The Magazine of the Canadian Association of Petroleum Landmen January rights reversion. Look What s Surfaced!

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1 THE NEGOTIATOR The Magazine of the Canadian Association of Petroleum Landmen January 2009 Alberta shallow rights reversion The ERCB LLR Trap Am I My Brother s LLR Keeper? Look What s Surfaced! Land Agent Licensing Bill 9 Update 2009 CAPL Conference Main Street To Bay Street: Negotiating The Road Ahead

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3 SATURDAY, MAY 2, 2009 THE WESTIN CALGARY THE NEGOTIATOR The Magazine of the Canadian Association of Petroleum Landmen Senior Editorial Board Director of Communications Sue Klassen [ph] Advertising Editors Clark Drader [ph] Bradley Campbell [ph] Coordinating Editor Tom Hunter [ph] Feature Content Editor Candace Kendrick [ph] Regular Content Editor Jared Frese [ph] Social Content Editor Mark Horne [ph] Editorial Committee Kellie Stante [ph] Mary Grant [ph] Jennifer Ho [ph] Mark Innes [ph] Claire Jenkins [ph] John Knox [ph] Lindsey Lovse [ph] Suki Sahota [ph] Joe Swift [ph] Design and Production Rachel Hershfield, Folio Publication Design Printing McAra Printing Submissions For information regarding submission of articles, please contact a member of our Senior Editorial Board. Disclaimer All articles printed under an author s name represent the views of the author; publication neither implies approval of the opinions expressed, nor accuracy of the facts stated. Advertising For information, please contact Clark Drader ( ) or Bradley Campbell ( ). No endorsement or sponsorship by the Canadian Association of Petroleum Landmen is suggested or implied. The contents of this publication may not be reproduced either in part or in full without the consent of the publisher CAPL Board of Directors President Robert Telford, P.Land [ph] Vice-President Ken Gummo, P.Land [ph] Director, Business Development Frank Terner, P.Land [ph] Director, Communications Sue Klassen [ph] Director, Education Len Moriarity, P.Land [ph] Director, Field Management Noel Millions [ph] Director, Finance Dalton Dalik, P.Land [ph] Director, Member Services Margaret Ariss [ph] Director, Professionalism Robyn Van den Bon, P.Land [ph] Director, Public Relations Robin Thorsen [ph] Director, Technology Jason Tweten [ph] Secretary/Director, Social James Condon, P.Land [ph] Past President Cindy Rutherford, P.Land [ph] Suite 350, Avenue S.W. Calgary, Alberta T2P 3L5 [ph] [fax] THE NEGOTIATOR Features January st CAPL Annual Conference Kevin Burke-Gaffney 4 Alberta Shallow Rights Reversion 6 Frequently Asked Questions: Shallow Rights Reversion 9 The ERCB LLR Trap Paul Negenman In Every Issue 14 Board Briefs 17 Message from the Executive 19 Get Smart 21 Roster Updates 28 CAPL Calendar of Events 28 January Meeting 28 February Meeting Also in this issue 24 Look What s Surfaced an evening of ART for all the senses CAPL Squash Tournament 27 Olds College Update 0 9 C A P L P R E S I D E N T S S P R I N G B Betty Cousins Denise Grieve Irene Krickhan Karin Steers bcousins@landman.ca dgrieve@landman.ca ikrickhan@landman.ca ksteers@landman.ca

4 31st CAPL Annual Conference September 20 23, 2009 The Fairmont Royal York, Toronto, Ontario Main Street To Bay Street: Negotiating The Road Ahead with over 2.5 million residents. It is the fifth most populous municipality in North America with 2 Believe it or not, the CAPL Annual Conference has only been held in Toronto once before and that was in years later the 2009 Conference Committee felt it was time to return. Located on the north-western shore of Lake Ontario, Toronto is the largest city in Canada almost six million people living within the Greater Toronto Area. Because of the city s low crime rates, clean environment, generally high standard of living, and friendlier attitudes to diversity, Toronto is consistently rated as one of the world s most livable cities. Defining the Toronto skyline is the CN Tower which is the world s second tallest freestanding written BY Kevin Burke-Gaffney, P.Land 2009 Conference Chair

5 2009 Conference Organizing Committee with the Stanley Cup at the Hockey Hall of Fame in Toronto structure and the tallest tower in the western hemisphere surpassing the Sears Tower in Chicago. Close by is the Financial District, home to Toronto s high concentration of banks and brokerage firms located on Bay Street. Less than a block away on Front Street immediately across the street from Union Station is The Fairmont Royal York, the host hotel and conference center for the 2009 CAPL Conference. Generally considered the economic capital of Canada, Toronto is viewed as a global city and one of the top financial cities in the world. The Toronto Stock Exchange is the third largest stock exchange in North America and seventh largest in the world based on market capitalization. The TSX Group, which owns and operates Canada s two major stock exchanges, the Toronto Stock Exchange and the TSX Venture Exchange, is a cornerstone of the Canadian financial system and is at the center of Canada s equity capital market. The TSX Group is key to the success for many of the CAPL member oil and gas companies whether it s by providing access to public equity capital for the senior market or by providing emerging growth companies and entrepreneurs with access to public and private venture financing. Hence, the rationale for our 2009 Conference theme, Main Street to Bay Street Negotiating the Road Ahead. Like every previous CAPL Conference, the success of the 2009 Conference will ultimately be judged on the strength of its program. The current global economic crisis (which shows no signs of abating anytime soon) should provide for some stimulating and educational discussion in Toronto. Needless to say there are plenty of things to do in Toronto. Whether it s antiquing or visiting the recently renovated Royal Ontario Museum, watching theatre and other performing arts, ferrying to the Toronto Islands, walking the Distillery District, shopping in the Yorkville neighborhood, cheering on one of Toronto s six major league sports teams, or eating at Greektown on the Danforth, the New York of Canada never sleeps! Those will be the challenges faced by our Activities Committee as they incorporate the very best of what Toronto has to offer into the networking events and activities. For the first time in our Association s Conference history, the 2009 Conference Organizing Committee has aligned itself with an industry-leading performance improvement firm to help provide what we hope will be the very best Annual Conference ever. In the coming months between now and July 2009, The Negotiator and CAPL website will feature regular updates from our Conference Committees concerning program speakers, networking events, sponsorship opportunities and administrative details. Don t miss the 2009 Conference, Main Street To Bay Street Negotiating The Road Ahead. I look forward to seeing you all in Toronto, September 20 23, m 2009 Conference Chairs Kevin Burke-Gaffney, P.Land Geoff Cain Carla Neumeier Mike Galvin Peter Parkinson Laura Brick Richard Fulton, P.Land Conference Chair Activities Chair Administration Chair finance Chair Marketing Co-Chair Marketing Co-Chair Program Chair

