The Magazine of the Canadian Association of Petroleum Landmen

February 2018

THE NEGOTIATOR

AER Bulletin 2017-21 New Rules Imposed by the AER

Overriding RoyaltiesThe Test for an Interest in Land

The Property Transfer Procedure: An Idea Whose Time Has Come

Great New Tool, But Remember You Still Have to Think

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2017–2018 CAPL Board of DirectorsPresident

Larry Buzan, P.LandVice-President

Noel Millions, PSLDirector, Business DevelopmentAlberta

Tim GalbreathDirector, Business DevelopmentSaskatchewan & Alberta Oilsands

Michelle CreguerDirector, Communications

Marah GrahamDirector, Education

Robyn Baron, P.Land, PSLDirector, Field Acquisition & Management

Rob Pettifer, P.Land, PSLDirector, Finance

Kristin RennieDirector, Member Services

Rob Pitchford, PSLDirector, Professionalism/Business Development (BC)

Glenn Miller, PSLDirector, Public Relations

Gary Richardson, PSLSecretary/Director, Technology

Shaun WilliamsDirector, Social

Janice RedmondPast President

Larry Buzan

Readers may obtain any Director’s contact information from the CAPL office. Suite 1600, 520 – 5 Avenue S.W. Calgary, Alberta T2P 3R7 [ph] 403-237-6635 [fax] 403-263-1620www.landman.ca

Kaitlin Polowski reception@landman.caDenise Grieve dgrieve@landman.caKarin Steers ksteers@landman.ca

Also in this issue

22 Myth Busters

24 CAPL 2018 Conference

27 2018 CAPL Curling Bonspiel

THE NEGOTIATORThe Magazine of the Canadian Association

of Petroleum Landmen THE NEGOTIATOR

Features February 2018

2 Update to AER Directive 067 Caireen E. Haner

5 Overriding Royalties Ashley Weldon & Tasha Wood

10 2017 CAPL Property Transfer Procedure Jim MacLean

14 The Property Transfer Procedure George V. Lepine & William M. Laurin

In Every Issue18 Board Briefs

20 The Negotiator’s Message From the Board: Public Relations

21 The Negotiator’s Message From the Board: Business Development – British Columbia

26 Roster Updates

26 In Memoriam

28 The Social Calendar

28 CAPL Calendar of Events

28 Networking Night

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AS READERS WILL BE AWARE, THE COURT OF QUEEN’S BENCH OF ALBERTA IN RE REDWATER ENERGY CORPORATION i IN MAY 2016 determined that trustees in bank-

ruptcy and receivers are permitted to disclaim

non-producing assets, are not required to carry

out abandonment, reclamation and remedia-

tion obligations that would have been required

of the insolvent licensee, and are not required

to perform abandonment orders issued by the

Alberta Energy Regulator (AER). The Court of

Appeal upheld the decision.ii The AER and Orphan

Well Association have further appealed the deci-

sion to the Supreme Court of Canada, which

appeal is scheduled to be heard in February 2018.

The AER’s initial response to the Redwater

decision was Bulletin 2016-16, which set out

interim measures in relation to licensee eligibility

(both on initial application and prior to approval

of licence transfers) and required an increased

WRITTEN BY

CAIREEN E. HANERTMCMILLAN AND ASSOCIATES

Update to AER Directive 067Further Regulatory Hurdles in Response to Redwater

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Liability Management Ratio of 2.0 for licence transferees as a

condition of transferring existing licences, approvals and permits.

As of December 6, 2017, the AER issued Bulletin 2017-21,

which announced the release of a new edition of Directive 067:

Eligibility Requirements for Acquiring and Holding Energy Licences

and Approvals. In setting out the revisions, the AER has empha-

sized that acquiring and holding a licence or approval in

Alberta is a privilege, and that increased scrutiny will be

applied to applicants and licensees to ensure that only respon-

sible parties are granted and permitted to maintain licences.

The significant changes include:

1. a more comprehensive licence application process, which

permits the AER increased discretion to reject applicants

where the AER deems that the applicant poses a risk; and

2. a requirement that applicants and licensees provide addi-

tional information to the AER upon undergoing a “material

change” or upon request by the AER.

Changes to Licence Application ProcessAdditional Information

Applicants are now required to provide the following information:

• details regarding corporate structure;

• names of related entities (including parent and subsidiary

corporations) and any entity with common directors, officers,

partners, or control persons of the applicant;

• the existence of and details regarding current regulatory

proceedings or outstanding noncompliances (including finan-

cial) associated with the applicant or related entities, whether

in Alberta or another jurisdiction;

• a copy of the most recent audited financial statements for the

applicant;

• names of all shareholders (including corporate shareholders)

who directly or indirectly own more than 20% of the outstanding

voting securities of the applicant, all directors and officers of the

applicant;

• list of all energy companies for whom the applicant’s directors

and officers have been in an officer or director capacity within

the previous five years;

• list of the applicant’s directors and officers who have been

a director or officer of an energy company which has been

subject to insolvency proceedings either while they were a

director or officer or during the 12-month period preceding the

insolvency proceedings; and

• copies of government-issued photographic identification for

the applicant’s directors and officers with accompanying affi-

davit or attestation of instrument and declaration (as provided

on the application form).

Risk Assessment

The AER has implemented a new risk assessment process to

ensure that it is granting licences only to those parties it deems

do not pose an unreasonable risk. The factors which the AER may

consider in making this determination include:

• Compliance history of:

• the applicant, its directors, officers and shareholders;

• current or former AER licensees that are directly or indirectly

associated or affiliated with the applicant or its principals;

• entities currently or previously associated with the appli-

cant or its directors, officers or shareholders;

• experience of the applicant, its directors, officers and

shareholders;

• corporate structure of the applicant;

• financial health of the applicant;

• outstanding debts owed by:

• the applicant;

• current or former AER licensees that are directly or indi-

rectly associated or affiliated with the applicant or its

directors, officers or shareholders;

• outstanding noncompliances of current or former AER licens-

ees that are directly or indirectly associated or affiliated with

the applicant or its directors, officers or shareholders;

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• involvement of the applicant’s directors, officers and share-

holders in:

• entities that have initiated or are subject to bankruptcy or

receivership proceedings;

• current or former AER licensees that have outstanding

noncompliances;

• naming of directors, officers or shareholders of current or

former AER licensees under section 106 of the Oil and Gas

Conservation Act.

The AER has expressly reserved the right to consider “other

relevant information” as part of its risk assessment process.

How this will be implemented in practice remains to be seen.

Further, the compliance history of licensees and approval hold-

ers is not limited to Alberta, but may extend to other jurisdictions

in which they currently or have formerly operated.

It should also be noted that information provided as part of

the application process may be audited by the AER for accuracy

and completeness at any time before or after a licence has been

granted.

The AER has stated that it may refuse to grant licence eligi-

bility, or may grant eligibility with or without restrictions, terms

or conditions, which may include:

• the types or numbers of licences or approvals which may be

held;

• a requirement that security be provided at the time of applica-

tion for a licence or approval;

• requirements regarding the minimum or maximum working

interest percentage an applicant must hold; or

• a requirement to address outstanding noncompliances of

current or former AER licensees that are directly or indi-

rectly associated with the applicant, its directors, officers or

shareholders.

Additional scrutiny may also be undertaken when application is

made for transfer of a licence or approval.

“Material Changes” and Their Effect

The AER is also implementing a requirement that licensees

ensure that they meet licence eligibility requirements on an

ongoing basis. To ensure that this is done, the AER requires that

all licensees provide an updated Schedule 1 within 30 days of any

material change.

Material changes include:

• changes to a licensee’s legal status or corporate structure;

• addition or removal of a related corporate entity;

• amalgamation, merger, or acquisition;

• changes to directors, officers, or control persons;

• appointment of a monitor, receiver, or trustee over the licens-

ee’s property;

• implementation of a plan of arrangement or other transaction

which will result in a material change to the licensee’s operations;

• sale of all or substantially all of the licensee’s assets; or

• cancellation of the licensee’s insurance coverage.

Reporting material changes is an additional regulatory hurdle for

licensees. The above list should not be viewed as an exhaustive

list of what the AER may consider to be a material change. What

would otherwise be considered normal course corporate activi-

ties, such as taking steps to effect tax savings, may be captured

by these new reporting requirements and may have an impact on

the AER’s risk assessment of a licensee’s eligibility.

