By Nia Williams
CALGARY, Alberta, March 21 (Reuters) - Canadian junior oil
and gas producer Terra Energy Corp TT.TO on Monday shut down
production, ceased operations and announced the resignation of
directors and officers, after its lender, Canadian Western Bank,
demanded full repayment of its debt.
Terra, which was producing around 3,600 barrels of oil
equivalent from its operations in western Alberta and
north-eastern British Columbia, said that at current low oil
prices the cost of operating was more than its revenue.
The company is the latest Canadian producer to fall victim
to the prolonged slump in global crude prices, which have
plunged by nearly two-thirds since June 2014.
Canadian Western Bank served notice on Friday demanding
repayment in full of the C$15.9 million ($12.18 million) owed by
the company by March 28.
"The company's lender has declined to provide further
financial support to Terra and there is no other means of
financing available to the company at this time," Terra said in
a statement on its website.
Canadian Western Bank has not announced a receiver to sell
Terra's assets and declined to comment on the matter.
Since September 2015 Terra has sold off around C$12 billion
in oil and gas assets to help pay down debt, but the amount was
not enough to cover all its liabilities.
Terra also said the asset sales in Alberta were hampered by
the company having a liability management rating of below one -
the ratio that regulators use to assess whether a company's
revenues cover the cost of fully reclaiming all its oil wells.
Liability management ratings and oil well liabilities are
becoming an increasingly hot topic in Alberta, where lawyers
have warned buyer concerns over reclamation costs tied to
inactive wells are disrupting energy asset sales.
Terra shares were suspended from trading on the Toronto
Stock Exchange.
($1 = 1.3058 Canadian dollars)