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Production Sharing Contract Review

Production sharing contract review that lays the host government’s draft on one negotiating table and finds the sentence that moves the deal before the session.

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Follow the second round to a signed brief ↓
The problem

A draft that argues the ceiling while another article moves the money

The host government’s new draft lands with a cover letter that names a few changes, and the team has weeks to decide what to fight for. Everyone argues the term that shows, like the cost recovery ceiling, while a new sentence in another article quietly moves more value than the ceiling ever could.

Old contracts get pulled from memory and typed into a spreadsheet. The economist runs the model on the headline terms, late, and counsel’s memo on the legal articles travels separately. By the time anyone reads the clauses together, the session has already happened.

Built forCommercial negotiatorsLead negotiatorsPetroleum counselFiscal economistsInternal reviewers

The Problem Today

Teams argue the term that shows, while one sentence elsewhere in the draft quietly moves more value.

129 h
to place 386 terms among precedents by hand, at 20 minutes each our estimate

Compared by hand today

  • Draft
  • Old deals
  • The model
  • Legal notes
  • The model runs lateTerms get argued before anyone prices them together
  • Rounds change quietlyA cover letter may leave a change unnamed

The Solution

  1. Each term among precedentsCommercial terms placed among your signed contracts, page cited
  2. Read clauses togetherAgents follow references and find clauses that change each other
  3. Redo the sumSample economics step by step, open to checking, and no forecast
  4. Change the ask, then signThe negotiator gives a reason; the lead negotiator opens and signs

Built-in controls

  • Law and meaning go to counsel
  • Only the signer’s own openings count
  • Precedents stay off the brief that crosses

What You Get

Negotiators walk in knowing which article is worth the fight, with the sum and sources behind it.

  • Rounds compared word by wordChanges the cover letter left out come up too
  • A sum anyone can redoEight steps, year by year, field by field
  • A brief that follows decisionsUnsigned until signed; a later change voids it
One round, one day

A production sharing contract review in the week before the session

Round 2 of the host government’s draft for an offshore area has arrived. The reply is due in days and the next session follows soon after. The negotiating team has one working day to find what matters.

demoThe host government, the area, the draft, the precedents, the team and every figure are sample data; the economics are a sample sum and not a forecast.

  1. 01Morning

    Round 2 lands, 64 articles long, and the first sum reads one article alone

    Commercial negotiator

    The host government’s draft runs down the middle of the table: 64 articles, set against 38 sample precedents in 386 comparisons. A dark meter shows the contractor’s share of profit at 31.0%, with a floor of 28.0% drawn on it. A banner warns that this first sum reads Article 14 alone, and that the terms must be read together before anyone relies on it.

  2. 02Morning

    The cost recovery ceiling fell to 50%, and 31 of 38 precedents sit higher

    Commercial negotiator

    The cover letter leads with the ceiling, so the negotiator opens it first. Round 1 said 55% and the draft now says 50%. One dot per precedent shows where the draft falls: 31 higher, 3 the same, 4 lower, each row naming its article and page. Her first ask lifts it to 60%, the obvious reply to the term that shows.

  3. 03Before lunch

    Read together, the same draft gives the contractor 26.0%

    Commercial negotiator

    One button sets the agents reading every article against every other, following references and defined words. The meter falls to 26.0%, the draft as it really reads. Without the small second field it reads 28.6%. Her first ask, a 60% ceiling, reaches only 26.8%, below the floor, if that field is built. Nothing about the ceiling changed; the reading did.

  4. 04Before lunch

    A new ring-fence sentence the cover letter never named

    Commercial negotiator

    The finding opens Article 22, changed in Round 2, with sentence 22.3 marked. Costs charged to an accounting area may be recovered only from that area, and exploration charged outside any development area is not recoverable. The bar shows 6 of 38 precedents read like this. The agents say it moves more than the ceiling can bring back, and that counsel holds the meaning.

  5. 05Early afternoon

    Seven pairs of clauses, and the ring-fence pair costs 5.0 points

    Commercial negotiator

    Pairs that change each other’s value are listed largest first. At the top, Article 14 and Article 22: the passages sit side by side with the linking words marked, Article 14.4 saying it is subject to Article 22. The band reads 31.0% alone and 26.0% as drafted. Below them, four trades the agents propose, each with its sample take and where it lands against the floor.

  6. 06Early afternoon

    What sentence 22.3 catches is a legal reading, so it waits for counsel

    International petroleum counsel

    The agents send meaning to a named lawyer and give no answer of their own. The question is whether 22.3 reaches exploration spent before any development area exists. Counsel opens Article 14 and Article 22, both marked opened, then writes her reading in her own words. It is recorded under her name, and the sign-off now waits on the lead negotiator.

  7. 07Mid-afternoon

    The ask flips: hold the ceiling at 50% and strike sentence 22.3

    Commercial negotiator

    She picks the trade that holds 50% as the give and strikes 22.3 and 14.4 for one pool across the area, with exploration pooling as the fallback. Every change carries a reason code and a sentence. The strip now reads draft 26.0%, ask 31.0%, fallback 28.6% and floor 28.0%. Twelve terms show Round 1, the draft, the precedents and why.

  8. 08Late afternoon

    Seven sources opened by the signer himself, including one restricted contract

    Lead negotiator

    Sign-off counts only what the signer opens, as things now stand. Two lines counsel opened earlier did not count for him. He opens counsel’s reading, the sum both ways, the changed ask, both articles, the finding and precedent S-19, whose confidentiality terms keep it to the internal part of the brief. All seven now count, and the sign button wakes up.

