Securities Law & Instruments


Mutual Reliance Review System for ExemptiveRelief Applications - relief from registration and prospectusrequirements in connection with statutory arrangement involvingan exchangeable share structure where exemptions may not beavailable for technical reasons; first trade deemed a distributionunless made in accordance with specified provisions of MultilateralInstrument 45-102, Resale of Securities; and variation to aprevious MRRS decision document.

Ontario Statutes

Securities Act, R.S.O. 1990, c. S.5, as am.,ss. 24, 53, 74(1), 144(1).

Multilateral Instruments

Multilateral Instrument 45-102 Resale of Securities.

Ontario Rules

Rule 45-501 Exempt Distributions.


















1. WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") ineach of Alberta, British Columbia, Saskatchewan, Manitoba,Ontario, Québec, New Brunswick, Nova Scotia, PrinceEdward Island, Newfoundland, Yukon Territory, Nunavut andthe Northwest Territories (the "Jurisdictions")has received an application from Nabors Industries Ltd. ("Nabors"),3064297 Nova Scotia Company ("Callco") and NaborsExchangeco (Canada) Inc. ("Canco") (collectively,the "Applicant") for a decision pursuant to thesecurities legislation, regulations, rules, instruments and/orpolicies of the Jurisdictions (the "Legislation")that the requirements contained in the Legislation to be registeredto trade in a security (the "Registration Requirement")and to file a preliminary prospectus and a prospectus andto obtain receipts therefor (the "Prospectus Requirement")shall not apply to certain trades and distributions of securitiesto be made in connection with an agreement to combine thebusinesses of Nabors and Ryan Energy Technologies Inc. ("Ryan")pursuant to a plan of arrangement (the "Arrangement")under Section 193 of the Business Corporations Act(Alberta) as amended (the "ABCA");

2. AND WHEREAS the Decision Makers issueda decision on April 18, 2002, In the Matter of Nabors Industries,Inc. et al. (the "Enserco Decision") under theLegislation exempting trades in certain securities by NaborsIndustries, Inc. (the predecessor to Nabors), Callco and Cancoand exempting Canco from, among other things, the requirementscontained in the Legislation to issue a press release andfile a report with the Decision Makers upon the occurrenceof a material change, file and deliver an annual report, whereapplicable, interim and annual financial statements, informationcirculars and annual information forms and provide, whereapplicable, interim and annual management's discussion andanalysis of financial conditions and results of operations(collectively the "Continuous Disclosure Requirements")and the Applicant has applied to the Decision Makers for adecision under the Legislation varying the Enserco Decision;

3. AND WHEREAS under the Mutual Reliance ReviewSystem for Exemptive Relief Applications (the "System")the Alberta Securities Commission is the principal regulatorfor this application;

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

5. AND WHEREAS the Applicant has representedto the Decision Makers that:

5.1 Nabors is an exempted company organizedand existing under the laws of Bermuda, with its registeredoffice in Bridgetown, Barbados; Effective June 24, 2002,Nabors became the successor to Nabors Industries, Inc.,a Delaware corporation ("Nabors Delaware"), followinga corporate reorganization;

5.2 the authorized capital of Nabors isUS$425,000, which consists of 425,000,000 shares of stock,par value US$0.001 per share, of which 400,000,000 are commonshares of Nabors ("Nabors Shares") and 25,000,000are preferred shares, par value US$0.001 per share;

5.3 the Nabors Shares are currently listedand posted for trading on the American Stock Exchange (the"AMEX") under the symbol "NBR";

5.4 as of August 20, 2002, there were 15registered holders of Nabors Shares resident in Canada (outof a total of 2,209 registered holders) holding 878,274Nabors Shares, representing approximately 0.608% of thetotal number of issued and outstanding Nabors Shares. Asof September 6, 2002, there were 978 beneficial holdersof Nabors Shares resident in Canada holding 334,414 NaborsShares representing approximately 0.231% of the total numberof issued and outstanding Nabors Shares;

5.5 on August 12, 2002, the day immediatelyprior to the Arrangement being publicly announced, the closingprice for Nabors Shares was US$31.29, representing a marketcapitalization of approximately US$4.5 billion;

