Executive Summary: Key Legal and Evidentiary Issues

• Yangarra alleged Advanced's Limitless Frac System failed on five wells, claiming approximately $61 million in losses from remediation, redrilling costs, and foregone profits.

• A Mareva injunction application was filed by Yangarra over concerns that Advanced's acquisition by ExxonMobil Canada Ltd would render any future judgment unenforceable.

• Advanced declined to voluntarily disclose transaction details, asserting no legal obligation existed, which escalated the dispute into costly litigation proceedings.

• Collectively, the parties spent more than $1 million on the aborted Mareva injunction in a little over three months, aggressively exchanging affidavits, producing expert reports, and conducting cross-examinations.

• Yangarra withdrew the Mareva application after Advanced provided an affidavit confirming its ongoing business plans, with the Court ruling that withdrawal constituted a victory for Advanced.

• The Court apportioned blame to both parties and awarded costs to Advanced at 50% of solicitor-client costs plus full reimbursement for disbursements, rejecting full solicitor-client costs.

The underlying technology dispute and contractual relationship

Advanced Upstream Ltd is a company in the business of developing and marketing technology for use in drilling oil and gas wells. The technology at the centre of this case is Advanced's proprietary Limitless Frac System, described as a "dart and sleeve" system for use in well completions. In 2023, Yangarra Resources Ltd contracted with Advanced to provide its Limitless Frac System for use in Yangarra's 2023 drilling program. Yangarra asserts that it contracted with Advanced on the strength of various representations about the Limitless Frac System made in Advanced's marketing materials and by Advanced employees to Yangarra representatives. The Limitless Frac System was used on five Yangarra wells drilled in the summer and early fall of 2023 before Yangarra suspended its use, alleging that the system failed on all five wells and that Yangarra was required to undertake steps to remediate or redrill the wells. Yangarra alleges that between remediation and redrilling costs and foregone profits, it lost approximately $61 million. Yangarra commenced this proceeding in late 2024, which Advanced defended, denying Yangarra's allegations.

Yangarra's concerns over the corporate acquisition

In late September 2025, Yangarra learned from what it describes as "reliable industry sources" that Advanced had been or was in the process of being acquired by another company. Yangarra was concerned that the transaction could prejudice its ability to enforce any judgment that might result from the Action. On September 28, 2025, Yangarra's counsel wrote to Advanced's counsel seeking confirmation that Advanced would not deal with its assets in a way that would have "the effect of frustrating enforcement or compromising the integrity of this litigation." Yangarra's counsel added that if a satisfactory response was not received, it would seek relief from the Court, including perhaps a Mareva injunction. Advanced's counsel responded on October 3, 2025, declining to provide the confirmation sought by Yangarra and instead observing that Yangarra was seeking "extraordinary relief" that was a "significant departure" from industry practice. Advanced closed by inviting Yangarra to conduct a search of the corporate registry.

Escalation of the disclosure dispute

Two days later, Yangarra's counsel wrote to advise that the company understood that Advanced was being acquired by Imperial Oil or an affiliate of Imperial Oil. Yangarra's concern was that Advanced would cease to operate and that Imperial Oil would just use Advanced's technology, with the effect being that Advanced would not retain any assets capable of satisfying any potential judgment to be obtained by Yangarra in the Action. On October 8, 2025, Advanced's counsel responded by notifying Yangarra's counsel that the purchaser was ExxonMobil Canada Ltd and that the transaction had closed a few weeks earlier. He averred that the transaction was made in pursuit of legitimate business interests and was not driven by the Action. Later the same day, Yangarra's counsel responded by asking if the transaction was a share deal, an asset deal, or an amalgamation. He explained that he needed "something more concrete" or the matter would go to Court. The parties exchanged correspondence over the next two weeks, but nothing was accomplished. On October 21, 2025, Yangarra's counsel wrote seeking information on three matters: the transaction structure, the value and form of consideration for the transaction, and copies of all governing agreements for the transaction. On October 24, 2025, Advanced's counsel confirmed that the transaction was effected by way of a share purchase for cash consideration. The cash consideration was paid to Advanced's shareholders, and Advanced refused to disclose the amount on the grounds that it was irrelevant. Advanced further advised that it "will continue to be a going concern and will continue to service its customers." Advanced expressed the opinion that in disclosing this information, it had gone beyond what it was legally obliged to do and beyond what is "consistent with industry and commercial practice."