Before effecting a material change, a licensee may request an

advance ruling on whether the AER would consider the change to

result in an unreasonable risk that may impact licence eligibility.

Until such time as there is more guidance from the AER as to when

a material change does or does not result in what it deems to be

an unreasonable risk, we encourage licensees to contact legal

counsel before disclosing any confidential, competitive or material

non-public information within the context of Directive 067.

The AER may revoke a licensee’s eligibility or impose terms

and conditions on the licence where it believes the material

change has resulted in an unreasonable risk. Also, if a licensee

fails to disclose a material change within 30 days, the AER may

revoke or restrict licence eligibility.

Immediate Impact

All licensees with current licence eligibility are required to

provide the same information that is required of new applicants

by January 31, 2018. Failure to meet this deadline may result in

the AER revoking or placing restrictions on a licensee’s eligi-

bility. If there are concerns as to how this information may be

processed and the impact it may have on a licensee’s eligibility,

we recommend discussing same with legal counsel.

In addition, all licensees should implement a material

change compliance program to ensure that the new disclosure

requirements are met. It will be instructive to discuss with legal

counsel during the development of such a program to ensure that

all potential material changes are identified in advance of their

implementation and are reported in compliance with Directive 067.

My colleagues and I at McMillan LLP would be pleased to

provide further guidance with respect to Directive 067 and its

impact in your particular circumstances. Please contact us if we

may be of assistance. m

Notesi 2016 ABQB 278 (Redwater).

ii 2017 ABCA 124.

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THE DOWNTURN IN CANADA’S NATU-RAL RESOURCES SECTOR OVER THE PAST FEW YEARS HAS CAUSED INDUS-TRY AND INSOLVENCY PROFESSIONALS TO CONSIDER THE COMPLICATED AREA OF ROYALTIES IN THE CONTEXT OF INSOLVENCY PROCEEDINGS. Two recent

cases indicate the potential adverse effects of

insolvencies on royalty owners whose interests

do not meet the test for an “interest in land”.

Nature of Overriding RoyaltiesLegal deliberation on the nature of oil and gas

royalties traces back to the early 1930s. Cases

discussing whether a particular royalty was an

interest in land, or whether royalties by their

Overriding RoyaltiesWalter Energy, Dianor Resources and the Importance of Negotiating for an Interest in Land

WRITTEN BY

ASHLEY WELDON

& TASHA WOOD BD&P

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character even could be found to be an interest in land, culmi-

nated in the Supreme Court of Canada (SCC) decision in Bank

of Montreal v Dynex Petroleum Ltd.1 (Dynex). A stumbling block in

earlier decisions was the common law doctrine that an interest

in land cannot issue from an incorporeal hereditament (such as a

profit à prendre or working interest). In Dynex, the SCC held that

the parties “could not offer any convincing policy reasons for

maintaining the common law prohibition on the creation of an

interest in land from an incorporeal hereditament”.2 Therefore,

the customs of the oil and gas industry warranted a shift in

the law to recognize overriding royalties as an interest in land,

subject to the intentions of the parties.

Dynex set out a two-part test. An overriding royalty interest

can be an interest in land if:

1) the language used in describing the interest is sufficiently

precise to show that the parties intended the royalty to be a

grant of an interest in land, rather than a contractual right

to a portion of the oil and gas substances recovered from the

land; and

2) the interest, out of which the royalty is carved, is itself an

interest in land.3

Why is an “interest in land” Important? An “interest in land” is a legal term denoting an interest that

“runs with the land.4 An interest in land allows the holder

to register a caveat on the subject land title to give notice

to potential purchasers and protect its interest against third

parties. In contrast, a contractual interest governs a relation-

ship between the royalty owner and royalty payor and does not

attach to the lands. As a result, if the original royalty payor sells

its interest to a third party purchaser without specific assign-

ment and novation of the royalty agreement, the royalty owner

may not be able to compel the new purchaser to comply with

the royalty obligations.

The Decision in Walter Energy The value of overriding royalties as interests in land is noth-

ing new to the oil and gas industry, but as demonstrated in

the recent British Columbia Supreme Court decision Re: Walter

Energy Canada Holdings, Inc5 (Walter Energy), it is of paramount

importance in the current climate of the industry. Walter Energy

involved an application to the Court by the debtor companies

for approval of a transaction for the sale of certain coal mining

properties pursuant to the Companies Creditors Arrangement Act

[CCAA]. The debtor companies had been granted protection to

restructure as a debtor in possession under the CCAA by the

Court in December, 2015.

The proposed sale included the Wolverine Mine, to which

the applicant Kevin James objected. James was the owner of a

1% gross overriding royalty on coal produced from the Wolverine

coal mine (the GORR) pursuant to a royalty sharing agreement

(the Royalty Agreement) between James and the debtor’s prede-

cessor in interest (WCC). The asset sale agreement listed the

Royalty Agreement as an “excluded contract”, that would not

be assumed by the purchaser. As a result, James opposed the

proposed sale on the grounds that his GORR was an interest in

land. Therefore, the Wolverine coal licences could only vest in the

purchaser subject to the GORR.

The decision in Walter Energy turned directly on whether

the GORR was an interest in land that ran with the Wolverine

coal licences or merely a contractual royalty. The Court exam-

ined the jurisprudence, and the text of the Royalty Agreement

against numerous indicia indicating an interest in land. One

clause in the Royalty Agreement provided that the GORR was

based on the price bracket of the product produced from the

coal properties. This strongly factored against characterizing

the GORR as an interest in land. The payment of a royalty on

substances produced indicates an obligation to pay money,

in contrast with a royalty in all the minerals within, under or

upon the lands which indicates conveyance of an interest in

the minerals in situ. This clause also lacked any granting or

conveyancing language. The Court highlighted the fact that, as

a director, James controlled WCC at the time it entered into the

Royalty Agreement. If it had been the intention of the parties,

James could have easily incorporated clear language indicating

that the GORR ran with the land. Further, the Royalty Agreement

could have been drafted to grant a security interest to James and

to restrict the sale of the properties subject to the purchaser

assuming the GORR obligations.

The Court concluded that James’ GORR was a mere contrac-

tual royalty. As a result, the nature of the Royalty Agreement was

executory – where performance is ongoing or not yet completed.6

This characterization granted the debtor in possession the ability

to terminate the executory Royalty Agreement to enhance the

prospects of restructuring.7

What is clear is that overriding royalty interests in Crown mineral tenure

do not obviously fit within the standard legislative schemes in place to

aid in protection of an interest by registration.

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The Implications of Walter Energy In non-distressed circumstances, if a particular royalty obliga-

tion was excluded from a sale and the corresponding royalty

agreement was not assigned to the purchaser, the vendor/royalty

payor would be in a difficult position, burdened with royalty obli-

gations after selling its interest. The insolvency context shifts the

risk and puts a contractual royalty owner in a far more precar-

ious position. The Court’s recognition of the potential future

disclaimer of the Royalty Agreement sets a precedent for future

debtors to attempt to disclaim royalty payor obligations where

the agreement does not clearly establish an interest in land.

If a debtor company is successful, the holder of the contractual

royalty interest assumes the position of an unsecured creditor

with recourse only through the formal claims process.

The Decision in Dianor Resources In a recent Ontario case, a receiver was appointed over the

assets of Dianor Resources Inc. (Dianor) which included mining

interests. The receiver brought an application for an approval of

the sale of the Ontario assets to Third Eye Capital Corporation.

The sale contained a condition that a 15.4% GORR on diamonds

and a 1.5% GORR on metals and other minerals be either termi-

nated or reduced and included a cash payment of $250,000 to

be paid as “fair and reasonable compensation” for the GORRs.

2350614 Ontario Inc. (the Royalty Owner) argued that the approval

order needed to vest the assets in the purchaser subject to the

two GORRs. The resulting decision in Third Eye Capital Corp. v

Dianor Resources Inc.8 (Dianor) has raised some alarm bells for

royalty holders due to a statement of the Court made in passing

after deciding the central issue of the case—whether the diamond

and mineral GORRs were interests in land. On the interest in land

question, the Court applied the test from Dynex and held that

despite the clear statement that the interests were intended to be

interests in land, the lack of granting or conveying language and

the royalty being paid on the products once recovered from the

properties, meant the GORRs did not run with the lands.9

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If a debtor company is successful, the holder of the contractual royalty

interest assumes the position of an unsecured creditor with recourse

only through the formal claims process.

