Repsol Oil & Gas Canada Inc., Liquidation

Repsol Oil & Gas Canada Inc. (“ROGCI”), a Calgary, Alberta-based, oil and gas exploration and production (“E&P”) company, obtained an initial order providing for the liquidation of the company under the CBCA on November 2. ROGCI’S parent company, Repsol Exploración, S.A.U. ("REXSA"), wishes to exit the Canadian oil and gas E&P industry. In order for REXSA to avail itself of the associated Spanish tax deduction, ROGCI must be dissolved according to Canadian legislation before the end of 2023. ROGCI is subject to a CRA audit for the year ended December 31, 2018. On October 18, the date that the materials were filed and served in this case, CRA advised ROGCI that it was proposing adjustments of approximately US$61 million, as well as a US$6.1 million penalty. There are tax losses available to ROGCI to off-set the adjustments, but the company was not anticipating a penalty. Should the tax penalty be deemed to be valid, EY as liquidator is of the view that there will be sufficient funds available in excess of known liabilities (approximately US$56.6 million) to pay the penalty in full. REXSA and ROGCI have undertaken divestiture and downsizing efforts in advance of the liquidation application, with the most significant transaction being a sale of ROGCI’s upstream oil and gas business to Peyto Exploration & Development Corp. and Peyto Energy Corp. EY is the liquidator. Counsel is Bennett Jones for the company, MLT Aikins for EY as liquidator, and BDP for Peyto.

By: Dina Milivojevic