5.6 Nabors is subject to the reporting requirementsof the United States Securities Exchange Act of 1934,as amended (the "1934 Act");

5.7 Nabors is not a reporting issuer inany of the Jurisdictions but anticipates becoming a reportingissuer, absent exemptive relief from the securities regulatoryauthority or regulator therein, in Alberta and Québecfollowing, and as a consequence of, the completion of theArrangement;

5.8 Callco is:

5.8.1 an indirect wholly-owned subsidiaryof Nabors;

5.8.2 an unlimited liability company incorporatedunder the Companies Act (Nova Scotia) solely forthe purpose of holding the various call rights associatedwith the exchangeable non-voting shares of Canco (the"Exchangeable Shares"); and

5.8.3 not a reporting issuer or the equivalentin any province or territory of Canada and does not intendto become a reporting issuer or the equivalent in anyprovince or territory of Canada;

5.9 all of the issued and outstanding sharesof Callco are and will be held indirectly by Nabors at allmaterial times;

5.10 Nabors and Callco have applied to bedeemed to have ceased to be reporting issuers after theEffective Time (as defined below) of the Arrangement;

5.11 Canco was incorporated under the CanadaBusiness Corporations Act on March 8, 2002 for the purposeof implementing business combinations in Canada and issuingExchangeable Shares in connection therewith, and has itsregistered office in Calgary, Alberta. The only businessCanco has carried on prior to its involvement in the Arrangementwas the arrangement involving Nabors Delaware, Canco, Callcoand Enserco Energy Service Company Inc. on April 2002 (the"Enserco Arrangement");

5.12 the authorized capital of Canco consistsof an unlimited number of common shares and an unlimitednumber of Exchangeable Shares;

5.13 as at August 31, 2002, there was onecommon share of Canco and 641,982 Exchangeable Shares issuedand outstanding. All of the issued and outstanding commonshares of Canco are and will continue to be held indirectlyby Nabors as long as any outstanding Exchangeable Sharesare owned by any person or entity other than Nabors or anyof Nabors' subsidiaries;

5.14 Canco is a reporting issuer in BritishColumbia, Alberta, Saskatchewan, Manitoba, Ontario and Québec;

5.15 the Exchangeable Shares are listedand posted for trading on TSX Inc. (the "TSX");

5.16 on January 22, 1993, Adesso Corporationwas incorporated under the ABCA and on March 14, 1994, AdessoCorporation acquired all of the issued and outstanding sharesof Ryan Energy Technologies Inc., a private Alberta Company,which was incorporated on October 30, 1991;

5.17 on April 1, 1994, Adesso Corporationand Ryan Energy Technologies Inc. amalgamated under theABCA to continue under the name Ryan Energy TechnologiesInc.;

5.18 the authorized capital of Ryan consistsof an unlimited number of common shares ("Ryan Shares")and an unlimited number of preferred shares issuable inseries, of which 22,716,848 Ryan Shares were issued andoutstanding as of August 12, 2002. Up to an additional 565,566Ryan Shares may be issued pursuant to outstanding in-the-moneyoptions ("Ryan Options") and up to 1,731,450 RyanShares may be issued pursuant to outstanding out-of-the-moneyRyan Options;

5.19 the Ryan Shares are listed and postedfor trading on the TSX under the symbol "RYN";

5.20 Ryan is a reporting issuer in Alberta,British Columbia, Manitoba, Ontario and Québec;

5.21 to the knowledge of the Applicant,Ryan is not in default of any requirements of the Legislation;

5.22 the Arrangement is subject to approvalof the holders of Ryan Shares ("Shareholders"),and the holders of Ryan Options (collectively, the "RyanSecurity Holders") and the Court of Queen's Bench ofAlberta by virtue of a final order approving the Arrangement;

5.23 a meeting of the Ryan Security Holders(the "Ryan Meeting") has been scheduled for October8, 2002 to consider and, if deemed appropriate, approvethe Arrangement;

5.24 an information circular dated September6, 2002 (the "Circular") prepared in accordancewith the Legislation was mailed to the Ryan Security Holderson September 10, 2002 in connection with the Ryan Meetingand filed with each of the Decision Makers concurrentlytherewith;

