CALGARY: RedWater Energy's bankruptcy last May raised few eyebrows. After all, the C$3.2 million the small Canadian energy company owed creditors was insignificant in a multibillion-dollar industry.
But questions thrown up by the case are causing issues for Canadian companies looking to sell oil and gas wells in a bid to shore up their balance sheets.
Oil and gas companies in Canada, desperate to sell assets amid tough market conditions, are seeing deals complicated by buyer concerns over reclamation costs tied to inactive wells, which are a massive bone of contention between creditors and the Alberta Energy Regulator (AER) in the RedWater matter.
Companies selling conventional oil and gas assets typically market vast parcels of land which include a mixed-bag of wells.
These can include wells that are in-production, some not fully developed or not viable in a low energy-price environment, and others that are completely tapped out.