CRA notes that no valuation is required where drilling rights are granted in consideration for a royalty

If the holder of a patent licenses it for a royalty, the royalty is only recognized as it is earned. Contrast this with an individual who grants drilling rights over his freehold property in consideration for annual royalties payable out of any oil and gas production. He will be considered to have acquired a Canadian resource property (i.e., the royalty) giving rise to an immediate addition to his "CCOGPE" account equal to the fair market value of that royalty right; and to have also disposed of a Canadian resource property (i.e., by granting of the drilling rights) so that their fair market value is subtracted from his CCOGPE account. However, CRA recognizes that the drilling rights would be considered to have the same value as what was paid for them (the royalty). Thus the two items would offset so that "a formal valuation of the right is not required."

In the case of a non-resident individual receiving the royalties, CRA was completely non-committal as to whether they were taxable to him under s. 115(1)(a)(ii) or (iii.3) rather than s. 212(1)(d)(v).

Neal Armstrong. Summaries of 23 January 2015 T.I. 2013-0509771E5 under s. 66.4(5) – CCOGPE, s. 115(1)(a)(iii.1), Treaties – Art. 6, Art. 12 and Reg. 805.