Background: The Orphan Well Association and British Columbia Oil and Gas Commission sued SanLing Energy Ltd., which was managed by a receiver from PricewaterhouseCoopers due to bankruptcy. SanLing had sold certain assets to Spoke Resources Ltd. under an Asset Purchase Agreement, which included handling "Cure Costs" for contract defaults.

Dispute: The primary issue revolved around the calculation of these Cure Costs, with disagreements about whether pre-receivership credits that CNRL (Canadian Natural Resources Limited) owed to SanLing should offset the Cure Costs that Spoke was to pay CNRL.

Positions:

• Receiver: Argued that Spoke must pay all Cure Costs as outlined in the APA (Asset Purchase Agreement), without deducting pre-receivership credits.
• CNRL: Remained neutral regarding the credits but wanted clarity on payment issues.
• Spoke: Claimed they were entitled to offset the Cure Costs with the pre-receivership credits from CNRL.

Legal Analysis: The court analyzed contractual obligations, looking at the specific terms of the APA and the intent of the parties. It was determined that the APA did not provide Spoke the right to deduct the pre-receivership credits from the Cure Costs.

Decision: The court ruled that:

• The court found in favor of the Receiver and Canadian Natural Resources Limited (CNRL), ruling that the pre-Receivership credits owed by CNRL to SanLing must be paid to the Receiver and not used to reduce the Cure Costs owed by Spoke.
• Spoke’s cross-application for additional financial relief was dismissed, but Spoke was entitled to a reimbursement of $38,538 for overpayment of Cure Costs.
• Each party to bear own costs.