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June 21, 2016

Will the Redwater Decision Encourage Reckless Abandon(ment) of Oil and Gas Wells in Alberta?

On May 19, 2016, the Alberta Court of Queen’s Bench released its decision in Redwater Energy Corporation (Re).  The issues at hand were whether the receiver and trustee is required to take possession and control of all licensed assets of a company and fulfil provincial statutory obligations to abandon, reclaim and remediate same.  The Court also considered whether the Alberta Energy Regulator (AER) can refuse applications to transfer licenses of the retained assets by relying on the provincial regime in the bankruptcy context. The Court held that proceeds from the sale of assets will prioritize secured creditors over cleaning up the company’s abandoned oil and gas wells.

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