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Concerning Statements in Dianor Resources In a standard approval and vesting order application, a debtor

in possession or monitor (under CCAA) or a receiver or trustee

(under the Bankruptcy and Insolvency Act) seeks the Court’s

approval of an asset transaction. The standard form order allows

for the discharge of all encumbrances and claims from the assets

except for any permitted encumbrances, and vest the assets in

the purchaser. Those encumbrances and claims that are “vested

off” title to the purchased assets then attach to the purchase

proceeds, which stand in place of the sold assets. The order

contemplates encumbrances such as personal property security

interests and other financial or monetary claims whether or

not registered or perfected against the sale assets. In Dianor, the

purchaser argued that the GORRs could be vested off by the Court

whether or not they were interests in land, so long as fair value

was paid to the Royalty Holder.

In finding that this claim did not have to be considered,

given the finding that the GORRs did not amount to an inter-

est in land, the Court nonetheless went on to state as follows:

“I see no reason in logic however why the jurisdiction would

not be the same whether the royalty rights were or were not

an interest in land.”10 While this statement is troubling, the

authors suggest that its relevance is questionable given the

established judicial treatment of interests in land and the

fact that the statement was not part of the Court’s finding.

This would render it “obiter dicta” or non-binding on other

courts. Under a receivership order, a receiver takes possession

of a particular debtor’s property. However, royalties that are

interests in land are separate property interests outside the

scope of such an order. Further, converting an interest in land

to an unsecured claim is, in effect, expropriation of the royalty

owner’s property interest for the benefit of the debtor’s cred-

itors. Selling the debtor’s property free and clear of a royalty

interest running with the land is effectively disclaimer, which

is limited to executory contracts.

No Formula for Determining an Interest in Land It is essential that parties signal their intent to create an inter-

est in land, rather than merely a contractual obligation owed by

the royalty payor to the royalty owner. Unfortunately, there is

no “magical incantation” required to create an interest in land.

However, the language used in an agreement will aid the Court in

assessing the parties’ intentions.11 Each case will depend on the

particular agreement and circumstances and no particular indicia

will be determinative of the outcome.12

Protecting Your Interest in LandRoyalties that are an interest in land can be protected through

registration of a caveat which gives notice to the world of the

interest claimed. Registrations in respect of royalties granted

on freehold mineral interests are governed by the Land Titles Act

[LTA] and registered at the Alberta Land Titles Office. The LTA

awards priority to the first party to register its interest.

The current law in Alberta is unclear as to the proper forum

for registration in circumstances where the overriding royalty

interest is granted by the lessee of Crown-owned mines and

minerals. Section 202(a) of the LTA prohibits registration of

a caveat or encumbrance affecting Crown mineral interests.

The Mines and Minerals Act [MMA] provides for a limited exception

applicable generally only to financial institutions. Per section 4(g),

security interests registered under the Alberta Personal Property

Security Act cannot be used to protect an interest in land. What is

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WE KNOW

WILDLIFE.

The current law in Alberta is unclear as to the proper forum for

registration in circumstances where the overriding royalty interest is

granted by the lessee of Crown-owned mines and minerals.

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clear is that overriding royalty interests in Crown mineral tenure

do not obviously fit within the standard legislative schemes in

place to aid in protection of an interest by registration.

It is possible that the definition of a “charge on land” under

the Law of Property Act encompasses this type of interest.

Land charges are defined as interests in the real property of a

corporation to secure payment or performance of an obligation

and are registered in the Alberta Personal Property Registry.

Land charges are often used by financial institutions to register

floating charges against corporate debtors until taking steps

to register against specific interests in a situation of default.

While a royalty owner would not be able to register against

specific interests under the MMA, registration of a land charge

will, at minimum, provide notice to third parties and potential

creditors of the royalty payor (and, if applicable, subsequently

appointed insolvency professionals) that the royalty owner has

an interest. m

Notes1 2002 SCC 7 [Dynex].

2 Dynex, at para 18.

3 Dynex, at para 22, citing Virtue J. in Vandergrift v Coseka

Resources Ltd. (1989), 67 Alta LR (2d) 17, 95 AR 372 (Alta QB) at

para 26.

4 Strathcona (County) v Half Moon Lake Resort Ltd, 2013 ABQB

236 at para 61.

5 2016 BCSC 1746 [Walter Energy].

6 Barron’s Canadian Law Dictionary, 6th ed, sub verbo “executory”

(QL).

7 Section 32 of the CCAA.

8 Third Eye Capital Corp. v Dianor Resources Inc., 2016 ONSC 6086

[Dianor].

9 Dianor, at paras 22-30.

10 Dianor, at para 40.

11 Walter Energy, at para 100.

12 James H Meek Trust v San Juan Resources Inc, 2003 ABQB 1053, at

para 37.

This article is intended only as general legal

information at the time it was written and is

not to be relied upon as legal advice.

Authors Ashley Weldon and Tasha Wood are

associates in BD&P’s Energy Group.

Article originally published in BD&P’s On Record

Energy Newsletter, December, 2017 found:

http://www.bdplaw.com/energy/publications/

overriding-royalties-walter-energy-dianor-resources-and-

the-importance-of-negotiating-for-an-interest-in-land/

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THE 2017 CAPL PROPERTY TRANSFER PROCEDURE (“PTP”) WAS ENDORSED BY THE CAPL BOARD IN DECEMBER, 2017. The package on the CAPL web page includes:

(i) an overview of the project scope and the major

changes relative to the 2000 PTP; (ii) a detailed 39

page matrix that outlines all material changes

relative to the 2000 PTP and their rationale;

(iii) a clean copy of the text and annotations;

(iv) a coded comment matrix that presents the

detailed verbatim comments we received from a

modest number of commenting parties, together

WRITTEN BY

JIM MACLEAN

2017 CAPL Property Transfer ProcedureTransition To Use

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British Columbia207 10139 - 100 St.Fort St. John BC V1J 3Y6T: 250-261-6644F: 250-261-6915Alberta

Box 847 10912 - 100 Ave.Fairview, AB T0H 1L0T: 780-835-2682F: 780-835-2140Toll Free: 888-835-6682

Visit us online at www.roynorthern.com

Negotiator Feb 2016.indd 1 2/12/2016 2:00:54 PM

with our responses to each individual comment; (v) a redline

of the final document relative to the July, 2017 draft; (vi) Word

versions of the election sheets and the case studies included

as Addendums to the PTP to facilitate early use of the PTP for

anyone that wishes to use the document for a new transaction;

(vii) a PDF of the text of the 2017 PTP without the annotations to

facilitate use; (viii) a collection of the articles from The Negotiator

to date on the PTP, as updated to reflect the final document;

and (ix) a redline of the final document relative to the 2000 PTP.

While we do not expect that the redline to the 2000 PTP will be

reviewed in any detail, we believe that even a cursory glance

at that redline will demonstrate convincingly the thought and

effort invested in the 2017 document over 20 months by our 15

member committee.

The January article was about the process of transferring

well and tangibles licences under the Regulations and the

endorsement of the PTP. This month’s article is about the tran-

sition to use.

Lessons Learned From The 2000 PTPI believed for many years that the 2000 PTP was infrequently

used by industry based on a combination of my larger company

experiences and the small number of calls I had ever received

about it. I discovered in a discussion with representatives of

the EPAC Land Committee on another topic in the fall of 2015,

though, that my assumption was wrong. Not only was it used

regularly by many small companies for their low to modest

value transactions without major problems, but the personal

experiences of the EPAC representatives were very positive.

They also thought that the time was ideal for an update and

that there would be a greater receptiveness to an updated PTP.

In considering how best to approach the 2017 update, we

needed to understand why the 2000 PTP did not receive the level

of acceptance that had been anticipated when the 2000 PTP was

completed and to apply those learnings to the new project.

We determined that one of the major reasons for the

narrower than expected usage was that the original vision for

the 2000 PTP was overly ambitious. We believed in 2000 that it

would become widely used for a broad spectrum of transactions

by a diverse range of users. The reality proved to be quite differ-

ent, however. The 2000 PTP was far from being a one size fits all

model, and did not suitably address user needs or expectations

for large or otherwise complex transactions, such as those with

Investment Canada, Competition Act or employee issues. We had

also assumed from the participation of larger companies in the

commenting phase on the 2000 PTP that they would be much

more willing to consider using the 2000 PTP than ultimately

proved to be the case.

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Based on that assessment, we made two strategic decisions

for the 2017 PTP update project.

The first was to be much less ambitious in our objective.

