Frontier Lands Petroleum Royalty Regulations

8 (1) Where a person (in this section referred to as the “successor”) acquires, by purchase or otherwise, from an interest holder (in this section referred to as the “predecessor”) a share in an interest in relation to a project, for the purpose of determining the adjusted cumulative cost base of the successor in relation to the project in respect of the month of acquisition, there shall be added to the cumulative cost base of the successor in relation to that project in respect of that month an amount equal to the product of

• (a) the aggregate of

  • (i) the amount, if any, by which the adjusted cumulative cost base of the predecessor in relation to that project in respect of the month immediately preceding the month of acquisition exceeds the cumulative adjusted gross revenues of the predecessor in relation to that project in respect of the month immediately preceding the month of the acquisition, and

  • (ii) the return allowance of the predecessor in relation to that project in respect of the month immediately preceding the month of acquisition, and

• (b) the ratio that the share of the interest acquired by the successor bears to the share of the interest held by the predecessor immediately before the disposition.

(2) Where, in respect of any month, an amount is added to the cumulative cost base of the successor in relation to a project pursuant to subsection (1), for the purpose of determining the adjusted cumulative cost base of the predecessor in relation to the project in respect of that month, there shall be deducted a like amount from the cumulative cost base of the predecessor in relation to that project in respect of that month.

(3) For the purposes of subsection (1), where the cumulative cost base of a predecessor in relation to a project in respect of the month of acquisition exceeds the cost of the acquisition, the cumulative cost base of the successor in relation to that project in respect of that month is the cost of the acquisition.