1.0 IOGC is a special operating agency of the Department of Indigenous Services Canada. IOGC is committed to managing and regulating oil and gas resources on First Nation reserve lands across Canada.
IOGC operates under legislative authority derived from the Indian Act, the Indian Oil and Gas Act (IOGA), and the Indian Oil and Gas Regulations (IOGR). As part of its trust responsibility, IOGC is responsible for the receipt and subsequent verification of royalty payments for oil, natural gas and gas products extracted from First Nation lands.
The lessees are required to submit appropriate production data to IOGC, to Canada’s Petroleum Information Network (“Petrinex”) and to other agencies. They must also remit royalty payments to IOGC together with monthly electronic royalty submissions and supporting documents as requested. The subject matter may be financial (e.g., oil and gas pricing, revenue, and deductions, etc.) or non-financial (e.g. production and sales volumes, diagrams, maps, etc.) in nature. The types of Work used to verify that appropriate royalties are being received by IOGC on behalf of First Nations include:
• Oil price audits or examinations;
• Oil volume audits or examinations;
• Gas and gas product price audits or examinations;
• Gas and gas product volume audits or examinations;
• Audits or examinations of data and information supporting Gas Cost Allowance (GCA) or other authorized deductions from royalties; or
• Other audits, examinations, inspections, reviews or tests that may be deemed necessary according to circumstances.
The Work will involve gathering sufficient and appropriate evidence (data, documents and other information) at corporate offices and may require an inspection of documents or related activities in the field as referred to in 6.0 Tasks. The evidence will be evaluated to confirm whether submissions to IOGC, to Petrinex and to other agencies have been accurate, and whether appropriate royalties have been received by IOGC on behalf of First Nations, all in compliance with the legislative instruments identified in 2.0 above.
2.0 DESCRIPTION OF RESOURCES CATEGORIES
2.1 Partner/Managing Director
The Partner’s responsibilities include, but not limited to, the following:
• must have appropriate credentials, oil and gas experience, competence, and capabilities;
• provide the direction, supervision, performance of and overall quality control on the Work, the competency and assignment of the team members;
• ensure significant matters are addressed or difficult issues are properly resolved;
• review and decide on whether sufficient and appropriate audit evidence has been obtained or whether there is a need to revise the nature, timing, and extent of Work performed;
• compile, sign and submit the draft and final audit reports;
• meet lessees and IOGC’s Project Authority for discussions or presentations; and
• review and make sure the documentation is adequately maintained.
2.2 Project Manager/Leader
The Project Manager/Leader responsibilities include, but not limited to, the following:
• must have oil and gas experience and appropriate credentials;
• participate in the audit/examination planning, performance, and the report preparation;
• develop the audit or examination plan and procedures and assess risks;
• design and conduct tests, gather and evaluate evidence, conclude findings, review performed tasks, and assist in the preparation of draft(s) and final reports;
• carry out activities including audit, examination, review or inspection.
• involve in addressing significant matter and queries, resolving difficult issues, and making recommendations; and
• brief and debrief lessees and IOGC’s Project Authority.
2.3 Senior Auditor
The Senior Auditor responsibilities include, but not limited to, the following:
• possess analytical skills, and knowledge of accounting and auditing procedures; and
• provide supports for the Work and assist other team members in planning, conducting audit or examination procedures, documentation and administration tasks.
2.4 Auditor
The technical expert responsibilities include, but not limited to, the following:
• must have the education and experience in oil and gas, production accounting, volumetric verification and data analysis; and
• possess technical skills in field operations, schematics, well and facility flow process, production data and allocation (oil, gas and produced water), royalties, sales delivery points, product pricing, transportation charges, custom fees and gas cost allowance.
