Marathon Oil Corporation and 1339971 Alberta Ltd. - MRRS Decision

Headnote

Mutual Reliance Review System for Exemptive Relief Application -- issuer and its indirect wholly-owned subsidiary request relief from the requirements of National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities -- issuer has less than 10% of its security holders resident in Canada -- subsidiary would qualify for "exchangeable security issuer" exemption in section 8.2 of NI 51-101, except that one special preferred share was issued to a third party -- issuer and subsidiary exempt from requirements of NI 51-101, provided that the issuer complies with the oil and gas disclosure requirement of the SEC, New York Stock Exchange and Chicago Stock Exchange.

Applicable Provisions

National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities, s. 8.1.

Citation: Marathon Oil Corporation, 2008 ABASC 108

March 4, 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

MARATHON OIL CORPORATION (MARATHON) AND

1339971 ALBERTA LTD. (ACQUISITIONCO AND,

TOGETHER WITH MARATHON, THE FILERS).

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 Filers for a decision under the securities legislation of the Jurisdictions (the Legislation) that the Filers be exempted from the requirements of National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities (NI 51-101) (the Requested Relief).

Application of Principal Regulator System

2. 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 of the Filers;

(b) the Filers are relying on the exemption in Part 3 of MI 11-101 in British Columbia, Saskatchewan, Manitoba, Québec, New Brunswick, Nova Scotia and Newfoundland and Labrador; and

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

Interpretation

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

Representations

4. This decision is based on the following facts represented by the Filers:

(a) Pursuant to an arrangement agreement among Western Oil Sands Inc. (Western), Marathon, AcquisitionCo and WesternZagros Resources Inc. dated July 30, 2007, as amended and restated on September 14, 2007 and as further amended on October 16, 2007 (the Arrangement Agreement), Marathon acquired all of the Class A Common Shares of Western (the Western Shares) through its indirect wholly-owned subsidiary, AcquisitionCo. The Arrangement Agreement was implemented by way of a court-approved plan of arrangement (the Arrangement) under the Business Corporations Act (Alberta) pursuant to the terms of the Arrangement Agreement.

(b) The Western Shares were delisted from the Toronto Stock Exchange at the close of trading on October 19, 2007.

(c) As a result of the Arrangement, Marathon and AcquisitionCo became reporting issuers or the equivalent in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Québec, New Brunswick, Nova Scotia and Newfoundland and Labrador (the Reporting Jurisdictions).

(d) As reporting issuers, Marathon and AcquisitionCo are subject to NI 51-101.

AcquisitionCo

(e) AcquisitionCo is an indirect subsidiary of Marathon incorporated under the laws of the Province of Alberta for the purpose of implementing the Arrangement. To date, AcquisitionCo has not carried on any business except in connection with its role as a party to the Arrangement Agreement.

(f) Exchangeable shares in the capital of AcquisitionCo (the Exchangeable Shares) were created for the purposes of the Arrangement. Each Exchangeable Share was, on issuance, exchangeable on a one-for-one basis for shares of Marathon common stock (the Marathon Shares). The Exchangeable Shares have economic and voting rights that are, as nearly as practicable, the same as the rights of Marathon Shares, including the right to vote at meetings of holders of Marathon Shares. In addition, the exchange ratio for the Exchangeable Shares is adjusted from time to time to account for cash dividends paid by Marathon on the Marathon Shares. All of the outstanding Exchangeable Shares are held by Marathon Canadian Oil Sands Holding Limited (CallCo), a subsidiary of Marathon, and by former holders of Western Shares who have elected to receive Exchangeable Shares in exchange for their Western Shares pursuant to the Arrangement.

(g) The Exchangeable Shares are not listed on any exchange.

(h) As at February 5, 2008 there were 5,156,093 Exchangeable Shares issued and outstanding, of which CallCo held 1,155,022 Exchangeable Shares. The Exchangeable Shares held by CallCo represent the number of Exchangeable Shares that have been exchanged for Marathon Shares.

(i) Pursuant to an MRRS order dated November 29, 2007 (the Order), AcquisitionCo was granted exemptive relief from various Canadian reporting requirements as long as Marathon and AcquisitionCo satisfy certain conditions.

(j) As a result of the issuance of one special preferred share to a third party, AcquisitionCo cannot rely on the "exchangeable security issuer" exemption in section 8.2 of NI 51-101.