We designed the 2017 PTP for undeveloped lands transactions

and other relatively straightforward transactions on the low to

modest end of the value spectrum. Our belief was that we could

have the greatest efficiency impact on industry by focusing on

the 75%+ of deals at this end of the range, while being clear that

we were not making any attempt to disrupt the more traditional

approach to complex or higher value transactions. This decision

had a significant impact on both the way that we communicated

the case for change and the content we chose not to include in

the PTP, such as seismic, employees and Investment Canada and

Competition Act approvals.

The second was to recognize that larger companies were

likely to be sufficiently comfortable with the status quo

that they would be unlikely ever to regard the PTP as their

“document of choice”. The consequence of this was the more

extensive and visible participation of EPAC representatives on

the Committee and the associated emphasis over the course of

the project on trying to engage the smaller and intermediate

companies.

How Is The 2017 PTP Likely To Be Used?We anticipate that the document will most likely be used for two

types of transactions.

The first is for relatively straightforward producing property

sales and swaps on the low to modest value end of the deal

spectrum (i.e., the under $20-25MM range). That being said, we

also expect that some users who are not already familiar with

the 2000 PTP will proceed more cautiously by initially using a

materially lower internal threshold, such as $5MM, with a vision

of increasing their threshold as comfort, confidence and industry

acceptability increase.

The application of a threshold test by users does not reflect a

structural design that limits use of the PTP for relatively straight-

forward transactions with a greater value. Similarly, it does not

reflect any belief on our part that we took shortcuts on the qual-

ity of coverage included in the document for the less complex

transactions for which it was designed. Instead, it reflects the

practical realization that management and legal advisors would

typically be much less comfortable in using a CAPL form for

transactions with a value at the higher end of the deal spectrum.

The second major contemplated transactional use of the 2017

PTP is to bring much greater efficiency to the increasing number

of undeveloped land transactions, as addressed in greater detail

in the November, 2016 article in The Negotiator and throughout

the annotations.

Most companies have a short form conveyance agreement of

5-15 pages they use for these transactions, with certain associated

tradeoffs in breadth and depth of coverage in favour of brevity.

These forms are all different in coverage, balance and overall qual-

ity, such that there are likely to be several drafts of the agreement

and delays while the drafts are reviewed and discussed.

As shown in Addendums V-VII of the 2017 PTP, parties using

the PTP, on the other hand, can complete these types of trans-

actions in one or two pages by using the PTP as the foundation

for their transaction, while obtaining greater breadth and depth

of coverage.

The use of the 2017 PTP for undeveloped land transactions

has the added benefit of providing potential users with a low

risk way to become familiar with the document and to assess

its suitability for future use, an avenue that we did not explore

sufficiently with the 2000 PTP.

To facilitate use of the 2017 document, we have made anno-

tated and unannotated versions of the PTP election sheet and

examples of producing property and undeveloped lands trans-

actions available in a downloadable format from the CAPL and

CAPLA websites.

There is one other impactful use. We anticipate that users of

all experience levels in companies of all sizes will also soon begin

to use the 2017 PTP as a reference document when reviewing the

draft agreement of another party and when considering a poten-

tial issue under an existing agreement.

Turning The Document Standardization Engagement Process Upside DownThere are four common themes in any industry project for the

creation of a new or updated industry agreement form, such as

the PTP. The first is the attempt to position users to negotiate,

document and administer their applicable agreements more

efficiently and effectively than would otherwise be the case.

The second is the desire to mitigate the potential for unnecessary

disputes to disrupt or damage ongoing business relationships.

The third is to use the document and the associated annota-

tions and case studies to enable users of all experience levels

to enhance their expertise. And, last, but certainly not least, the

fourth is to create a document that will be widely used in due

course by creating a clear case for change and by ensuring that

the document is balanced and of high quality.

My approach in other agreement standardization projects in

which I have been involved has been to try to build momentum to

use initially with the larger companies, so that they would cascade

use of the document outward to the remainder of industry.

Having recognized that the updated PTP is unlikely ever to be

the “document of choice” for larger companies, we chose to turn

the traditional approach upside down for this project. We decided

to try to build momentum to use initially with the smaller and

intermediate companies, so that they would cascade use of the

2017 PTP outward to their peers and the larger companies.

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Although the larger companies are unlikely to be early

embracers of the 2017 PTP, there are five reasons for them to

become familiar with the document in the near-term. The first

is that the review will probably identify improvement opportu-

nities to their existing precedent agreement forms. The second

is that the PTP is likely to be used by commenting parties on an

increasing basis to assess the reasonability of draft agreements

presented to them for review, such that existing precedents will

come under increasing scrutiny by the other party. The third is

that users of the PTP will probably request its use for transac-

tions at the lower end of the value spectrum, particularly if they

are the vendor. Although larger companies are unlikely to agree

today, the fourth is that larger companies are likely to experi-

ment with the PTP in due course for lower value transactions

when they have competing internal demands, particularly for

transactions involving undeveloped lands. The fifth is that the

annotations are an excellent reference and teaching tool that

can be helpful in examining issues in new and older agreements,

even if the PTP is not then being used by the applicable company.

Déjà Vu And The 1997 CAPL Farmout & Royalty ProcedureThe transition to use following completion of a document stan-

dardization project can be extremely slow, as was the case for the

2007 CAPL Operating Procedure. It can also be surprisingly fast,

as was the case for the 1997 CAPL Farmout & Royalty Procedure.

Between the two, the 2017 PTP feels much more like the 1997

CAPL Farmout & Royalty Procedure.

Current industry conditions create an appetite for efficiency,

effectiveness and change, particularly for the smaller to inter-

mediate companies that we believe are the likely early users

of the document. Based on informal feedback we have been

receiving, we believe that the combination of the compelling

business case for a step change in approach and the quality of

the document will see significant early stage interest by at least

that subset of users.

As was the case with the 1997 CAPL Farmout & Royalty

Procedure, we also believe that companies that use the docu-

ment in one or two transactions will want to use it routinely

for the transactions for which it was designed once they

experience for themselves the quality of the document, how

intuitive it is to users and the resultant uplift in efficiency when

each of us is being challenged on a daily basis to do more with

even less.

We look forward to hearing about your experiences as you

begin to work with the 2017 PTP. m

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A FAMOUS QUOTE BY THE FRENCH POET AND NOVELIST VICTOR HUGO, AUTHOR OF BOTH LES MISÉRABLES AND THE HUNCHBACK OF NOTRE-DAME, is often translated as “Nothing is as

powerful as an idea whose time has come.”

That sentiment is entirely appropriate for

the arrival of the 2017 CAPL Property Transfer

Procedure (PTP); its completion is a monumental

achievement and the CAPL PTP Committee is to

be applauded. This updated version of the PTP is

extremely well suited for its intended purpose;

namely small and medium sized asset transac-

tions under $20 million (Targeted Transactions),

WRITTEN BY

GEORGE V. LEPINE &

WILLIAM M. LAURIN

The Property Transfer ProcedureAn Idea Whose Time Has Come

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and in our view, is destined to be quickly and widely adopted

by industry.

Considering the longstanding and universal adoption by

negotiators of the CAPL Operating Procedures, the CAPL Farmout

& Royalty Procedures and of the PJVA’s Construction, Ownership

and Operating Model Form Agreements (Co-Ownership

Agreements), it has always been troubling as to why purchase

and sale agreement (Sale Agreements) did not follow a similar

arc when the original version of the PTP was introduced in 2000.

The most straightforward explanation for the difference in

adoption rates and extents, is that the relationship among

co-owners is much more “symmetrical” under Co-Ownership

Agreements, than the relationship between the vendor and the

purchaser under a Sale Agreement. It made sense for indus-

try to standardize Co-Ownership Agreements because each

co-owner retained a broad set of independent development

rights, and most companies were both operators and non-op-

erators, making it easier to reach a common understanding of

what was “market” in terms of language, leaving an appropriate

suite of elections to reflect commercial terms. On the other

hand, during the late 1980s and the 1990s throughout Western

Canada larger, established legacy companies such as Imperial,

Shell, Chevron and Amoco were “net sellers” which preferred

using existing precedent agreements, while the junior and

immediate market such as Renaissance, CNRL and Penn West

were “net acquirers”. In 2000 there was not sufficient homoge-

neity among Sale Agreements in common use, nor was there the

commonality of interest that evolves with regularly being both

a vendor and a purchaser; the 2000 PTP was simply ahead of its

time. An easy parallel is the residential housing market, where a

… during the late 1980s and the 1990s throughout Western Canada

larger, established legacy companies such as Imperial, Shell, Chevron

and Amoco were “net sellers” which preferred using existing precedent

agreements, while the junior and immediate market such as Renaissance,

CNRL and Penn West were “net acquirers”.