6 Alberta Shallow Rights Reversion 4 Shallow rights reversion (SRR) was announced in Alberta s New Royalty Framework in October Work began on SRR in June CAPL members have played a key role in the process to date and will continue to do so as the processes are finalized. There are CAPL members on both the Shallow Rights Reversion Working Group and Communications team. As SRR is a significant change to the way business is done today, the Department of Energy has added the changes to the Mines and Minerals Act rather than the Petroleum and Natural Gas (P&NG) Tenure Regulations. Changes to the P&NG Tenure Regulations may also be required and will take place over the next year or more (prior to any SRR occurring). written BY Angela St. Jean Manager, Continuations P&NG Tenure Operations Alberta Department of Energy

7 The Department of Energy expects to start serving notices in 2011 on the oldest agreements first, starting with 1,000 notices and eventually increasing to 5,000 notices per year. The notices will be served throughout the year. The intent of SRR is to encourage increased production from up-hole zones by severing non-productive shallow rights and to fill existing pipeline capacity. SRR refers to the severance of the petroleum and natural gas rights above the top of the shallowest productive zone in an agreement at continuation. SRR will be implemented along with the existing deeper rights reversion. Rights between the top of the shallowest productive zone and the base of the deepest productive zone will remain in the agreement after continuation. In some cases, this may result in zone-specific continuation if there is only one productive zone. All agreements purchased after January 1, 2009, will be subject to SRR at continuation. The application process in the Petroleum and Natural Gas Tenure Regulation will apply. The first severance for these agreements will occur in All existing agreements will be subject to SRR over a period of time, after a SRR notice has been served. Agreements that are already continuing pursuant to Section 15 of the P&NG Tenure Regulation will be served a SRR notice over a period of time and it will be based on vintage. Agreements that exist prior to January 1, 2009, but have not been continued yet, will only be severed based on deeper rights reversion at the time of continuation. SRR will only apply to these agreements once a SRR notice has been served and it will also be based on vintage. The Department of Energy will issue an information letter with a schedule indicating which vintage of agreements will be served notices during the following two years. SRR notices are served under the Mines and Minerals Act (Section 82). The Department of Energy expects to start serving notices in 2011 on the oldest agreements first, starting with 1,000 notices and eventually increasing to 5,000 notices per year. The notices will be served throughout the year. This project will take several years to complete and may change over time. A SRR notice will be for three years and will advise what the shallowest productive zone is based on the public records. Shallow rights severance will take place at the expiry of the notice period. If there is a shallower producing zone than listed in the notice, an application can be made to the Department of Energy. If the Department of Energy disagrees with your application, you will be able to request a review of the decision. There is no provision for a late application. Section 17 (potential) of the P&NG Tenure Regulation will not apply after a SRR notice expires. Section 16 (qualifying well) will also not apply; however, an extension of the notice period under Section 82.1 (6) of the Mines and Minerals Act can be requested for qualifying wells. This is different than your current practices and will be different than applications for new agreements purchased after January 1, The Department of Energy continues to work towards finalizing decisions on SRR policy, including rules on commingling, the application of shallow rights within units, extension criteria and the schedule of agreements subject to SRR. The Department of Energy will provide information on these decisions as they are made. m L A N D W E S T R E S O U R C E S E R V I C E S L T D. With over a decade of exceptional commitment to service, Landwest Resources Ltd. is passionate about consistently exceeding your expectations. From surface lease and right of way acquisitions to public consultation and environmental field reports for crown or freehold lands, Landwest prides itself on achieving your objectives efficiently, accurately and always with public consideration in mind. Our dedicated team of surface land experts guarantees your project will be developed, implemented and managed according to your expectations. Our mission with every project we undertake? 100% client satisfaction and a reputation the public will embrace. Landwest Resources Services Ltd. Customized. Committed. Caring. For more information, call us at or visit us online at 5

8 Frequently Asked Questions: Shallow Rights Reversion 6 Shallow Rights Reversion What is shallow rights reversion? Shallow rights reversion (SRR) means that the petroleum and natural gas rights above the top of the shallowest productive zone in an agreement will be severed from the agreement at continuation. The depth of the shallowest zone will depend on the rights in your existing agreement i.e. shallow may be shallow, or deep. This is in addition to the existing deeper rights reversion. Rights between the top of the shallowest productive zone and the base of the deepest productive zone will remain in the agreement. Why implement shallow rights reversion? To encourage increased production from up-hole zones by severing non-productive shallow rights and to fill existing pipeline capacity. There is an estimated 44 tcf of potential reserves to be produced. Economics and cost to test shallow zones Will shallow rights reversion force a company to shut down their well in order to conduct a test in a shallow zone? Each company will make their own decision on how to prove their shallow rights. Shallow rights can be proven in a number of ways including: use of geological mapping to prove the shallowest productive zone unitized zones payment of offset compensation proving productivity with a good gas test or production either by re-entering an existing wellbore or drilling a new well Will the Department of Energy consider relaxing the continuation rules for shallow rights? The same continuation rules will apply for shallow zones as currently apply to deeper zones. The department will continue to review all tenure policies on a regular basis and amend them if appropriate. Surface Footprint Will SRR significantly increase the surface footprint by requiring increased drilling? The Government of Alberta does anticipate an increase in drilling as a result of SRR however there are several ways to prove the shallow zones so new drilling is not the only option.(see question 1). The development of shallower hydrocarbon resources that result from the SRR policy will be managed based on existing policy and management approaches. The increase in surface footprint will be mitigated by staging the implementation over several years and may be mitigated by innovative ways to utilize existing surface disturbance. Legislated protected areas and other areas may be off limits to SRR. Will SRR cause additional development near cities and towns? There is the potential for additional development across most of the province. Activities associated with this energy development will be managed in the same manner as current activities with the same opportunities for stakeholder consultation and involvement. Will operators be able to use existing surface leases and wellbores to exploit shallower rights or is there likely to be an increased industry footprint resulting from additional roads, well pads, flow lines and associated infrastructure? In some cases industry will make use of existing access and infrastructure. The re-entry of existing wellbores and hence the re-use of existing surface leases and roads may be an approach used by industry as approved by the appropriate regulator. Not all existing facilities, roads and surface leases will lend themselves to exploitation of shallower hydrocarbon-bearing formations so that some additional surface impacts are likely to happen. Activity Levels Does the Energy Resources Conservation Board (ERCB) anticipate an increase in non-routine applications? The ERCB does not anticipate an increase in non-routine applications as a result of SRR. The ERCB also advised that due to the success of the Alternate Dispute Resolution process, the Board has not experienced an increase in the number of hearings.