5.25 the Circular contains or incorporatesby reference prospectus-level disclosure concerning theArrangement and the business and affairs of both Naborsand Ryan as well as certain historical financial informationregarding both Nabors and Ryan;

5.26 at the Ryan Meeting, each Shareholderwill be entitled to one vote for each Ryan Share held, andeach holder of Ryan Options will be entitled to one votefor each Ryan Share such holder would receive on a validexercise thereof;

5.27 subject to the satisfaction or waiverof all closing conditions, including the receipt of allregulatory approvals, it is currently anticipated that theArrangement will be completed on or about October 9, 2002;

5.28 under the terms of the Arrangement,at the effective time (the "Effective Time") onthe date shown on the registration statement issued uponfiling Articles of Arrangement under the ABCA giving effectto the Arrangement (the "Effective Date"):

5.28.1 each Ryan Share that is not heldby either a Shareholder who has exercised its dissentright and who is ultimately entitled to be paid the fairvalue of its Ryan Shares, or by Nabors or any affiliatethereof, will be transferred to, and acquired by, Canco,in exchange for, at the Shareholder's election (or deemedelection): (a) Cdn. $1.85 (the "Per Share Price");or (b) such number of fully paid and non-assessable ExchangeableShares as is determined pursuant to an Exchange Ratio(as defined in paragraph 5.29);

5.28.2 each Ryan Share in respect of whichno election or no effective election has been made bythe Shareholder (other than Ryan Shares held by (i) aShareholder who has exercised its dissent right and isultimately entitled to be paid the fair market value ofits Ryan Shares, or (ii) Ryan or any affiliate) will betransferred to, and acquired by, Canco without any actor formality on the part of the Shareholder or Canco,free and clear of all liens, claims and encumbrances,and the Shareholder shall be deemed to have elected toreceive in exchange therefor the Per Share Price in cash;and

5.28.3 each Ryan Option that has not beenduly exercised or surrendered for termination prior tothe Effective Time shall be terminated and, in considerationfor such termination, each holder of such Ryan Optionshall receive cash, without interest, in an amount equalto the greater of: (A) the positive difference, if any,between (i) the product of the Per Share Price and thenumber of Ryan Shares that are subject to issuance uponthe exercise of such Ryan Option, and (ii) the cash exerciseprice of such Ryan Option; and (B) Cdn.$0.10, for eachRyan Share subject to such issuance;

5.29 the "Exchange Ratio" willbe determined by dividing the Per Share Price by the simpleaverage of the weighted average trading price of NaborsShares on the AMEX over 3 consecutive trading days endingon the third Business Day prior to the date of the RyanMeeting (the "Measurement Period") using a currencyexchange rate of Canadian dollars to U.S. dollars equalto the average of the noon-buying rates in New York Cityfor cable transfers in Canadian dollars as certified forcustoms purposes by the Federal Reserve Bank of New Yorkfor each trading day in the Measurement Period. The "SimpleAverage of the Weighted Average Trading Price" is determinedby dividing the aggregate sale price of all Nabors Sharessold on the AMEX during the Measurement Period by the totalnumber of Nabors Shares sold;

5.30 upon the completion of the Arrangement,all of the issued and outstanding Ryan Shares will be helddirectly or indirectly by Nabors and its affiliates;

5.31 it is expected that the Ryan Shareswill be delisted from the TSX on or after the EffectiveDate. Ryan will continue to be a reporting issuer or theequivalent thereof, absent exemptive relief from the securitiesregulatory authority or regulator therein, in Alberta, BritishColumbia, Manitoba, Ontario and Québec;

5.32 Nabors will apply to the AMEX to listthe Nabors Shares to be issued in exchange for the ExchangeableShares;

5.33 the rights, privileges, conditionsand restrictions attaching to the Exchangeable Shares (the"Exchangeable Share Provisions"), the terms andconditions of the voting and exchange trust agreement betweenNabors Delaware, Canco and Computershare Trust Company ofCanada (the "Trustee") dated April 26, 2002 (the"Voting and Exchange Trust Agreement") and theterms and conditions of the support agreement between NaborsDelaware, Callco and Canco dated April 26, 2002 (the "SupportAgreement") are described in the Circular. Nabors becamea party to the Voting and Exchange Trust Agreement and theSupport Agreement by a novation agreement dated June 24,2002;

