Brett McKay, Local Journalism Initiative Reporter, Investigative Journalism Foundation

The IJF has identified nearly 600 Alberta companies responsible for millions of dollars of municipal tax arrears and unpaid leases to landowners.

Unpaid oil and gas property taxes have created an increasingly large burden for local governments in Alberta. Rural municipalities reported companies owed $81 million in cumulative tax arrears in 2018. As of the end of 2024, the property tax debt had grown to nearly $254 million, despite policies being introduced to stop insolvent or struggling companies from acquiring new oil and gas wells.

Taxpayers are also on the hook for unpaid leases to landowners, since property owners can apply to the province to reimburse them for outstanding bills.

A March 2023 ministerial order from Alberta’s energy minister established rules authorizing Alberta Energy Regulator (AER) to block the transfer of new well licences to companies that owe more than $20,000 in unpaid municipal taxes, unless certain conditions are met. There were 130 companies exceeding that threshold in 2024, according to documents released through an access to information request. 

Twenty-one of these companies that owed more than the government’s threshold were given new well licences, the IJF has found, raising questions about how the energy regulator’s rules are enforced.

“Why are you allowing it? And what are you doing to stop it?”

Kara Westerlund, president of the Rural Municipalities of Alberta (RMA), an association representing 69 counties and municipal districts, said the 2023 ministerial order was a welcome step for governments frustrated by delinquent companies.  However, Westerlund said the order doesn’t address the unpaid taxes of companies that aren’t trying to acquire new wells, and the reported use of the order remains unclear.

“The other issue is, we know in several cases in the last few years that there’s been companies that have managed to slip through this somehow,” Westerlund said.

The ministerial order allows the regulator to approve well licence transfers to a company in arrears if certain conditions are met, such as entering into an agreement to repay owed taxes to municipalities or providing proof the debt has been paid.

“We have reports. I know of two instances right now where companies were able to transfer, and they should not have been able to transfer,” Westerlund said.

“The question that we’re asking is, how did this happen? Why are you allowing it? And what are you doing to stop it? And those questions still remain unanswered up to this date.”

 The Ministry of Municipal Affairs’ monitoring process reported that the 130 companies beyond the tax arrears threshold in 2024 owed a combined $109 million, according to documents obtained through an access to information request. The ministry estimated that only $12.4 million was related to companies “with a likely capacity to repay,” according to a March 2025 document providing advice to the minister. The remaining amount was “attributed to struggling, insolvent, and defunct companies,” and the ministry advised these amounts were unlikely to be recovered even through insolvency proceedings.

• Search Alberta oil and gas company municipal tax arrears

Data from Municipal Affairs and the AER indicates several companies showed early signs of financial struggles but continued to acquire new wells — and fell further behind on their tax bills.

In 2021, Northern Sunrise County was the only municipality that reported tax arrears from Blue Sky Resources, which owed $28,215. When Municipal Affairs repeated its survey for 2024, the company’s unpaid tax bills in 15 municipalities had grown to nearly $3 million. Between May and December 2023, the AER approved the transfer of 407 well licenses to Blue Sky Resources.

MAGA Energy Ltd.’s total tax arrears doubled between 2021 and 2024, from $616,541 to more than $1.2 million. The company acquired 191 new well licences in 2024 and 2025.

Battle River Energy’s total tax arrears increased from $208,316 in 2021 to $602,316 in 2024. The AER approved the transfer of five wells to the company in October 2023.

These cases aren’t exactly loopholes or leniencies being exploited by companies, said Drew Yewchuk, a public interest lawyer and PhD student at the University of British Columbia, but are rather a matter of regulatory policy.

“It’s a mistake by the AER’s overall approach, where they think it is better for any solvent company, any company that is not officially bankrupt, to have the wells than for a company that is officially bankrupt to have the well. And so even if the company is doing very badly —  it’s not paying landowners, it’s not paying municipal taxes, it’s not able to pay for the closure of its assets — they will still approve any transfer from a bankrupt company to that officially still-operating company,” Yewchuk said.

“That’s the mistake that leads to a process where wells that have different kinds of liabilities attached — environmental liabilities, municipal taxes, landowner payments — bounce from failing company to failing company to failing company in this long chain, instead of going, as they probably should, to the Orphan Well Association,” he said.

The Orphan Well Association manages the closure of orphan wells, pipelines, and facilities when a company is insolvent or otherwise unable to close and reclaim a site.

Yewchuk also noted the AER and municipalities have differing interests that put them in conflict when an oil and gas company is failing. The AER’s priority is to use the company’s remaining money for closure liabilities, whereas municipalities want the remaining money to cover their back taxes, he said.

A spokesperson for the AER said any licensee that initiated a well transfer application while on Municipal Affairs’ list of companies owing more than $20,000 would have had to provide evidence that it was meeting the necessary requirements.

“The AER is actively assessing, monitoring and managing compliance of the large majority of companies in operation that have municipal tax arrears,” the AER said in a statement.

Vitor Marciano, chief of staff to Alberta’s Energy Minister Brian Jean, said that there are signs the system is working and companies are making good on their agreements with municipalities.