  9. 09End of day

    The brief that crosses the table names no precedent

    Lead negotiator

    The opening position is signed on version 2 and the brief follows from it. What crosses the table: one pool for the whole area in Article 22, the 50% ceiling accepted as a give, three legal articles reserved with counsel. The fallback, the floor and the sample take sit in a part for the company’s own team. Nothing here is sent; people do that.

The take on the draft as written, line by line, lands at 26.0%

The draft as written, with the ring-fence sentence and the second field built. Flat $70 a barrel, undiscounted, at contractor group level. Sample economics anyone can redo.

Profit to shareValue $15,867M less costs $5,358M$10,509M
Recovered under the ceiling$751M never recovered behind the fence$4,607M
Contractor’s share of profit$3,739M
Domestic supply given up− $187M
BonusesNot recoverable− $65M
Costs spent− $5,358M
Contractor net$2,736M
Take: net over profit to shareArticle 14 read alone: 31.0%26.0%

demoSample data, from the working solution.

Four trades on the ring-fence, and only two clear the 28.0% floor

The trades the agents proposed once the clauses were read together. The negotiator chose B as the opening ask and C as the fallback.

TradeWhat the company givesSample takeAgainst the floor
A. Lift the ceiling to 60%Nothing; Article 22 left as drafted26.8%Below
B. Hold 50%, strike 22.3Accepts the 50% ceiling31.0%Clears
C. Hold 50%, exploration poolsCeiling, and development costs kept by area28.6%Clears
D. Keep 22.3, count tiers by areaAccepts 22.3 and the ceiling27.3%Below

demoSample data, from the working solution.

Around the table

The sum, the shelf and the rules behind a signed opening ask

The economist, the lead negotiator and the internal reviewer work Round 2 from these screens as well. Click any one to see it larger.

The take, step by stepEight steps from value to take, each with its article. Why 31 becomes 26: $390M of outside exploration and $361M on the second field that do not come back.
A change needs a reasonChoosing a trade opens a version with a reason code and the negotiator’s sentence. The old ask stays on record.
Sign-off, before the openings0 of 7 count, so the sign button stays off. A price check sits among the gates: at $60 a barrel the fallback drops to 26.8%, below the floor.
All 386 comparisonsOne row per term and precedent, with value and page. Nine values held below 80% sure stay off every bar until a person confirms them.
The precedent shelf38 fictional signed contracts and 6,112 pages: setting, ceiling, ring-fence and held values, with restricted contracts marked.
Who may do whatEach role with what it can do and what it never does. The administrator sets the rules around the work and touches no term.

demoSample data, from the working solution.

The agents

Not one of the eight agents takes a position on a single term

They split, place, count, pair, price, compare, route and write. People decide.

Draft reader

Splits each round into articles and clauses, by page.

  • Never rewrites or corrects wording
Precedent reader

Pulls each term from a signed contract, with page and confidence.

  • Holds a value it reads with low confidence instead of guessing
Term comparer

Counts precedents higher, the same and lower.

  • Never calls a term good or bad
Interplay finder

Follows references and defined words between articles.

  • Never rules on meaning
Sample economist

Runs the signed sample sum both ways.

  • Never changes an assumption
  • Never calls it a forecast
Round tracker

Compares rounds word by word against the cover letter.

  • Never guesses a motive
Legal router

Sends law, meaning and safety to the named person.

  • Gives no answer of its own
Brief writer

Writes the brief from signed decisions.

  • Never shows an unsigned position as signed

Calls in a PSC negotiation that stay with the team

The sample sum and the comparisons inform these calls. Named people make them.

What a clause meansThe ring-fence question went to international petroleum counsel, who wrote the reading in her own words.
Which trade to open withAgents propose trades. The commercial negotiator chooses one and writes why.
The signature on the positionThe lead negotiator signs only on what he opened himself, after anything it rests on last changed.
The mandate floorIt is locked in settings. Only the new ventures committee sets it.
What goes to the other sideThe brief is written for people to send. Precedents never appear in the part that crosses the table.

What negotiators ask about production sharing contract review

What is a production sharing contract review?

A production sharing contract review reads a host government’s draft article by article, sets each commercial term against the contracts you have signed before, and works out what the draft does to your share of profit. Here agents place, compare and price the terms on sample economics, and people decide the ask.

Does a higher cost recovery ceiling always help the contractor?

Not on its own. A ceiling decides how fast costs come back. If another article fences costs by area, some never come back at all, and lifting the ceiling barely moves the take. The sample sum shows both readings side by side.

What does ring-fencing do to cost recovery?

It limits where a cost can be recovered from. Costs charged to one accounting area come back only from that area’s production, and exploration outside any development area may not come back at all. Whether a given sentence reaches past spending is a reading for counsel.

Which production sharing agreement terms does it compare?

The commercial terms: exploration period, minimum work, relinquishment, state participation, royalty, the cost recovery ceiling, capital cost rate, the profit split, bonuses, domestic supply and the ring-fence. Legal articles go to counsel and cross the table as reserved until counsel answers.

How is contractor take measured here?

As the contractor’s net cash over field life divided by the field’s lifetime profit, undiscounted, with a discounted figure beside it. The sum is sample economics in eight steps, and the economist or anyone else can redo it line by line.

Can it use our own signed contracts?

Yes. Your signed contracts load in place of the fictional shelf, with restricted contracts marked so they stay in the internal part of the brief. Each value cites its page, and a value read with low confidence is held until a person confirms it.

Who signs the opening position?

The lead negotiator, and only on what he has opened himself as things now stand. A new reading, sum or round clears his openings, and a change to the ask voids his signature.

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Bring the last draft
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We’ll lay that draft on the table against your own precedents and read its clauses together.

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