Category Archives: Oil & Gas

When Does the Purchaser of an Interest in a Natural Gas Processing Plant also Purchase an Interest in the Sulphur Block Associated with the Plant? Answer: Only when the Agreement (or perhaps ‘the Elephant in the Room’) says so!

PDF version: When does the purchaser of an interest in a natural gas processing plant also purchase an interest in the sulphur block associated with the plant? Answer: only when the agreement (or perhaps ‘the elephant in the room’) says so!

Case commented on: Talisman Energy Inc v Esprit Exploration Ltd, 2013 ABQB 132

Talisman purchased Canadian 88’s interest in the East Crossfield Conditioning Plant in 2000. Did it also purchase the sulphur block and the liabilities associated with ownership of the block? In this case, and after undertaking an extensive and detailed contractual paper trail, Justice Sal LoVecchio concluded that the answer was no. The ‘elephant in the room’ was C88’s draft purchase and sale agreement (PSA) (which Talisman elected not to use) which, had it been executed, would have dictated the opposite result.

Continue reading →

Summary judgement on an oil and gas lease termination case

PDF version: Summary judgement on an oil and gas lease termination case

Decision commented on: P Burns Resources Limited v Locke, Stock and Barrel Company Limited, 2013 ABQB 129.

In this appeal from an unreported decision of Master Laycock, Justice Bensler granted partial summary judgement on an application for a declaration that a petroleum and natural gas lease had expired during its secondary term for want of production or working operations. The evidentiary basis for this conclusion consisted primarily of production records filed with the Energy Resources Conservation Board (or its predecessors). On the appeal before Justice Bensler in the Court of Queen’s Bench the lessee supplemented the record with evidence of one of its employees and one of its consultants.

Continue reading →

A Farmee that Spuds in the Test Well has the Right to a Default Notice

PDF version: A farmee that spuds in the test well has the right to a default notice

Case commented on: EOG Resources Canada v Unconventional Gas Resources Canada Operating Inc, 2013 ABQB 105 (MC)

This decision interprets the default clause (Article 13) of the Canadian Association of Petroleum Landmen’s (CAPL) Farmout and Royalty Procedure. It confirms that there is no automatic termination of the farmee’s right to earn provided that the farmee has spudded in the earning well; the farmee is entitled to proper notice of default and the opportunity to rectify that default.

Continue reading →

Whoever heard of such a thing? A Crown oil and gas lease an intangible form of personal property?

PDF version: Whoever heard of such a thing? A Crown oil and gas lease an intangible form of personal property?

Case considered: Kasten Energy Inc v Shamrock Oil and Gas Ltd, 2013 ABQB 63.

In this case Justice Lee granted Kasten’s application to appoint a receiver\manager over all of the assets of Shamrock, including Shamrock’s Crown oil and gas lease. Kasten was a secured creditor of Shamrock claiming under a general security agreement (GSA) over Shamrock’s present and after acquired personal property. In the course of making his decision to appoint a receiver Justice Lee concluded that Shamrock’s lease was an intangible form of personal property. Kasten brought its application for the appointment of a receiver\manager Kasten under section 13(2) of the Judicature Act, RSA 2000, c J-2 rather than under section 65(7) of the Personal Property Security Act, RSA 2000, c P-7 (PPSA).

Continue reading →

When is a Lease Issued “In Lieu” of an Existing Lease?

PDF version: When is a lease issued “in lieu” of an existing lease?

Case Commented In: Canadian Natural Resources Limited v Jensen Resources Ltd, 2012 ABQB 786

In the early 1980s the Government of Alberta decided to make a clearer distinction in its tenure regime between grants of conventional petroleum and natural gas (PNG) rights and grants of oil sands rights. In implementing this policy the province went so far as to redefine the rights contained in existing Crown PNG leases. But in return, it allowed the affected PNG lessees to apply for a form of oil sands tenure for the rights that had been excluded from the PNG leases. That’s what happened in this case and the issue was whether Jensen’s gross overriding royalty (GOR) which clearly applied to the PNG leases also carried over to the oil sands rights. Justice Jo’Anne Strekaf held that it did.

Continue reading →