the adjustments to incentives that were previously denied. Although our client had done an excellent job of internally managing their processes and cost recovery initiatives, DMA was able to add value by serving as an extension of our client’s tax/royalty department as a second set of eyes.

Please do not hesitate to contact your local DMA office should you have specific questions or requests.