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PetroChina Company enters into a concession agreement with the Rwanda Government. PetroChina Company agreed to pay the government of Rwanda royalties of 15% of gross
PetroChina Company enters into a concession agreement with the Rwanda Government. PetroChina Company agreed to pay the government of Rwanda royalties of 15% of gross production. PetroChina Company bears all of the costs associated with exploration, development, and production. PetroChina Company spent $20,000,000 on exploration and drilling costs. Gross revenue of production period was $25,000,000, and production costs were $15,000,000. The income tax laws allow deduction of all production costs, with exploration and drilling costs deductible over a ten-year period. The tax rate is 30%. Show how the gross revenue would be shared by the parties.
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