EnerVest FTS Limited Partnership 2006 - MRRS Decision

Headnote

Mutual Reliance Review System for Exemptive Relief Applications - National Instrument 81-106, s.17.1 Continuous Disclosure Requirements for Investment Funds.

AIF requirement - fund seeks relief from section 9.2 of NI 81-106 that requires a fund that does not have a current prospectus as at its financial year end to prepare an annual information form - The issuer is a short-term vehicle formed solely to invest its available funds in flow-through shares of resource issuers; the issuer's securities are not redeemable and there is no secondary trading in the issuer's securities; the issuer's other disclosure documents will provide all relevant information necessary for investors to understand the issuer's business, financial position and future plans.

Proxy voting record - fund seeks relief from sections 10.3 and 10.4 of NI 81-106 that requires a fund to maintain a proxy voting record and annually to post the proxy voting record on its website - The issuer is a short-term vehicle formed solely to invest its available funds in flow-through shares of resource issuers; the issuer's securities are not redeemable and there is no secondary trading in the issuer's securities; the issuer's other continuous disclosure documents will provide all relevant information necessary for investors to understand the issuer's business, financial position and future plans.

Applicable Legislative Provisions

National Instrument 81-106, ss. 9.2, 10.3, 10.4, 17.1.

Multilateral Instrument 11-101 Principal Regulator System.

Citation: EnerVest FTS Limited Partnership 2006, 2008 ABASC 168

March 27, 2008

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ALBERTA AND ONTARIO

(the Jurisdictions)

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEW SYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

ENERVEST FTS LIMITED PARTNERSHIP 2006

(the Filer)

MRRS DECISION DOCUMENT

Background

1. The local securities regulatory authority or regulator (the Decision Maker) in each of the Jurisdictions has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) for an exemption from:

(a) the requirement in Section 9.2 of National Instrument 81-106 Investment Fund Continuous Disclosure (NI 81-106) to prepare and file an annual information form (AIF);

(b) the requirement in Section 10.3 of NI 81-106 to maintain a proxy voting record (Proxy Voting Record); and

(c) the requirements in Section 10.4 of NI 81-106 to prepare a Proxy Voting Record on an annual basis for the period ending June 30 of each year, to post the Proxy Voting Record on the Filer's website no later than August 31 of each year, and to send the Proxy Voting Record to the limited partners of the Filer upon request

((a), (b) and (c) are collectively, the Requested Relief).

2. For the purposes of this decision, the term "Filer" includes other partnerships that are established from time to time that:

(a) have a general partner with the same parent as the general partner of the Filer; and

(b) are identical to the Filer in all other respects that are material to this MRRS decision document.

Application of Principal Regulator System

3. Under Multilateral Instrument 11-101 Principal Regulator System (MI 11-101) and the Mutual Reliance Review System for Exemptive Relief Applications:

(a) the Alberta Securities Commission is the principal regulator for the Filer;

(b) the Filer is relying on the exemption in Part 3 of MI 11-101 in all of the provinces of Canada except Alberta and Ontario; and

(c) this MRRS decision document evidences the decision of each Decision Maker.

Interpretation

4. Defined terms contained in National Instrument 14-101 Definitions have the same meaning in this decision unless they are defined in this decision.

Representations

5. This decision is based on the following facts represented by the Filer:

(a) The Filer is a limited partnership duly formed under the laws of the province of Alberta on April 28, 2006.

(b) The principal place of business and registered office of the Filer is located in Calgary, Alberta.

(c) The Filer is a reporting issuer, where such status exists, in each of the provinces of Canada and is not in default of its obligations as a reporting issuer.

(d) The Filer is a non-redeemable investment fund.

(e) The Filer was formed to invest in flow-through common shares of companies, limited partnerships, trusts or other issuers in Canada engaged in oil and gas and mineral exploration, development and/or production (Resource Companies) pursuant to agreements (Resource Agreements) between the Filer and the investee Resource Company.

(f) Under the terms of each Resource Agreement, the Filer subscribes for flow-through shares of the Resource Company and the Resource Company agrees to incur and renounce to the Filer, in amounts equal to the subscription price of the flow-through shares, expenditures in respect of resource exploration and development which qualify as Canadian exploration expense or as Canadian development expense which may be renounced as Canadian exploration expense to the Filer.

