Nova Scotia will be receiving a windfall of about $870 million as part of a deal resolving the Crown share dispute over offshore oil royalties with the federal government.

Premier Rodney MacDonald and Defence Minister Peter MacKay revealed the official figure in an announcement Sunday in Halifax.

MacDonald spoke to CTV Newsnet Sunday and said that the deal puts to rest a dispute that goes back to 1986, when Ottawa promised to compensate the province for giving up its ownership interest in offshore oil and gas revenues.

"I can't tell you how excited I am, not only for today's announcement, but for what it means for the future of our province," he said.

The lion's share of the money will go towards Nova Scotia's $12.4-billion debt, MacDonald said.

About $75 million will be set aside for university infrastructure purchases, protected lands and off-shore research. MacDonald emphasized how important research was for the province's future.

"If we have another significant find of either oil or gas off the shores of Nova Scotia we will also receive Crown share benefits for those projects," he said.

The amount owed by Ottawa was made by a three-member panel that was appointed to look at both sides of the dispute.

Former Nova Scotia chief justice Lorne Clark headed the panel and published an 80-page report on the final total last week.

Under the deal, Nova Scotia will receive $234.4 million for past payment up to March 31.

The remainder of the money comes from the estimated future payments for the Sable and Deep Panuke offshore projects for about $633 million.

MacDonald acknowledged the premiers who fought over the issue before him and thanked the federal government.

"To Prime Minister Stephen Harper's credit and Mr. MacKay, they helped bring this together," he said.

It's a long way from the war of words that erupted last summer when Ottawa told Newfoundland and Labrador, and Nova Scotia to make a choice between a new equalization formula or the offshore accord signed in 2005 with the Liberal government of Paul Martin.

The Atlantic Accord, as it was known, saves the two provinces from equalization claw backs on offshore revenues.

But the Harper government placed a cap on the amount of offshore revenue the province was entitled to. MacDonald decided on a deal that allows the province to choose the old or new system each year.

MacDonald was facing criticism at home that he wasn't tough enough with the federal government, but Sunday's settlement should ease some of the burden.

With files from The Canadian Press