9 Will the Government of Alberta be able to handle the increase in workload to handle SRR? The Government of Alberta will need to acquire additional resources in order to accommodate the increase in workload during the implementation period and maintain appropriate turnaround times. Does the ERCB expect an increase in common carrier and common processor applications from owners of the shallow resource? Utilizing existing infrastructure is the preferred option to reduce the footprint of oil and gas activity, however, in many instances deeper production has higher operating pressures than the shallow zones and may not be suitable for common production streams. The ERCB will continue to support the use of the Alternate Dispute Resolution process to settle disputes; however they will hold hearings as required. Will SRR mean more seismic activity? If existing seismic data was shot for deeper strata and the technical parameters are different to image shallower depths then a new survey may be needed. This will be determined by the quality of industry data and also the existing regulatory approach for seismic activity. Agreements Subject to Unit Agreements Will SRR affect agreements that are subject to unit agreements? If the shallowest rights are unitized, they will not be affected. Will the additional activity generated from SRR create additional impacts on wildlife and biodiversity, and specifically on species at risk? SRR will not always result in additional activity. Surface activities will continue to be subject to current practices approved by regulatory agencies such as ERCB and SRD. Common mitigation practices include directional drilling from common well-pads, joint use of roads and flow-lines, etc. Will the exploitation of shallower rights mean more coalbed methane (CBM) development and will useable groundwater be affected? Shallow-rights exploitation could result in more CBM development. Existing rules and practices to protect groundwater will continue to be implemented by regulatory agencies such as ERCB and Environment. As technology improves, other coal zones may become economic and best operating practices will be developed to minimize the effect. Will SRR development increase the demand for water for drilling or injection to assist with production from the shallower horizons? SRR will slightly increase the demand for the small amount of water used for drilling purposes. All produced saline water is either sent for injection into approved disposal wells or else injected back into the producing formation. When water is needed for injection, operators may be able to use produced saline water from deeper production, or else draw from the same approved water sources used for other wells in the vicinity. Alignment with Other Provincial Policies/Initiatives How does the implementation of SRR align with other government policies or initiatives such as the Land Use Framework, Integrated Land Management, the Draft Wetland Policy and the management of greenhouse gas emissions? Development of the shallower hydrocarbon resources that result from the SRR policy will be managed in accordance with provincial policy and adhere to the provincial regulatory framework. Spacing, Commingling and Consolidation Is the department contemplating using different continuation rules for spacing units and commingling for implementing SRR? The petroleum and natural gas tenure system uses spacing units for issuing and continuing agreements. These same spacing unit rules will be used for SRR. However, the department has recently reviewed commingling rules and will clarify the rules as they affect the shallow and deep zones that are eligible for continuation. 7

10 Can companies consolidate shallow rights documents and deep rights documents to maximize continuation of more zones? Consolidation can occur if you have the same ownership interests and designated representative and documents must be in the same vintage (primary or continued). Initial term licences can t be consolidated. Flaring Is the ERCB contemplating changing any rules for the possible increase in flaring that may result from the implementation of SRR? The ERCB has rules in place for flaring and does not contemplate a need to change them for SRR. Definitions Capable of producing in paying quantity The Department determines capability by several factors, including production, tests, reserves, logs and mapping of wells on the agreement and in the area. Potentially Productive Zone A zone that is, in the opinion of the Minister, potentially capable of producing petroleum or natural gas or both in paying quantity Producing Well A well that is considered by the Minister to be a producing well on the basis of the records of the Board and other information available to the Minister Productive Capable, in the opinion of the Minister, of producing petroleum or natural gas from [a]well in paying quantity Proven Treated the same as productive Reservoir In petroleum geology, any porous and permeable rock that yields oil or gas Deeper Rights Reversion Zone Designation (DRRZD) A DRRZD identifies a zone by its name. As noted in ERCB Decision 95-10, historically the name of the zone identified within type wells takes precedence over the depths identified in terms of utilizing a DRRZD Formation A body of rock identified by lithic characteristics and stratigraphic position; it is prevailingly but not necessarily tabular, and is mappable on the Earth s surface or traceable in the subsurface Pool A natural underground reservoir containing or appearing to contain an accumulation of oil or gas or both separated or appearing to be separated from any other such accumulation Test Physical recovery of a measurable quantity of hydrocarbons at the surface Zone A stratum or series of strata considered by the Minister to be a zone for the purposes of the P&NG Tenure Regulation Zone Designation (ZD) Designates a lithostratigraphic zone described specifically by the depths identified in a particular well. ZDs are used, for instance, to describe the zones included in natural gas leases. When a ZD is being used, the depths and the interval take precedence over the name given to the zone m 8

11 The ERCB LLR Trap The 1.0 Rule. Every licensee is required to maintain a monthly LLR of 1.0 or greater and must have a pre and post transfer LLR above 1.0. If you fall below 1.0 a security deposit must be paid to the board. The calculation and impact of the 1.0 rule is discussed in detail below. (Am I My Brother s LLR Keeper?) The ERCB Licensee Liability Rating (LLR) Program is one of those things that no one seems to be in charge of. It s not really a general land matter; it s only sort of a regulatory matter and is often missed on A&D transactions. Small companies forget to worry about it, and large companies figure it will never apply to them. In this article we will focus on one small part of the LLR program, namely the potential trap that exists when parties transfer licensed wells and facilities on a sale without first considering the LLR implications. What the Heck is a LLR The LLR Program is administered under a set of ERCB Directives, starting with Directive 006, which nicely summarizes the program as follows: The LLR Program assesses a licensee s ability to address its abandonment and reclamation liabilities each month and on receipt of a licence transfer application ( LTA ) in which it is the transferor or transferee. The LLR is corporation specific and is based upon the wells, facilities and (rarely) pipelines licensed in that company s name. The resultant LLR number value is comprised of the ratio of deemed assets/deemed liabilities. The calculation parameters are set out in Directive 006. Some important aspects of which are as follows: Licensee Specific. The licensee (operator) assumes 100% of the assessed LLR for any particular well or facility. It is irrelevant to the board if you beneficially own only 5% of the crappy underperforming oil facility. As operator you are responsible for 100% of the deemed liability value for that facility license. Deemed Assets. The asset value (the numerator) is calculated by multiplying a licensee s reported production of oil and gas from the proceeding 12 calendar months in cubic meters oil equivalent by the 5 year rolling average industry netback by 3 years... (Directive 006, Appendix 5, part 1.2) Big long sentence, but the important concept is that the asset value for LLR purposes will not come crashing down as the price of oil and gas falls. It takes a while for the asset value to rise or fall. Deemed Liabilities. The liability value (the denominator) is the ERCB established abandonment and reclamation cost for all wells and facilities held by a particular licensee. There are parameters in Directive 006, Appendix 6 setting out how these values are calculated. It is important to note that the monthly asset and liability value for every well and facility can be obtained under the ERCB digital date submission (DDS) system. These values are private and only the licensee can check its specific well or facility value. Pipelines generally do not have an asset or liability value, unless they are a problem site. Resultant LMR (Liability Management Rating) values for all licensees are publically available on the ERCB website. The spreadsheet is located under Rules, Regulations and Requirements, then Liability Management Programs, then Reporting then Licensee Liability Rating Report - updated monthly. The LMR Calgary, AB Edmonton, AB Bentley, AB Whatever the direction, we can take you. LandSolutions has the knowledge and resources to plan, implement and manage all aspects of your land and consultation requirements. Lloydminster, AB Lampman, SK Victoria, BC