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standardized real estate purchase contract was broadly adopted

as in general most participants in the market are concurrently

a buyer and a seller.

Virtually all Sale Agreement forms currently in use for

Targeted Transactions follow the same basic agreement structure

and contain largely identical commercial terms, representa-

tions, indemnities and conditions; albeit worded in slightly

different ways. By distilling the various parallel Sale Agreement

forms into a single commonly accepted agreement form, the

PTP will eliminate much of the time and effort that goes into

negotiating specific wording. At the same time, by providing

alternative elections for many key substantive issues, the PTP

will allow buyers and sellers to quickly focus on negotiating

those key issues without engaging in seemingly trivial semantic

debates regarding definitions and largely standardized clauses.

The PTP strikes a thoughtful and extremely well-reasoned

balance between consistency of language and flexibility over

key terms. Given the need for cost competitiveness facing

the Western Canadian Sedimentary Basin from onshore U.S.

oil production, the efficiencies and savings to be realized by

industry through a swift and broad adoption of the updated

PTP will be recognized by industry from the outset. Adoption of

the PTP will also greatly enhance the predictability, consistency

and stability of the deal making process. By focusing attention

on key substantive issues, the PTP will generally foster a much

more meaningful discourse in industry about those substan-

tive issues. Imagine where we would be if, like in the 1960s, we

still drafted and negotiated operating procedures; by standard-

izing Sale Agreements negotiators and administrators will have

more time and energy to focus on functions that meaningfully

add value.

Without ever being acknowledged as such, CAPL was an

early entry in the disruptive trend of the “commoditization

of legal services”. In a global context many industries are,

with the benefit of advances in technology, undertaking the

adoption of standardized agreements, processes and proce-

dures in a concerted effort to reduce legal costs, standardize

terms and ease agreement administration. The Co-Ownership

Agreements that CAPL has been providing to industry for 45

years, are examples of transforming what used to be “bespoke

legal services” (i.e. the drafting of complex joint ventures in a

highly regulated industry), into essentially a “legal commod-

ity” (i.e. a standardized, widely accepted, non-negotiated

arrangement available for a low, fixed cost without any

appreciable degradation in quality). Interestingly, the struc-

ture and form of the Co-Ownership Agreements and the PTP

are also ideally suited for the next “big thing” in technology;

namely the introduction of blockchain technology to the

energy industry. Harvard Business Review defines blockchain

as “an open, distributed ledger that can record transactions

between two parties efficiently and in a verifiable and perma-

nent way”, and in Calgary on November 30, 2017 IBM hosted a

“Blockchain for Energy Roundtable” which provided a window

on its potential application to the management and admin-

istration of oil and gas assets. The most interesting aspect

for negotiators and asset administrators will be introduction

of so-called “smart contracts”, which are computer protocols

intended to facilitate, verify, or enforce the negotiation or

In a global context many industries are, with the benefit of advances

in technology, undertaking the adoption of standardized agreements,

processes and procedures in a concerted effort to reduce legal costs,

standardize terms and ease agreement administration.

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performance of a contract. Contractual clauses may be made

partially or fully self-executing, self-enforcing, or both with

a view to reducing the transaction and compliance costs

associated agreement administration. Imagine, if you will, a

version of the industry where all lands, leases and assets are

recorded on a single, common, cloud-based “ledger” where

ownership interests are permanently recorded and verified,

where the terms governing co-ownership (i.e. Co-Ownership

Agreements) are hard-wired into that ledger, and those

ownership interests are readily traded with the push of a

button on the basis of standardized terms agreed to in a front-

end user agreement (i.e. the PTP).

But let’s not get ahead of ourselves - there is one thing

the PTP does not do yet, it does not think for you. Asset deals,

by their nature, have varying degrees of complexity. While a

small purchase and sale of undeveloped Crown land is gener-

ally quite straight forward; other deals, even if their value is

small, may be quite complex. Furthermore, the world is always

changing. The ever-shifting landscape of AER license transfers

is a good example of this change. The PTP Committee made

a conscious decision to avoid addressing transitory current

events and included in the PTP only standard and stable terms

and conditions that will stand the test of time. This means

that transitory issues will need to be addressed in the head

agreement. Finally, in certain instances, the PTP Committee

had to make judgement calls as to what would be in or out of

the PTP. For example, the PTP is generally structured to exclude

most seismic data from the definition of “Assets”. For all of

these reasons it is critical that anyone who uses the PTP do

the following: (i) actually read, understand and become famil-

iar with the PTP; and (ii) think critically about the interplay

between the PTP and the specific assets that are the subject of

the transaction. In sum, the PTP is a very robust document and

well suited for its intended use but it doesn’t do your thinking

for you… at least not yet.

While several pages could be filled with commentary about

the opportunities and possibilities afforded by our technolog-

ical revolution, we have more pressing matters to attend to.

We have recently connected our door locks to the black box

with the blinking red light that sits in the corner of our office

kitchen (which we named “HAL” - that may have been a

mistake). We are presently locked inside the office and when

we asked HAL to open the door he said: “I’m afraid I can’t do

that George”. If you are not too busy when you read this article

we would appreciate if you come over to Suite 760 in Calgary

Place 1; and please bring a crowbar with you if it is not too

much trouble. m

We’ve heard you.New options for the New Year. LandSolutions is pleased to offer bundled service and pricing for both crown dispositions and pipeline maintenance. Land and environment working together. Simple. No billable hour. Value.

Land Acquisition I Environmental Services I Asset Management I Stakeholder Engagement

To learn more, contact LandSolutions today.Calgary I Bentley I Edmonton I Lloydminster I Grande Prairie I Fort St. John I Lampman I Toronto I Fredericton

LandSolutions.ca | 1-866-834-0008

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Board BriefsThe key discussion items at the

CAPL Board of Directors’ Meeting

held December 5, 2017 at the

CAPL office were as follows:

In Attendance Absent GuestsR. Baron N. Millions R. Pitchford Denise Grieve

L. Buzan R. Pettifer Kaitlin Polowski

M. Creguer J. Redmond Jim MacLean

T. Galbreath K. Rennie

M. Graham G. Richardson

G. Miller S. Williams

• Jim MacLean presented the 2017 Property Transfer procedure

for final approval. The document, along with the redline

versions, matrix of changes, etc. are to be posted on the

website for membership in December. Jim advised that CAPL

should officially contact the AER and propose a change to

Bulletin 2017-13 to make the approval of the transaction

run smoother and not leave A&D transactions in-trust while

the AER approves well transfers to the new owners. Jim also

mentioned the update to the new PSSA is basically done. It will

be administered once the PJVA Board is done reviewing it. Jim

added that CAPL may want to align with PJVA on the CO&O.

• Kristin Rennie, Finance, presented a Treasurer’s Report as

at November 30, 2017, showing CAPL investments totalling

$349,039.22 Canadian along with a cash balance of $340,634.21

Canadian for a total of $689,967.43. The CAPL Scholarship

Fund has a balance of $237,261.41 at the end of November

30, 2017. There were no transfers made since the last report.

Kristin noted that membership fees had started arriving in

November. Kristin also mentioned she is looking at subletting

unused office space.

• In Rob Pitchford’s absence, Robyn Baron presented the

Board with a motion to endorse the recommendation of the

Membership Committee to approve nine candidates’ change

from Active Membership to Senior Membership in the Canadian

Association of Petroleum Landmen, which were approved.

• Tim Galbreath, Business Development, informed the Board

he had a meeting with the Tenure Advisory Committee.

The ETS system is being updated to provide for holders of

securities to register their claims online.

• Glenn Miller, Business Development, provided the following

update:

• The Kinder Morgan project will be approximately 980km of

new pipeline, 193km of reactivated pipeline and will cost

approximately $7.4 billion.

• This will create many long-term and short-term jobs.

• The combined impact on government revenue will be $46.7

billion with Alberta receiving $19.4 billion.

• Gary Richardson, Public Relations, had the following updates:

• MRU held a career fair, “World of Choices”, that Deb

Degenstein and Moya Little attended with the CAPL booth.

• The Government Committee has had a revamp and is now

the Energy In Action committee.

