Bulletin – Licensee Liability Rating
The AER announced, in accordance with its previous Bulletin 2013-09, that it is implementing the third, and final, phase of changes to the Licensee Liability Rating (LLR) program (the “LLR Program”). The LLR Program will increase the well abandonment liability costs and industry average netback to the 2012 values, which was previously announced as effective before May 1, 2015. However, the AER announced a delay in implementation to August 1, 2015 to allow licensees time to prepare for the changes in light of market conditions.
The changes affect Directive 011: Licensee Liability Rating (LLR) Program Updated Industry Parameters and Liability Costs (“Directive 011”) as follows:
(a) An increase to the deemed well abandonment liabilities by an additional one third towards the 2012 values, to bring them to the full 2012 values; and
(b) An increase to the deemed assets by an additional one third towards the 2012 industry average netback values.
The AER also noted that the LLR program management plan, announced in Bulletin 2014-06, allows licensees to pay the financial security owed in increments over a period of time.
