Trident Exploration, a Calgary, Alberta-based natural gas production company, was placed in receivership on May 3 on application by the Alberta Energy Regulator's Orphan Well Association. The AER had been in discussions with the company since February 2019 regarding its financial difficulties as well as a potential debtor-led restructuring of the company's business and operations. On April 29, the company advised the AER that it may be unable to continue operations at its licensed sites. The AER responded by issuing an order directing the company to address end-of-life obligations associated with 4,400 energy licensed sites, either by decommissioning those sites, posting financial security or transferring the sites to responsible energy companies. With no funds to even enter into creditor protection, the company ceased operations the next day, terminating its 33 employees and 61 contractors and leaving its wells to the care of the AER, including proximately 1,500 wells that were not shut-in and continue to produce. It is estimated that the company's abandonment and reclamation obligations total approximately $329.0MM. The company also owes its secured lenders an additional $90.0MM and has unpaid property taxes of over $2.0MM. In the interest of public safety, the Orphan Well Association applied for a receiver to be appointed to ensure that the company's wells are properly cared for and maintained and shut-in where necessary. The Orphan Well Association is also hoping that, where possible, wells and other oil and gas assets can be sold to responsible producers to avoid having further assets designated as orphan wells. PwC was appointed receiver. Counsel is BLG for the applicant, Norton Rose Fulbright for the company, Bennett Jones for the receiver, Torys for Aimco, Blakes for ATB Financial and Brownlee for Stettler and Woodlands Counties
Patriot Equipment, a Medicine Hat, Alberta-based oil and gas field services supplier, was placed in receivership on April 11 on application by RBC, owed approximately $892.4M. In or about late 2018 and early 2019, RBC discovered that Patriot had failed to disclose its liability for an oil spill on a third party's property, as well as committing several other acts of default. The receivership application was adjourned in early March to permit Patriot time to payout the RBC indebtedness, however proposed financing fell through and the amount was not repaid. KPMG was appointed receiver. Counsel is Osler for the applicant and BDP for the receiver.
Strategic Oil & Gas (TSX-V: SOG), a Calgary, Alberta-based junior oil and gas company, along with its wholly owned subsidiary, Strategic Transmission, obtained protection under the CCAA on April 10. Focused primarily on oil and gas development in Northern Alberta, the company cites several key factors that have led to its current financial position, including deteriorating differentials on Canadian oil prices and political uncertainty with respect to pipeline approvals at the Federal level. In June, 2018, the company entered into a transaction to sell certain of its assets. Despite the sale closing, however, the proposed purchaser was unable to meet the Liability Management Ratio requirements of the Alberta Energy Regulator to facilitate the necessary license transfers. As a result, Strategic was forced to unwind the transaction, further weakening its financial position. With no capital available to fund further development and drilling improvements, the company will look to complete a sale and investment solicitation process while under creditor protection. KPMG was appointed monitor. Counsel is Dentons for the applicant and Torys for the monitor.
Dundee Energy Ltd., a Toronto, Ontario-based oil and natural gas company, filed for bankruptcy on March 29. The company's principal subsidiary, Dundee Energy Limited Partnership, was already subject to insolvency proceedings and a sale of substantially all of the partnership's assets had been completed in November 2018. MNP is the bankruptcy trustee.
Elcano Group, a Calgary, Alberta-based independent oil and gas exploration, development, and production company, filed for protection under the CCAA on February 26, listing approximately $9.3MM in liabilities, including $6.3MM to National Bank of Canada ("NBC") under its primary credit facility. Several key factors have resulted in the company having constrained working capital, including the recent volatility of West Texas Intermediate (WTI) oil prices, the effect of mandated hedging programs, the softening of the Canadian dollar, the deteriorating differential price for Canadian-produced crude oil, and temporary operational challenges. Finally, the company has limited access to necessary cash flow for reinvestment due to its significant monthly payments to NBC. Since November 2018, the company has been assisted by Meta Capital Advisors to conduct a marketing process to seek investments in the company. Thus far, it has received a number of letters of intent which offer consideration sufficient to repay NBC in full, pay all of the company's liabilities, as well as provide value to the group's shareholders. The company currently requires a stay of proceedings in order to, amongst other things, provide the company with enough time to run a comprehensive and transparent sale and investment solicitation process. The company has retained the services of GMP FirstEnergy, a leading independent global energy investment bank, to assist in this sale and investment process. Hardie & Kelly was appointed monitor. Counsel is Bennett Jones for the company and BLG for the monitor.
Horseshoe Bay Resources, a Calgary, Alberta-based exploration and production company, filed for bankruptcy on January 9. Grant Thornton is the bankruptcy trustee.
R.I.I. North America, a Calgary, Alberta-based upstream oil company that owns the North American intellectual property rights for a patented enhanced oil recovery technology, had certain of its assets placed in receivership on November 29 on application by Espresso Capital. The company, which had filed an NOI in October 2018, was later deemed to have filed for bankruptcy in November after it did not file a proposal within its granted 30-day stay of proceedings. MNP was the proposal trustee. In these proceedings, Hardie & Kelly was appointed receiver over select assets of the company, including the accounts receivable and the intellectual property and patents. BLG is counsel to the applicant.
Diagonal Oil & Gas, a Calgary, Alberta-based oil and natural gas company, filed for bankruptcy on August 24. Grant Thornton is the bankruptcy trustee.
Delfan Energy Resources, a Calgary, Alberta-based oil field service provider, filed for bankruptcy on July 10, listing $325.7M in liabilities, including $139.1M to Normont Energy. KPMG is the bankruptcy trustee.
The OpsMobil Group, a Calgary, Alberta-based group of oilfield service companies that provides energy, aviation and construction services, filed for protection under the CCAA on July 10. Although the OpsMobil Group's primary assets are aircraft and aircraft support facilities, it has been focused on transitioning to value added services through its asset management solutions. By nature of its business, the OpsMobil Group's revenues are dependent on the expenditures of oil and gas producers, which have been depressed since 2014. In 2015, Third Eye Capital purchased the $5.3MM debt owed by OpsMobil to BMO for $3.8MM. After paying its own legal fees in addition to Third Eye and BMO's legal fees, OpsMobil was only left with $42.0M to prepare an aircraft fleet for the 2016 season, which was grossly inadequate. OpsMobil was able to negotiate and enter into a payment plan with the CRA for amounts owing at the time; however, it eventually missed the third payment and discovered that its line of credit had been restricted due to a lower than expected borrowing base calculation. As a result of the missed payment, CRA issued an enhanced garnishment of OpsMobil's revenue and accounts. Throughout early 2016, OpsMobil was continuously deprived of funds that were required for its daily operations due to its borrowing base restrictions and CRA's garnishment. By late June 2018, the group was served with a receivership application by Third Eye, which led to it filing for protection under the CCAA. During these proceedings, the OpsMobil Group will receive $1.4MM in interim financing from Third Eye. EY was appointed monitor. Gowling WLG is counsel to the OpsMobil Group.