CONDENSED INTERIM BALANCE SHEET (UNAUDITED)

Transcription

1 CONDENSED INTERIM BALANCE SHEET (UNAUDITED) As at (Canadian dollar in thousands) Notes June 30, 2016 December 31, 2015 ASSETS CURRENT ASSETS Cash and cash equivalents $11,420 $47,235 Restricted cash 4 7,100 - Trade and accrued receivables 10,803 10,653 Inventories 5,393 6,046 Other assets 5 12,588 13,895 47,304 77,829 NON-CURRENT ASSETS Property, plant, and equipment 6 447, , , ,254 $495,157 $872,083 LIABILITIES AND SHAREHOLDERS EQUITY CURRENT LIABILITIES Trade and accrued payables $6,965 $16,535 Liabilities subject to compromise 2 281,910 - Debtor-in-possession credit facility 8 13,036 2, ,911 18,644 NON-CURRENT LIABILITIES Long-term debt 8-255,228 Decommissioning liabilities 9 81,741 74,114 81, ,342 SHAREHOLDERS EQUITY Share capital 10 1,177,556 1,177,556 Contributed surplus 41,390 41,190 Deficit (1,107,441) (694,649) 111, ,097 $495,157 $872,083 Going concern (note 2) The accompanying notes to the condensed interim financial statements are an integral part of the statements.

2 CONDENSED INTERIM STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED) (Canadian dollar in thousands) Notes Three months ended June 30, Six months ended June 30, INCOME Revenue, net of royalties $22,757 $71,349 $34,581 $125,123 Interest and other income ,784 71,429 34, ,336 EXPENSES Blending of products sold 8,345 18,315 14,288 40,211 Production and operating expenses 14,806 20,060 32,192 42,360 Transportation and handling costs 7,117 19,935 18,313 41,218 Onerous contract provision 13 1,920-12,345 - Restructuring expenses 5 4,217-4,217 - General and administrative 3,067 7,566 7,049 13,498 Share-based compensation Depletion, depreciation, amortization, and impairment 6 345,122 24, ,154 50,916 Loss (gain) on risk management contracts (12) Foreign exchange loss (gain) 711 (35,343) (11,689) 32,763 Loss (gain) on disposition and derecognition of property, plant, and equipment (51) 206 (51) 641 Finance charges 8,690 15,311 16,925 43,189 Gain on Recapitalization transaction - (210,235) - (210,235) Unrealized gain on convertible notes (1,486) (232,600) (1,486) (232,600) INCOME (LOSS) BEFORE INCOME TAX (369,777) 442,795 (412,792) 302,912 Income tax provision INCOME (LOSS) AND TOTAL COMPREHENSIVE LOSS $(369,777) $442,795 $(412,792) $302,912 INCOME (LOSS) PER SHARE (1) Basic $(13.05) $26.19 $(14.57) $34.68 Diluted $(13.05) $5.32 $(14.57) $4.04 (1) When the Company is in a net loss position; any effect of stock options and Convertible Note conversion are anti-dilutive The accompanying notes to the condensed interim financial statements are an integral part of the statements. 2

3 CONDENSED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY (UNAUDITED) For the six months ended June 30, (Canadian dollar in thousands) SHARE CAPITAL Balance, beginning of period $1,177,556 $622,681 Equity issued for second lien senior notes - 554,863 Balance, end of period $1,177,556 $1,177,544 CONTRIBUTED SURPLUS Balance, beginning of period $41,190 $40,553 Share-based compensation Balance, end of period $41,390 $41,028 DEFICIT Balance, beginning of period $(694,649) $(652,354) Net (loss) gain (412,792) 302,912 Balance, end of period $(1,107,441) $(349,442) Total shareholders equity $111,505 $869,130 The accompanying notes to the condensed interim financial statements are an integral part of the statements. 3

