July 19, 2020
Western Canadian effective royalty rates for oil and gas are calculated based on security disclosure of largest Canadian oil and gas producers. The producers report actual royalties paid in previous fiscal year. Effective royalties are calculated based on weighed average royalties from producers since 2014.
In Western Canada, royalties are calculated based on a complex formula, which includes production, oil and gas prices, as well as different incentives. If the price of oil and gas decline, it will lead to a decline in royalty rates, as occurred in 2015 for oil and 2019 for gas. The effective royalty rate has declined from 9% in 2016 to 7% in 2019.