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June 2010

Table of Contents

In Remembrance - Hugh Crosbie

2010 Golf Tournament
Prize Winners and Sponsors

Industry Info
June 9, 2010 - EPAP Implementation and System Seminars

Task Force Update
Joint Venture Representative Skill Assessment Tool is currently under development...

The Language of Efforts
BD&P Energy Record, February 2010, by Mark Henderson, Student-at-Law

Table of Contents

In Remembrance

Hugh Crosbie

Hugh Crosbie, a PJVA member of over a decade and most recently a Joint Venture Representative at Devon Canada, passed away peacefully at home on March 5, 2010, with his loving wife, Ursula, by his side. Hugh was another great import from Saskatchewan and will always be remembered for his permanent smile, gentle nature and professionalism. He acquired over thirty-five years of Western Canadian resource experience in land, oil and gas, agriculture, forestry, water resources, environmental resources, anthropology and archaeology, horse ranching and retail business. Hugh was one of the "good guys" and will be missed by many. We wish you great tales and happy trails, Hugh.

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2010 Golf Tournament - June 2, 2010

1st Prize Scott Allen (KEYERA), Duane Norgaard (Apache), Gord Kublik (SemCAMS), Delores Hiscott (BP)

2nd Prize Jon Remmer (AltaGas), Alicia Duhault (Independent), Graham McLennan (Crescent Point), Teresa Waddington (Shell)

3rd Prize Lorie Caron (EnCana), Jarid Poissant (KEYERA), Doug Phillips (Advantage), Trevor Ross (Crescent Point)

Most Honest Steve Bosma (JVMI), Grant Feddema (Devon), Diego Lucero (Advantage), Shannon Gervais (ConocoPhillips)
Early Bird Draw: Suma Mathew (Talisman) - Westin - 1 Night Weekend Stay
Skill Prizes Winners
Ladies Longest Putt Alicia Duhault (Independent) gave to next winner Yvonne Firth (KEYERA)
Men's Longest Putt Murray Feddema (Feddema Consulting)
Ladies Longest Drive Alicia Duhault (Independent)
Men's Longest Drive Jason Wiens (JVMI)
Ladies Closest to the Pin Nancy Price (KEYERA)
Men's Closest to the Pin Jason Wiens (JVMI)
Ladies Ball in Water Alicia Duhault (Independent)
Men's Ball in Water Jason Mann (Pengrowth)
Ladies Ball in Sand Tracey Moore-Lewis (Suncor)
Men's Ball in Sand Jerry Marchak (Daylight)
Ladies Closest to the Pot (GPMi) Tracey Moore-Lewis (Suncor)
Men's Closest to the Pot (GPMi) Jarid Poissant (KEYERA)
Other Prizes: Winners
Ladies $1000 Travel Certificate (JVMI) Wendy Lockie (EOG)
Men's $1000 Travel Certificate (JVMI) Lee Wahl (CNRL)
Trip for 2 (Silverwing) - $1,700 Tim Reimer (Enerplus)
Food Bank Tax Receipt (1) - $230 Duane Norgaard (Apache)
Food Bank Tax Receipt (2) - $230 Amber Stephens (ATCO Midstream)
Food Bank Tax Receipt (3) - $230 Greta Legaspi (EnCana)
Sheraton Suites - 1 Night Weekend Stay Amber Stephens (ATCO Midstream)
Delta Bow Valley - 1 Night Weekend Stay Terry Moschopedis (Energy Navigator)
Nanatari - Cooking Lessons (Kimi Rutz) Kurt Brackman (EnerMark)
Pandell Bag Wes Mah (ConocoPhillips)
Pandell Bag Chris Haubrich (ARC)
Pandell Bag Nick Markic (Talisman)
Pandell Bag Duane Norgaard (Apache)
TAQA Safety Kit (1) Sharon Burns (Devon)
TAQA Safety Kit (2) Scott Allen (KEYERA)
TAQA Safety Kit (3) Kody Carroll (JVMI)

Sponsors and Acknowledgements

GOLF COMMITTEE: Arleen Agate - Suncor Energy
Mike Ferris - Advantage Oil & Gas
Randy Fryer - Fryer Consulting Services
Jaron Nogas - ATCO Midstream
Doug Phillips - Advantage Oil & Gas
Rick Steffensen - Penn West Energy