4 CONDENSED INTERIM STATEMENTS OF CASH FLOW (UNAUDITED) (Canadian dollar in thousands) Notes Three months ended June 30, Six months ended June 30, OPERATING (Loss) Gain from operations $(369,777) $442,795 $(412,792) $302,912 Adjustments for: Depletion, depreciation, amortization, and impairment 6 345,122 24, ,154 50,916 Onerous contract provision 13 1,920-12,345 - Share-based compensation Finance charges - non-cash portion 289 1, ,994 Interest expense on long-term debt 7,291 13,987 14,901 38,923 Unrealized gain on risk management contracts - (2,798) - (4,033) Unrealized foreign exchange loss (gain) 647 (36,534) (11,615) 33,240 Unrealized gain on convertible notes (1,486) (232,600) (1,486) (232,600) Gain on recapitalization transaction - (210,235) - (210,235) Loss (gain) on disposition and derecognition of property, plant, and equipment 6 (51) 206 (51) 641 Decommissioning liabilities settled 9 (1) (6) 5 (20) Changes in non-cash working capital (8,848) (18,955) 4,179 (35,384) Cash flow used in operating activities (24,791) (17,520) (38,572) (51,171) INVESTING Expenditures on property, plant, and equipment 6 (453) (4,950) (1,834) (11,051) Proceeds on the disposition of equipment Changes in non-cash working capital 17 1,724 (404) (2,711) Cash flow used in investing activities (130) (3,226) (1,932) (13,762) FINANCING Proceeds from the recapitalization transaction (net of transaction costs) - 49,032-49,032 Repayment on borrowings under the Amended Term Loan Facility - (470) - (877) Proceeds from the debtor-in-possession credit facility (net of transaction costs) 8 12,913-12,913 - Interest paid on long-term debt (27) (4,248) (27) (7,022) Cash flow from financing activities 12,886 44,314 12,886 41,133 (12,035) 23,568 (27,618) (23,800) Foreign exchange gain (loss) on cash balances held in foreign (1,097) 3,505 Cash and cash equivalents, beginning of period 30,503 49,307 47,235 94,164 Restricted cash (7,100) - (7,100) - Cash and cash equivalents, end of period $11,420 $73,869 $11,420 $73,869 The accompanying notes to the condensed interim financial statements are an integral part of the statements. 4

5 NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS 1. NATURE OF OPERATIONS Connacher Oil and Gas Limited ( Connacher or the Company ) is an in situ oil sands developer, producer, and marketer of bitumen. The address of the Company s principal office is Suite 1040, 640-5th Avenue S.W., Calgary, Alberta. On June 17, 2016, the Toronto Stock Exchange delisted the Company s common shares for failure to meet the continued listing requirements. 2. COMPANIES CREDITOR ARRANGEMENT ACT ( CCAA ) ANNOUNCEMENT AND GOING CONCERN On March 31, 2016, the Company entered into a forbearance agreement (the Forbearance Agreement ) with Credit Suisse AG, Cayman Islands Branch, as administrative agent, and certain lenders constituting the Required Lenders in respect of US$154.6 million of loans made by the lenders (the Lenders ) under the credit agreement dated as of May 23, 2014 (as amended, restated, supplemented, or otherwise modified from time to time), including as amended pursuant to the Amendment No. 1 dated May 8, 2015 (the Amended Term Loan Facility ). Under the terms of the Forbearance Agreement, the Lenders agreed to, among other things, forbear from exercising enforcement rights and remedies arising from the Company s failure to pay the cash interest and principal payments due on March 31, 2016 until the earlier of April 30, 2016; the occurrence of an event of default under the Amended Term Loan Facility, unrelated to the failure to pay principal and interest due on March 31, 2016; or the occurrence of a default or breach of representation by the Company under the Forbearance Agreement. On April 30, 2016, the Company entered into a second forbearance agreement (the Second Forbearance Agreement ) which extended the forbearance period until May 16, On May 17, 2016, the Company sought and obtained creditor protection under the Companies Creditors Arrangement Act ( CCAA ) pursuant to an order (the Initial Order ) granted by the Court of Queen s Bench of Alberta, Judicial Centre of Calgary (the Court ). The Court granted CCAA protection for an initial period expiring on June 16, 2016, which was first extended to August 16, 2016 and subsequently extended to September 15, Under the Initial Order, Ernst & Young Inc. was appointed by the Court as the monitor (the Monitor ). The CCAA is a federal insolvency statute that allows an insolvent company which owes creditors in excess of $5 million to restructure its business and financial affairs and stays creditors and others from enforcing rights against the insolvent company. The decision to file for creditor protection was a result of, among other things, the continued deterioration of prices for oil and the Company s limited ability to access capital markets. As authorized and approved by the Initial Order, the Company secured interim financing in the form of a senior secured debtor-in-possession credit facility (the DIP ) from certain existing lenders for up to US$20 million, with initial commitments of up to US$11.5 million (the Initial Commitments ). The DIP is expected to provide sufficient liquidity to support the Company during the CCAA proceeding. The Initial Order also approved and authorized the Company and the Monitor to conduct a sale and investment solicitation process (the SISP ) as set out in Schedule A to the Initial Order in order to identify one or more purchasers and/or investors in the Company s business and/or property. The SISP is currently in progress. At May 17, 2016, in connection with the filing of CCAA, the Company identified the following obligations subject to potential compromise: (Canadian dollars in thousands) Current and long-term portions of Amended Term Loan Facility $201,138 Interest payable on Amended Term Loan Facility 9,033 Convertible Notes 44,000 Interest payable on Convertible Notes 6,714 Trade and accrued liabilities 21,025 Total liabilities subject to compromise $281,910 The aforementioned obligations subject to potential compromise represent the amounts expected to be resolved through the CCAA proceeding and remain subject to future, potentially material, adjustments. The liabilities that are not subject to the CCAA proceeding are excluded from the liabilities subject to potential compromise and include certain non-restructuring liabilities incurred subsequent to May 17,

