CONDENSED INTERIM BALANCE SHEET (UNAUDITED)

Transcription

1 CONDENSED INTERIM BALANCE SHEET (UNAUDITED) As at (Canadian dollars in thousands) Notes September 30, 2016 December 31, 2015 ASSETS CURRENT ASSETS Cash and cash equivalents $10,236 $47,235 Restricted cash 4 7,100 - Trade and accrued receivables 10,782 10,653 Inventories 5,337 6,046 Other assets 5 11,714 13,895 45,169 77,829 NON-CURRENT ASSETS Property, plant, and equipment 6 432, , , ,254 $477,683 $872,083 LIABILITIES AND SHAREHOLDERS EQUITY CURRENT LIABILITIES Trade and accrued payables $7,729 $16,535 Liabilities subject to compromise 2 292,324 - Current portion of long-term debt - 2,109 Debtor-in-possession credit facility , ,138 18,644 NON-CURRENT LIABILITIES Long-term debt 8-255,228 Decommissioning liabilities 9 85,103 74,114 85, ,342 SHAREHOLDERS EQUITY Share capital ,177,556 1,177,556 Contributed surplus 41,623 41,190 Deficit (1,141,737) (694,649) 77, ,097 $477,683 $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 GAIN (LOSS) (UNAUDITED) (Canadian dollars in thousands) Notes Three months ended September 30, Nine months ended September 30, INCOME Revenue, net of royalties $31,711 $58,097 $66,292 $183,220 Interest and other income ,732 58,235 66, ,571 EXPENSES Blending of products sold 9,597 17,279 23,885 57,490 Production and operating 16,549 23,396 48,741 65,756 Transportation and handling 4,843 26,856 23,156 68,074 Onerous contract provision ,345 - Restructuring 5 1,769-5,986 - General and administrative 3,014 4,681 10,063 18,179 Share-based compensation Depletion, depreciation, amortization, and impairment 6 18, , , ,331 Gain on risk management contracts (12) Foreign exchange loss (gain) 2,222 10,610 (9,467) 43,373 Loss on disposition and derecognition of property, plant, and equipment Finance charges 9,288 7,562 26,213 50,751 Loss (gain) on recapitalization transaction (209,845) Unrealized gain on Convertible Notes - (12,000) (1,486) (244,600) INCOME (LOSS) BEFORE INCOME TAX (34,296) (289,175) (447,088) 13,737 Income tax provision INCOME (LOSS) AND TOTAL COMPREHENSIVE LOSS $(34,296) $(289,175) $(447,088) $13,737 INCOME (LOSS) PER SHARE (1) Basic $(1.21) $(10.21) $(15.78) $0.89 Diluted $(1.21) $(10.21) $(15.78) $0.19 (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 nine months ended September 30, (Canadian dollars 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 $41,623 $41,183 DEFICIT Balance, beginning of period $(694,649) $(652,354) Net (loss) gain (447,088) 13,737 Balance, end of period $(1,141,737) $(638,617) Total shareholders equity $77,442 $580,110 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 dollars in thousands) Notes Three months ended September 30, Nine months ended September 30, OPERATING Gain (loss) from operations $(34,296) $(289,175) $(447,088) $13,737 Adjustments for: Depletion, depreciation, amortization, and impairment 6 18, , , ,331 Onerous contract provision ,345 - Share-based compensation Finance charges - non-cash portion ,366 Interest expense on long-term debt 8,980 7,174 23,881 46,097 Unrealized gain on risk management contracts (4,033) Unrealized foreign exchange loss (gain) 2,223 12,431 (9,392) 45,671 Unrealized gain on Convertible Notes - (12,000) (1,486) (244,600) Loss (gain) on recapitalization transaction (209,845) Loss on disposition and derecognition of property, plant, and equipment Decommissioning liabilities settled (14) Changes in non-cash working capital 1,820 18,239 5,999 (17,145) Cash flow from (used in) operating activities (2,251) 6,073 (40,823) (45,098) INVESTING Expenditures on property, plant, and equipment 6 (116) (953) (1,950) (12,004) Proceeds on the disposition of equipment Changes in non-cash working capital (271) (2,297) (675) (5,008) Cash flow used in investing activities (387) (3,250) (2,319) (17,012) FINANCING Proceeds from the recapitalization transaction (net of transaction costs) Repayment on borrowings under the Amended Term Loan Facility Proceeds from the debtor-in-possession credit facility (net of transaction costs) - (390) - 48,642 - (509) - (1,386) 8 1,931-14,844 - Interest paid on long-term debt (473) (4,622) (500) (11,644) Cash flow from (used in) financing activities 1,458 (5,521) 14,344 35,612 Foreign exchange gain (loss) on cash balances held in foreign currency (1,180) (2,698) (28,798) (26,498) (4) 1,727 (1,101) 5,232 Cash and cash equivalents, beginning of period 18,520 73,869 47,235 94,164 Restricted cash (7,100) - (7,100) - Cash and cash equivalents, end of period $10,236 $72,898 $10,236 $72,898 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 CREDITORS ARRANGEMENT ACT ( CCAA ) ANNOUNCEMENT AND STATUS 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$155.4 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, Since the Initial Order, four Court-ordered extensions have been obtained, with the most recent extending the stay of proceedings until and including January 13, 2017 (the CCAA Stay Period ). 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. 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 Interim Financing Credit Facility or DIP ) from certain existing lenders (the Interim Lenders ) for up to US$20 million, with initial commitments of up to US$11.5 million (the Initial Commitments ). Subsequent to September 30, 2016, the Company entered into a Waiver, Approval, and Modification Agreement (the Agreement ) with its Interim Lenders related to the DIP. Pursuant to the Agreement, the Interim Lenders agreed to waive certain limited defaults under the DIP related to the CCAA SISP timelines and have committed to provide the Company with access to an additional amount of approximately US$5.0 million of the US$20 million DIP initially authorized by the Court to support the Company s continuing operations. 