12 Since the board will have just rejected the transfer, they will almost certainly send a letter to the vendor/licensee asking it to establish that it retains the surface and mineral rights for the wells in the rejected LTA. is basically your LLR plus or minus any security deposits paid. We will just refer to LLR in this article. Remember that the public LLR value does not provide you with any information on the underlying dollar value of deemed assets and deemed liabilities, only a numerical value. The A&D LLR Trap A significant A&D issue arises where the asset specific LLR profile of the licensed assets being bought and sold tips the LLR of either the vendor or purchaser below 1.0 post transfer. Under Directive 006: If either the transferor or transferee has a Post Transfer LLR below 1.0, a security deposit for the difference between its deemed liabilities and deemed assets must be received by the EUB before the licence transfer application is approved. (Directive 006, Appendix 2, part 8). If all required security deposits are not received by the due date(s), the licence transfer application will be closed and the transferor will be required to establish that it retains surface and mineral rights for any well license included within the cancelled license transfer application. (Directive 006, Appendix 1, part 9) (emphasis mine). See also Directive 006, Appendix 2, part 5 which states: Sections 16 and 17 of the Oil and Gas Conservation Act require a licensee to hold a working interest participation (WIP) in each well or facility for which it is the licensee. (emphasis mine) I could go on, but suffice it to say that it is a very bad thing to close a transaction and have your LTA rejected by the ERCB post closing. Both parties will typically be immediately non compliant with the ERCB once the transfer is rejected. Since the board will have just rejected the transfer, they will almost certainly send a letter to the vendor/licensee asking it to establish that it retains the surface and mineral rights for the wells in the rejected LTA. The licensee will also be required to show that it holds a WIP in the facilities. This trap occurs due to the standard procedure in industry for closing A&D transactions, namely: sign the sale agreement; close the sale; and prepare and submit the LTA post closing. Example 1. So let s pretend that you are a great big oil company selling to a start-up. Got an ok price but you are still very excited because you cannot believe you are going to be able to off load a bunch of marginal wells and facilities. Your purchaser start-up company has received an ERCB business associate code (operator code) so you figure you are good to go. The purchaser is 100% 10

13 financed and the financing is based upon the value of the assets being acquired. You close and submit the LTA post closing. The ERCB begins a routine LTA review and calculates the asset specific LLR profile of the licensed assets being sold is negative $2.5 million. Meaning that the deemed liability value is greater than the deemed asset value by $2.5 million; The board writes a nice letter to the proposed purchaser/ transferee requiring them to submit a security deposit for $2.5 million within 30 days from the assessment date. This occurs because your start-up has no pre transfer wells or facilities and so has a deemed asset/deemed liability value of $0/$0 for an LLR of 1.0; The purchaser calls and politely points out that they are 100% financed and have no more money to pay the security deposit; In the meantime you have sent out all the NOAs and completed all the Alberta Energy transfers and surface transfer documents; and After 30 days the ERCB closes the LTA th Avenue S.W. 6 11

14 You are non compliant. Much badness ensues not just with the ERCB, but internally as you must continue to manage the assets in accounting and in the field because you are still the licensee. You have closed, you no longer beneficially own the assets and you have completed the closing specific conveyancing. Therefore you cannot confirm to the ERCB that you as licensee retain surface and mineral rights in the wells and hold a WIP in the facilities. You are non compliant. Much badness ensues not just with the ERCB, but internally as you must continue to manage the assets in accounting and in the field because you are still the licensee. Don t Forget About the Transferor s Post Transfer LLR Example 2. Please remember that both the transferor and transferee s LLR must be above 1.0 post transfer. Image you are buying from a distressed vendor for a bargain basement price. Sweet. You work for a great big company so why the heck should you care about your vendor/transferor s LLR. Well, here comes the trap. Suppose the vendor company has one good well, one bad well and no other licensed wells or facilities. Its LLR deemed asset value is $200,000, deemed liability value $100,000, for a company LLR of 2.0. If you buy only the good well and remove $150,000 of deemed asset value and $50,000 of the deemed liability value, the post transfer LLR of the vendor will be $50,000/$100,000 for a post transfer LLR of 0.5. No can do. The board will reject the transfer unless the transferor comes up with a $50,000 security deposit to bring its LLR to 1.0. So you have bought and paid for the assets but the board closes the LTA because the vendor s post transfer LLR will be below 1.0. You cannot get the licenses into your name and your distressed vendor is non compliant and teetering on a closure order. How to Avoid the LLR Trap (Pre Closing Due Diligence) There is a simple due diligence process to avoid the trap. As always, doing your homework ahead of time will prevent nasty surprises. Whenever you are buying or selling licensed Alberta assets and either you or the other party potentially have post transfer LLR issues you should: Pre calculate the asset specific LLR profile for the wells and facil- ities being sold/transferred. This can be done very simply from the ERCB DDS system. The information is private and can only be accessed by the licensee. We simply print off the summary page for each well and facility and create a spreadsheet. Totally simple. Completely negligent not to do this. Look especially hard for non producing wells and facilities. These often get missed if information is pulled from accounting since they often do not keep track of non producing assets. Non producing facilities in particular are often large liability items that can really affect your deemed liability value. Also remember you are dealing with the ERCB licenses issued under the Liability Management Program. These numbers are different than facility codes and battery codes. Subtract or add the asset specific LLR profile dollar value from the corporate LLR dollar value of the transferor and transferee, respectively. Each party must have a post transfer LLR above 1.0 in order for the LTA to be processed without a security deposit. 12

15 Very tough to unscramble the egg with a stand alone sale agreement clause. This type of clause appears to be an attempt to deal with the LLR trap without a full closing in escrow. As is typical with half measures, they usually only half work. In example 1 above, the start up company will need to find an extra $2.5 million in financing in order to complete the sale since the asset specific LLR profile is negative $2.5 million. In today s market that probably means your deal is dead. Don t be sad, it is way way better than the alternative of closing and trying to figure out how to unscramble the egg when the LTA is rejected. In example 2, you cannot buy the assets without first confirming that the vendor can pay the $50,000 security deposit in order to have the LTA processed. Good luck with that. Remember that the transferee cannot pay the money to the board on behalf of the transferor. The money must come from them. There are ways around this problem, but they must be addressed pre closing. Keep in mind that the asset specific LLR profile is good for only a month. The ERCB reruns its LLR values on the first Saturday of each month. The values will change from month to month. So you must make sure you build in a buffer amount to account for any change over a reporting month, or ensure you close and process the LTA within the same reporting month. How to Avoid the Trap (Sale Agreement Drafting) The more problematic issue is how to deal with the LLR trap in your sale agreement. At least three possible approaches exist. Close In Escrow To strictly comply with the Oil and Gas Conservation Act and Directive 006, the parties to a sale agreement should close in escrow subject to ERCB approval of the LTA. Think of a typical house sale. The parties meet at closing, sign all documents and close in escrow. The purchaser pays the cash to close not to the vendor, but to the vendor s lawyer in trust and he holds the cash plus any other closing paper pending land titles registration of the transfer of land. Simple and straight forward. Nothing truly closes until the transfer is registered. I expect this is how the ERCB thinks oil and gas transactions work. This may in fact be how deals should close, but I have only very rarely been involved in escrow closings based upon LTA registration. I can think of no reason not to use this approach, it just does not seem to be used very often. Null and Void Clause An alternative approach is the addition of a null and void clause in the sale agreement. This type of clause states that if the LTA is closed or rejected for any reason, the parties agree that the transaction shall be null and void and of no effect. The problem with such a clause is that it would usually only come into effect after closing occurred, the purchase price was paid, beneficial interest had passed and closing documents had been circulated. Very tough to unscramble the egg with a stand alone sale agreement clause. This type of clause appears to be an attempt to deal with the LLR trap without a full closing in escrow. As is typical with half measures, they usually only half work. Pre Closing Calculation and Payment Clause My personal approach has been to draft an ERCB security deposit calculation and pre payment clause. This is really just taking the due diligence discussed above to its logical conclusion. How the clause works is that the parties pre calculate the asset specific LLR profile and review same together with the transferor and transferee dollar value LLR. If a post transfer deficiency is identified, the deficient party is required to pre pay such amount to the ERCB (either by cash or a letter of credit) such that the post closing LLR of that party would be above 1.0. As indicated above, the LLR is calculated monthly and so the LLR value is somewhat of a moving target. To deal with this, I have the prepayment amount set at a value slightly above the deficiency amount to allow for any monthly changes. For long closings, we will recalculate the asset specific LLR value each month to make sure we have the most accurate value for closing. The Alberta LLR Program has been around for a very long time. No one should ever get caught in the LLR trap, however it seems to come up at least a few times every single year. m Paul Negenman Partner, EnerLaw LLP 13

