CALGARY, AB — A Calgary-based oil company announced they are shutting down.
Trident Exploration Corp. officially ceased operations on Tuesday, according to a release on the company’s website. The decision affects 33 employees and 61 contractors.
In the release, the privately-held company says “the combination of extremely low natural gas prices and high surface lease and property tax payments (totaling $0.72 C$/GJ) has exhausted the liquidity of the company.” The company is also blaming capacity constraints on TransCanada Corp.’s NGTL pipeline system.
“Further, and despite our extensive efforts, Alberta has no mechanism to allow a struggling energy company such as Trident to address its inflated surface lease and property tax obligations,” the release reads.
The company says approximately 4,700 wells are being transitioned to the care of the Alberta Energy Regulator. They say the estimated abandonment and reclamation obligations are approximately $329 million.
“Behind these obligations, we do not anticipate any recovery for shareholders and unsecured creditors,” the release reads. “Likewise, any recovery for secured lenders is highly uncertain.”
Trident says a restructuring process failed due to issues that they linked to the Supreme Court of Canada’s Redwater decision.
The court ruled that energy companies must fulfil their environmental obligations before paying back creditors in the case of insolvency or bankruptcy. The decision overturned lower court decisions that had favoured bankruptcy law over provincial environmental responsibilities.
“As many have speculated and we have now unfortunately proven, the Redwater decision has had the unintended consequence of intensifying Trident’s financial distress and accelerating unfunded abandoned well obligations,” the company states. “Without regulatory collaboration and clarity, Trident is unable to address its near-term liquidity needs and has no financial ability to continue operating.”
-With files from The Canadian Press
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