6 On August 24, 2016, the Court granted a claims procedure order establishing a process for the filing, review, and determination of claims against the Company and its directors and officers. The condensed interim financial statements have been prepared on a going concern basis, which asserts that the Company has the ability to realize its assets and discharge its liabilities and commitments in the normal course of business. Conversely, if the going concern assumption is not appropriate, adjustments to the carrying amounts of the Company s assets, liabilities, revenues, expenses, and balance sheet classifications may be necessary and such adjustments could be material. The decision to file for CCAA protection was due to the continued deterioration of crude oil pricing and the restrictive provisions of the Company s long-term debt arrangements, as both factors constrained the Company s ability to generate positive cash flow from operations and to access additional financing. The Company continues to investigate, evaluate, and consider possible sale and restructuring alternatives. The aforementioned factors and related uncertainties cast significant doubt about the Company s ability to continue as a going concern. 3. BASIS OF PREPARATION The condensed interim financial statements are unaudited and have been prepared in accordance with International Accounting Standard ( IAS ) 34 - Interim Financial Reporting and follow the same accounting policies and methods of computation as the most recent annual financial statements. Certain information and disclosures normally required to be included in notes to the annual financial statements have been condensed or omitted. Accordingly, the condensed interim financial statements should be read in conjunction with the annual financial statements for the year ended December 31, 2015, which were prepared in accordance with International Financial Reporting Standards ( IFRS ). 3.1 Accounting pronouncements issued but not adopted The standards and interpretations that are issued but not yet effective up to the date of the issuance of the Company s condensed interim financial statements are discussed below. The Company intends to adopt the following standards and interpretations, if applicable, when they become effective. IFRS 9 - Financial Instruments ( IFRS 9 ) IFRS 9 is intended to replace IAS 39 - Financial Instruments: Recognition and Measurement. IFRS 9 will address: the classification and measurement requirements for financial assets and liabilities; a new hedge accounting model; and the impairment of financial instruments. IFRS 9 will be effective for annual periods beginning on or after January 1, 2018; however, early adoption is available. The extent and impact of the adoption of IFRS 9 has not yet been determined. IFRS 15 - Revenue from Contract with Customers ( IFRS 15 ) IFRS 15 will replace IAS 18 - Revenue, IAS 11 - Construction Contracts, and related interpretations. IFRS 15 is required to be adopted either retrospectively or using a modified transition approach for fiscal years beginning on or after January 1, The extent and impact of the adoption of IFRS 15 has not been determined. IFRS 16 - Leases ( IFRS 16 ) IFRS 16 will replace IAS 17 - Leases. For lessees applying IFRS 16, a single recognition and measurement model for leases will apply, with required recognition of assets and liabilities for most leases. IFRS 16 will be effective for annual periods beginning on or after January 1, The extent and impact of the adoption of IFRS 16 has not been determined. 6