16 Board Briefs Dalton Dalik advised that members of the Board met with several CAPL past-presidents to gather suggestions and discuss and provide feedback on the ad-hoc Budget Surplus Committee s The key issues discussed at the CAPL Board of Directors Meeting recommendations with respect to CAPL s accumulated surplus. Feedback received from the meeting was very positive and the Committee is currently reviewing the information gathered held December 2, 2008 at the prior to bringing a formal Motion to the Board. CAPL Office: Frank Terner, Director of Business Development, provided the following update: In Attendance Absent Guest M. Arris F. Terner S. Klassen Denise Grieve J. Condon C. Rutherford D. Dalik R. Telford K. Gummo R. Thorsen N. Millions J. Tweten L. Moriarity R. Van den Bon A Tenure Advisory Committee is scheduled for December 4, 2008 with the Alberta Department of Energy to discuss the next steps in the implementation of the new Shallow Rights Reversion program. The Alberta Government will be presenting the first draft of an Information Letter regarding the tenure process for the Carbon Capture and Sequestration on December 4, Implementation of Alberta s CCS tenure process is expected to be implemented by Q Dalton Dalik presented a Treasurer s Report as at November A meeting with the Information Services Corporation of 30, 2008 showing CAPL investments totaling $1,358, Saskatchewan is scheduled for December 9, ISC will Canadian and $30, U.S. along with a cash balance of present updates on ISC initiatives regarding: $74, Canadian and $3, U.S. The CAPL Scholarship Fund has a balance of $107, There was one transfer made 1. Mineral Parcel Project since the last report; $75, was transferred from the T.Bill 2. Mineral Parcel Dimensions Account to the Current Account on November 26, Regulatory Changes 4. New Interest Type Dalton Dalik reminded Directors to provide him with their Lapsing of Leases Budgets by December 15, Fractional Ownership System Enhancements Margaret Ariss presented seven active and three student Proposed Enhancements membership applications to the Board of Directors, all of which 9. Bulk Data were approved. Jonathan Chapman announced that Melanie Storey and Craig Robyn Van den Bon, Professionalism Director, moved and the Brygidyr have recently joined the ISC committee; however Board approved revised changes to the CAPL Professionalism several volunteers are still required. Procedure effective January 1, The revised Professionalism Frank Terner was invited to attend the Treaty 8 First Nations Procedure will be posted on the CAPL website. BC Long Term Oil and Gas Agreement tenure workshop on November 6 and 7, 2008 in Ft. St. John to discuss the BC Robyn Van den Bon advised that the updated Professionalism Crown sale tenure process and consultation. The B.C. Ministry Manual will be printed in the early part of of Energy, Mines and Petroleum Resources, the Oil and Gas Commission and the Council of Treaty 8 Chiefs are engaged in Len Moriarity, Director of Education, announced that the CAPL negotiations of a Long-Term Oil and Gas Agreement (LTOGA). Scholarship Committee has reviewed and interviewed the The parties have developed a series of inter-active workshops applicants from the University of Calgary PLM Program and with industry. The workshops are aimed at identifying issues 14 Olds College Land Agents Program, and have selected the recipients for scholarships for and working together to develop options and opportunities. Tenuring is one of the key workshops. The tenuring deliverables expected were:

17 1. Recommendations with regards to existing consultation process between MEMPR and the Treaty 8 First Nations regarding tenure sales. 2. Recommendations with regards to the use of caveats on Petroleum and Natural Gas tenures. 3. Recommendations with regards to Treaty 8 First Nations concerns with respect to issues of technical and human capacity during the tenuring process. 4. Recommendations on how industry can improve its engagement with Treaty 8 First Nations prior to and during the tenure process. BC Drilling Licence Tenure Practices CAPP, CAPL and SEPAC have been working with the BC Ministry since May 2008 and are identifying areas for improvement that the crown and industry can work together on. Cindy Rutherford advised that the AAPL is currently looking at the licencing of landmen in Texas. Rob Telford recently met with the President elect of the IRWA and discussed opportunities on how the two organizations can work together to promote the education of CAPL and IRWA members. Rob Telford reminded Directors of the following: The next Board of Directors Meeting will be held January 9, 2009 at the CAPL Office. The next General Meeting will be held December 11, 2008 at the Westin Hotel. m James Condon, P.Land Secretary/Director, Social 15

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19 Message from the Executive The objective of the Professionalism Portfolio is to work on initiatives intended to raise the level of professionalism of CAPL members and to increase the recognition of that professionalism with all of the stakeholders that we, as Landmen, may come in contact with. In addition to this objective, the Professionalism portfolio is responsible for the ongoing administration and maintenance of the Professionalism program, the professional conduct of members, handling disputes and claims with regard to unethical or unprofessional behavior by CAPL members. Since April 2008, I have had the opportunity to work with the Professionalism Committee as Director. In this time, the committee has continued with a number of positive initiatives and changes to the portfolio as outlined below: Professionalism Manual With the numerous changes that have occurred in the industry over the last number of years, the Professionalism Committee struck a sub-committee lead by Trevor Williams to work on a re-write of the current Professionalism Manual. Currently they have reviewed and contacted numerous people to update or re-write sections within the manual to be consistent with today s practices. A professional writer is compiling the material for the new manual which should be ready for the membership by the end of March Professionalism Procedure Based on input from numerous CAPL committees, the Professionalism Committee recommended an update to CAPL s Professionalism Procedure to the Board of Directors for their input and approval. These recommendations were endorsed by the Board on December 2, 2008 and included various changes to the procedure. The changes included clarification on the requirements of the members applying for the P.Land and PSL designations, clarification regarding re-certification, and clarification to the exam structure. Please visit the CAPL website ( for a copy of the updated Professionalism Procedure which is effective January 1, Ethics In May 2008 an Ethics committee was formed, consisting of Ian Clark, P.Land as Chair and Brad Goodfellow, P.Land as Vice- Chair. The Ethics Chair and Vice-Chair are dealing with ethical complaints received in writing against a CAPL member. The Ethics Committee is currently reviewing ethics complaints received involving several members. Certification Committee The certification committee has reviewed a number of applications received by the CAPL office. As of December 2008, five individuals have written and passed the P.Land Exam and six individuals have written and passed the PSL Exam. Congratulations to those members on attaining a professional designation. I want to thank all the members on the committee for their hard work and time put forward in the reviewing of applications submitted. P.Land/PSL Exam It is the hope of the Professionalism Committee that upon the completion of the updated Professionalism Manual that it be reviewed and a new exam be created and be available for the Summer of This last year has been busy with numerous changes, and the next one looks to be very similar. I would like to thank the current and past members of the Professionalism Committee for their volunteer efforts, for without these efforts our professionalism program would not have been as successful. On behalf of the Professionalism Committee, I appreciate the opportunity to provide you with a brief update on the changes to the professionalism portfolio that have occurred over the past year. If you would like to provide input or be a part of this committee please contact the Chairman Dave Holmes, P.Land, or myself. m Robyn Van den Bon, P.Land Director, Professionalism 17

