Canadian junior settles protracted Yukon lawsuit over field development

Gary Park

Petroleum News Calgary correspondent

A legal battle involving a Yukon natural gas field and stretching over 13 years has finally been settled.

Canadian Southern Petroleum said it will collect C$25 million of the C$100 million it had originally claimed from Imperial Oil and Anderson Exploration (which has since been acquired by Devon Energy), although legal costs of about C$16 million will erode its final payment.

Canadian Southern said in a statement it was pleased to have concluded “this long and costly litigation and looks forward to a renewed focus on exploration and development of the company’s properties.”

As part of the settlement, Canadian Southern has agreed to end all litigation against defendants related to the Yukon’s Kotaneelee field, including a claim “that the defendants failed to fully develop the field.”

When it launched the lawsuit in 1990, the plaintiff accused Imperial and Anderson of breaching their fiduciary duty in failing to develop or adequately market gas from Kotaneelee and alleged that operating procedures had added to the cost of developing the field.

Kotaneelee, covering 30,000 acres in the southeastern corner of the Yukon just north of the British Columbia border, has produced upwards of 60 million cubic feet per day of gas.

Canadian Southern holds a 30 percent carried interest in the field.