Fortune Creek	9 Months Ended
Sep. 30, 2015
Equity Method Investments and Joint Ventures [Abstract]
Fortune Creek	FORTUNE CREEK Note 14 to the consolidated financial statements in our 2014 Annual Report on Form 10-K contains additional information on Fortune Creek. We do not expect to be able to satisfy the capital expenditure or equipment purchase requirements described in our 2014 Annual Report on Form 10-K with our cash on hand, committed financing or cash flow from operations and will need to obtain additional debt or equity financing or sell assets, which we may not be able to do on satisfactory terms, or at all. We committed gas production from our Horn River Asset for ten years beginning 2012. KKR contributed C$125 million cash in exchange for a 50% interest in Fortune Creek. Our Canadian subsidiary has responsibility for the day-to-day operations of Fortune Creek. The firm gathering agreement with Fortune Creek is guaranteed by us. If our subsidiary does not pay its minimum volume obligations under the gathering agreement or meet the capital expenditure requirements, KKR has the right to liquidate the partnership and consequently we have recorded the funds contributed by KKR as a liability in our consolidated financial statements. We recognize accretion expense to reflect the rate of return earned by KKR via its investment. Fortune Creek has made cash distributions to KKR, which are reported as cash used in financing activities. QRCI did not make an approximately C$1.6 million payment due at the end of June 2015 and has not made subsequent monthly payments of the same amount pursuant to the gathering agreement with Fortune Creek. As a result, among other things: (i) Fortune Creek may discontinue transporting QRCI's gas until all amounts owing are repaid (although, as previously disclosed, production was previously shut-in due to the termination of a third-party gathering and processing agreement in March 2015); (ii) if the non-payment continues for more than 90 days after a written demand therefor, subject to certain existing contracts for the sale of gas, Fortune Creek may enforce the lien granted by QRCI to Fortune Creek on the natural gas belonging to QRCI while it is in the Maxhamish Pipeline and in Fortune Creek's possession; (iii) Fortune Creek has certain set-off rights against QRCI; (iv) if the non-payment continues for 180 days (or 60 days following a written notice by the other partner), we will not be entitled to receive partnership distributions or vote with respect to partnership matters until the non-payment is cured and Fortune Creek may be dissolved or our partnership interest in Fortune Creek may be purchased by the other partner; and (v) the operating agreement could be terminated by Fortune Creek. We have not received any written notices regarding the past due amounts. Past due amounts under the gathering agreement bear interest compounded monthly at prime plus 2%. We are in discussions with KKR in connection with the issues related to Fortune Creek; however, we may not reach a resolution in the near-term, or at all. Based on a quarterly analysis of the partners’ equity at risk, we have determined the partnership to be a VIE. Further, based on our ability to direct the activities surrounding the production of natural gas and our direct management of the operations of the Fortune Creek facilities, we have determined we are the primary beneficiary and, therefore, we consolidate Fortune Creek. We will continue to evaluate this assessment in light of our bankruptcy filings in the U.S., breach of contract due to non-payment and our liquidity constraints in Canada; however, if we are unable to resolve these items, we may no longer be the primary beneficiary and may therefore not consolidate Fortune Creek as early as the fourth quarter of 2015.

FORTUNE CREEK

Note 14 to the consolidated financial statements in our 2014 Annual Report on Form 10-K contains additional information on Fortune Creek. We do not expect to be able to satisfy the capital expenditure or equipment purchase requirements described in our 2014 Annual Report on Form 10-K with our cash on hand, committed financing or cash flow from operations and will need to obtain additional debt or equity financing or sell assets, which we may not be able to do on satisfactory terms, or at all.

We committed gas production from our Horn River Asset for ten years beginning 2012. KKR contributed C$125 million cash in exchange for a 50% interest in Fortune Creek. Our Canadian subsidiary has responsibility for the day-to-day operations of Fortune Creek.

The firm gathering agreement with Fortune Creek is guaranteed by us. If our subsidiary does not pay its minimum volume obligations under the gathering agreement or meet the capital expenditure requirements, KKR has the right to liquidate the partnership and consequently we have recorded the funds contributed by KKR as a liability in our consolidated financial statements. We recognize accretion expense to reflect the rate of return earned by KKR via its investment. Fortune Creek has made cash distributions to KKR, which are reported as cash used in financing activities.

QRCI did not make an approximately C$1.6 million payment due at the end of June 2015 and has not made subsequent monthly payments of the same amount pursuant to the gathering agreement with Fortune Creek. As a result, among other things: (i) Fortune Creek may discontinue transporting QRCI's gas until all amounts owing are repaid (although, as previously disclosed, production was previously shut-in due to the termination of a third-party gathering and processing agreement in March 2015); (ii) if the non-payment continues for more than 90 days after a written demand therefor, subject to certain existing contracts for the sale of gas, Fortune Creek may enforce the lien granted by QRCI to Fortune Creek on the natural gas belonging to QRCI while it is in the Maxhamish Pipeline and in Fortune Creek's possession; (iii) Fortune Creek has certain set-off rights against QRCI; (iv) if the non-payment continues for 180 days (or 60 days following a written notice by the other partner), we will not be entitled to receive partnership distributions or vote with respect to partnership matters until the non-payment is cured and Fortune Creek may be dissolved or our partnership interest in Fortune Creek may be purchased by the other partner; and (v) the operating agreement could be terminated by Fortune Creek. We have not received any written notices regarding the past due amounts. Past due amounts under the gathering agreement bear interest compounded monthly at prime plus 2%. We are in discussions with KKR in connection with the issues related to Fortune Creek; however, we may not reach a resolution in the near-term, or at all.

Based on a quarterly analysis of the partners’ equity at risk, we have determined the partnership to be a VIE. Further, based on our ability to direct the activities surrounding the production of natural gas and our direct management of the operations of the Fortune Creek facilities, we have determined we are the primary beneficiary and, therefore, we consolidate Fortune Creek. We will continue to evaluate this assessment in light of our bankruptcy filings in the U.S., breach of contract due to non-payment and our liquidity constraints in Canada; however, if we are unable to resolve these items, we may no longer be the primary beneficiary and may therefore not consolidate Fortune Creek as early as the fourth quarter of 2015.