HOLE-IN-ONE SPOTTERS: Nancy Fontana - QSC Consulting
Joyce Scully - Joyce Scully & Associates

Joint Venture Management Hole sponsor/ Golf Balls/ Trip to Vancouver
Shell Canada Golf Carts
Pandell Technology Beer Tent
Gas Processing Management Closest to the Pot
AltaGas Income Trust Lunch Co-sponsor
ARC Resources Lunch Co-sponsor
Crescent Point Energy Trust Lunch Co-Sponsor
The Westin Hotel Early Bird Draw
Sheraton Suites Door Prize
Delta Bow Valley Door Prize
Nanatari Kimi Rutz - Cooking Lesson
Skill Prize Frank Kirby (GFK Consulting)
Skill Prize Encana
Skill Prize Enerplus
Skill Prize Signalta
Buzzards / Bottlescrew Bills Restaurant
Rivoli Chophouse & Tavern
The Bow River Barley Mill
The Unicorn Pub  
Silverwing Golf Course Staff, Lunch, Dinner, Golf, etc.
Kristen Brown - Food Bank Continued support from the PJVA for Food Bank
Doug Phillips MC

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Industry Info

EPAP Implementation and System Seminars
Wednesday, June 9, 2010

EPAP Implementation
Implementing and operating the ERCB's Enhanced Production Audit Program (EPAP) successfully is a critical aspect of compliance. In this 1/2-day seminar, Yogi Schulz will describe key considerations in implementing and operating EPAP for maximum value.

EPAP System
Using the EPAP System successfully is an important aspect of operating in compliance with EPAP. In this 1/2-day seminar, Reg Brehaut will show how to use the EPAP System efficiently, how to choose among the many options available and how to maintain compliance with EPAP.

Download a detailed Brochure and Registration Form

Corvelle Consulting Website

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Task Force Update

Tim Reimer, Task Force Director

A task force is currently developing a Joint Venture Representative Skill Assessment Tool. The finished product will contain a typical JV Rep role description, definitions of key competencies that a JV Rep should possess, and an assessment tool that will enable Reps evaluate themselves. This will enable Reps to establish their skill levels within their organization and the industry and will help them to focus on specific knowledge and skill improvements required. The goal is to provide this tool to the membership in the fall.

The Language of Efforts

Mark Henderson, Student-at-Law

The terms "best efforts", "reasonable efforts" and "commercially reasonable efforts" are often included in commercial contracts. As the terms impose different obligations on the signing parties, it is important to understand the meaning of each term.

Best efforts
Of the three phrases, "best efforts" presents the most onerous obligations for the party having to make those efforts. The meaning of "best efforts" was clarified in Atmospheric Diving Systems Inc. v International Hard Suits Inc.1("Atmospheric Diving") where the Court listed seven distinguishing factors of the "best efforts" standard:
  1. "Best efforts" imposes a higher obligation than a "reasonable effort".
  2. "Best efforts" means taking, in good faith, all reasonable steps to achieve the objective, carrying the process to its logical conclusion and leaving no stone unturned.
  3. "Best efforts" includes doing everything known to be usual, necessary and proper for ensuring the success of the endeavour.
  4. The meaning of "best efforts" is... not boundless. It must be approached in the light of the particular contract, the parties to it and the contract's overall purpose as reflected in its language.
  5. While "best efforts" of the defendant must be subject to such overriding obligations as honesty and fair dealing, it is not necessary for the plaintiff to prove that the defendant acted in bad faith.
  6. Evidence of "inevitable failure" is relevant to the issue of causation of damage but not to the issue of liability. The onus to show that failure was inevitable regardless of whether the defendant made "best efforts" rests on the defendant.
  7. Evidence that the defendant had it acted diligently, could have satisfied the "best efforts" test, is relevant evidence that the defendant did not use its best efforts. The point was clearly made in Atmospheric Diving, after a review of a number of cases, that where parties include a "best efforts" clause in a contract, they must surely intend that "something more than reasonable efforts" be used. The seven distinguishing factors for the "best efforts" standard were endorsed in Alberta in the case of Amonson v. Martin Goldstein.2 A helpful note for drafters or those who are entering a contract with "best efforts" language, is that the best efforts requirement is more limited in the case of government bodies. Where public policy issues arise that conflict with the best efforts obligations in a contract, these public policy concerns will supersede the contractual "best efforts" requirement.3
Reasonable Efforts
The concept of "reasonable efforts" is not well defined. Certainly it appears on its face to be a less onerous obligation than "best efforts". Commentary from an Ontario case, Ontario(Ministry of Transportation) v. O.P.S.E.U.4 indicates that it may be easier to define "reasonable efforts" by what it is not: "reasonable efforts" does not connote "all efforts", "every effort" or "efforts to the point of undue hardship". Instead "what it means is efforts that are reasonable in the circumstances, all things considered. What is reasonable in the circumstances will obviously, depend on the facts of particularcases."5

