Securities Law & Instruments

Headnote

MRRS - Rule 54-501 - Relief from the requirementto reconcile to Canadian GAAP financial statements includedin an information circular which are prepared in accordancewith U.S. GAAP; relief from the requirement to restate thoseparts of MD&A that are prepared based on financial statementsprepared in accordance with U.S. GAAP if that MD&A wouldrecord differently if was based on financial statements preparedin accordance with Canadian GAPP.

Ontario Rule Cited

Rule 54-501 Prospectus Disclosure in CertainInformation Circulars (2000), 23 OSCB 8519, section 3.1.

Rule 41-501 General Prospectus Requirements(2000), 23 OSCB 761, sections 9.1, 9.4.

Rule 41-501F1 subsection 8.5(2).

IN THE MATTER OF

THE SECURITIES LEGISLATIONOF

BRITISH COLUMBIA, ALBERTA,ONTARIO AND

QUÉBEC

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEWSYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

RYAN ENERGY TECHNOLOGIES INC.

AND

IN THE MATTER OF

NABORS INDUSTRIES LTD.

 

MRRS DECISION DOCUMENT

WHEREAS the local securities regulatoryauthority or regulator (the "Decision Makers") ineach of British Columbia, Alberta, Ontario and Quebec (the "Jurisdictions")has received an application from Ryan Energy Technologies Inc.(the "Applicant" or "Ryan") for a decision(the "Decision") under the securities legislationof the Jurisdictions (the "Legislation"), that theApplicant be exempt from the following requirements with respectto Nabors Industries Ltd. ("Nabors") in the managementinformation circular (the "Circular") to be sent toRyan's Securityholders (as defined below):

(a) the requirement that historical financialstatements of Nabors prepared in accordance with UnitedStates generally accepted accounting principles ("U.S.GAAP") be accompanied by a note to explain and quantifythe effect of material differences between Canadian generallyaccepted accounting principles ("Canadian GAAP")and U.S. GAAP that relate to measurements and provide areconciliation of such financial statements to CanadianGAAP;

(b) the requirement that Nabors auditor'sreport disclose any material differences in the form andcontent of its auditor's report as compared to a Canadianauditor's report and confirming that the auditing standardsapplied are substantially equivalent to Canadian GAAP; and

(c) the requirement that Nabors management'sdiscussion and analysis of operating results and financialposition ("Nabors MD&A") provide a restatementof those parts of the Nabors MD&A that would read differentlyif the Nabors MD&A were based on statements preparedin accordance with Canadian GAAP and the requirement thatthe Nabors MD&A provide a cross-reference to the notesin the financial statements that reconcile the differencesbetween U.S. GAAP and Canadian GAAP;

(collectively, the "GAAP ReconciliationRequirements").

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

AND WHEREAS, unless otherwise defined,the terms herein have the meaning set out in National Instrument14-101 Definitions or in Quebec Commission Notice 14-101;

AND WHEREAS the Applicant has representedto the Decision Makers that;

1. In connection with the proposed combinationof Nabors and Ryan (the "Transaction") pursuantto an arrangement agreement (the "Arrangement Agreement")dated August 12, 2002 between Nabors and Ryan, Ryan intendsto mail the Circular to Ryan Securityholders (as defined below)on or about September 10, 2002, which Circular will seek,among other things, Ryan Securityholder approval of the Arrangement.Subject to satisfying all closing conditions (including obtainingthe requisite Ryan Securityholders' approval and regulatoryapprovals), the parties anticipate that the Transaction willbe completed on or about October 9, 2002 (the "ClosingDate").

2. The Transaction is to be effected pursuantto the Arrangement, which will be carried out under section193 of the Business Corporations Act (Alberta) ("ABCA").The effect of the Arrangement will be to provide holders (the"Ryan Shareholders") of common shares of Ryan ("RyanCommon Shares") (other than Ryan Common Shares held bydissenting shareholders (the "Dissenting Shareholders")or by Nabors) with cash or exchangeable shares (the "ExchangeableShares") of Nabors Exchangeco (Canada) Inc. (TSX, NBX.U)("Nabors Exchangeco"), a wholly-owned Canadian subsidiaryof Nabors, in exchange for their Ryan Common Shares. Underthe terms of the Arrangement Agreement, the value of the ExchangeableShares will be determined based on the weighted average tradingprice of the Nabors common stock on the American Stock Exchangefor the three consecutive trading days ending on the thirdbusiness day prior to the date of the meeting of Ryan Shareholdersand optionholders to approve the Arrangement. The number ofExchangeable Shares to be received for each Ryan Common Sharepursuant to this formula will be announced prior to the Ryanshareholder meeting (the "Exchange Ratio"). TheRyan Common Shares will be transferred to and acquired byNabors Exchangeco, which is an indirect wholly-owned subsidiaryof Nabors, such that upon completion of the Transaction, Naborswill own indirectly all of the Ryan Common Shares.