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, to identify one or more purchasers and/or investors in the Company s business and/or property. The SISP continued through Q As at September 30, 2016, in connection with the CCAA proceeding, the Company identified the following obligations subject to potential compromise: (Canadian dollars in thousands) Current and long-term portions of Amended Term Loan Facility $203,822 Interest payable on Amended Term Loan Facility 14,864 Convertible Notes 44,000 Interest payable on Convertible Notes 8,613 Trade and accrued liabilities 21,025 Total liabilities subject to compromise $292,324 5

6 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. On August 24, 2016, the Court granted a claims procedure order establishing a process for the filing of claims against the Company and its directors and officers by September 26, 2016 (the Claims Bar Date ). The Company received 89 claims by the Claims Bar Date. 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, 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 move forward with the CCAA proceeding and evaluate sale and restructuring options. Future operations are dependent on the Company s ability to restructure its balance sheet to provide the potential to generate positive cash flow from operations; maintain existing operations; and discharge obligations as they come due. The risks and uncertainties associated with a potential asset sale, corporate sale, and/or implementation of a balance sheet restructuring, cause significant doubt about the Company s ability to continue as a going concern. The condensed interim financial statements have been prepared on a basis which asserts that the Company will continue to have the ability to realize its assets and discharge its liabilities and commitments in a planned manner with consideration to expected possible outcomes. Conversely, if the assumption made by management 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. These condensed interim financial statements reflect management s best estimates after giving consideration to likely outcomes. The interim financial statements continue to be prepared in accordance with International Financial Reporting Standards ( IFRS ) and are consistent with the Company s accounting policies as outlined in financial statement note 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 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 September 30, 2016, $7.1 million was restricted under the Initial Order and related to costs associated with any potential cessation of the Company s operations. 5. RETAINERS AND RESTRUCTURING EXPENSES At September 30, 2016, prepaid expenses and retainers authorized under the Initial Order due to professional advisors related to the CCAA proceeding totaled approximately $2.0 million of the $11.7 million of other assets. The remaining amounts represent prepaid expenses incurred in the normal course of business. For the three and nine months ended September 30, 2016, the Company incurred restructuring expenses of $1.8 million and $6.0 million, respectively. Restructuring expenses 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 dollars in thousands) Cost Petroleum and natural gas properties Corporate Balance, December 31, 2015 $1,506,180 $22,598 $1,528,778 Additions 1, ,950 Dispositions (294) (6,802) (7,096) Change in decommissioning liabilities (note 9) 10,120-10,120 Balance, September 30, 2016 $1,517,780 $15,972 $1,533,752 Total Accumulated depletion, depreciation, and impairment Petroleum and natural gas properties Corporate Balance, December 31, 2015 $718,523 $16,001 $734,524 Impairment 335, ,500 Dispositions (203) (6,187) (6,390) Depletion and depreciation 36,591 1,013 37,604 Balance, September 30, 2016 $1,090,411 $10,827 $1,101,238 Total Carrying amount of PP&E As at December 31, 2015 $787,657 $6,597 $794,254 As at September 30, 2016 $427,369 $5,145 $432,514 PP&E with a carrying cost of $432.5 million (December 31, 2015: $794.3 million) is collateralized to secure long-term debt. At September 30, 2016, the Company performed an impairment test as the carrying value of the Company s assets remained subject to future, potentially material adjustments due to the continued uncertainty surrounding the SISP and CCAA proceeding. 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. To determine the recoverable amount, the Company utilized its internal discounted cash flow forecast, which reflected anticipated capital expenditures, pricing, and input costs. The recoverable amount of $432.5 million was calculated as value in use. 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. 7

