​On June 20, 2016, the Alberta Energy Regulator (AER) issued Bulletin 2016-16, available here, in response to the decision in Redwater Energy Corporation (Re).

BLG had previously posted a summary of the Redwater decision (available here) and noted that the Redwater decision had implications for creditors and it would likely have a positive influence on the ability of oil and gas companies to attract debt financing.

Now, in response to the Redwater decision, the AER has implemented interim rules that will increase liability management ratios (LMR) from 1.0 to 2.0. For lenders to the energy industry, the increase to the LMR requirement should be considered in reviewing the creditworthiness of a current or potential licence holder. This increase will likely also impact certain rights under CAPL Operating Procedure as transferees of licences, approvals and permits will need to meet the increased LMR requirement.