(g) The limited partnership units of the Filer are not and will not be listed or quoted for trading on any stock exchange or market. None of the limited partnership units of the Filer are redeemable by the limited partners. Generally, limited partnership units are not transferred since limited partners must be holders of units on the last day of each fiscal year of the Filer in order to obtain the desired tax deduction. In addition, other than the issuance of the initial limited partnership units to the initial limited partners and other than as described in this order, the Filer has not issued any limited partnership units.

(h) Unless a material change takes place in the business and affairs of the Filer,

(i) the limited partners of the Filer will obtain adequate financial information concerning the Filer from the interim financial statements and annual audited financial statements of the Filer together with the auditor's report distributed to the limited partners; and

(ii) the Prospectus (defined below) for the Filer and the interim financial statements provide sufficient background materials and the explanations necessary for a limited partner to understand the business, financial position and future plans of the Filer.

(i) If a material change takes place in the business and affairs of the Filer, the Filer will ensure that a timely material change report is filed with the securities regulatory authority in each of the Jurisdictions in compliance with applicable securities laws.

(j) The Filer received a final receipt dated May 24, 2006 on behalf of the local securities regulatory authority or regulator in each of the provinces of Canada for the Filer's prospectus dated May 24, 2006 (the Prospectus) relating to an offering of up to 1,200,000 limited partnership units in the Jurisdictions. On May 31, 2006, the Filer completed the issue and sale of 955,319 limited partnership units under the Prospectus. On June 21, 2006, the Filer completed the issue and sale of 183,640 limited partnership units under the Prospectus. The Filer became a reporting issuer, where such status exists, in each of the provinces of Canada.

(k) On or about June 30, 2008, the Filer will be liquidated and the limited partners will receive their pro rata share of the net assets of the Filer, unless the Filer completes a rollover transaction before that time, provided that the dissolution of the Filer may, at the discretion of the general partner, be extended to a date not later than December 31, 2008.

(l) It is the current intention of the general partner prior to such time that the Filer exchange its assets for mutual fund shares of EnerVest Natural Resource Fund Ltd. (a mutual fund corporation) and to distribute such securities to the limited partners on a pro rata basis.

(m) The Filer's range of business activities is limited to (i) completing the issue and sale of limited partnership units under the Prospectus, (ii) investing its available funds in flow-through shares of the Resource Companies and (iii) incurring expenses as described in the Prospectus.

(n) Given the limited range of business activities to be conducted by the Filer, the short duration of its existence and the nature of the investments of the limited partners, the preparation and distribution of an AIF by the Filer will not be of benefit to the limited partners and may impose a material financial burden on the Filer.

(o) Upon the occurrence of any material change to the Filer, limited partners would receive all relevant information from the material change reports that the Filer is required to file in accordance with applicable securities laws.

(p) As a result of the implementation of NI 81-106, investors purchasing limited partnership units of the Filer were provided with the Prospectus containing written policies on how the flow-through shares or other securities held by the Filer are to be voted (the Proxy Voting Policies) and had or will have, as the case may be, the opportunity to review the Proxy Voting Policies before deciding whether to purchase limited partnership units.

(q) The Proxy Voting Policies give the general partner broad discretion whether or not to exercise the Filer's voting rights in respect of securities of an issuer. Generally, the general partner of the Filer does not intend to exercise the Filer's voting rights on routine matters, but may, in its sole discretion, decide to vote in any circumstance.

(r) Given the short lifespan of the Filer, the production of a Proxy Voting Record would provide limited partners very little opportunity for recourse if they disagreed with the manner in which the general partner exercised or failed to exercise any of the Filer's proxy voting rights, as the Filer would likely be dissolved by the time any potential change could materialize.

(s) Preparing, maintaining, posting and delivering a Proxy Voting Record to limited partners will not be of any benefit to limited partners and may impose a material financial burden on the Filer.

Decision

6. The Decision Makers being satisfied that each has jurisdiction to make this decision and that the relevant test under the Legislation has been met the Requested Relief is granted.