Page 58 - Azerbaijan State University of Economics

Fariz A. Guliyev: The economics of financial securities for environmental obligations and
their impact in royalty revenues from Alberta oil sands in North America

MFSP Assets

MFSP Assets represent the financial capability of a mine project which is operated by an

Approval Holder. Satisfying the Asset Safety Factor Deposit calculation, MFSP Assets of a mine

project must always be at list three times bigger than MFSP Liabilities of the same project. Note,

MFSP Assets and MFSP Liabilities point to a current mine project and not to corporate-wide

assets.

MFSP Assets (MFSP Asset Calculation, Description, page 13 Alberta Environment MFSP

Guide 2011) are calculated by multiplying the project’s gross proven and probable reserves by

the three year average netback. The result is then multiplied by a forward price factor also known

as projected future commodity price. The Formula given below describes the calculation.

Formula 1. MFSP Assets calculation

Where,

 Netback means gross profit and represents a 3 year average of annual netbacks.

 R = Gross proven and probable reserves. Total dollar values of reserves are calculated

based on current product price being sold. If the product being sold is bitumen the dollar value is

per unit of bitumen. If the product being sold is synthetic crude then the dollar value is per unit

of bitumen. Note that approved mine areas that are excluded from mining in either the ERCB or

EPEA approval must not be included in estimating the reserves.

 F = Forward Price Factor. In Oil Sands a forward price factor is the lesser of

- 1.00 or

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