Newspaper article The Canadian Press

Supreme Court's Well Ruling 'Credit Negative' for Energy Firms, Says Moody's

Newspaper article The Canadian Press

Supreme Court's Well Ruling 'Credit Negative' for Energy Firms, Says Moody's

Article excerpt

Abandoned well ruling 'credit negative'

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CALGARY - A credit rating agency says high court support for the Alberta Energy Regulator's ability to force a bankruptcy trustee to pay out well-abandonment obligations before paying back creditors is credit negative for energy companies.

Moody's Investor Services says the Supreme Court of Canada ruling Thursday creates a "super priority position" for payment of such liabilities over repaying other creditors.

It says the decision potentially reduces how much a lender could recover in the event of an insolvency and, therefore, how much it will be willing to lend to companies.

That could potentially lead to a reduction in how much money oil and gas companies will be able to call upon to fund their exploration and development programs. …

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