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21 Get Smart The CAPL Education Committee is pleased to present the following courses: 1999 CAPL Freehold Mineral Lease Economic Considerations For Land Deals January 22, :30 a.m. to 12:00 p.m. February 18 & 19, :30 a.m. to 4:30 p.m. A discussion of the philosophy adopted by the Freehold Mineral This seminar is intended for senior landmen and individu- Lease Committee will be followed by a review and discussion of als involved in conducting project economic evaluations. the changes made to the 1999 Freehold Lease and its impact on Emphasis is on the use of economics to assist in the structuring and the industry. evaluation of land deals. Landmen and other oil and gas valuation specialists will find the principals and illustrative examples that CAPL Farmout And Royalty Procedure are discussed throughout the course equally valid in the context Class: of their daily work. Landmen may also wish to encourage their January 28, :30 a.m. to 4:30 p.m. project evaluation team members to register for this seminar. Workshop: January 29, :30 a.m. to 4:30 p.m. Freehold Mineral Lease or: February 26, :30 a.m. to 4:30 p.m. January 30, :30 a.m. to 4:30 p.m. This seminar is intended for industry personnel who require a This course is intended for any land personnel requiring a better detailed knowledge of freehold mineral rights. Anyone who is taking understanding of the 1997 CAPL Farmout and Royalty Procedure this seminar should previously have taken CAPL s Oil and Gas Law or and the associated 1997 CAPL Overriding Royalty Procedure. an equivalent course and/or have several years of experience in land. The instructor will also refer to contemplated changes in the pending update to the 1997 documents. Understanding Natural Gas And Crude Oil Marketing (PSL) Preparing For A Surface Rights Board Hearing March 3, :30 a.m. to 4:30 p.m. This seminar is designed for industry personnel who want an over- February 5, :30 a.m. to 4:30 p.m. view of the fundamentals of gas marketing. The seminar will begin This course will begin by covering the types of surface rights board with a brief discussion of the history of gas marketing and some hearings, compensation, rent review, damage claims and back of the more commonly used industry terminology and methods of rent. The next section will focus on the structure of the hearing measurement. It will cover the North American supply and demand and deal with procedural elements, evidence taken under oath, picture including new areas of exploration and the demand growth direct and cross examination of witnesses and questions from the forecasts driven by new power generation. The course will review the board. From there the course will focus on evidentiary issues like transportation of natural gas and how to devaluate new pipelines the burden of proof and discuss privacy issues before closing by and pipeline space. The course will then examine the fundamentals discussing the orders ultimately issued by the board. of natural gas pricing, storage and the basics of risk management. Alberta Crown Lease Continuation Selected Developments In Oil And Gas Law February 12, :30 a.m. to 12:00 p.m. March 4 & 11, :30 a.m. to 4:30 p.m. or: 1:00 p.m. to 4:30 p.m. This two day seminar is targeted for more senior industry person- An overview of the regulations and geological case studies govern- nel and is suitable for personnel in all aspects of the oil and gas ing lease continuation will be provided by instructors from the business, especially, those involved in the acquisition and admin- Alberta Department of Energy. istration of oil and gas lands, leases and other interests, as well as those involved in the negotiation, drafting, interpretation and application of the various contracts used in the industry. This seminar will cover a range of legal issues, including environmental law and regulatory matters, but will focus on the types of contracts most often dealt with in the upstream oil and gas industry. A question and answer period will be scheduled for each day. 19

22 ROFR Law: Overview Of Practical Issues For The Senior Landman In 2009 Ethics March 17, :00 p.m. to 4:30 p.m. March 5, :30 a.m. to 12:00 p.m. This seminar is designed to help the participant deepen their This half day seminar will focus on the following, which have been understanding of the role of ethics in the life of a professional and selected to help with the most important current legal and busi- as a member of CAPL. Specific attention will be given to various ness developments on the ROFR front: methods used in ethical decision-making along with the various recommended reading and pearls of wisdom nuances of ethics. This seminar will also provide an initial forum, the practical consequences of Best Pacific and Calcrude primarily through the use of case studies, for discussion with differences among various CAPL precedent ROFR provisions and respect to land related ethical issues. potential pitfalls in using the 1990 CAPL ROFR provisions as a universal guide A Practical Guide To Title Review And Acquisitions case studies of ROFRs in selected farmout situations March 19, :30 to 4:30 p.m. This seminar is intended for landmen and other industry person- (PSL) Constructive Conflict Management nel who are responsible for coordinating the conduct of title March 10, :30 a.m. to 4:30 p.m. review with outside counsel or those conducting due diligence This seminar is intended for individuals who deal with conflict in reviews and rectifying title deficiencies when acquiring assets. the workplace on a regular basis and require a platform to better This seminar will focus on the practical aspects of title and due deal with it. The instructor will discuss how and why conflict diligence reviews when acquiring assets in Western Canada. occurs in the workplace and discuss solutions for dealing with it Attendees will benefit from the suggestions presented to make the and avoiding it in the future. Topics will include professionalism, title review process involving outside counsel more cost-effective defusing angry and aggressive subjects, and understanding why and efficient, enabling you to interpret the title opinion and use it people act as they do during conflicts. Both presentations and as a working document in your land administration system. interactive discussion will be used throughout the course to help identify the difference between people s positions and their inter- Surface Land Management ests. The course will conclude with an interactive skills practice March 30, :30 a.m. to 4:30 p.m. session focusing on newly learned Active Listening Skills. This course is provided for professionals such as mineral landmen, engineers, geologists and other project managers who Directive 056: AEUB Energy Development Application & Directive 60 Public Consultation Requirements either work with their surface land department or manage their surface land group as part of a larger team. Individuals new to the March 12 & 13, :30 a.m. to 4:30 p.m. land industry would also benefit from this course; some knowl- This is a two day seminar which helps participants understand edge of surface land is beneficial but not required. The course is the public consultation requirements, expectations of the AEUB designed to provide an overview of how the surface land depart- and assists companies in completing the application or audit ment works by examining the surface land process from project processes for regulatory compliance. This seminar is designed for kick-off to licencing. land agents, land administrators, operations engineers as well as any other personnel who may be responsible for AEUB applica- Conventional Exploration Agreements: Junior Level tions or regulatory compliance issues. March 26, :30 a.m. to 4:30 p.m. This seminar is intended for those landmen, contract analysts and Fiduciary Duties administrators requiring an introductory understanding of explo- March 18, :30 a.m. to 12:00 p.m. ration agreements. The seminar will focus primarily on reviewing This seminar is intended for experienced landmen and joint typical agreements such as farmouts, seismic options, pooling venture personnel who are involved in acquisitions, divestments and other transactions or interpretation of exploration, operating, and joint operating agreements through the utilization of sample letter agreements, formal agreements and precedents. m joint ventures and other agreements. It is also for P.Land holders who require re-certification. This seminar will focus on problem Registration can be done online at 20 areas arising in the context of both transactions and day-to-day operations. Case examples and court decisions specific to land related issues will be presented and discussed. Specifically, this course will emphasize situations and circumstances where fiduciary duties do and do not arise and the nature of these duties. Full course descriptions can be found in the 2009 CAPL Course Calendar which is available online at For further information, please contact the CAPL office either by phone at , or dgrieve@landman.ca.