• Gary tried following up about the ACO letter, Larry informed

he received a phone call response and would like to get

Richard Feehan involved.

• Gary attended the SAIT EAMS night and received some

resumes from summer students.

• Shaun Williams, Technology, presented a point of sale system

that could be used at General Meetings and other social

events. The Square is a small device that plugs into a cell

phone or tablet and would be directly connected to CAPL’s

bank account. The system has the potential to replace the

current in-office POS system. Shaun also informed that the

caplconference.ca domain will be shut down and the confer-

ence websites will be under landman.ca going forward. The

migration to AWS is going well and will be fully migrated

and live soon. Also, Hurland & Associates signed up for web

advertising. Web advertising has the potential to create

$24,000 in revenue.

• Marah Graham, Communications, reported based on feedback,

advertisers want to go digital with The Negotiator which is

already done with an average of 400-600 clicks per magazine.

Marah brought forward the question do we want to start

charging people who opt to get the hard copy along with their

complimentary digital version.

• Marah also provided the following update on the 2018 CAPL

Conference:

• The Committee is getting phenomenal feedback and is way

ahead of schedule.

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• They have procured a Conference App that is the same cost

as the 2017 Conference App.

• They are working with Double Tree Hotel on overflow space

that will be no cost to CAPL.

• Secured group discounts with Air Canada and WestJet.

• Have had serious queries on sponsorship; sponsorship pack-

ages are just getting built.

• Working with Tech Committee to get website up.

• Janice Redmond, Social, updated the Board with a 2018

calendar of events to replace what would have been the

General Meetings. Janice said she is already getting interest

from potential sponsors. Janice wants to team up with the

Education Committee to offer short educational discussions/

presentations over lunch hours to utilize the CAPL office.

Janice is looking for more committee members to help with

new upcoming Social events. Janice also mentioned that CAPL

should have a volunteer appreciation event that could take

place in the office.

• Rob Pettifer, FAM, had the following update:

• The Agri-Trade in Red Deer was a successful event with

improvement in booth location and attendance from last

year.

• Olds College currently has 9 students enrolled. They are

hopeful to get 20 students per year.

• There are currently 2 more students looking for mentorship.

The Surface Land Management program may not be imple-

mented until 2019.

• Chris Sillito has been to an IDA session and mentioned

that rights bearing vs stakeholder notification seems to be

a struggle.

• The ACO and AER continue to struggle with roles and

responsibilities which wholly impact industry during its

winter drilling season.

• Robyn Baron, Education, advised the Education Committee is

going through the course list for 2018 to update and revitalize

some courses. The Committee has been working with BC,

AB and SK First Nations government bodies about holding

courses and/or lunch and learns. Also a possibility, a geology

tour to Canmore, similar to the 2017 Conference geology tour.

The Committee is looking at going green in 2018 and will be

sending materials electronically for students to print off them-

selves or bring a laptop to the course.

• Glenn Miller, Professionalism, had the following updates:

• Glenn sent an article to The Negotiator for the January issue.

It will include flowcharts on how to obtain designations.

• Working on getting the Professionalism manual updates.

• Had a very positive conference call with CAPP on December

4, 2017. CAPP will be publishing the article written for the

newsletter next week. The newsletter reaches approxi-

mately 2,200 CAPP members.

• Noel Millions had the following updates on the CAPL Office:

• Noel informed the Board that he will be conducting office

staff reviews later in the week.

• There will be a new contract worker starting in the office

one day a week on finance reporting. This will help free up

Karin to take on some of Denise’s responsibilities.

• Larry Buzan, President, reminded the Board of the following:

• The next General Meeting is the Christmas Networking

Night on December 14, 2017 at The Palliser.

• The next Board of Directors’ Meeting will be held on Tuesday,

January 9, 2018 and will be held at the CAPL office.

• Meeting adjourned. m

Shaun Williams

Secretary/Director, Technology

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The Negotiator’s Messages From the Board

Public RelationsWHAT CAN WE SAY ABOUT THE PAST YEAR? WITH ALL THAT’S GOING ON IN THE WORLD, CANADA AND ALBERTA, THE WORK OF THE PR COMMITTEES SEEM TO HARDLY WARRANT NOTICE.

But lest you not give it a second thought please reconsider.

Our work has not gone unnoticed. PR committees continue to

advance the CAPL name. We have gotten in front of the Provincial

government, regulators, public schools, colleges and universities.

The CAPL booth made the rounds of several events and

we’ve made steps to get in front of more people, especially

schools. Once again thanks to go to the volunteers who have

made this possible. Particularly to Calynda Evans and Melissa

Sadal for opening new opportunities and keeping old ones

open. And thanks to the many folks who made the journey up

the Queen’s highway for the Red Deer Agri-Trade organized

by Cori Lundquist on behalf of the FAM committee and Chris

Koichopolis for toting the booth. We were again able to partici-

pate in the Junior Achievement of Southern Alberta’s career fair

for public school students. Thanks to Deb Degenstein and Moya

Little for supporting the students at this event. Your participa-

tion is much appreciated by CAPL and the JA of Southern Alberta.

It wouldn’t be a PR committee without providing the public with

some swag which is the fine responsibility of Nadine Ukueke

and the store was amply replenished this year with some great

craft while holding the line on expenses. We are all conscious of

our costs these days. Thanks Nadine. CAPL members attended

SAIT’s Energy Asset Management Industry night, another career

opportunity for the students. In the spring I was invited for the

second time to be one of the judges at SAIT’s annual capstone

project review. Several very impressive and ambitious projects

and worthwhile prizes.

Due to the continuing economic downturn PR lost some volun-

teers. An unfortunate situation beyond our control. Despite this

we continued to get good support for the Alberta Government

committee which, thankfully, was rebranded to the Energy in Action

committee. The former was a restart of a group that had its genesis

shortly after the provincial election in 2015 when we were faced

with finding new friends among the NDP. Interesting how a couple

of years in office has awakened their interest in the energy industry.

Thank you to Nikki Sitch who volunteered to chair the Energy in

Action group, fostered the new name – a much more palatable and

focused title – and has forged new efforts to bring issues forward

to the attention of regulators and government officials. Now you

should understand that meeting with the GoA can be challenging

as invitations are often given on short notice. This compromises

our opportunity to respond with volunteers who can attend and

provide informed dialogue. Yet several times this year we’ve met

this challenge. To date, we have managed to find ourselves in front of

several provincial regulatory and government reviews. Not the least

of which is the very relevant and important consultation currently

ongoing with the GoA and the ACO office regarding First Nations

consultation. Likewise, there are discussions with the Ministry of

Energy regarding mineral tenure and the AER on property trans-

fers, reclamation and wetlands policy that will certainly result in

changes that affect business in the province. Indeed, the AER has

already acted with Bulletin 2017-13, Changes to Process for Transfer

Application Decisions, that is a shore up of their need to manage

the liability quotient and the deficit the Orphan Well Fund is facing

considering the RedWater decisions. We cannot underestimate

the gravity of the situation vis-a-vis the LLR, Redwater and what

direction the AER might take to alleviate the situation. Peculiar and

ironic this story, with its potential financial and political impact, has

avoided extensive media coverage. Or maybe that’s just the natural

obfuscation talents of government. Better left dormant lest some

media outlets brand the energy industry master of the dark arts in

contriving with government to put one over on the unsuspecting

public to avoid extensive abandonment and reclamation responsi-

bilities. A preposterous situation should it develop.

We have found through the Energy in Action committee, the

necessity to build strength in numbers and as a result have allied

with Canada Action and are working to associate with other

groups, like the Canadian Association of Drilling Contractors

(CAODC) and EPAC to provide more vocal support for the energy

industry while it continues to encounter setbacks. The cancel-

lation of Energy East by TransCanada and Progress Energy

Resources Pacific Northwest project was a disappointment.

These unfortunate developments reflect a position taken by the

federal government. A policy alternating between appeasement

to certain politically active groups and conditional permission

to certain energy projects. There must have been some relief on

parliament hill when these projects were pulled by the propo-

nents. The need to make sensible socio-economic decisions at

the federal level is compromised by lobby groups who helped

orchestrate the Liberals’ win two years ago. It is a balance that

is lately more tenuous than ever. Even more reason to redouble

our efforts and consult with governments and regulators and

demonstrate to all Canadians the benefits derived from provin-

cial and federal coffers via transfer payments.

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I don’t think any committee functions well without the dedi-

cated support of the office staff so without further ado I’d like to

acknowledge Denise Grieve, Karin Steers and Kaitlin Polowski

and all the work they do to keep the wheels turning in the

background.