7 4. RESTRICTED CASH At June 30, 2016, $7.1 million was restricted under the Initial Order and related to hibernation or shut down costs associated with any potential cessation of the Company s operations and is subject to the CCAA proceeding. 5. RETAINERS AND RESTRUCTURING EXPENSES At June 30, 2016, prepaid expenses and retainers due to professional advisors related to the CCAA proceeding totaled approximately $2.0 million of the $12.6 million of other assets. The remaining amounts represent prepaid expenses incurred in the normal course of business. For the three months ended June 30, 2016, the restructuring expenses of $4.2 million included legal fees, the Monitor s fees, and professional advisory fees associated with the CCAA proceeding. 6. PROPERTY, PLANT, AND EQUIPMENT ( PP&E ) As at (Canadian dollar in thousands) Cost Petroleum and natural gas properties Corporate Balance, December 31, 2015 $1,506,180 $22,598 $1,528,778 Additions 1, ,834 Dispositions (294) (168) (462) Change in decommissioning liabilities (note 9) 7,034-7,034 Balance, June 30, 2016 $1,514,578 $22,606 $1,537,184 Total Accumulated depletion, depreciation, and impairment Petroleum and natural gas properties Corporate Balance, December 31, 2015 $718,523 $16,001 $734,524 Impairment 332, ,000 Dispositions (203) (4) (207) Depletion and depreciation 22, ,014 Balance, June 30, 2016 $1,072,574 $16,757 $1,089,331 Total Carrying amount of PP&E As at December 31, 2015 $787,657 $6,597 $794,254 As at June 30, 2016 $442,004 $5,849 $447,853 Property, plant, and equipment with a carrying cost of $447.9 million (December 31, 2015: $794.3 million) is collateralized to secure long-term debt. As at June 30, 2016, the scope of the Company s development plan associated with its non-current assets changed materially, which indicated a potential impairment. As a result, the Company performed an impairment test. For the purposes of determining whether impairment of the Company s PP&E has occurred, and the extent of any impairment reversal, management exercises its judgment in estimating future cash flows for the recoverable amount, being the higher of fair value less costs of disposal and value in use. These key judgments include estimates about recoverable reserves, forecast benchmark commodity prices, royalties, operating and transportation costs, capital costs, and discount rates. The fair value less costs of disposal and value in use estimates are categorized as Level 3. In prior periods, to determine the recoverable amount, which was calculated as fair value less costs of disposal, the Company utilized the reserve volumes and values included in the reserve report evaluated by the Company s independent reserve evaluators. However, due to a material alteration in the development plan, the Company utilized its internal discounted cash flow forecast, which reflected material changes to capital expenditures and revised pricing and input costs. The recoverable amount of $442.0 million was calculated as value in use. 7

8 The value in use was determined based on discounted before-tax future net cash flows of proved and probable reserves assuming forecast prices and input costs. The forecast prices used to determine value in use reflect benchmark prices, as determined by the Company s independent reserve evaluators, adjusted for basis differentials to determine local reference prices, transportation costs and tariffs, heat content, and quality. The following benchmark reference prices were used as a basis for the impairment test at June 30, 2016 (annual escalation rated used after 2026 was 2.0%): WTI crude oil (US$/bbl) WCS (Western Canadian Select) (C$/bbl) Edmonton C5 (C$/bbl) Exchange rate (C$/US$) The Company s previous impairment test was conduct using a risk adjusted discount rate, before-tax, of approximately 14.7%; whereas, at June 30, 2016, the Company utilized a risk adjusted discount rate, before-tax, of 16.0%. The impairment test, which is the difference between the net book value of the Company s non-financial assets and the value in use, yielded an impairment of $332.0 million. 7. FAIR VALUE OF FINANCIAL INSTRUMENTS All assets and liabilities for which fair value is measured or disclosed in the condensed interim financial statements are categorized within the fair value hierarchy: Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities; Level 2 - Valuation techniques for which the lowest-level input that is significant to the fair value measurement is directly or indirectly observable; or, Level 3 - Valuation techniques for which the lowest-level input that is significant to the fair value measurement is unobservable. The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs. The Company assesses the fair value of the Convertible Notes, DIP financing, and Amended Term Loan Facility at each reporting date or as needed. In computing the fair value for these financial instruments, the Company considers various outcomes and multiple variables, including, but not limited to: credit spreads and interest rate spreads. The calculations are complex and require significant judgment around market inputs, which are subject to factors outside of management s control. As such, these values are subject to measurement uncertainty and may not be reflective of values that these financial instruments are settled at. The following table shows the comparison of the carrying and fair values of the Company s financial instruments by classification: As at June 30, 2016 December 31, 2015 (Canadian dollar in thousands) Carrying Value Fair Value Carrying Value Fair Value Loans and receivables Cash (1) $11,420 $11,420 $47,235 $47,235 Restricted Cash (1) 7,100 7, Trade and accrued receivables (1) 10,803 10,803 10,653 10,653 Fair value through profit and loss Convertible Notes (2) 44,000 44,000 45,486 45,486 Other liabilities Trade and accrued payables (1) 6,965 6,965 16,535 16,535 DIP (1) 13,036 13, Amended Term Loan Facility (2) 201, , , ,540 (1) The fair values of cash, restricted cash, trade and accrued receivables, and trade and accrued payables approximate the carrying amounts due to the short-term maturity of the instruments (2) The fair values of long-term debt are based on market information, a Level 2 measurement 8

