On Monday, June 20, 2016, the Alberta Energy Regulator (AER) issued Bulletin 2016-16 (Bulletin) detailing its interim regulatory response to the Alberta Court of Queen's Bench decision in Re Redwater Energy Corporation (Redwater).
As detailed in a previous post, the Redwater decision allows a trustee to disclaim certain assets under the provisions of the federal Bankruptcy and Insolvency Act (BIA).
The Bulletin confirms that the AER and Orphan Well Association (OWA) have appealed Redwater, and announces three interim regulatory measures to be effective immediately. According to the AER, the following measures are temporary, pending the earlier of the Redwater litigation or the implementation of appropriate regulatory measures.
- Licence Eligibility Approvals
The AER will consider and process all applications for licence eligibility under Directive 067: Applying for Approval to Hold EUB Licences as nonroutine and may exercise its discretion to refuse an application or impose terms and conditions on a licence eligibility approval if appropriate in the circumstances.
- Material Changes in Licence Eligibility
For holders of existing, but previously unused, licence eligibility approvals, prior to approval of any application (including licence transfer applications), the AER may require evidence that there have been no material changes since approving the licence eligibility. This may include evidence that the holder continues to maintain adequate insurance, and the directors, officers and/or shareholders are substantially the same as when licence eligibility was originally granted.
- Post-Transfer LLR of 2.0 or Higher
As a condition of transfer of existing licences, approvals, and permits, the AER will require all transferees to demonstrate they will have a LLR of 2.0 or higher immediately following the transfer.
More detail and analysis on the AER's Bulletin can be found on our Canadian Energy Perspectives blog.
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