Marathon

(k) Marathon is incorporated pursuant to the laws of Delaware and its head office and management are located in Houston, Texas.

(l) The Marathon Shares are listed on the New York Stock Exchange (the NYSE) and the Chicago Stock Exchange (the CSE).

(m) Marathon does not have any of its securities listed on an exchange in Canada.

(n) As at December 31, 2007 there were 713,444,033 Marathon Shares issued and outstanding.

(o) A search of registered holders of Marathon Shares conducted on December 31, 2007 by National City Bank, Marathon's transfer agent, indicated that there were 356 registered holders resident in Canada holding 214,481.616 Marathon Shares, representing approximately 0.03% of the issued and outstanding Marathon Shares as at December 31, 2007.

(p) A search of beneficial holders of Marathon Shares conducted on January 15, 2008 by Broadridge Financial Solutions, Inc. indicated that there were 6,565 beneficial holders resident in Canada holding 15,411,123 Marathon Shares, representing approximately 2.16% of the issued and outstanding Marathon Shares as at December 31, 2007.

(q) A search of registered holders of Exchangeable Shares conducted on February 5, 2008 by Valiant Trust Company, AcquisitionCo's transfer agent, indicated that there were 5 registered holders resident in Canada holding 4,001,071 Exchangeable Shares, representing approximately 0.56% of the issued and outstanding Marathon Shares as of December 31, 2007 on a fully diluted basis, assuming an exchange ratio of one Marathon Share for each Exchangeable Share.

(r) A search of beneficial holders of Exchangeable Shares conducted on February 8, 2008 by Broadridge Financial Solutions, Inc. indicated that there were 126 beneficial holders resident in Canada holding 3,989,088 Exchangeable Shares, representing approximately 0.56% of the issued and outstanding Marathon Shares as at December 31, 2007 on a fully diluted basis, assuming an exchange ratio of one Marathon Share for each Exchangeable Share.

(s) Based on the foregoing information regarding registered and beneficial holders of Marathon Shares and Exchangeable Shares:

(i) less than 10% of the number of registered and beneficial holders of Marathon Shares together with registered and beneficial holders of Exchangeable Shares are resident in Canada; and

(ii) less than 10% of the aggregate of outstanding Marathon Shares and Exchangeable Shares are held by residents of Canada.

(t) Marathon is subject to the 1934 Act and the rules, regulations and orders promulgated thereunder.

(u) Marathon files with the SEC, the NYSE and the CSE disclosure about its oil and gas activities (Oil and Gas Disclosure) prepared in accordance with the requirements of the 1933 Act, the 1934 Act and the rules and regulations of the SEC, the NYSE and the CSE (collectively, the US Rules).

(v) Marathon is an "SEC Issuer" within the meaning of that term in National Instrument 71-102 Continuous Disclosure and Other Exemptions Relating to Foreign Issuers. Accordingly, Marathon is generally exempt from Canadian reporting requirements, including the requirement for insiders of Marathon to file reports with respect to trades of Marathon securities, provided Marathon complies with the requirements of US federal and state securities laws and US market requirements in respect of all financial and other continuous and timely reporting matters and Marathon files with the relevant provincial and territorial securities regulatory authorities copies of its documents filed with or furnished to the SEC under the 1934 Act.

(w) The Filers are not in default of any of the requirements of the securities legislation of any of the Reporting Jurisdictions or the conditions of the Order.

Decision

5. Each of the Decision Makers is satisfied that the tests contained in the Legislation that provides the Decision Maker with the jurisdiction to make the decisions described herein have been met.

6. The decision of the Decision Makers under the Legislation is that the Requested Relief is granted for so long as:

(a) Marathon remains subject to and complies with the disclosure requirements of the US Rules in connection with its oil and gas activities;

(b) Marathon issues in Canada, and files on SEDAR, a news release stating that it will provide Oil and Gas Disclosure prepared in accordance with the US Rules rather than in accordance with NI 51-101;

(c) Marathon files the Oil and Gas Disclosure with the Decision Makers as soon as practicable after the Oil and Gas Disclosure is filed with the SEC;

(d) less than 10% of the number of registered and beneficial holders of Marathon Shares together with registered and beneficial holders of Exchangeable Shares are resident in Canada;

(e) less than 10% of the aggregate of outstanding Marathon Shares and Exchangeable Shares are held by residents of Canada; and

(f) Marathon remains the direct or indirect beneficial owner of all of the issued and outstanding voting securities of AcquisitionCo.