Securities Law & Instruments

Headnote

Mutual Reliance Review System for ExemptiveRelief Applications - issuer deemed to cease to be a reportingissuer after all of its common shares purchased by its U.S.parent. Aside from the common shares, the only outstanding securitiesof the issuer are debt securities issued in the United States.There are three Canadian-resident holders of debt securitiesholding a de minimus aggregate amount of debt.

Applicable Ontario Statutory Provisions

Securities Act, R.S.O. 1990, c. S.5, as am.s. 83.

IN THE MATTER OF
THE SECURITIES LEGISLATION OF
BRITISH COLUMBIA, ALBERTA, QUEBEC, SASKATCHEWAN, ONTARIO, NOVASCOTIA AND NEWFOUNDLAND AND LABRADOR

AND

IN THE MATTER OF
THE MUTUAL RELIANCE REVIEW SYSTEM
FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF
CONOCO CANADA RESOURCES LIMITED

MRRS DECISION DOCUMENT

1. WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") in eachof British Columbia, Alberta, Quebec, Saskatchewan, Ontario,Nova Scotia and Newfoundland and Labrador (collectively, the"Jurisdictions") has received an application fromConoco Canada Resources Limited ("Conoco Canada")for a decision under the securities legislation of the Jurisdictions(the "Legislation") that Conoco Canada be deemed tohave ceased to be a reporting issuer under the Legislation;

2. AND WHEREAS under the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Alberta Securities Commission is the principal regulatorfor this application;

3. AND WHEREAS Conoco Canada has representedto the Decision Makers that:

3.1 Conoco Canada is governed by the CanadaBusiness Corporations Act (the "CBCA") and is a reportingissuer in each of the Jurisdictions;

3.2 Conoco Canada is not in default of any ofits obligations as a reporting issuer under the Legislation;

3.3 Conoco Canada's head office is located inAlberta;

3.4 the authorized capital of Conoco Canadaconsists of an unlimited number of ordinary shares, an unlimitednumber of Senior Preference Shares issuable in series and anunlimited number of Junior Preference Shares issuable in series;

3.5 as at May 28, 2001, Conoco Canada had issuedand outstanding 535,373,276 ordinary shares;

3.6 as at April 1, 2002, Conoco Canada had issuedand outstanding 85,504,557 Senior Preference Shares Series 1(the "Series 1 Preference Shares"), 300 Senior PreferenceShares Series 2 (the "Series 2 Preference Shares")and no Junior Preference Shares;

3.7 Conoco Inc. ("Conoco U.S."), ConocoCanada and Conoco Northern Inc. ("Conoco Northern"),an indirect wholly-owned subsidiary of Conoco U.S., enteredinto a Support Agreement made as of May 28, 2001, whereby theparties agreed that Conoco Northern would make a take-over bidfor all of the issued and outstanding ordinary shares of ConocoCanada;

3.8 upon completion of the take-over bid onJuly 16, 2001 and the use of the compulsory acquisition provisionsof the CBCA, Conoco Northern acquired all of the issued andoutstanding ordinary shares of Conoco Canada other than thoseheld by dissenting shareholders, which shareholders were entitledto receive a cash payment representing fair value for theirshares or to withdraw their dissent and receive the cash take-overbid consideration. All dissenting shareholders have been dealtwith;

3.9 upon completion of the take-over bid andthe acquisition of all of the issued and outstanding ordinaryshares of Conoco Canada by Conoco Northern, Conoco Canada'sordinary shares were delisted from the Toronto Stock Exchangeand the New York Stock Exchange;

3.10 the Series 1 Preference Shares were redeemedon April 22, 2002, at the redemption price set out in the Articlesof Conoco Canada;
3.11 the Series 2 Preference Shares were redeemed on April 10,2002, at the redemption price set out in the Articles of ConocoCanada;

3.12 the Series 1 Preference Shares have beendelisted from the Toronto Stock Exchange and the New York StockExchange;

3.13 as at August 31, 2001, Conoco Canada hadthe following publicly traded debt securities outstanding:

 
In millions
6.45% Medium Term Notes
$ 100 (Cdn)
8.375% Senior Notes due 2005
200 (US)
8.35% Senior Notes due 2006
250 (US)
7.125% Notes due 2011
300 (US)
8.25% Senior Notes due 2017
225 (US)

3.14 the 6.45% Medium Term Notes due 2007 (the"Crestar Notes") were offered by a predecessor corporationof Conoco Canada, Crestar Energy Inc., by way of prospectusin Canada;

3.15 the trust indenture under which the CrestarNotes were issued allows for redemption of the Crestar Notes.The Crestar Notes were redeemed April 22, 2002 in accordancewith their terms;

3.16 the 8.375% Senior Notes due 2005, the 8.35%Senior Notes due 2006, the 7.125% Notes due 2011 (the "2011Notes") and the 8.25% Senior Notes due 2017 (collectivelythe "U.S. Notes") were offered by way of prospectusin the United States;

