Canadian Overseas Petroleum Limited (CSE:XOP) and various related entities, CCAA

Canadian Overseas Petroleum Limited (CSE:XOP), an international oil and gas company headquartered in Calgary, Alberta, and various related entities (the “COPL Group”) obtained CCAA protection on March 8.

The main oil producing assets and reserves of the COPL Group are located in the State of Wyoming, USA and operated by COPL America Inc. (“COPL America”), an applicant in the CCAA proceedings.

Owing to an over-leveraged balance sheet, market conditions and a series of operational and weather-related challenges, oil production from the Wyoming assets has been significantly curtailed, leading to decreased sales, increased capital expenditure and higher production costs. These issues, combined with an inflationary and high-interest market and certain hedging losses, significantly strained the COPL Group’s liquidity.

Efforts to reduce costs and restructure the business outside of a proceeding were ultimately unsuccessful, and the COPL Group faces a looming liquidity crisis.

On December 20, 2023, COPL America received a notice of default from ABC Funding as administrative and collateral agent for the lenders under its senior credit facility, such that payments became due on March 9. The COPL Group is unable to meet this obligation, as available cash reserves are expected to be fully depleted by no later than the middle of March.

The purpose of the CCAA proceedings is to effect a restructuring of the COPL Group through a stalking horse SISP.

KSV is the monitor.

Counsel is Osler for the COPL Group and Cassels for the monitor.

By: Dina Milivojevic