Acreage rentals are payable annually in advance. Rents vary, depending on whether Production licences were awarded as a result of a competitive licensing round or as the result of an open-door invitation. Note that although these rentals are defined by legislation, the Falkland Islands Government may consider negotiating rents under the right circumstances in order to encourage continued activity in instances where licensees can demonstrate that set payments may be detrimental to exploration activity.

For the production licences awarded in 1996 (under competitive bidding) the acreage rentals are:

Licence phase

Rent

Comments

Phase 1 (Years 1 through 12, or for as long as the extended Phase 1 lasts beyond 12 years)

US$30 per km2 per annum

Phase 1 was extended beyond the end of year 7 to allow licensees to acquire farm-in partners

Phase 2 (seven years following on from the end of the extended Phase 1)

US$60 per km2 per annum

Phase 2 will commence 6 months after a new farm-in partner joins any licence.

There is a notional 50% acreage relinquishment before Phase 2 commences, but actual percentages can be negotiated.

Phase 3

US$600 per km2 per annum

There is a notional 50% acreage relinquishment before Phase 2 commences, but actual percentages can be negotiated.

During development

US$375,000 per development area.

Rentals are payable only until first royalties are paid from production.

 

 

For the production licences awarded under open-door access since 2001, the acreage rentals are:

Licence Phase

Rent

Comments

Phase 1 (of 3 to 5 years depending on work programme)

US$30,000 per annum for first licence held, plus US$10,000 for each additional licence

Work programmes will determine length of first phase – seismic only results in a 3 year initial period, while a drilling commitment provides 5 years.

A licence can cover up to an entire 1° by 1° quadrant of 30 blocks.

Phase 2

Fees as per Phase 1

 

Discovery area

US$375,000 per annum per discovery area.

A discovery area can be held for 5 years to allow for development planning and/or appraisal drilling.

Field production

US$375,000 per annum per field.

Rentals are payable only until royalty payments start on production

 

 

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