Terra Energy said Monday that it will shut down all of its operations after the company’s directors determined the business is “no longer viable.”
The Calgary-based company said its decision to shut-in all of its operations was prompted by a request from its lender, Canadian Western Bank (CWB), for full payment of the company’s outstanding debt plus accrued interest, costs and fees.
CWB has provided Terra and each of its guarantors with a Notice of Intention to Enforce Security under section 244(2) of the Bankruptcy and Insolvency Act (Canada).
Terra and all of its guarantors have “consented to the enforcement by CWB,” the company said.
Terra has shut-in all of its operated and licensed wells and facilities in Alberta and British Columbia.
The company has terminated “certain officers” and all of its remaining non-executive employees.
The company’s directors and officers have also resigned.
Terra has notified CWB, the Alberta Energy Regulator and the British Columbia Oil and Gas Commission of the shut-in and told Canadian regulators it “no longer has the financial capability to carry on its operations.”
Terra said that CWB has declined to provide further financial support and the company currently has no other means of financing.
“The cost of operations, including processing and transportation of commodities, field labor and production costs, royalties, and administrative expenses, exceed gross revenues at current commodity pricing levels,” Terra Energy said.
The company has been undertaking an asset sales and restructuring process since September 2015 that has yielded about $12 million in proceeds that have been used to reduce debt.
However, the company said the asset sales have not provided sufficient proceeds to satisfy all of its liabilities.
Terra added that attempts to reorganize or restructure the company have also been unsuccessful.
“The directors have determined that Terra’s business is no longer viable…Terra cannot refinance or recapitalize its operations, that Terra no longer has the financial capability to carry on its operations and that no further business can be conducted by Terra,” the company said.