3.0 SCOPE OF SERVICES
The Contractor must on an "as-and when-requested" basis, and as detailed in respective Task Authorization(s) issued by IOGC’s Project Authority, provide the following services:
• Oil price audits or examinations;
• Oil volume audits or examinations
• Gas and gas product price audits or examinations;
• Gas and gas product volume audits or examinations
• Audits or examinations of data and information supporting Gas Cost Allowance (GCA) or other authorized deductions from royalties;
• Audit or examine to determine whether and when a project’s investment payout has been achieved, according to the respective legislation, contracts or approvals, which could trigger different royalty payment requirements;
• Audit or examine whether net profit interest arrangements or carried interest arrangements, as the case may be according to the respective contract(s), are being complied with;
• Conduct engagements in accordance with standards published by the CPA Canada and industry practices. The Contractor must comply with the Canadian Standard on Quality Control 1 (CSQC 1) for quality assurance, and ethical requirements;
• Conduct audit or examination of a lessee’s documents and information according to the Indian Oil and Gas Act, RSC 1985, cI-7, section 10;
• Meet with the lessee and the First Nation, as required or requested;
• Prepare drafts, revisions and final audit reports or other subject matter-specific reports as prescribed by IOGC in the respective Task Authorization(s);
• Conduct engagements in order to provide reasonable assurance, or to report otherwise, on whether a lessee has complied with all the relevant federal and provincial legislation, regulations, guidelines and directives, as well as respective contracts and agreements with First Nations, at a point in time or over a specified period of time;
• The Work may require travel outside of the Calgary Metropolitan Area as specified in the Task Authorization(s);
• Defend their findings in meetings with IOGC, the lessee, and First Nation representatives, or in court; and
• IOGC will exercise its right to assign representatives to accompany the Contractor during an audit/examination when necessary.
4.0 TASKS
4.1 design and develop the nature, timing and extent of audits, assess risks individually and in aggregate, and inform IOGC’s Project Authority of any revisions and associated impacts when appropriate and necessary;
4.2 review and evaluate a lessee’s audit/examination-related operating procedures and internal controls (i.e., policies and procedures), assess how deficiencies impact on royalties, and make improvement recommendations;
4.3 examine a lessee’s related source documents, including field data capture reports and production, and revenue accounting records, to confirm that all product dispositions are accounted for, and all IOGC and respective provincial government reporting requirements are met;
4.4 examine and confirm the royalty-related calculations (i.e., volumes, prices, authorized deductions, allowances.);
4.5 confirm whether the actual selling price is deemed to be the fair value in accordance with Schedule 5 of the IOGR;
4.6 confirm submitted oil or natural gas and natural gas product (where applicable) prices against respective marketing contracts, and confirm produced or sales volumes against other related supporting documentation;
4.7 examine the following facility schematics and conduct physical inspection related to the Work, as required or requested:
• oil wells;
• oil batteries;
• oil delivery facilities and systems, including trucking and pipeline facilities, terminals and hubs; and
• produced water treatment and disposal facilities; and
• other related facilities
to verify oil disposition and receipt documents, information and documents regarding authorized deductions and to provide a description of oil production and disposition, including transportation and marketing;
4.8 examine the following facility schematics and conduct physical inspections related to the Work, as required or requested:
• gas wells;
• gas well batteries;
• gas compression facilities;
• gas gathering systems;
• gas plants; and
• other related facilities;
to ensure whether custom processing fees, or GCA data, information and documents, regarding royalty payment and authorized deductions submitted to IOGC, are a true representation of the physical layout and functionality of the facilities;
4.9 verify GCA rate by examining related documents, including, but not limited to,
• GCA submissions;
• working interest ownership;
• First Nation interest; and
• the eligibility and accuracy of capital and operating costs claimed;
4.10 request written representations from a lessee, when applicable, as per standards published by CPA Canada and the Alberta Energy Regulator (AER), Enhanced Production Audit Program (EPAP), or Enhanced Valuation Audit Program (EVAP);
4.11 gather and evaluate sufficient and appropriate evidence on the lessee’s compliance with the legislative instruments identified in 2.0 above, and other requirements specified in the respective Task Authorization(s); and
4.12 identify all areas of non-compliance, when applicable.