23 Roster Updates New Members The following members were approved by a Motion on December 2, 2008: Jim Rae Penn West Energy Trust James Bell Gordon Timm, P.Land ryan Zembiak Travis Whitlock Maverick Land Jim Armstrong Consultants Ltd. J. Barry Rowe, P.Land neal Taylor Applicant Current Employer Sponsors Active Linda Barbaro Argosy Energy Inc. Shane Holden Andy Kirby russ Marshall Jason Blanch EnCana Corporation Howard Colborne, P.Land noel Millions, PSL robert Telford, P.Land Kris Bower Prairie Land Brad Bergquist Consultants Inc. Darren Clarke, PSL susan Klassen Student Tom Cowan University of Calgary Robert Schulz Richard Forrester University of Calgary Robert Schulz Ryan Tuchscherer Olds College doug Peters m On the Move Jeffrey Badyk, P.Land Independent to True Energy Inc. Derek Jacobus Cavalier Land Ltd. Mike Charles, P.Land Garry Cook robert James, P.Land Carol Barrell NuVista Energy Ltd. to Independent Mark McKee Scott Land & Lease Ltd. Larry Buzan, P.Land david MacKay tom Staines Geoffrey Cain Independent to Seven Energy (Canada) Inc. Surface & Mineral Land Acquisition Services Providing fully integrated Land Services for our clients since Environmental Services Experienced and diverse group of professionals offering a full range of Environmental Services. GEOSCI Technical Services Applying Geophysics for your Exploration and Environmental Needs. Research & Development Services Our Research & Development Associates develop the necessary technology to solve your problems. Every industry has its Professional Services 30 CELEBRATING CELEBRATING YEARS OF SER SER VICE trailblazers Established 1978 Learn more at or call CALGARY EDMONTON LLOYDMINSTER GRANDE PRAIRIE FORT ST. JOHN REGINA MEDICINE HAT 21

24 John Charuk Geocan Energy Inc. Colin McKinnon, P.Land Apache Canada Ltd. to Independent to Alberta Ltd. Ashley Craib Independent Jean Melnychuk Compton Petroleum Corporation to Indian Oil and Gas Canada to Enerplus Group Mark Darrah ConocoPhillips Canada Limited Scott Morgan Guard Resources Ltd. to Insignia Energy Inc. to OMERS Energy Inc. Brenda Davidson Independent Deric Orton, P.Land Piper Resources Ltd. to Tourmaline Oil Corp. to Penn West Energy Trust John Dmetruik Integrity Land Inc. Keely O Neil Harvest Energy Trust to ARC Resources Ltd. to Independent Robert Drew Cavalier Land Ltd. Rick Pollock Independent to Independent to Canadian Natural Resources Limited Thomas Emerson Independent Dwayne Spence Compton Petroleum Corporation to CanEra Resources Inc. to Daylight Energy Ltd. Mark Fawcett Silverwing Energy Inc. Drew Tumbach Duvernay Oil Partnership to Breaker Energy Ltd. to Tourmaline Oil Corp. Sheldon Funk Exceed Energy Inc. Kim Urban, P.Land Urban Consulting Corp. to NuVista Energy Ltd. to Harvest Operations Corp. Alicia Garay Artumas Group Inc. Brian Veroba Independent to Rife Resources Ltd. to Argosy Energy Inc. Marah Graham Independent Matteo Villani Cavalier Land Ltd. to Austwide Mining Title Management Pty Ltd. to Enbridge Pipelines Inc. Pamela Leiper Colonsay Resources Ltd. to Kiloran Bay Resources Ltd. Kenneth Young, P.Land Avante Garde Energy Corp. to Enerplus Group m Alan Lyon, P.Land Tokala Energy Ltd. to Enerplus Group 22 Rockford Land Ltd. Alberta Crown Sales Scott Clapperton Freehold Mineral Acquisitions Surface Acquisitions rockfordland@shaw.ca Suite 119, 2526 Battleford Ave SW Calgary, Alberta T3E 7J

25 SATURDAY, MAY 2, 2009 THE WESTIN CALGARY an evening of ART for all the senses HOST RECEPTION: 6:00-7:00 P.M. DINNER: 7:30 P.M. DANCE: 9:30 P.M. BAND: THE REAL DEAL TICKETS: $ C A P L P R E S I D E N T S S P R I N G B A L L 23

26 Look What s Surfaced Land Agents Licensing Bill 9 Update In September of 2008 we printed an article called Land Agents Licensing Times are Changing. In this article we covered Bill 9, a Bill proposed to remove clause 1 (c) (ii) from the Land Agents Licensing Act. Clause 1 (c) (ii) which formed part of the definition of a Land Agent read as follows; a person who for a fee, which includes accepting compensation for travel and other incidental expenses, gives or offers advice to a owner or the owner s agent with respect to a negotiation for or acquisition of an interest in land. The clause prohibited anyone other than a licensed land agent to acquire an interest in land and was intended to keep unlicensed people from acting as a Land Agent. Bill 9 passed the third reading through the Alberta Legislature on October 28th and went onto Royal Assent on November 4th which means it has become law. It is now waiting on proclamation which would be the effective date of the revision. What this means to industry is that unlicensed people may legally act as EXPLORE your options... CS*EXPLORER Integrated Oil & Gas Software CS*Image Integrated Imaging CS*JointInterest Service & Facility Agreements EXPLORER Online Business Processes Customized Online Policy & Procedure Manuals Oil & Gas Property Management Consulting Information Management Services Product Support Training Contact: John Pullar or Ken Holmes 800, Avenue S.W. Calgary, Alberta T2P 3P8 p f