3. Nabors is an exempted company formed underthe laws of Bermuda on December 11, 2001. Nabors' registeredoffices are located at Whitepark House, White Park Road, Bridgetown,Barbados. Nabors is the successor to Nabors Industries, Inc.,a Delaware corporation (Nabors Delaware) for financial andsecurities law purposes in the United States. Effective June24, 2002, Nabors became the successor to Nabors Delaware followinga corporate reorganization. The reorganization was accomplishedthrough the merger of an indirect, newly formed Delaware subsidiaryowned by Nabors into Nabors Delaware. Nabors Delaware wasthe surviving company in the merger and became a wholly-owned,indirect subsidiary of Nabors. Upon consummation of the merger,all outstanding shares of Nabors Delaware common stock automaticallyconverted into the right to receive Nabors common shares,with the result that the shareholders of Nabors Delaware onthe date of the merger became the shareholders of Nabors.Nabors and its subsidiaries continue to conduct the businessespreviously conducted by Nabors Delaware and its subsidiaries.The reorganization has been accounted for as a reorganizationof entities under common control, and accordingly, it didnot result in any changes to the consolidated amounts of assets,liabilities and stockholders' equity.

4. As of August 12, 2002, Nabors' authorizedshare capital was US$425,000, which consists of 425,000,000shares of stock, par value U.S.$0.001 per share, of which400,000,000 are common shares ("Nabors Common Shares")and 25,000,000 are preferred shares. The Nabors Common Sharesare fully participating voting shares. As of July 31, 2002,there were 144,429,630 Nabors Common Shares and one preferredshare issued and outstanding. As of August 20, 2002, out ofa total of 2,299 total registered holders of Nabors CommonShares, 15 holders were resident in Canada, holding 878,274Nabors Common Shares in aggregate, representing approximately0.608% of the total number of issued and outstanding NaborsCommon Shares as at that date. In addition, there are sixregistered holders of Exchangeable Shares holding 662,064Exchangeable Shares; five of these holders are resident inCanada and hold 504,587 Exchangeable Shares.

5. As of July 31, 2002, there were up to amaximum of approximately 50,000,000 Nabors Common Shares reservedfor issuance pursuant to Nabors stock option plans or uponexchange or conversion of outstanding Nabors debt securitiesor warrants or previously issued Exchangeable Shares. Of the819 Nabors optionholders, 38 are resident in Canada.

6. The Nabors Common Shares are listed onthe American Stock Exchange (the "AMEX") under thesymbol "NBR".

7. Nabors is currently subject to the UnitedStates Securities Exchange Act of 1934,as amended (the"Exchange Act"). Nabors is not and does not intendto become a "reporting issuer" or the equivalentin any province or territory of Canada. To the extent that,as a result of the consummation of the Transaction. Naborswould, pursuant to the securities laws of any jurisdictionin Canada, be deemed to be a reporting issuer or the equivalent,Nabors will seek and expects to obtain orders deeming it notbe to be a reporting issuer or the equivalent in such jurisdictions.

8. Ryan was incorporated under the laws ofthe Province of Alberta on January 22, 1993 under the name"Adesso Corporation". On March 15, 1994, Ryan acquiredall of the issued and outstanding shares of Ryan Energy TechnologiesInc., a private Alberta company, which was incorporated onOctober 30, 1991. On April 1, 1994, Ryan amalgamated withRyan Energy Technologies Inc. under the ABCA and continuedunder the name "Ryan Energy Technologies Inc." OnJanuary 1, 1999, Ryan amalgamated with its wholly owned subsidiary747253 Alberta Ltd. and continued under the name "RyanEnergy Technologies Inc.".

9. Ryan's authorized capital, consists ofan unlimited number of Ryan Common Shares. As of August 12,2002, 22,716,848 Ryan Common Shares were issued and outstanding.

10. As of August 20, 2002, there were 46 registeredRyan Shareholders in Canada holding 16,084,874 Ryan CommonShares, representing approximately 70.8% of the total numberof issued and outstanding Ryan Common Shares.

11. As of August 12, 2002, up to a maximumof 517,600 Ryan Common Shares may be issued pursuant to outstandingin-the-money Options; and up to a maximum of 1,737,050 Sharesmay be issued pursuant to outstanding Options that are notin-the-money (collectively the "Ryan Options"),all of which Ryan Options were held by residents in Canada,except for 920,220 options.