8 The following benchmark reference prices were used as a basis for the impairment test at September 30, 2016 (annual escalation rate used after 2025 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 impairment test was conducted using a risk adjusted discount rate, before-tax, of approximately 16.0%. The Q 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 $3.5 million. In Q2 2016, the Company recorded 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, Interim Financing Credit Facility, 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 September 30, 2016 December 31, 2015 (Canadian dollars in thousands) Carrying Value Fair Value Carrying Value Fair Value Loans and receivables Cash (1) $10,326 $10,326 $47,235 $47,235 Restricted Cash (1) 7,100 7, Trade and accrued receivables (1) 10,782 10,782 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) 7,729 7,729 16,535 16,535 Interim Financing Credit Facility (1) 15,085 15, Amended Term Loan Facility (2) 203,822 98, , ,540 (1) The fair values of cash, restricted cash, trade and accrued receivables, trade and accrued payables, and Interim Financing Credit Facility 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 dollars in thousands) September 30, 2016 December 31, 2015 Current portion of Amended Term Loan Facility - principal payments $1,999 $- Amended Term Loan Facility, due May 23, 2018 (US$155.4 million face value) 201,823 - Convertible Notes, 12%, due August 31, 2018 (US$35 million face value) 44,000 - Liabilities subject to compromise 247,822 - Current portion of Amended Term Loan Facility - principal payments - 2,109 Interim Financing Credit Facility 15,085 - Current portion of long-term debt 15,085 2,109 Amended Term Loan Facility, due May 23, 2018 (US$155.4 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. Under the CCAA proceeding, borrowings related to the Amended Term Loan Facility and Convertible Notes, including accrued interest up to September 30, 2016, were classified as liabilities subject to potential compromise and classified as current liabilities. 8.1 SENIOR SECURED DEBTOR-IN-POSSESSION CREDIT FACILITY ( INTERIM FINANCING CREDIT FACILITY OR 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. Subsequent to September 30, 2016, the Interim Lenders increased their commitment under the Interim Financing Credit Facility by approximately US$5 million. The currently available DIP financing is expected to provide sufficient liquidity to support the Company through January 13, At September 30, 2016, the Company had drawn US$11.5 million of the Initial Commitments. The usage of the DIP proceeds is subject to an agreed budget, which was approved by the existing lenders. 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 dollars in thousands) September 30, 2016 December 31, 2015 Balance, beginning of period $74,114 $70,174 Liabilities settled 5 (14) Change in estimates 10,120 2,478 Unwinding of discount 864 1,476 Balance, end of period $85,103 $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 September 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 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 nine months ended September 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 nine months ended September 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 currently available DIP financing is expected to provide the Company sufficient liquidity through January 13, 2017 and is 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. The Company continues to investigate, evaluate, and consider possible sale and restructuring alternatives. 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 September 30, 2016, the Company is subject to the following commitments: For the 12 months ending September 30, (Canadian dollars in thousands) > 2021 Total Operating (1) $479 $265 $241 $55 $- $- $1,040 Service and Maintenance (2) 2,400 2,400 2,400 2,400 2,400 5,600 17,600 Long-term debt - interest payments (3)(4) 33,810 26, ,626 Long-term debt - principal (3) 1, , ,469 Total commitments $38,688 $299,951 $2,641 $2,455 $2,400 $5,600 $351,735 (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 = $1.3117; 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 For the nine months ended September 30, 2016, the Company recorded two onerous contract provisions: In Q1 2016, the rail cars under lease were no longer being utilized; however, the Company was still obligated to make payments. As a result, an onerous contract provision was recorded as the unavoidable costs associated with the lease contract exceeded the economic benefits to be received. The aggregate liability was measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract, which totaled $10.4 million; and In Q2 2016, the Company recorded an onerous contract provision of $1.9 million associated with its disclaimed head office lease. The onerous contract provisions for the rail car lease and the head office lease remained stayed under the CCAA proceeding and are classified as current liabilities subject to potential compromise and are not included in the aforementioned contractual obligations and commitments summary. 14. SUBSEQUENT EVENT Subsequent to September 30, 2016, the Company entered into the Agreement with its Interim Lenders related to the DIP. Pursuant to the Agreement, the Interim Lenders agreed to waive certain limited defaults under the DIP related to the CCAA SISP timelines and have committed to provide the Company with access to an additional amount of approximately US$5.0 million of the US$20 million DIP initially authorized by the Court to support the Company s continuing operations. The additional availability under the DIP is expected to provide the Company with sufficient liquidity through to January 13,