9 8. LONG-TERM DEBT (Canadian dollar in thousands) June 30, 2016 December 31, 2015 Current portion of Amended Term Loan Facility - principal payments $1,982 $- Amended Term Loan Facility, due May 23, 2018 (US$154.6 million face value) 199,156 - Convertible Notes, 12%, due August 31, 2018 (US$35 million face value) 44,000 - Liabilities subject to compromise 245,138 - Current portion of Amended Term Loan Facility - principal payments - 2,109 Debtor-in-possession credit facility 13,036 - Current portion of long-term debt 13,036 2,109 Amended Term Loan Facility, due May 23, 2018 (US$154.6 million face value) - 209,742 Convertible Notes, 12%, due August 31, 2018 (US$35 million face value) - 45,486 Long-term debt $- $255,228 On March 31, 2016, the Company entered into the Forbearance Agreement with the Lenders. Under the terms of the Forbearance Agreement, among other things, the Lenders agreed to forbear from exercising enforcement rights and remedies arising from the Company s failure to pay the cash interest and principal payments due on March 31, 2016 until the earlier of April 30, 2016; the occurrence of an event of default under the Amended Term Loan Facility unrelated to the failure to pay principal and interest due on March 31, 2016; or the occurrence of a default or breach of representation by the Company under the Forbearance Agreement. On April 30, 2016, the Company entered into the Second Forbearance Agreement which extended the forbearance period until May 16, On May 17, 2016, the Company sought and obtained creditor protection under the CCAA. Due to the commencement of CCAA proceeding, borrowings under the Term Loan Facility and Convertible Notes, including accrued interest, were classified as liabilities subject to potential compromise and classified as current liabilities. 8.1 SENIOR SECURED DEBTOR-IN-POSSESSION CREDIT FACILITY ( DIP ) The Company secured interim financing in the form of a senior secured debtor-in-possession credit facility from certain existing lenders for up to US$20 million, with initial commitments of US$11.5 million. The DIP financing is expected to provide sufficient liquidity to support the Company during the CCAA proceeding. At June 30, 2016, the Company had drawn US$10.0 million of the Initial Commitments. Subsequent to June 30, 2016, the Company received the remaining US$1.5 million of the Initial Commitments. The usage of the DIP proceeds is subject to an agreed budget, which was approved by the existing lenders. In addition, in accordance with the agreed budget, the Company must maintain production of 8,000 bbl/d. The DIP bears interest, as selected by the Company, at an alternative base rate ( ABR and ABR Loans ) or LIBOR ( Eurodollar Loans ), plus an applicable margin as follows: ABR Loans - ABR plus 9.00% per annum cash interest Eurodollar Loans - LIBOR (floor of 1.00%) plus 10.00% per annum cash interest For loans advanced as ABR Loans, interest payments occur on March 31, June 30, September 30, and December 31. For loans advanced as Eurodollar Loans, the Company has the option to select an interest period of 1, 2, 3, or 6-months. The DIP is payable, in full, on the earlier of: Acceleration of the DIP as a result of the occurrence of any event of default which is continuing and has not been cured; The implementation of a plan of compromise or arrangement within the CCAA proceeding; The closing of a sale within the CCAA proceeding; Conversion of the CCAA proceeding into a proceeding under the Bankruptcy and Insolvency Act (Canada); and May 17,