“Some of the companies, between 2021 and 2024, dramatically reduced the amount of taxes owing. So obviously they were making some level of progress on their payment plans,” Marciano said.

Lease payments and the path to insolvency

Westerlund said that the RMA’s research has found that tax arrears are often a later sign that a company is struggling, and municipalities tend to be “third on the list” behind local vendors and landowners.

“We’re finding that they’re not paying the local vendors first,” she said. “It’s the bread and butter of a lot of our communities. So we’re finding a lot of the subtrades and the subcontractors and our vendors in our communities are the first not to be paid. Then the surface leases, so obviously that’s the landowners not being paid, and then the municipal portion is next.”

She added, “The other interesting piece that we’re finding … if we’ve got a company not doing those three things, that generally means the likelihood of them not keeping up on their environmental liabilities and requirements are also slipping.”

A surface lease is an agreement between a company and a landowner setting the terms for access to the land where a well is located. While a landowner can’t refuse access to a company that wants to drill on their property, there are programs in place landowners can turn to if surface leases go unpaid.

Landowners can apply to the province’s Land and Property Rights Tribunal (LPRT) to have the unpaid rent reimbursed by the government. In theory, the government can then collect the amount it has paid for oil and gas company’s leases. However, less than one per cent of the $150 million the government spent to cover these leases between 2010 and 2024 was recovered, according to a report from The Narwhal.

Jen Stephenson has had companies drilling for oil and gas on her property in Brazeau County for years, but until recently she had no need to know much about the land and property rights board or the province’s recompensation scheme.

“We’ve always had good dealings with our oil companies,” Stephenson told the IJF.

Last summer, MAGA Energy failed to pay their lease on time. After a few weeks of trying to sort it out with the company directly, Stephenson and her husband went to the LPRT. Her claim has moved through the tribunal, and she expects to get the $5,000 she’s owed sometime in March, about nine months after the payment was due.

Though she’s glad to be getting the money she’s owed, Stephenson said the process doesn’t sit right with her knowing it will ultimately be taxpayers, through the province’s general revenue fund, and not MAGA Energy that is settling the debt.

“I’m a taxpayer. So basically, I’m paying myself, and you’re paying me, and everybody else is paying me,” she said.

MAGA Energy and Battle River Energy did not respond to requests for comment by the time of publication.

The AER says it considers these unpaid leases in its assessment of a company’s financial position. But getting a public disclosure of how much the government has paid on behalf of individual companies isn’t easy.

The LPRT orders the government to pay landowners when appropriate. The board doesn’t compile or analyze aggregate data, including total amounts directed to be paid by each operator per year, LPRT director Njeri Karanja told the IJF. However, it does publish its decision to various public databases, including directions to pay orders issued

Using web scraping and text extraction tools, The IJF analyzed nearly 18,000 LPRT direction to pay orders issued between 2021 and 2025. The orders account for $89.6 million paid by the government of Alberta for the unpaid leases of about 300 companies, including 131 companies that also appear on the most recent list of companies with municipal tax arrears.

For many companies, these orders to pay are indicators it is on the path to insolvency.

In 2023, Blue Sky Resources was named in 13 LPRT orders directing Alberta’s government to pay $49,873 to landowners for unpaid leases. The following year that number nearly tripled, with the government paying out $145,624 for 33 LPRT decisions related to unpaid leases involving Blue Sky.

On Sept. 24, 2025, the company filed for bankruptcy. A preliminary list of creditors included in the filing shows the company owed $63.7 million to dozens of contractors, businesses, landowners and municipalities.

Many of the LPRT decisions for unpaid leases name multiple operators for the same property, but the board doesn’t give any direction on how the government recoups these funds. As such, some orders only indicate that a company was named in connection to an unpaid lease, and not whether the government is looking to the company for repayment of part or all of the amount.

“Once the LPRT issues the Direction to Pay, the LPRT’s authority ends. The responsibility for collections and enforcement falls with Crown Debt Collections in the Ministry of Treasury Board and Finance,” Karanja told the IJF.

“You just get pushed aside”

In a small community where “everybody knows what everybody’s doing,” Stephenson said that after her first lease payment was missed, it didn’t take long to find out that her neighbours had similar stories, and so did local welders, fluid haulers and contractors that had dealings with MAGA Energy.

Between 2021 and July 2025, the LPRT directed the province 74 times to pay landowners for MAGA Energy’s unpaid leases, more than $412,000. MAGA Energy was also named as an operator in an additional 18 LPRT orders alongside other companies for the amount of $167,276. The AER has approved the transfer of 191 wells to the company since 2024.

“I’m not an accountant, but the amount of money that MAGA owed in back leases and in taxes to counties, it did not make sense for them [the AER] to say, ‘Oh, there’s an exception,’” Stephenson said.

“I don’t know where to go. I’ve tried our MLA. I’ve tried [Minister of Energy and Minerals] Brian Jean and stuff like that, and you just get pushed away,” she said.

“Why should these guys live high and mighty?” she said. “That’s not right. If I don’t pay my taxes, whether it’s my property taxes or my provincial tax or my federal tax, there’s consequences.”

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