Last week we discussed the decision of the Alberta Court of Queen’s Bench in Kasten Energy Inc. v. Shamrock Oil & Gas Ltd., 2013 ABQB 63 and, in particular, the Court’s concise summary of the applicable test for the appointment of a receiver.

The Court also considered whether a security interest granted by Shamrock Oil & Gas Ltd. (“Shamrock”) in all of its present and after acquired personal property pursuant to a general security agreement (“GSA”) included a petroleum and natural gas lease it held for the development of an oil well.

Shamrock contended that the authority of a receiver only extended to personal property but not to the lease or sale of the well. Shamrock submitted that the lease was a profit à prendre, which was an interest in land excluded under the Personal Property Security Act (Alberta) (the “PPSA”). The Court found that the lease was a property interest covered by the PPSA and the GSA, relying heavily on the Supreme Court of Canada’s reasoning in Saulnier v. Royal Bank of Canada, 2008 SCC 58. In that case, the Supreme Court of Canada considered the term “property” in the context of a commercial fishing license under the BIA and the Nova Scotia PPSA. In its reasoning, the Supreme Court of Canada stated that “the subject matter of the license (i.e. the right to participate in a fishery that is exclusive to license holders) coupled with a proprietary interest in the fish caught pursuant to its terms, bears a reasonable analogy to rights traditionally considered at common law to be proprietary in nature …”. In this instance, the Court noted that the oil and gas lease was analogous, as Shamrock had a licence to access, drill and extract substance from the ground which was coupled with a proprietary interest under the licence in the extracted resource. Such right was transferable, and fell within the power and authority of the receiver, subject to the terms of the oil and gas lease with the Crown.