Red Deer County has cut a deal with a pair of Calgary oil companies to recoup nearly $2 million in back taxes.
Almost all of the unpaid taxes — $1.87 million — are owed by Vantage Point Resources Inc. A smaller company, High Point Oil Inc., owes about $27,000.
Under the terms of repayment deals approved by county council on Tuesday, Vantage will have two years to pay off through monthly instalments its back taxes plus its 2023 and 2024 tax bills of just under $712,000 a year.
High Point worked out a similar one-year agreement to pay its back taxes and its 2023 bill of $63,000. During those periods the companies will not have to pay late payment penalties.
Assistant county manager Dave Dittrick described them as “good companies that got behind on their credit card bill” and said they had been willing to work with the county to pay their debts.
That has not been the case with a number of companies.When Trident Exploration Corp. shut down in 2019 and walked away from its 4,700 wells, it owed the county $2.5 million in taxes. Besides Trident’s debt, which had to be written off, 25 other companies currently owe the county money.
The county got some help recouping the taxes after the province’s energy minister issued an order under the Responsible Energy Development Act requiring the Alberta Energy Regulator to receive evidence that municipal taxes have been paid when approving licence transfers or new licences.
Both Vantage and High Point needed approvals and could not get them until they settled with the county first.
Dittrick said working out a repayment schedule benefits the county and energy companies.
“What we’re trying to do is keep the industry alive in Red Deer County,” he said. “I feel there is a risk if we were not to accept this. We don’t want to put anyone into bankruptcy.”
Coun. Connie Huelsman had a similar take on the repayment deal.
“At least for the county we’re getting some of our tax money back and we’re helping them to get back on track.”
Coun. Christine Moore said she “reluctantly” supported the repayment plans, noting many county residents have faced hard financial times in recent years.
“We need to support the industry, but I just hope this is not repeated and we can get back on the right path.”
Also expressing reservations was Coun. Brent Ramsay, who was concerned making tax concessions put the county on a “slippery slope.
“It’s frustrating. I don’t think our residents would get the same deal.”
Despite the reservations of council, the repayment plans were unanimously approved.
Unpaid oil and gas taxes have been a sore spot for Alberta’s rural municipalities for years.
A Rural Municipalities of Alberta (RMA) survey found $268 million was owed communities by energy industry companies, many of which are operating. RMA has lobbied for legislation with more teeth to force tax-dodging companies pay up.