New Ministerial Order 96/2024 allows for the transfer of oil and gas assets with tax arrears in some situations
The Minister of Energy and Minerals has replaced Ministerial Order 43/2023 (MO 43/2023) with Ministerial Order 96/2024 (MO 96/2024). MO 43/2023 was a partial solution to the ongoing unpaid municipal tax concern; it prohibited companies with tax arrears in excess of $20,000 from transferring or acquiring oil and gas assets. This meant that when an oil and gas company wanted to sell or purchase an asset, both parties in the transfer needed to be current on their municipal taxes. While this did not solve the broader issue of operating companies not paying taxes, it did limit their ability to transfer assets in such cases.
MO 96/2024 provides an exemption to the conditions set out in the original MO 43/2023. MO 96/2024 states that the conditions do not apply when the asset being transferred is one that has been designated an orphan. The intent of this exemption appears to be to keep producing assets that were owned by a company with tax arrears from becoming orphaned and therefore requiring abandonment and reclamation by the Orphan Well Association by decreasing the cost for an operational company to purchase and continue operating them.
The RMA has learned the exemption is designed so that the tax arrears on the specific asset being transferred in this scenario will become the obligation of the purchasing company. However, without the enforcement tool of a ministerial order, it is not clear if there is any mechanism to require the purchasing company to pay these tax arrears.
The RMA will continue to explore the implications of MO 96/2024 and report to members.
Warren Noga
Policy Advisor
825.319.2285
warren@RMAlberta.com
Wyatt Skovron
General Manager of Policy & Advocacy
780.955.4096
wyatt@RMAlberta.com