10 9. DECOMMISSIONING LIABILITIES The following table summarizes the details of decommissioning liabilities: As at (Canadian dollar in thousands) June 30, 2016 December 31, 2015 Balance, beginning of period $74,114 $70,174 Liabilities settled 5 (14) Change in estimates 7,034 2,478 Unwinding of discount 588 1,476 Balance, end of period $81,741 $74, SHARE CAPITAL Authorized: unlimited number of common voting shares with no par value Authorized: unlimited number of first preferred shares with no par value of which none are outstanding Authorized: unlimited number of second preferred shares with no par value of which none are outstanding 10.1 Issued and outstanding common share capital June 30, 2016 December 31, 2015 Canadian dollars Canadian dollars Number Number in thousands in thousands Balance, beginning of period 28,328,658 $1,177, ,118 $622,681 Convertible Notes exercised , Common shares repurchased - - (70) (2) Shares issued for exchange of the Notes ,743, ,863 Balance, end of period 28,328,658 $1,177,556 28,328,658 $1,177,556 Weighted average common shares outstanding basic and diluted 11. STOCK OPTION PLAN 11.1 Stock option plan 28,328,658 18,629,708 The following table shows the changes in stock options and the related weighted average exercise prices on a post-consolidation basis: For the six months ended June 30, (1) Number of Options Weighted Average Exercise Price Number of Options Weighted Average Exercise Price Outstanding, beginning of period 1,337,768 $ ,979 $ Cancelled/Forfeited - - (19,227) Expired - - (2,752) 1, Granted - - 1,675, Outstanding, end of period 1,337,768 $1.21 1,675,536 $1.80 Exercisable, end of period (1) Number of options and weighted average exercise price reflect the 800:1 share consolidation associated with the Company s recapitalization transaction, which closed on May 8, 2015 For the three and six months ended June 30, 2016, no additional stock options were granted. 10

11 12. CAPITAL MANAGEMENT In managing capital, the Company seeks to safeguard its ability to operate as a going concern while continuing to maintain and pursue the development of its in situ oil sands properties. On May 17, 2016, the Company sought and obtained creditor protection under the CCAA. The decision to file for CCAA protection was a result of among other things, current depressed crude oil prices and the Company s limited ability to access capital markets. The DIP proceeds are expected to provide the Company sufficient liquidity during the CCAA proceeding and are subject to an agreed budget approved by the existing lenders. In the current low price commodity environment, the Company will continue to actively monitor its working capital balances and deploy capital prudently to maximize its liquidity position. Refer to financial statement note 2 for CCAA announcement and going concern discussion and financial statement note 13 for summary of commitments. 13. CONTRACTUAL OBLIGATIONS AND COMMITMENTS At June 30, 2016, the Company is subject to the following commitments: For the 12 months ending June 30, (Canadian dollar in thousands) > 2021 Total Operating (1) $178 $55 $27 $1 $- $- $261 Service and Maintenance (2) 2,400 2,400 2,400 2,400 2,400 6,200 18,200 Long-term debt - interest payments (3)(4) 29,399 34,198 1, ,181 Long-term debt - principal (3) 1, ,665 52, ,887 Total commitments $33,959 $250,318 $56,251 $2,401 $2,400 $6,200 $351,529 (1) Operating commitments relate to vehicle and information technology (2) Service and maintenance commitments pertain to the Company s facilities and equipment (3) Interest and principal repayments related to the Company s US dollar-denominated Convertible Notes and Amended Term Loan Facility are translated at US$1 = $1.3009; amounts are subject to the Company s CCAA proceeding (4) Interest includes PIK and cash interest on the Amended Term Loan Facility and cash interest on the Convertible Notes; amounts are subject to the Company s CCAA proceeding In Q2 2016, the Company recorded an additional onerous contract provision of $1.9 million associated with its disclaimed head office. The onerous contract provisions for the head office lease and the rail car lease recorded in Q were stayed under the CCAA proceeding and are classified as current liabilities subject to potential compromise. 11