Public Relations volunteers opened doors for consultation

with government and regulators and advanced the CAPL name

in communities. Still there is more to do. Public Relations would

like to extend a heartfelt thank you to all our volunteers and take

the opportunity to welcome new members. m

Gary Richardson

Director, Public Relations

Business Development – British ColumbiaAS I FLY OVER THE ROCKY MOUNTAINS INTO BC’S INTE-RIOR, I’M REMINDED JUST HOW BEAUTIFUL BC IS and

how an oil and gas industry can

coexist with such beauty while still

bringing benefits to British Columbians.

I’ve had the opportunity to consult for Kinder Morgan on

their Trans Mountain Expansion Project for just over a year

now, shortly after they received the federal National Energy

Board’s (“NEB”) approval in November 2016. Many of you

continue to hear this project in the news on a weekly basis

that continues to attract media attention. While the company

has received the federal permit to proceed with the project,

Trans Mountain is working expeditiously to meet the 157

conditions that were outlined by the NEB and also obtain

the outstanding permits from the BC government. The Trans

Mountain Expansion Project team has grown substantially

since I started working on the project and I’ve never seen a

team that is so committed to getting this project built, which

will bring great benefits to our industry and all Canadians.

A few key facts about the project:

• It’s expected to cost approximately $7.4 billion

• It will create benefits including new short- and long-term jobs,

job-related training opportunities and increases in taxes collected

by all three levels of government

• During construction, the equivalent of 15,000 people will be

working on the pipeline expansion. The expansion will also

create the equivalent of 37,000 direct, indirect and induced

jobs per year during operations

• The combined impact on government revenue for construc-

tion and the first 20 years of expanded operations is $46.7

billion; revenues that can be used for public services such as

health care and education – British Columbia receives $5.7

billion, Alberta receives $19.4 billion and the rest of Canada

receives $21.6 billion

• It will be approximately 980 km of new pipeline

• 73 per cent of the route will use the existing right-of-way, 16

per cent will follow other linear infrastructure such as tele-

communications, Hydro or highways and 11 per cent will be

new right-of-way

• It will include 193 km of reactivated pipeline

• 12 new pump stations will be built

• 19 new tanks will be added to the existing storage terminals in

Burnaby (14), Sumas (1) and Edmonton (4)

• Three new berths will be built at Westridge Marine Terminal in

Burnaby. Once the new berths are completed and in service, the

number of tankers loaded at the Westridge Marine Terminal

could increase to approximately 34 per month.

• The existing pipeline will carry refined products, synthetic

crude oils, and light crude oils with the capability for heavy

crude oils

• The new twin pipeline will carry heavier oils with the capability

for transporting light crude oils

The original Trans Mountain Pipeline was built in 1953

and continues to operate safely today. The expansion is essentially

a twinning of this existing 1,150-kilometre pipeline between

Strathcona County (near Edmonton), Alberta and Burnaby, BC.

It will create a pipeline system with the nominal capacity of the

system going from 300,000 barrels per day to 890,000 barrels per

day. This is a great project which will benefit all of Canada.

Other initiatives that your CAPL Board is pursuing in BC:

The spring election in BC brought about a new NDP Coalition

Government which no one was expecting. We continue to get more

clarity on the new vision of this new government. The new Minister

for Energy, Mines and Petroleum Resources, is Michelle Mungall

from Nelson, BC. We have heard that the new BC Government is

pro-industry and are currently focused on competitiveness with all

the loss of LNG projects and also hydraulic fracturing.

We’ve recently had meetings this fall with the BC Government

Petroleum and Tenure Branch, and there appears to be a signifi-

cant focus on Land Use Initiatives/Policy (i.e.: Agricultural Land

Reserve use, Planning, Water, Dams, etc.) and an undercurrent

to revitalization of the Environmental Assessment Office. We

will continue to keep apprised of these updates and in touch

with our contacts to ensure we stay ahead of future pinch

points, as BC continues to be very important for our industry

and our members, as well as tide water access for our oil and

gas industry. m

Glenn Miller, PSL

Director, Business Development, BC

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Myth Busters

An Update from CAPL Finance THERE HAVE BEEN MANY UPDATES AND CONVERSA-TIONS THROUGHOUT OUR ASSOCIATION REGARDING THE FINANCIAL VIABILITY OF THE CAPL GO FORWARD. As with all games of telephone, some parts are rooted in fact and

others… not so much.

In 2016, CAPL withdrew $450,000 from savings to float the

day-to-day operational expenses in the face of rapidly falling

revenue. In 2017, we lived within cash flow, and even added a

bit to the pot. More details will follow as we move through year-

end financials and audit on exactly how much that amount was

but credit should be given to the 2017 Conference Committee

for $37,000 profit and The Negotiator, our two cash positive port-

folios. Figure 1 (cash flow summary) shows some very positive

news, with austerity measures paying off in 2017 but we are not

out of the woods yet. For sustainability, we now begin to work

towards replenishing the savings account to support a healthy

financial future.

Myth #1: Networking Events Cost CAPL Nothing so Members Should Not PayFACT: CAPL pays a fee to block out exclusive access to

venues. This fee is not related to a minimum spend generally.

Our March 2017 networking event was the first paid networking

CAPL Cash Flow2016–2017

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function, with booking costs of $5,652. Ticket sales fully covered

the expenses and a profit of $4,062 was made. It was the only

self-funding meeting of 2017. In 2016, CAPL members supported

$101,543 of general meetings expenses after ticket sales offsets.

Myth #2: The Negotiator is a Money Losing Venture and Should be TurfedFACT: The Negotiator has always been a revenue source for CAPL,

in addition to an educational resource and cornerstone of

communication for members. In 2017, The Negotiator contributed

over $20,000 of profit to the CAPL.

Myth #3: Education Makes Money Hand-Over-FistFACT: The Education portfolio has traditionally been a revenue

source for CAPL. Since 2014, attendance at courses has been

in progressive decline, with more and more courses being

cancelled. Each committee and CAPL event bears its share of

CAPL fixed costs, and the Ed Committee carries over $250,000 of

office expenses annually, the largest share of all portfolios by far.

Inclusive of the office expense, as of November 2017, the commit-

tee ran a deficit of $27,000.

Myth #4: Our Rent is Killing UsFACT: No myth busting on this one, it is a fact. For 2017, rent

and office costs were ~ 37% of annual expenditures. Our tenancy

agreement is iron-clad and we are committed to the space until

2030. In 2017, a rent reduction was negotiated to save $120,000

over 2017 and 2018. Office expenses include our three amazing

CAPL office staff, fixed rent costs and variable opex expenses

in the building. For 2018, changes in the office include Denise’s

move to part-time and the addition of a consulting accountant.

What you as members can do:• Join a committee with a focus on revenue creation (The

Negotiator, Education, Conference).

• Every event needs a budget approved by the Board in advance

and a follow up on revenue/expenses the month after.

Every volunteer can help by ensuring all revenues and expenses

are settled as soon as possible.

• Get out to meetings!

• Provide feedback on any cost savings initiatives and revenue source

generation you may have to me directly or any BOD member. m

Sincerely,

Kristin Rennie, Finance Director, krennie@rife.com, 403-663-2595

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CAPL 2018 ConferenceOUR WESTERN CANADIAN ENERGY BUSI-NESS IS DEEPLY ROOTED IN THE PROVINCE OF SASKATCHEWAN AND ITS CAPITAL CITY OF REGINA. The Queen City, named after Queen Victoria, is a bustling hub of

oil and gas government and administration but with its humble

population of just over 200,000 people, the city still maintains

a small town feel. Additionally, you do not have to travel far to

find yourself right in the heart of Canadian oil and gas opera-

tions as some of Western Canada’s largest oil fields are right on

Regina’s doorstep.

When we started brainstorming locations for the 2018 CAPL

Conference, Regina quickly emerged as a frontrunner. The CAPL

Board and the 2018 Conference Committee were focused on find-

ing a location that was proximal to Calgary, and one that reduced

the required time away from the office. Regina is an accessible

location with daily flights from multiple airlines and it is also

reachable via car or bus. Our 2018 host city offers a phenomenal

hospitality scene full of great places to eat, drink, and be enter-

tained, and the people of Regina are some of the friendliest you

will ever meet.