12. The Ryan Common Shares are listed on theToronto Stock Exchange (the "TSX") under the symbol"RYN".

13. Ryan is a "reporting issuer"or the equivalent in British Columbia, Alberta, Manitoba,Ontario and Quebec.

14. Ryan is not currently eligible to fileunder National instrument 44-101 - "Short Form ProspectusDistributions".

15. Prior to the Special Meeting (as definedbelow), Ryan will apply under section 193 of the ABCA foran interim order (the "Interim Order") of the Courtof Queen's Bench of Alberta (the "Court") whichorder will specify, among other things, certain proceduresand requirements to be followed in connection with the callingand holding of the Special Meeting and the completion of theArrangement.

16. A special meeting (the "Special Meeting")of the Ryan Shareholders and the holders of Ryan Options ("RyanOptionholders") (together with Ryan Shareholders, the"Ryan Securityholders") is anticipated to be heldon or about October 8, 2002 at which Ryan will seek the requisiteRyan Securityholder approval (which, pursuant to the InterimOrder, is expected to be 66 2/3% of the votes attached tothe Ryan Common Shares and Ryan Options, voting as one class,represented at the Special Meeting) for the special resolutionapproving the Arrangement.

17. In connection with the Special Meetingand pursuant to the Interim Order, Ryan will mail on or aboutOctober 8, 2002 to each Ryan Securityholder (i) a notice ofspecial meeting, (ii) a form of proxy, (iii) the Circular,and (iv) a letter of transmittal and election form by whichRyan Shareholders will be entitled to elect the considerationto be received in exchange for their Ryan Common Shares. TheCircular will be prepared in accordance with OSC Rule 54-501,except with respect to any relief granted therefrom, and willcontain disclosure of the Transaction and the business andaffairs of each of Nabors and Ryan.

18. It is proposed that the Circular willcontain the following financial statements:

(a) audited consolidated financial statementsof Nabors for each of the three fiscal years ended December31, 2001, 2000 and 1999, together with balance sheets asat the end of such periods and the auditor's reports thereon,and unaudited consolidated financial statements for thesix months ended June 30, 2002, 2001 and 2000, all in accordancewith U.S. GAAP; and

(b) audited consolidated statements of earningsand retained earnings and consolidated statements of cashflows of Ryan for each of the three fiscal years ended December31, 2001, 2000 and 1999, together with balance sheets asat December 31, 2001 and 2000 and the auditor's reportsthereon, and unaudited consolidated statements of earningsand retained earnings and consolidated statements of cashflows for the six months ended June 30, 2002, 2001 and 2000,together with the balance sheet as at June 30, 2002, allin accordance with Canadian GAAP.

19. Following approval by the Ryan Securityholdersof the special resolution approving the Arrangement, receiptof all required consents and regulatory approvals and issuanceby the Court of a favourable final order, and subject to thesatisfaction of all other closing conditions specified inthe Arrangement Agreement, Ryan will effect the Arrangementby filing Articles of Arrangement.

20. It is expected that upon consummationof the Arrangement or shortly thereafter the Ryan Common Shareswill be delisted from the TSX.

21. Nabors is mailing an application to theAMEX in order that the Nabors Common Shares issued pursuantto the Arrangement be listed for trading on the AMEX.

22. Upon completion of the Arrangement, assumingthat all the Ryan Shareholders elect to exchange their RyanCommon Shares for Nabors Common Shares issuable pursuant tothe Arrangement, and assuming an Exchange Ratio of 0.0360(based on the closing price of Nabors Common Shares on August20, 2002, and based on the Bank of Canada noon exchange ratefor U.S. dollars on that date of Cdn $1.5715 per U.S. $1.00),it is expected that beneficial holders of Nabors Common Sharesresident in Canada (calculated based upon the number of registeredRyan Shareholders and registered holders of both Nabors CommonShares and Exchangeable Shares who are resident Canadiansas of the above-mentioned dates) will hold Exchangeable Sharesor Nabors Common Shares representing approximately 1.35% ofthe issued and outstanding Nabors Common Shares (includingNabors Common Shares issuable on conversion of the ExchangeableShares).

23. If Nabors becomes a reporting issuer inany of the Jurisdictions, it will be able to satisfy its continuousdisclosure obligations using financial statements preparedin accordance with U.S. GAAP by relying on Part 15 of NationalInstrument 71-101 - The Multijurisdictional Disclosure System.

AND WHEREAS under the System, this MRSSDecision Document evidences the decision of each Decision Maker;

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;

THE DECISION of the Decision Makers underthe Legislation that the GAAP Reconciliation Requirements shallnot apply in connection with the disclosure pertaining to Naborsin the Circular.

September 13, 2002.

"Agnes Lau"