Landowners affected by demise of Lexin Resources could see lease payments soon, regulator says

Landowners affected by the financial woes of Lexin Energy Ltd., which went into receivership earlier this year, should start collecting lease payments again soon, the provincial energy regulator says.

Officials with the Alberta Energy Regulator (AER) met Wednesday with about 70 people in Cayley, a hamlet south of Calgary, to offer an update on the sale of the troubled natural gas producer's assets.

This month, Lexin agreed to stop fighting the AER in court over the receivership and the company's non-compliance with various safety requirements.

"We think this is a significant step forward and there is line of site to when we should be able to get answers to all the landowners," said Mark Taylor, AER's executive vice-president of operations.

"It's still going to be two, three months down the road, but at least we can see a path forward now."

Jack Shier counted on the extra $4,500 he got every year from Lexin for leasing his land, south of High River, for a natural gas well.

But he says he hasn't been paid for two years while the company struggled to stay afloat.

"I'm concerned because the company has gone into receivership and they're saying until it's all settled, we're told we won't be getting our payments. And there's no guarantee how long that will take."

The question of who takes care of the land where the well is located is also a concern, said Shier. He said in the meantime, weeds are growing out of control.

The Alberta Surface Rights Board handles requests from landowners who haven't been paid their annual surface rights lease cheques.

Those cheques can run anywhere from $500 to $5,000, depending on the age of the well, the location and the arrangement made between the company and landowner.

The court-appointed receiver, Grant Thornton LLP, will ask a judge in July for approval to begin marketing Calgary-based Lexin's assets.

Those assets include more than 1,380 well sites, 201 pipeline licences and 81 facilities — all of which were turned over to the Orphan Well Association to be suspended and locked up after AER shut down Lexin's operations in February.

Asset sales could start next month 

Taylor said Lexin's assets could be sold off as early as next month.

"What that means is you're going to have a responsible energy company that is going to have that well in their care and custody, put it back on production, they'll be paying surface lease rentals, they'll be controlling weeds, they'll be the good neighbour," he said.

Wells that don't get sold will go to the Orphan Well Association for suspension and eventual abandonment and reclamation.

"I strongly believe that Albertans should not be on the hook for a company's end-of-life obligations," said AER CEO Jim Ellis in a release.

"I am optimistic that this co-operation will get us out of the courtroom and allow us to focus on reducing the burden placed on the Orphan Well Association, minimizing environmental risk, and getting the most economic benefit for Albertans."

When the AER shut down Lexin earlier this year, it said the company had failed to:

• Comply with orders made by the regulator to address hydrocarbon spills at its sour gas facility in southern Alberta.
• Close and abandon wells.
• Pay its administration fees or its security deposit for well reclamation.

The company was also unable to provide the regulator with proper health and safety overview and measures for its sour wells after Feb. 15.

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