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Low Productivity and Reactivation Oil Well Program

The 2025-26 Saskatchewan Budget introduces the Low Productivity and Reactivation Oil Well Program, a Crown royalty and freehold production tax volumetric drilling incentive for low-producing, suspended or inactive horizontal oil wells. Eligibility will be based on the following:

  • Eligible wells include any horizontal well producing 50.0 m3 per month or less on average for 12 consecutive months on a pro-rated basis; and, on an ongoing basis after April 1, 2025, any horizontal well producing 50.0 m3 per month or less on average for 24 consecutive months.
  • Eligible wells that drill new horizontal sections, with a minimum drilling length of 500 metres, will receive a 3,000 m3 incentive volume per new horizontal section to a maximum additional incentive volume of 6,000 m3 per well.

The Low Productivity and Reactivation Oil Well Program will apply to new horizontal sections drilled on existing low-producing, suspended and inactive horizontal wells between April 1, 2025, and March 31, 2029.

  1. Guidance
  2. Eligibility
  3. How to Apply
  4. Further Information
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1. Guidance

The program will be administered under The Low Productivity and Reactivation Oil Well Program Regulations (available Spring 2025).

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2. Eligibility

The program is effective from April 1, 2025, to March 31, 2029. 

  • As of April 1, 2025, any horizontal well producing on average < 50.0 m3 per month (10.5 barrels per day [bbls/d]) for 12 consecutive months on a pro-rated basis would be eligible. This includes wells that have been classified as suspended.
  • On an ongoing basis, after April 1, 2025, any horizontal well producing on average < 50.0 m3 per month (10.5 bbls/d) for 24 consecutive months would be eligible.
  • Natural gas wells and natural gas production are not eligible for the program.
  • Qualifying wells would receive 3,000 m3 in incentive volume per new horizontal section to a maximum additional incentive volume of 6,000 m3 per well. While producing the incentive volume, the oil well will pay a maximum Crown royalty rate of 2.5% and 0% Freehold Production Tax. This incentive volume would be in addition to the original incentive volume assigned to the well.
  • Where a new horizontal section is drilled, the royalty status of the existing low-productivity non-fourth tier well will be converted to fourth tier.
  • Require a minimum lateral length of 500 metres per new horizontal section.
  • All qualifying horizontal sections must have drilling activity completed by March 31, 2029.
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3. How to Apply

Applications are to be submitted to petroleumroyalties@gov.sk.ca. Applications must include:

  • The well location (UWI), licence number and number of new horizontal sections.
  • An Oil Production Summary (up to 24 months) to verify the oil well’s production.
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4. Further Information

For additional information on the program, please review Information Circular (PR-IC14): Low Productivity and Reactivation Oil Well Program or contact petroleumroyalties@gov.sk.ca.

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