The Mareva injunction application and its withdrawal

Unsatisfied with the level of disclosure, Yangarra commenced the Mareva injunction application on November 12, 2025. Over the next two months, the parties pursued litigation aggressively, exchanging affidavits, producing expert reports, and conducting cross-examinations. A sealing order was obtained to facilitate the exchange of confidential information and use of such information in the court application. On January 19, 2026, Advanced delivered an affidavit providing information about Advanced's ongoing business plans. Yangarra responded to the delivery of this information by cancelling the remaining cross-examinations and withdrawing the Mareva injunction application.

The costs dispute and the Court's analysis

Both parties sought costs of the aborted Mareva injunction application. Yangarra argued it was substantially successful because the application achieved its purpose, which was to force Advanced to produce information about the transaction and Advanced's future business plans. Advanced submitted that it was substantially successful because Yangarra had no right to disclosure of information about the Advanced transaction or its future business and the Mareva injunction application was withdrawn. The Court, presided over by Justice Colin C.J. Feasby, held that the withdrawal of an application by an applicant is "almost always a victory for the respondent," and this case was not exceptional. Yangarra aggressively pursued a Mareva injunction that it withdrew when it realized that the apprehended harm did not exist. Advanced was therefore found to be the successful party entitled to costs.

Assessment of both parties' litigation conduct

In determining the quantum of costs, the Court evaluated the reasonableness of both parties' conduct under the Alberta Rules of Court, noting that under Rule 1.2(1), the purpose of the Rules of Court is to facilitate the timely and cost-effective resolution of disputes, and under Rule 1.2(2), litigants are instructed to use the Rules of Court "to facilitate the quickest means of resolving a claim at the least expense" and "to oblige the parties to communicate honestly, openly, and in a timely way." The Court found that the Mareva injunction application did not have to happen and would not have happened if both parties had acted reasonably. Yangarra assumed an aggressive posture threatening court proceedings almost immediately upon learning of Advanced's transaction, and Advanced exacerbated the situation by asserting its strict legal rights and providing little information. The Court further found that Yangarra's dogged pursuit of the Mareva injunction after learning that the purchaser was ExxonMobil Canada and that it had purchased shares of Advanced was unreasonable, as it should have been obvious to Yangarra that Advanced had been acquired by a solvent entity with extensive business operations in Alberta and that judgment proofing of Advanced as a subsidiary of ExxonMobil Canada was unlikely and, if it occurred, would be reviewable by the Court as a possible fraudulent preference. Advanced, on the other hand, was found to share enough of the responsibility for the inefficient conduct of the Mareva injunction application. The Court acknowledged that Yangarra's concern, though expressed more aggressively than necessary, was understandable, and that the obvious solution would have been for Advanced to provide the requested information, which would have cost a small fraction of what the Mareva injunction application cost.

Ruling and outcome

The Court rejected Advanced's request for full solicitor-client costs, noting that the allegations against Advanced, though ultimately unproven, were "not beyond the pale" and were not sufficiently stigmatizing to warrant such an award. The Court also declined to award solicitor-client costs based on alleged shortcomings in Yangarra's evidence, observing that the Court did not assess the evidence because the application was withdrawn and that it was not a good use of the Court's time to conduct a forensic analysis of withdrawn evidence. Justice Feasby awarded costs to Advanced at a rate of 50% of solicitor-client costs pursuant to McAllister v Calgary (City), 2021 ABCA 25, plus full reimbursement for disbursements including expert fees. The Court noted that between them, the parties spent more than $1 million on the aborted Mareva injunction in a little over three months, a figure described as consistent with what the Court sees in high stakes corporate litigation, conducted on a level playing field with no significant asymmetry between the parties. No exact dollar amount for the costs award was specified in the decision; only the rate of recovery was established.