The Company attempts to mitigate the risk from joint venture receivables by obtaining venturer pre-approval of significant capital expenditures. However, the receivables are from participants in the oil and natural gas sector, and collection of the outstanding balances is dependent on industry factors such as commodity price fluctuations, escalating costs and the risk of unsuccessful drilling. In addition, further risk exists with joint venturers as disagreements occasionally arise that increase the potential for non-collection.
The Company does not typically obtain collateral from oil and natural gas customers or joint venturers; however, the Company does have the ability to withhold production from joint venturers in the event of non-payment.
The Company's allowance for doubtful accounts as at December 31, 2012 was $0.9 million (December 31, 2011 - $0.9 million). This allowance was mostly created in prior years and is associated with prior corporate acquisitions and potential joint venture billing disputes.
The maximum exposure to credit risk for accounts receivable and accruals, net of allowance for doubtful accounts at the reporting date by type of customer was:
Carrying Amount December December 31, 2012 31, 2011Oil and natural gas customers $ 4,290 $ 10,307Joint venture partners 5,220 2,335Other 371 1,630 ------------------------- $ 9,881 $ 14,272----------------------------------------------------------------------------As at December 31, 2012 and December 31, 2011, the Company's accountsreceivable and accruals, net of allowance for doubtful accounts was aged asfollows:Aging December December 31, 2012 31, 2011Not past due $ 8,947 $ 13,608Past due by less than 120 days 837 163Past due by more than 120 days 97 501 -------------------------Total $ 9,881 $ 14,272----------------------------------------------------------------------------
These amounts exclude offsetting amounts owing to joint venture partners that are included in accounts payable and accruals.
(c) Liquidity risk. Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company's objective is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation.
To achieve this objective, the Company prepares annual capital expenditure budgets, which are regularly monitored and updated as considered necessary. The Company uses authorizations for expenditures on both operated and non operated projects to further manage capital expenditures. To provide capital when needed, the Company has revolving reserves-based credit facilities which are reviewed semi-annually by its lenders. These facilities are described in note 8. The Company also attempts to match its payment cycle with collection of oil and natural gas revenue on the 25th of each month.
