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Canadian Acquisition Issues

Mark R. Smith, John A. Brussa, Oil and Gas Acquisitions (1995)

The oil and gas industry is relatively new in Canada. While natural gas was found in Alberta as early as 1884, significant exploratory activity did not occur in Alberta until after the discovery of the Leduc2 oilfield in 1947. Because the Canadian oil industry developed much later than in the United States, and as a result of a heavy dominance of American based oil companies, primarily the majors, Canadian oil and gas law and practices drew heavily from the United States. As was observed by the Alberta Court of Appeal3:

Canadian courts have consistently accepted help in the use and interpretation of terms in the oil and gas business from the courts of the United States because of their much wider experience in problems arising from the development of oil and gas fields and the production of these substances...

Until the early 1980's, the major oil companies of the United States, and to a lesser extent, Europe, dominated the industry. There has been a growing diversification of the oil and gas industry since that time. In an effort to increase Canadian ownership in oil and gas operations, the federal government created PetroCanada which grew through the purchase of various Canadian branches of foreign oil and gas companies.4 Another factor in diversifying the ownership of oil and gas reserves has been the “rationalization” by many of the majors of their reserve