3.17 the U.S. Notes were not offered in Canada,although for at least two series of U.S. Notes, a prospectuswas filed in Canada so the Multi-Jurisdictional Disclosure Systemcould be used;

3.18 on September 20, 2001, Conoco Canada commenceda tender offer for the U.S. Notes, which tender offer expiredon September 27, 2001;

3.19 as a result of the completion of the tenderoffer and subsequent purchases of U.S. Notes, as at February15, 2002, the following amount of U.S. Notes remained outstanding:

 
Amount Outstanding
 
U.S. dollars in millions
 
8.375% Senior Notes due 2005
$8.1
8.35% Senior Notes due 2006
3.9
7.125% Notes due 2011
.375
8.25% Senior Notes due 2017
8.2

3.20 of the U.S. Notes remaining outstanding,searches conducted by Conoco Canada indicated that in aggregatethere were three Canadian holders (all in Ontario) of the fourclasses of U.S. Notes, holding approximately US$254,000 principalamount of U.S. Notes;

3.21 on February 15, 2002, Conoco U.S., ConocoCanada and the trustee under the trust indentures under whichthe U.S. Notes were issued (the "Trustee") enteredinto supplemental trust indentures under which Conoco U.S. guaranteedthe U.S. Notes and agreed to file with the Trustee, copies ofthe annual reports and information, documents and other reports(the "SEC Filings") that Conoco U.S. is required tofile with the U.S. Securities and Exchange Commission (the "SEC")under Section 13 or 15(d) of the Securities Exchange Act of1934 of the United States (the "Exchange Act");

3.22 Conoco U.S. is in the process of completinga merger with Phillips Petroleum Corporation. Conoco U.S. hasadvised holders of U.S. Notes that following completion of themerger, Conoco U.S. or one of Conoco U.S.'s investment-gradeaffiliates that guarantees the U.S. Notes, will continue tofile the SEC Filings of Conoco U.S. or such affiliate with theTrustee;

3.23 the trust indenture under which the 2011Notes were issued allows for redemption of the 2011 Notes. The2011 Notes were redeemed on March 22, 2002, in accordance withtheir terms;

3.24 on February 19, 2002, Conoco Canada delivereda consent solicitation to the holders of each series of U.S.Notes, other than the 2011 Notes, (the "Remaining U.S.Notes"), requesting elimination of Conoco Canada's financialreporting obligations under the trust indentures under whichthe Remaining U.S. Notes were issued (the "U.S. Trust Indentures");

3.25 as part of the consent solicitation process,holders of the Remaining U.S. Notes were advised that if theyapproved the amendments to the U.S.Trust Indentures, ConocoCanada would no longer be required to file periodic reportswith the Alberta Securities Commission or with the Trustee.In addition, holders of the Remaining U.S. Notes were askedto consent to Conoco Canada being deemed to cease to be a reportingissuer under the securities legislation of each of the Jurisdictions;

3.26 Conoco Canada has obtained the requisiteapprovals from the holders of the Remaining U.S. Notes includingthe three Ontario holders referred to in paragraph 3.20 above,such that they have consented to Conoco Canada obtaining thisrelief and such that they no longer require Conoco Canada tofile financial reports under the U.S. Trust Indentures;

3.27 Conoco Canada has since purchased US$250,000principal amount of U.S. Notes from two of the three Ontarioholders referred to in paragraph 3.20;

3.28 the only securities of Conoco Canada remainingoutstanding that are held by persons or companies other thanConoco U.S. or its affiliates are the Remaining U.S. Notes,of which approximately U.S.$12,965,000 aggregate principal amountwere outstanding as of April 11, 2002;

3.29 no securities of Conoco Canada are listedor quoted on any exchange or market in Canada or elsewhere;

3.30 as a result of the various transactionsdescribed above (including the consent solicitation with respectto the Remaining U.S. Notes), the limited number of holdersof the Remaining U.S. Notes and the deregistration of the Series1 Preference Shares under the Exchange Act, Conoco Canada isno longer subject to periodic reporting requirements under theExchange Act or Trust Indenture Act of 1939 of the United Statesand Conoco Canada has no contractual obligations to file periodicreports in any other jurisdiction; and

3.31 Conoco Canada has no present intentionof seeking public financing by way of an offering of its securities.

4. AND WHEREAS under the System, thisMRRS Decision Document evidences the decision of each DecisionMaker (collectively, the "Decision");

5. AND WHEREAS each of the Decision Makersis satisfied that the test contained in the Legislation thatprovides the Decision Maker with the jurisdiction to make theDecision has been met;

6. AND WHEREAS the Decision of the DecisionMakers under the Legislation is that Conoco Canada is deemedto have ceased to be a reporting issuer under the Legislation.

May 16, 2002.

"Patricia M. Johnston"