Omers Energy Inc. v. Alberta - (Energy Resources Conservation Board)

Omers Energy Inc. v. Alberta (Energy Resources Conservation Board): Alberta Court of Appeal interprets "capable of producing" to mean "presently capable of producing in meaningful quantities".

In Omers Energy Inc. v. Alberta (Energy Resources Conservation Board),¹ the Alberta Court of Appeal confirmed the ERCB's interpretation of the Suspended Wells Clause in the standard form CAPL 91 oil and gas lease. In doing so, the Court held that for a lessee to rely on the Suspended Wells Clause to extend the lease beyond the primary term, the shut-in well must be: (1) "capable" of production in its existing state and configuration; and (2) that such "production" be meaningful in the sense that the continued operation of the well offers a reasonable expectation of a return to profitability within the short term. The Court's analysis and decision may impact thousands of oil and gas leases in Alberta and has significant implications for industry.