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ARTICLE · 01 MAY 2015

Alberta Court Of Queen’s Bench Recognizes Midstream Operators’ Need For Prompt Payment

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In SemCAMS, SemCAMS ULC asked for summary judgement against Blaze Energy Ltd ("Blaze") for amounts owing on six agreements including agreements for the processing and transportation of gas (the "Agreements").

CanadaEnergy and Natural Resources

In a recent decision, the Alberta Court of Queen's Bench recognized midstream operators' need for prompt payment from gas producers,  when it gave effect to 30-day payment clauses in gas processing and contract operating service agreements. In doing so, the Court affirmed of the common "pay first, audit later" arrangement and recognized the importance of this kind of arrangement in assuring a reliable cash flow for midstream operators. This decision, SemCAMS ULC v Blaze Energy Ltd. 2015 ABQB 218 ("SemCAMS") will be important for many industry players seeking to enforce payment terms in their agreements.

Background

In SemCAMS, SemCAMS ULC asked for summary judgement against Blaze Energy Ltd ("Blaze") for amounts owing on six agreements  including agreements for the processing and transportation of gas (the "Agreements"). SemCAMS ULC provided services to Blaze under the Agreements and issued monthly invoices to Blaze. Blaze did not pay as required, and SemCAMS

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