Commercially Reasonable Efforts

The meaning of "commercially reasonable efforts" was discussed in the case of 364511 Ontario Ltd. v. Darena Holdings Ltd.6 ("Darena Holdings"). There the numbered company ("Delta") entered into an offer to lease an arena from Darena. The offer was conditional upon Delta obtaining the required approvals to operate a bingo hall on the premises. Delta had been unaware of the strong opposition by the public and city council to the operation of the bingo hall and upon becoming aware, concluded its chances of succeeding with its application did not look good and abandoned a formal application. Darena argued that Delta had not made "reasonably commercial efforts" to obtain the approvals as required by the offer. The trial judge noted he could find no judicial authority on the meaning of "reasonable commercial efforts" and referred to the ordinary dictionary meaning of the words as follows:7

a) "Reasonable" implies sound judgment, a sensible view, a view that is not absurd.

b) "Commercial" means having profit or financial gain as opposed to loss as a primary aim or objective. The trial judge concluded that the standard of "reasonable commercial efforts" meant that if Delta had a doubt from the efforts made, that no approval would be granted; it could conclude its efforts would be unsuccessful and could withdraw from the transaction. While the Court of Appeal8 in this case agreed with the trial judge in terms of the outcome, that Delta had made all reasonable commercial efforts in the circumstances, the Court of Appeal did not agree that "a simple doubt" about the prospects of success would be enough to enable a party to withdraw from a transaction. In the words of the Court of Appeal, rather than simple doubt, "uncertainty that made it commercially unreasonable to proceed was required"9.It was interesting that the Court of Appeal commented that it did not find it necessary or useful to define "reasonable commercial efforts" in terms of "good faith", "bona fides" or "bestefforts."10 The Darena Holdings case was followed in the more recent case of Nelson v. 535945 British Columbia Ltd.11 ("Nelson") wherein the Court held that the obligation pursuant to "all reasonable commercial efforts" involved a requirement to pursue the matter up to the point where it became commercially unreasonable for them to proceed further. Further, in Nelson it was held that the addition of the adjective "all" before "reasonable commercial efforts" was found not to create a higher standard than "reasonable commercial efforts".12 According to Mr. Justice Ehrcke in Nelson, either efforts were commercially reasonable or they were not.

Concluding Thoughts
When a party sees one of these three terms in a contract, it should be aware of the level of flexibility available to the party who will have the obligation. To this end the parties are wise to clarify the standard by which the obligation will be measured, and to ensure that this standard conforms to what the parties intend and expect.

1 (1994), 89 B.C. L. R. (2d) 356 (B.C.S.C.)
2 (1994) 27 Alta L.R. (3d) 78.
3 Wentworth Developments Inc. v Calgary (City) [1998] A.J. No. 252 (Alta Q.B.)
4 1997 Carswell Ont 6197
5 Supra, Note 4, at para. 46
6 [1998] O.J. No. 603 (Ont. Gen. Div.).
7 Supra, Note 6, at para. 59
8 364511 Ontario Ltd. v. Darena Holdings Ltd. [1999] O.J. No. 1784 (C.A.)
9 Supra, note 8 at para. 5
10 Supra, note 8 at para. 4
11 2007 [2007] B.C.J. No. 2282
12Supra, Note 11, para .37

Source: BD&P Energy Record, February 2010. Published with permission.

PJVA was incorporated in 1985 to represent individuals and organizations involved in petroleum joint ventures. PJVA Joint Venture Views is written for you. Inside you will find articles about people active in the Association, articles in the Association, articles about current projects being worked on by the Association, information about coming events in the petroleum industry, courses and seminars offered and/or sponsored by the Association and some for people new to the industry.