5.34 the Exchangeable Shares will be issuedby Canco and are exchangeable at any time after the EffectiveDate (subject to earlier redemption in accordance with theArrangement), on a one-for-one basis, at the option of theholder, for Nabors Shares. An Exchangeable Share providesa holder with economic terms and voting rights which are,as nearly as practicable, equivalent to those of a NaborsShare;

5.35 the Arrangement involves or may involve,a number of trades and/or distributions of securities (collectively,the "Trades"), in respect of which there may beno registration or prospectus exemptions available underthe securities legislation of the Jurisdictions, other thanBritish Columbia, including, without limitation, the issuanceof the Exchangeable Shares; the issuance of Nabors Sharesupon the exchange of Exchangeable Shares; the creation andexercise of all the various rights under the Voting andExchange Trust Agreement, Support Agreement and ExchangeableShare Provisions; and the issuance of shares of Nabors andits affiliates (including Canco and Callco) in connectionwith the Arrangement;

5.36 the fundamental investment decisionto be made by a Ryan Security Holder will be made at thetime when such holder votes in respect of the Arrangement.As a result of this decision, unless Exchangeable Sharesare sold in the market, a holder (other than a dissentingShareholder) will ultimately receive Nabors Shares in exchangefor the Ryan Shares held by such holder. The use of theExchangeable Shares will provide certain Canadian tax benefitsto certain Canadian holders but will otherwise be, as nearlyas practicable, the economic and voting equivalent of theNabors Shares. As such, all subsequent exchanges of ExchangeableShares stem from the holder's initial investment decision;

5.37 as a result of the economic and votingequivalency in all material respects between the ExchangeableShares and the Nabors Shares, holders of Exchangeable Shareswill have an equity interest determined by reference toNabors, rather than Canco. Dividend and dissolution entitlementswill be determined by reference to the financial performanceand condition of Nabors, not Canco. Accordingly, it is theinformation relating to Nabors, not Canco, that will berelevant to the holders of Exchangeable Shares;

5.38 the Circular discloses that Naborsand Canco have applied for relief from the RegistrationRequirement and Prospectus Requirement and Insider ReportingRequirements for insiders of Canco. The Circular also identifiesthe limitations imposed on any resale of Exchangeable Sharesor Nabors Shares and the continuous disclosure that willbe provided to holders of Exchangeable Shares if the requestedrelief is granted;

5.39 upon completion of the Arrangement,assuming a maximum exchange ratio ("Exchange Ratio")of 0.0367 (based upon the weighted average trading priceof Nabors Shares on October 1, 2002 converted from US dollarsto Canadian dollars, based upon the average exchange rateon such date) and assuming that Exchangeable Shares areconsidered to be Nabors Shares, the beneficial holders ofNabors Shares resident in Canada will hold approximately0.9% of the issued and outstanding Nabors Shares (calculatedbased upon the number of Nabors Shares held by residentsof Canada, as set out above, the election of Ryan Shareholdersholding 9,082,675 Ryan Shares as of September 30, 2002 (theelection deadline) to receive either Exchangeable Sharesor Nabors Shares and on the assumption that all such electingRyan Shareholders are residents of Canada);

5.40 following completion of the Arrangement,Nabors will concurrently send to holders of ExchangeableShares or Nabors Shares resident in the Jurisdictions alldisclosure material it sends to holders of Nabors Sharesresident in the United States pursuant to the 1934 Act;

Varying the Enserco Decision

5.41 paragraph 6.4 of the Enserco Decisionprovides that the Continuous Disclosure Requirements shallnot apply to Canco so long as certain conditions are metincluding that Canco not issue any securities to the publicother than the exchangeable non-voting shares of Canco issuedpursuant to the Enserco Arrangement;

5.42 under the Arrangement, Canco is requiredto issue Exchangeable Shares to certain Ryan Shareholderswho elect to receive Exchangeable Shares and as this issuancewill contravene the Enserco Decision, the Enserco Decisionmust be varied to allow this issuance;

5.43 in addition to continuing to complywith the Enserco Decision:

