Calgary, Alberta – We regret to announce that Trident Exploration Corp. (“Trident”) ceased operations effective April 30, 2019. All 33 employees and 61 contractors have been terminated and approximately 4,700 wells are being transitioned to the care of the AER. Trident’s total estimated abandonment and reclamation obligations are approximately $329 million. Behind these obligations, we do not anticipate any recovery for shareholders and unsecured creditors. Likewise, any recovery for secured lenders is highly uncertain.
We had been working openly and collaboratively with our lenders and the Alberta Energy Regulator (“AER”) since February. The combination of extremely low natural gas prices and high surface lease and property tax payments (totaling $0.72 C$/GJ) has exhausted the liquidity of the company. These challenges reached a tipping point with persistent, unaddressed capacity constraints on TransCanada’s NGTL system leading to April AECO prices averaging $0.81 C$/GJ and summer prices currently averaging $1.00 C$/GJ. Further, and despite our extensive efforts, Alberta has no mechanism to allow a struggling energy company such as Trident to address its inflated surface lease and property tax obligations.
Although we had substantially settled the terms on a financing solution with our primary creditors for an orderly restructuring and sales process, we were unable to secure AER support for a restructuring in a timely fashion. Ultimately, the recent Redwater decision, regulatory uncertainty and a lack of egress has created a treacherous environment for energy investors that dare to risk their capital in Canada.
As many have speculated and we have now unfortunately proven, the Redwater decision has had the unintended consequence of intensifying Trident’s financial distress and accelerating unfunded abandoned well obligations. Without regulatory collaboration and clarity, Trident is unable to address its near-term liquidity needs and has no financial ability to continue operating. We fear that many other companies may falter without clear, sound policy making post-Redwater. In the face of this extended uncertainty, lenders and investors may flee Canada and further job losses will occur. Without access to financing, we expect that the Orphaned Well Association may grow exponentially.
We are incredibly grateful to everyone who has worked hard to help Trident grow over its history. Trident remains especially proud of its strong environmental, health, and safety record.
About Trident Exploration Corp.
Trident Exploration Corp. is an Alberta-based natural gas producer. Trident produces approximately 67,500 mcfe/d (4% liquids) and operates approximately 4,700 wells. As of its 2018 reserve audit, Trident has approximately 458 billion cubic feet equivalent of proved reserves.