Keely Cameron and Luke Morrison write in JWN and the Daily Oil Bulletin on how to deal with "zombie corporations" in Canada's oil patch. A zombie corporation is a shorthand label that can be used to refer to a company that is insolvent but not in formal proceedings or otherwise lacks the capacity/ability to address their co-ownership obligations. In the context of an oil and gas property with multiple working interest participants (WIPs), the presence of a zombie corporation creates a number of challenges for the operator and other WIPs.
Keely and Luke include tips and tricks in their column to mitigate the risks posed by zombies WIPs:
- Review co-ownership agreements to understand the tools and mechanics available to address Zombie WIP scenarios.
- Ensure WIP records are current and regularly assess the appropriateness of your insurance policies and coverage limits.
- Keep a precise/accurate inventory of existing AFEs regarding abandonment/reclamation work.
- Follow any court proceedings commenced in relation to zombie WIPs to mitigate the risk of your claims being barred.
- Ensure that Alberta Energy Regulator records are updated regarding working interests and that records are accurately maintained to track divestures.
- Monitor AER bulletins and legislative/regulatory developments affecting WIP risk exposure.
Please note that this publication presents an overview of notable legal trends and related updates. It is intended for informational purposes and not as a replacement for detailed legal advice. If you need guidance tailored to your specific circumstances, please contact one of the authors to explore how we can help you navigate your legal needs.
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