Our host hotel, The Hotel Saskatchewan, boasts a level of

quality that is second to none. In 2016, the “CPR Style” hotel

underwent a $12MM, top to bottom renovation, and the layout

and location of the hotel provide the perfect combination for our

diverse program. This historical building, built in the late 1920’s,

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is sure to offer a memorable backdrop for our first conference in

the province of Saskatchewan in 34 years.

The 2017 CAPL Conference in Calgary left us with big shoes to fill

when it comes to the quality of our program. My team has embraced

this challenge and I am extremely excited about the material

that they are developing with their sub-committees for 2018.

Marilyn Gosling – Activities

Jeff Rideout – Operations

Steve Brisebois – Program

Marah Graham – Marketing

Kelly Pypers – Finance

Many companies are already enquiring about securing sponsor-

ship for Regina. Marah Graham (2018 Conference Marketing Chair)

and her team are currently

speaking with prospective

sponsors. Please reach out

to her if you would like

more information on 2018

sponsorship opportunities.

Registration will kick

off in this spring. We look

forward to seeing you this

September as we celebrate

“Growing Possibilities,

Regina 2018”. m

Wayne Ellis

2018 CAPL Conference Chair

GROWING POSSIBILITIESREGINA 2018

CAPL Conference

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Roster UpdatesNew MembersThe following members were approved to change their

membership status from Active to Senior by a Motion on

December 5, 2017:

Erik DeWiel, P.Land Ray Heptonstall, P.Land

Glen Malo Brian Murray

Kofi Prah Ron Radies

Aldo Villani Andrew Weldon

Ross Willison m

On the MoveJames Armstrong, P.Land Nexen Energy ULC

to Heritage Royalty

Stacey Berube RMP Energy Inc.

to Iron Bridge Resources Inc.

Mary Lynne Bryan Independent

to Ridgeback Resources Inc.

Justin Calon Encana Corporation

to Lynx Energy ULC

Mark Darrah Independent

To Painted Pony Energy Ltd.

Mark Frankiw Cenovus Energy Inc.

To IPC Alberta Ltd.

Michael Ftichar Independent

to City of Medicine Hat

Jerry Hagen RPS HMA

to Moab Resources Inc.

Kristy Halat-Skulsky Pengrowth Energy Corporation

to Independent

Blaine Ham Pengrowth Energy Corporation

to Raging River Exploration Inc.

Justin Kangarloo Cenovus Energy Inc.

To Torxen Energy Ltd

Darryl Leason Cenovus Energy Inc.

to Torxen Energy Ltd.

Larry Lefaivre Westfour Oil & Gas Ltd.

To 858438 Alberta Ltd.

Jeff Leitl Independent

to Kicking Horse Oil & Gas Ltd.

Nathan MacBey Monterey Bay Exploration Ltd.

to Independent

Rhonda Martin RMP Energy Inc.

to Iron Bridge Resources Inc.

Bruce McFarlane RMP Energy Inc.

to Iron Bridge Resources Inc.

Lynn Peacock Independent

to Pembina Pipeline Corporation

Rajesh Pillai Independent

To Canadian Natural Resources Limited

Lori Potts Independent

To Jaytara Consulting Ltd.

Deborah Smith Ember Resources Inc.

To Independent

Ryan Smith Scott Land & Lease Ltd.

to MOI Resources Ltd.

Jeremy Thornborough Independent

to Cor4 Oil Corp.

Kim Urban, P.Land Urban Consulting Corp.

to Velvet Energy Ltd.

Patrick Vaughan Postell Energy Co. Ltd.

to Independent

Kari Webb Fortuna Energy Inc.

To Independentm

In MemoriamIt is with deepest sadness that the CAPL announces the pass-

ing of Ken Murphy on December 6, 2017 at the age of 72. He is

survived by his wife Judy and his children Kelly, Kevin (Jackie),

Janelle and sisters Shauna (Gary) and Judy, along with two

granddaughters Mischa and Emma. Ken was predeceased by his

parents Bill and Peg Murphy.

Ken was the life of the party and lit up the room with his

smile, jokes and his strong wit. He was a highly respected

and professional business man in the oil industry and a CAPL

Member since 1968.

Ken’s parting words to all “Thanks for the Entertainment”.

Ken enriched the lives of those who knew him and he will

be truly missed by all of those that had the opportunity to

know him. m

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2018 CAPL Curling Bonspiel IF YOU HAVE NOT REGISTERED FOR THIS YEAR’S 41ST ANNUAL CAPL CURLING BONSPIEL, then please go to the

CAPL website at landman.ca, as space is limited. This event will

be held at the Calgary Winter Club on Thursday, April 5, 2018.

NEW TIME! Registration will now begin at 2:30 p.m. until 3:00

p.m., as we are allowing people to work the majority of that day.

The registration time will provide everyone with an opportunity

to network with one another before the first rock is thrown.

Curling will start at 3:00 p.m. sharp and finish around 6:00 p.m.

At that time, cocktails, some more networking and a fabulous dinner

buffet around 6:15 p.m. will be provided. After dinner, we will hand

out some prizes before we close out the day by 7:00 p.m. This is a

fun event, geared towards networking with your fellow landmen, so

previous curling experience is not necessary.

The Entry fee is $120.00 for CAPL members and $150.00 for

non-CAPL members (GST not included). If you would like to sponsor

this event, the cost is $300, which includes one free curling entry.

Our online curling registration deadline is Tuesday, March 27,

2018. This is a first come first serve event, so if this event sells

out, we will place you on the waiting list and contact you if an

opening becomes available.

If you require further information, or if your company is still

interested in sponsoring this event, please contact one of the

committee members listed below:

Kevin Koopman (403) 807-1992 Rob Heynen (403) 930-1053

Richard Forrester (403) 930-1052 Justin Rockafellow (587) 293-4065

Wayne Ellis (403) 604-0309 Bryan Edstrom (403) 462-4634

Tasha Anderson (403) 767-6474 Mike Twomey (587) 393-8655

Please complete your entries on the CAPL website or call one of us

if you need help. We have sold out this event the past nine years,

so let’s keep the streak going. We look forward to seeing all of you

on Thursday, April 5, 2018. m

The 2018 CAPL Curling Committee

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February 6 Tuesday Board Meeting 6 Tuesday Saskatchewan Crown Land Sale 7 Wednesday Alberta Crown Land Sale 14 Wednesday Manitoba Crown Land Sale 19 Monday Family Day 21 Wednesday British Columbia Crown Land Sale m

March 6 Tuesday Board Meeting 7 Wednesday Alberta Crown Land Sale 15 Thursday Networking Night 21 Wednesday Alberta Crown Land Sale 21 Wednesday British Columbia Crown Land Sale 30 Friday Good Friday m

CAPL Calendar of Events

The Social Calendar

EVENT DATE TIME LOCATIONCOST

(INCLUDING GST)CONTACT NAME CONTACT PHONE CONTACT EMAIL

REGISTRATION DEADLINE

Networking Night 15-Mar-18 5:00 PM Ceili’s on Fourth $26.25 Karin Steers (403) 237-6635 ksteers@landman.ca 9-Mar-18

2017 Annual CAPL Curling

Bonspiel5-Apr-18 2:30 PM Calgary Winter Club

Members $126.00 Non-Members $157.50

Kevin Koopman (403) 930-3313 KevinKoopman@synergyland.ca 5-Apr-18

CAPL 20th Anniversary 2018

CAPL Squash Tournament

20-Apr-18 1:00 PM Glencoe Club $89.25 Travis Monk (403) 930-1751 tmonk@spartanenergy.ca 19-Apr-18

Elections/Merit Awards Dinner

26-Apr-18 4:30 PM The Westin HotelMembers $36.75

Non-Members $89.25 Student $36.75

Karin Steers Kaitlin Polowski

(403) 237-6635ksteers@landman.ca

reception@landman.ca20-Apr-18

* Information and online registration: General Meetings: http://landman.ca/events/general-meetings/ Social: http://landman.ca/events/social-events/

Networking Night March 15, 2018

Cocktails: 5:00 p.m.

Where: Ceili’s on Fourth

351 4 Avenue S.W.

Cost: $26.25

To register, please go the event tab on the CAPL website.

Deadline for registration: Friday, March 9, 2018. m

http://www.landman.ca/res

ources/volunteer-o

pportunities/

YOURAD

HEREInterested in Advertising

with The Negotiator?

Darcy Cosgrove, Advertising Editor, (403) 509-6439Hallie MacCuaig, Advertising Editor, (587) 476-3711

reception@landman.ca

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