27 Agent to the landowner with no accountability, standards of conduct, or regulation. There are concerns within industry about the change to the Act and how it may affect the level of expertise and professionalism of landowner advisors. Industry may need to be comfortable with refusing to deal with individuals who do not conduct themselves to the same standard as a licensed Land Agent. Industry may also need to be prepared to review costs of an unlicensed advisor and determine what an appropriate fee is for someone without a license or whether it is industry s obligation to pay for this. Licensed Land Agents understand that a mutually acceptable agreement is not always attainable, and at times they may be dealing with adverse conditions during negotiations. However, this obstacle will not change the ethical manner in which licensed Land Agents strive to represent both the industry and the parties for whom licensed Land Agents continue to negotiate lasting and beneficial agreements. If you would like more information regarding Bill 9 go to www. assembly.ab.ca. m Author: Chad Hughes, F.A.M. Communications Committee Edited by: Mike Bellefeuille 25

28 2009 CAPL Squash Tournament Please return the attached entry form and cheque made out to the 2009 CAPL Squash tournament to: Scott Clapperton, c/o, Rockford Land Ltd. Suite 119, 2526 Battleford Ave SW T3E 7J4 Check in at the West entrance and head down to the squash courts. Darts and pool in the Corner Pocket Sports Bar after the tournament This tournament is a great way to promote and market your company and yourself. The Glencoe Club 636, 29th Ave SW, Calgary, Alberta Saturday, March 7th, 2009 at 5:00 p.m. Entry Fee: $64.20 The Entry fee includes GST, a shirt, prizes, food and beverages We welcome all CAPL members and their guests to the 2009 CAPL Squash Tournament. This tournament encourages all levels of players from beginners to the very best players in the city. If you are interested in sponsoring this event please contact: Pat Burgess Scott Clapperton Kofi Prah Brad Purdy Kevin Koopman Don Austin Chris Bartole Brad Johnston Dan Cicero pburgess@thackrayburgess.com rockfordland@shaw.ca kofip@dolo.ca bpurdy@ridgeback.ca kkoopman@scottland.ca daustin@capexltd.com chrisb@emergoenergy.com bradj@galleonenergy.com dcicero@huntoil.com Please note that white clothing is required for racquet sports at the Glencoe. m Official CAPL insurance broker for over 18 years 26 underwritten by: for CAPL members preferred rates special discounts free offers , A Street SW, Calgary AB T2H 0G5 free fax

29 Olds College Update It s that time of year again! The Olds College Land Agent Program is canvassing for practicum placements for this academic year. We have approximately 60 students who will be completing their directed field studies in the fall. Would you or your company be able to take a student for a week between February 25 and March 5, 2009? We firmly believe that practical experience is a necessity for students in the Land Agent Program. We hope that companies participating and supporting the program can provide the students with practical experience in their chosen profession. The Olds College Land Agent Practicum has been an unqualified success for over twenty years. We attribute this success to the support and cooperation of various sectors of the energy and utility industries. The following is a list of the general areas that hopefully would be examined by our students while on their practicum with your firm: company background, policies and philosophies; meeting the personnel in the land department with an overview of job functions and duties; brief introduction to other company departments that have a bearing on the land department; office procedures and filing systems; public relations carried out by the company; flow of information, orders and documentation in reference to various aspects of land acquisition; notifications, negotiations and/or acquisitions and land systems. We are aware that time will not permit all the areas to be examined in detail, but we request the student s time be put to the most effective use. The following is a suggested list of specific activities that we would like our students to discuss and experience while with your company: office procedures used by surface land personnel; document preparation, crown and freehold; oil and gas or utility; document verification; if possible, follow the procedures used by the land agent and land administrator in an acquisition situation; review expropriation, damage claims, releases and ERCB Directive Requirement procedures; completing field work in the office; and data entry. We would appreciate your immediate response and/or feedback and your help to strengthen the program. Please feel free to contact me with any questions. I look forward to hearing from you soon. Thank you! m Tara S. Lloyd Instructional Assistant Land Agent & Land Administration Olds College Street Olds, AB T4H 1R6 Phone (403) Fax (403) tlloyd@oldscollege.ca Web site: 27

30 CAPL Calendar of Events January 1 Thursday New Year s Day 7 Wednesday Alberta Land Sale 12 Monday Understanding Well Logs 13 Tuesday Board Meeting 14 Wednesday British Columbia Land Sale 20 Tuesday Ethics 21 Wednesday Alberta Land Sale 22 Thursday 1999 CAPL Freehold Mineral Lease 22 Thursday General Meeting CAPL 60th Anniversary 28 Wednesday CAPL Farmout and Royalty Procedure 29 Thursday CAPL Farmout and Royalty Procedure Workshop 30 Friday CAPL Farmout and Royalty Procedure Workshop m February 3 Tuesday Board Meeting 4 Wednesday Alberta Land Sale 5 Thursday PSL: Preparing For a Surface Rights Board Hearing 9 Monday Saskatchewan Land Sale 11 Wednesday Manitoba Land Sale 12 Thursday Alberta Crown Lease Continuation 16 Monday Family Day 18 Wednesday General Meeting Wed-Thurs Economic Considerations for Land Deals 25 Wednesday British Columbia Land Sale 26 Thursday Freehold Mineral Lease 26 Thursday Curling m January Meeting CAPL 60th Anniversary Celebration Thursday, January 22, 2009 Cocktails: Dinner: Location: Cost: Guests: 5:00 p.m. 6:30 p.m. Hyatt Regency Ballroom 700 Centre Street S.E. No Charge for Members $89.25 (includes GST) All members are required to confirm their attendance by return fax. Only guests are required to purchase a ticket. Guest tickets will be sent to the member with an invoice. Fax Registration Form to ( ) Attn: Karin Steers or ksteers@landman.ca. Please confirm your attendance prior to noon on Monday, January 12, m February Meeting Management Night Guest Speaker: General Rick Hillier Wednesday, February 18, 2009 Reception: 5:00 p.m. Dinner: 6:00 p.m. Location: Westin Hotel Avenue S.W. Members: $75.00 plus GST ($78.75) Guests: $ plus GST ($115.50) All members are required to confirm their attendance by return or fax. Fax Registration Form to ( ) Attn: Karin Steers or ksteers@landman.ca. Please confirm your attendance prior to noon on Wednesday, February 11, m 28 Wherever you re reading this, we ve probably got an office. With offices in key areas throughout the west, we can take the stress out of your land deals. Scott Land & Lease s local knowledge, the industry s most experienced staff, and superior customer service means you can trust us with projects big and small. Calgary Edmonton Lloydminster Regina Grande Prairie Fort St. John scottland.ca

31 Prakash Mandalia Customer Support Analyst IHS And you thought you were just buying IHS software When you invest in any one of the IHS software superstars like AccuMap, PETRA or GeoSyn you get more than just easy-to-use, time-tested tools from a proven industry leader tools that can dramatically simplify your search for oil and gas. You get a whole team of hometown professionals supporting your efforts people just like Prakash. Got a how-do-i-do-this software question? Need training fast? Come to the source. At IHS you get more answers, more training, more resources, and more people all working for you. IHS. Great Products. Great People. Connect to the source and get MORE. Call us today at or visit ihs.com/connect and find what MORE means to you IHS Inc. All rights reserved.

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