Under Alberta’s generic Oil Sands Royalty, the Crown royalty is calculated as the greater of 1% of gross plant gate revenue before hedging, or 25% of gross plant gate revenue before hedging, less Syncrude operating, non-production and capital costs. For the year ended December 31, 2006, Crown royalties were $232 million, or $6.93 per barrel, an increase of $213 million, or $6.22 per barrel, compared to 2005. The increase in 2006 Crown royalties reflects both the shift in royalty rate to 25% of net revenues from the minimum 1% of gross revenues, which occurred in the second quarter of the year, and the increased net revenues on an annual basis from the higher production volumes and increase in the average realized selling price.
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