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Simple English definitions for legal terms
lifting costs
Read a random definition: hacienda pública
A quick definition of lifting costs:
Lifting costs refer to the expenses incurred in producing oil and gas after drilling is complete but before it is removed from the property. These costs include transportation, labor, supervision, supplies, operating pumps, electricity, repairs, depreciation, royalties payable to the lessor, gross-production taxes, and other incidental expenses. In simpler terms, lifting costs are the costs associated with getting oil and gas out of the ground and ready for sale.
A more thorough explanation:
Definition: Lifting costs refer to the expenses incurred in the production of oil and gas after drilling is complete but before the oil and gas is removed from the property. These costs include:
- Transportation costs
- Labor costs
- Costs of supervision
- Supplies
- Costs of operating the pumps
- Electricity
- Repairs
- Depreciation
- Certain royalties payable to the lessor
- Gross-production taxes
- Other incidental expenses
For example, if a company drills an oil well and begins producing oil, they will incur lifting costs to keep the well operating. These costs can include paying workers to operate the pumps, buying supplies like oil and filters, and paying for electricity to power the pumps.
Another example of lifting costs is transportation costs. Once the oil is produced, it needs to be transported to a refinery or other location for processing. The cost of transporting the oil is considered a lifting cost.
Overall, lifting costs are the expenses that oil and gas companies incur to produce and transport oil and gas before it is sold. These costs can add up quickly and impact the profitability of a project.