Assume that BP Company, a UK. Company, and Eni Company, Italian Company are involved in petroleum operations in Sudan. BP Company has a 40% working interest, Eni Company has a 40% working interest, while the local oil company has a remaining of working interest.

Gross production is to be split in the following order:

1- Royalty is 20% of gross production and is to be paid in-kind.

3- Cost oil is limited to 70% of gross production, with costs to be recovered in the following order:

a- Operating expenses.

b- Exploration costs (paid entirely by BP Company and Eni Company equally)

c- Development costs (paid 40% by BP Company and 40% by Eni company and the remaining by local oil Company).

4- Any excess production remaining after cost recovery becomes profit oil:

a- The government of Rwanda receives 15% of the profit oil.

b- The remainder is split among BP Company, Eni Company and local oil company based on their working interests.

For the current production round, assume the following:

• Recoverable operating costs total $8,000,000.
• Exploration costs (unrecovered to date) total $80,000,000.
• Development costs (unrecovered to date) total $400,000,000.
• The current gross production is 5,000,000 barrels (bbl.) of oil.
• The agreed-upon price is $80/bbl.

Allocate the production between the parties.