Cequence Energy Ltd. (TSX:CQE), a Calgary, Alberta-based company engaged in the acquisition, exploration, development, and production of petroleum and natural gas reserves in Western Canada — along with its subsidiaries — obtained protection under the CCAA on June 11, listing approximately $112.7 million in liabilities. The companies, which reported operating losses for the last five years, have a working capital deficiency of $10.3 million and a secured term loan outstanding of $50.0 million. They are currently in the midst of a liquidity crisis, primarily due to low commodity prices, declining production volumes, onerous contractual obligations, and significant debt. As a result of these factors and based on current cash balances, the companies will be unable to fund their financial commitments in 2020 absent a restructuring of their affairs. During the CCAA proceedings, the companies will be seeking up to $7.0 million in DIP financing from its second lien lenders. EY was appointed monitor. Counsel is Norton Rose Fulbright for the companies, BDP Law for CIBC, BLG for the second lien lenders, and McCarthy Tétrault for EY.
Bow River Energy Ltd., a Calgary, Alberta-based junior oil and gas producer, filed for protection under the CCAA on June 1. The company has been impacted by the various industry challenges facing Western Canadian oil and natural gas markets, including a precipitous decline in oil and natural gas prices over the past five months. Although the company was able to successfully emerge out of the 2014 and 2018 economic downturns, the more dramatic downturn in the last several months has presented difficulties which the company has not been able to overcome. In April, Western Canadian Select oil prices declined 92% in comparison to the 2019 average prices. This decline in price proved disastrous for the company and it estimates a 350% drop in cash flow. In addition, the company's operations have been adversely impacted by social distancing measures. BDO was appointed monitor. Counsel is BLG for the company and Bennett Jones for the monitor.
Q'Max Solutions Inc., a Calgary, Alberta-based oilfield services provider, along with its affiliates (collectively, the "Q'Max Group"), were placed in receivership on May 28 on application by HSBC Canada, as administrative agent for a syndicate of lenders (the "Agent"), owed approximately $145.4 million (USD) and $1.2 million (CAD). The syndicate is currently comprised of HSBC, BMO, BDC, Export Development Canada, and HSBC USA. In recent months, the business of the Q'Max Group has been negatively impacted by depressed oil and natural gas pricing and a corresponding reduction in rig and drilling activity. Such negative impacts were exacerbated by public health restrictions in response to COVID-19. KPMG was appointed receiver. Norton Rose Fulbright is counsel to the Agent.
Delphi Energy (TSX:DEE), a Calgary, Alberta-based junior energy producer focused on the exploration and development of conventional natural gas, shale gas and natural gas liquids in Alberta and British Columbia, obtained protection under the CCAA on April 14. The company had already attempted to restructure its debt-heavy balance sheet in November 2019 through a Plan of Arrangement under the CBCA, but just as it was emerging from that restructuring, the price of oil and gas started to fall dramatically beginning in December 2019. This, coupled with the impact of the COVID-19 pandemic, has resulted in a forecasted 29% drop in cash flow for Q1 2020, and the company expected to imminently breach a financial covenant under its loan agreement with its first lien lenders (ATB, BMO and BNS). While under creditor protection, the company plans on conducting a sales and investment solicitation process. PwC is the monitor. Counsel is Osler for the company and BLG for the monitor.
Direct Oil & Gas Inc., an oil and gas venture with producing properties in northern Alberta, filed for bankruptcy on February 28, listing approximately $16.6 million in liabilities, including $10.0 million to Rothwell Enterprises. Currently, the company's net production revenues are insufficient to cover operating and financing costs. MNP is the bankruptcy trustee. Due to the drastic downturn in oil prices after its appointment, MNP in consultation with Sproule Energy Consultants determined that all of the properties should be shut in. This shut in was completed on March 21. Gowlings is counsel to MNP.
Strategic Oil & Gas (TSX-V: SOG), a Calgary Alberta-based junior oil and gas company, along with its wholly owned subsidiary, Strategic Transmission, had its CCAA proceedings transitioned to a court-appointed receivership on January 28. In early January 2020, the company approached the Alberta Energy Regulator ("AER") with its high level plan of compromise and arrangement to exit the CCAA proceedings. The plan called for, among other things, a payment of $5.0 million to the Orphan Well Association ("OWA") in respect of certain assets the company was seeking to have abandoned and a proposed dividend of $0.10 on the dollar for the company's trade creditors, owed an estimated $10.6 million. In mid-January, the AER notified the company that it was not supportive of the proposed plan. In response, the company advised that it had no further options with respect to a restructuring and planned to wind up its operations and transition its assets to the OWA through a court-appointed receivership. KPMG was appointed receiver of the company's Alberta assets. Alvarez & Marsal is the receiver of the company's assets in the Northwest Territories. Counsel is Dentons for the company, Torys for KPMG, Bennett Jones for GMT Capital, a secured debenture holder and Cassels Brock for the Government of the Northwest Territories.
Traverse Energy (TSX-V: TVL), a Calgary, Alberta-based oil and gas company, was placed in receivership on December 6 on application by ATB, owed approximately $6.5 million. In 2017, the company completed a new well at a cost of over $9.0 million. Since completion, however, the new well only produced minor recoveries of oil, and in June 2018 management completely wrote off the asset. This unsuccessful project contributed to an increasingly tight cash flow situation for the company, with restricted capital available for capital expenditures and revenues declining generally as a result of industry conditions. Starting in early 2019, the company attempted to sell its assets with the assistance of Sayer Energy Advisors and subsequently GMP First Energy, but these attempts were unsuccessful, and by November the company consented to the appointment of a receiver. EY is the receiver. Counsel is MLT Aikins for the applicant and McCarthy Tétrault for the receiver.
Accel Canada, a Calgary, Alberta-based oil and gas company, obtained protection under the CCAA on November 22. The company had previously filed an NOI on October 21. PwC is the monitor. Counsel is Lawson Lundell for the company, BLG for the monitor, Bennett Jones for Third Eye Capital and Stikeman Elliott for Stream Asset Financial.
Eagle Energy (TSX-V: EGL), a Calgary, Alberta-based oil and gas company with oil-producing properties in Alberta and Texas, was placed in receivership on November 19 on application by White Oak Global Advisors as administrative agent for a group of lenders collectively owed approximately $31.2 million. For the past two years the company has attempted to combat difficult industry conditions by reducing overhead and selling assets. Despite its efforts, the company has not been able to generate positive cash flow and acknowledges that this is not likely to change in the foreseeable future. FTI was appointed receiver. Counsel is Blakes for the applicant, Bennett Jones for the company and Norton Rose Fulbright for the receiver.
Wolf Coulee Resources, a Calgary, Alberta-based oil and gas company with oil and gas wells located primarily in Southern Alberta, was placed in receivership on November 18 on application by the Orphan Well Association. The company has been in discussions with the Alberta Energy Regulator (AER) for several months in relation to its financial difficulties. In late September, the company advised the AER that it had ceased operations and did not have the ability to shut-in all of its wells. In the interest of public safety, the OWA moved for a receiver to be appointed to ensure the wells are properly maintained and, where possible, sold and placed in the hands of responsible producers. The total abandonment and reclamation obligations relating to the company's assets are estimated to be over $16.4 million. Hardie & Kelly was appointed receiver. Miles Davison is counsel for the applicant.