This Licence has a term of nine (9) years commencing on [date].
Beaufort Sea & Mackenzie Delta:
For those parcel which lie south of Line A on the call map, the term shall comprise of two (2) consecutive years of five (5) and four (4) years. Subject to the Licence, Period 2 shall follow Period 1.
For those parcels which lie north, or straddle, Line A on the call map, the term shall comprise of two (2) consecutive years of seven (7) and two (2) years. Subject to the Licence, Period 2 shall follow Period 1.
Arctic Islands of Nunavut:
The term shall be comprised of two consecutive periods of six (6) and three (3) years. Subject to the Licence, Period 2 shall follow Period 1.
The drilling of one (1) exploratory or delineation well prior to the end of Period 1 of the term is a condition precedent to obtaining tenure to Period 2.
Such a well should reach a depth sufficient to evaluate a prospective horizon as described in the geological prognosis in the application for Authority to Drill a Well.
Where a well has been commenced and drilling is being pursued diligently, Period 1 shall continue until the well has been completed. Period 2 shall be reduced accordingly.
Failure to drill a well on the lands by the end of Period 1 will result in the termination of the Exploration Licence. Consequently, lands revert to the Commissioner of the Northwest Territories as Commissioner's Lands. Any remaining Work Deposit will be forfeited.
The interest owner may, at its option, in order to meet the work requirement, extend Period 1 for one year by posting a Drilling Deposit before the end of the last year of Period 1. Where Period 1 is extended by the posting of a Drilling Deposit, Period 2 shall be reduced accordingly.
This Drilling Deposit shall be in the amount of one million dollars ($1,000,000.00) and is to be submitted in the form of an irrevocable standby letter of credit, certified cheque or other negotiable financial instrument in a form satisfactory to the territorial Minister.
If a Drilling Deposit is posted, it will be refunded in full if the licence is validated as required to obtain tenure for Period 2 by the drilling of a well. If a validation well is not drilled or has not been commenced within the one year extension, the Drilling Deposit will be forfeited to the Government of the Northwest Territories upon the termination of the licence at the end of Period 1. If a well has been commenced and drilling operations are being diligently pursued, Period 1 will continue until the well has been completed.
Allowable expenditures cannot be applied against the Drilling Deposit.
As a result of the extension of Period 1, by the posting of a Drilling Deposit, rentals payable in Period 2 will be applicable at the following rates, for the first year after the extension, at $5.50 per hectare and all subsequent years at $8.00 per hectare.
All other rental provisions remain applicable.
This Licence is accompanied by a Work Deposit in the amount of twenty-five per cent (25%) of the bid submitted.
Work Deposits are refundable as expenditures are deemed allowable during Period 1 of the term of the Exploration Licence. A credit against the Work Deposit will be made on the basis of twenty-five per cent (25%) of allowable expenditures, referred to hereafter, as they are approved. Any Work Deposit balance remaining at the end of Period 1 will be forfeited.
Expenditures incurred in Period 2 of the term will not be credited against the Work Deposit.
Rentals paid during Period 2 are refundable as allowable expenses are incurred during Period 2. There are no rentals payable during Period 1 of the term.
In Period 2, rentals will be applicable at the following rates:
||Beaufort Sea & Mackenzie Delta
||Arctic Islands of Nunavut
|5 & 4 years
||7 & 2 years
||6 & 3 years
|1st year of Period 2
|2nd year of Period 2
|3rd year of Period 2
|4th year of Period 2
Rentals will be payable annually, in advance, and are to be submitted in the form of an irrevocable standby letter of credit, certified cheque or other negotiable financial instrument in a form satisfactory to the territorial Minister.
When an Exploration Licence continues in force beyond Period 2 due to the drilling of a well deemed to be pursued diligently in accordance with section 27 of the Canada Petroleum Resources Act, rentals will be payable at the rate of $8.00 per hectare. Such rentals will be payable monthly, in advance, at the rate of one twelfth (1/12) of the applicable annual rates.
Failure to pay rentals will result in the early termination of the Exploration Licence and the lands will revert to the Commissioner of the Northwest Territories as Commissioner's Lands.
Beaufort Sea & Mackenzie Delta:
Rentals may be payable on lands included in a Significant Discovery Licence.
Arctic Islands of Nunavut:
Rentals will be payable on lands included in a successor Significant Discovery Licence to an Exploration Licence issued after 2012.
ALLOWABLE EXPENDITURES Footnote 1
Work Deposits and rentals will be refunded on the following basis, subject to further clarification by the Rights Administrator.
Costs related to the following classes of exploratory work undertaken as part of a program authorized by the National Energy Board may be claimed at cost:
Data acquisition: by means of reflection seismic surveys or other geophysical, geo-technical or geological surveys, including costs relating to field acquisition and processing, inspection and clean-up.
Data purchase: from vendors at arm's length for re-processing and/or interpretation, to the extent that the data assists the evaluation of the specific licence.
Drilling operations: Costs relating to construction of access routes, preparation of drilling sites, transportation to and from well location and staging areas, onsite drilling and evaluation, support vessels, helicopters, site clean-up and restoration. Drilling operations involved in an exploratory or delineation well may entail waiting on weather, logging, well testing and completion. Extended formation flow testing will not be regarded as an allowable expenditure.
Mobilization and demobilization: equipment and supplies, and any incurred stand-by charges deemed reasonable by the Rights Administrator.
Notwithstanding the above, the territorial Minister may agree to costs claimed with respect to classes of work or activity, or the use of innovative technology not contemplated by this schedule.
General and Administrative: Ten percent (10%) of the above allowable expenditures to reflect other costs not specifically itemized above, and including program specific consultations, data interpretation, regional office support, management and pre- and post program costs.
All claims are subject to approval by the territorial Minister and may be subject to a post audit if ordered by the Rights Administrator.