Q&A

Can a Magnetometry or Gravimetry survey run outside a block in to open areas (not in blocks) and would these survey points still add to the bid score?

Yes, magnetometry and gravimetry surveys can run outside the specific block the company is pursuing. Yes, these surveys still add to the work Unit count for such block. Nonetheless, such Work Units i.e. surveys do not grant any rights in regards to the areas outside the proposed or sought block. Also, at least 51% of the total Work Units counted towards a bid have to be inside the proposed or sought block.

Are you planning to upload on the website an English translation of the documents in Spanish (Contracts, Terms of Reference and Qualification Requirements)?

English versions will be provided as soon as possible. Nonetheless, the versions in Spanish are the one seen as “official”. If there is any clarification with regards to any clause of the Contract, please do not hesitate to request such clarification at any time. If any concern or request for modification is expressed during the timeframe of questions and is deemed reasonable by the State, the appropriate changes will be made to the Contract and such change will be published and notified to all participants. Nonetheless, we don’t foresee any changes to be made to the fiscal regime but want to make sure other clauses or terms do not represent a “poison pill” of sorts that we might have missed and that will inhibit or diminish the interest and/or participation in the round.

Can you clarify the process for “block observations” and determining the “final version of the blocks” (set for 10/21/2019 on the timeline)? What will that process be based on?

“Block observations” refers to the allotted timeframe within the official Round schedule during which the State, through the Ministry of Energy and Mines, will receive any requests for 1) the modification in shape, form or size of any of the current proposed on-shore or off-shore blocks and for 2) the complete addition of an all-new block, whether on-shore off-shore, that the participant feels should be added to the process and the participant is eager to bid for. Neither of these cases, and/or the fact that any observation or proposal for a block is made constitute and obligation to bid and/or participate in the process. Though, obviously, the proposal of changes or an entirely different block will “suggest” there is interest from the participant in question, no expectation and/or legal obligation is derived from the action of proposing a new block and/or modifications thereto. The final day in which this two (2) type or requests can be made is September 13th, 2019.

The “final version of the blocks” will be the result of a process carried out by the Ministry by which the initial blocks and all proposals are analyzed and a decision will be made and informed to all taking into consideration the best interest of the State. At the prescribed time the decision will be announced together with and updated map. Again, even when a proposal for modification has been accepted the participant that requested that change has no obligation or additional rights as regards to that block, so the participant can bid on such block if that participant sees it fit. The aforementioned decision will be made on October 21st, 2019.

Can a geochemical sampling run outside a block in to open areas (not in blocks) and would these survey points still add to the bid score?

Yes, a geochemical sampling can be performed outside the specific block the company is pursuing. Yes, these sampling still add to the work Unit count for such block. Nonetheless, such Work Units i.e. geochemical sampling do not grant any rights in regards to the areas outside the proposed or sought block. Also, at least 51% of the total Work Units counted towards a bid must be inside the proposed or sought block.

Would two geochemical samples from the same locations, but using different analytical methods and premise, count as one for the work programme score? (two different techniques to back each other up)

If different processes, object and value of running different processes exists, the sampling will count for as many as significant geochemical processes (for oil & gas exploration) are performed. Two different methods for identifying the same geochemical variant (ex. Total carbon content) will not count as two different processes as they have the same object. Two different processes one for identifying total carbon content, and other for gas biomarkers, for example, will count as two different samples and/or processes since they both carry exploratory value and their object is different.

Article 34: Valuation of Hydrocarbos sold to Third Parties. We note that, according to the model provisions, the Contractor’s oil sales agreements with third parties would be subject to MEM approval. We would find this very difficult to work in the international crude oil market and we do not normally find our or other producers’ sales being subject to State agreement. We need to have an unfettered right to sell our oil entitlement. Can this right of MEM approval be dropped?

The part of the article that refers to MEM’s necessary approval will be eliminated. The local tax authority will nonetheless have the right to verify that sale to associated third parties is made under normal market conditions as per Dominican law transfer pricing provisions.

Can you please post a link to the report so we can be sure which report it exactly is?

No, we cannot provide a link to the report since it is protected by copyright. Nonetheless, the report is available at a cost at the Energy Intelligence Group. We will also confirm any request by companies to verify if they are included in the top 100 of the report that is used by the MEM and that is the report of the Energy Intelligence Group issued on November 2018. Furthermore, according to the terms of reference of this process, companies that are within the top 100 of the report are waved and/or not required to present any documents for technical, economical-financial and Safety and Environment qualification.

Do you have access to the report? If not, what are bidders expected to provide as proof that they are listed there?

We have access to the reported list of the Top 100 world oil companies. In order to waive the provision participants don’t have to actively do anything, but if they don’t have access to the report that is used by the MEM and that is the report of the Energy Intelligence Group issued on November 2018, a request for verification by MEM can be made by interested companies.

We are looking to confirm the formulas that are stated in Article 24.2.i.b. and Article 24.2.ii.b.

The formula stated in Article 24.2.i.b when Price is within 40 and 130$ is Rminm = 0.0788 x Pb – 1.888. When we use this formula, we calculate a value that is smaller than the Rminm % in Article 24.2.i.a of 5%, when Price is less than 40$. The equation for calculating a slope when you know a point on a line is y=mx+b. The graph below demonstrates how the revenue should be share when linked to oil price and production.

Based on the points known from the line, you can calculate the slope and constant using the y=mx+b formula. m=slope; and b=value of y when x=0

Focusing on the line for production for 5mbopd, the slope(m) can be calculated as 0.0778%.

Calculation Example

m= (12%-5%)/(130-40) = (7%/90) = 0.0778%

However, the value of b can be calculated as positive 1.888, whereas Article 24.2.i.b has negative 1.888.

Calculation Example

y=mx+b

5% = 0.0778% x 40 + b

5% = 3.12% + b

b = 1.88%

When you also look at the graph above, you can extrapolate the blue line and see that when x=0 and the line crosses the y-axis, that y is a positive number.

For Article 24.2.i.b, if I use the formula 0.0788 x Pb + 1.888, I get a value that is now between 5-12%.

Question – given the above, should the formula written in Article 24.2.i.b “Rminm (%) = 0.0788 x Pb – 1.888” be changed to “Rminm (%) = 0.0788 x Pb + 1.888”? and should the formula written in Article 24.2.ii.b “Rmax (%) = 0.1818 x Pb – 1.366” be changed to “Rmax (%) = 0.1818 x Pb + 1.366”?

Note that this may also be the same with the equivalent gas calculation.

There was a mistake in the formulas in articles Article 24.2.i.b and Article 24.2.ii.b for onshore contract. These formulas have been changed according to the written proposal. From now on it should be read as:

–              Article 24.2.i.b — Rminm (%) = 0.0788 x Pb + 1.888

–              Article 24.2.ii.b — Rmax (%) = 0.1818 x Pb + 1.366

There is a definition of “Administration System” used in the PSC.

The English translation reads: “2.109. Administration System: Means the integral set of interrelated and documented elements whose purpose is the prevention, control and improvement of the performance of a facility or group of them in terms of industrial safety, operational safety and protection of the environment in the Hydrocarbons sector.” Can you please provide more details on what this is and do you have an example?

We have changed the term, for clarification purposes, to Health, Safety and Environment Policy. An example of it would be any control, or standard or procedure that operator have for HSE in a facility or group of facilities.