5.43.1 Nabors will send concurrently toall holders of Exchangeable Shares and Nabors Shares residentin Canada (including, following the Effective Time, toformer Shareholders who elect to receive ExchangeableShares pursuant to the Arrangement) all disclosure materialfurnished to holders of Nabors Shares resident in theUnited States, including, without limitation, copies ofits proxy solicitation materials and its annual financialstatements, which financial statements will be preparedsolely in accordance with US GAAP;

5.43.2 Canco will comply with the materialchange reporting requirements in respect of material changesin the affairs of Canco that would be material to holdersof Exchangeable Shares but would not be material to holdersof Nabors Shares; and

5.43.3 Nabors will include in all futuremailings of proxy solicitation materials (if any) to holdersof Exchangeable Shares a clear and concise statement explainingthe reason for the mailed material being solely in relationto Nabors and not in relation to Canco, such statementto include a reference to the economic equivalency betweenthe Exchangeable Shares and the Nabors Shares and theright to direct voting at Nabors' shareholders' meetingspursuant to the Voting and Exchange Trust Agreement (withouttaking into account tax effects);

5.44 the policy rationale underlying therelief from the Continuous Disclosure Requirements providedto Canco in the Enserco Decision is equally applicable toissuances of Exchangeable Shares to the Ryan Shareholders;and

5.45 Nabors and Canco are not in defaultof any requirements of the Legislation;

6. AND WHEREAS under the System, this MRRSDecision Document evidences the decision of each DecisionMaker (collectively, the "Decision");

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

8. AND WHEREAS the decision of the DecisionMakers under the Legislation is that:

8.1 except in British Columbia:

8.1.1 the Registration Requirement andProspectus Requirement shall not apply to the Trades;

8.1.2 the first trade in ExchangeableShares acquired in connection with the Arrangement shallbe deemed to be a distribution or primary distributionto the public under the Legislation of the Jurisdictionin which the trade takes place, unless: except in Québec: the conditions in subsections(3) or (4) of Section 2.6 of Multilateral Instrument45-102 Resale of Securities ("MI 45-102")are satisfied; and provided further that, in determiningthe period of time that Canco has been a reportingissuer for the purposes of Section 2.6 of MI 45-102,the period of time that Ryan has been a reportingissuer may be included; or where such first trade isa "control distribution" as such term isdefined in MI 45-102, such trade is made in compliancewith Sections 2.8 of MI 45-102; and provided furtherthat, in determining the period of time that Cancohas been a reporting issuer for the purposes of Section2.8 of MI 45-102, the period of time that Ryan hasbeen a reporting issuer may be included; and the periodof time that a holder of Exchangeable Shares (or anaffiliated or controlled entity of such holder) heldRyan Shares shall be included in the calculation ofthe hold period); in Québec: Canco or one of the partiesto the Arrangement (including, for greater certainty,Ryan) is and has been a reporting issuer in Québecin good standing for the twelve months immediatelypreceding the first trades (and for the purpose ofdetermining the period of time that the issuer orone of the parties to the Arrangement has been a reportingissuer in Québec, the period of time that Ryanwas a reporting issuer may be included); no unusual effort is madeto prepare the market or to create a demand for theExchangeable Shares; no extraordinary commissionor consideration is paid to a person or company inrespect of the trade; and if the selling ExchangeableShareholder is an insider or officer of Nabors orCanco, the selling Exchangeable Shareholder has noreason to believe that Nabors or Canco are in defaultof the legislation.

8.1.3 the first trade in Nabors Sharesacquired in connection with the Arrangement shall be deemedto be a distribution or primary distribution to the publicunder the Legislation unless, at the time of the trade: except in Québec: if Nabors is a reportingissuer in any Jurisdiction listed in Appendix B toMI 45-102 other than Québec, the conditionsin subsections (3) or (4) of Section 2.6 of MI 45-102are satisfied; and for the purpose of determiningthe period of time that Nabors has been a reportingissuer under Section 2.6, the period of time thatRyan has been a reporting issuer may be included;or if Nabors is not a reportingissuer in any Jurisdiction other than Québec,such first trade is made through an exchange, or amarket, outside of Canada; and in Québec: Nabors or one of the partiesto the Arrangement (including, for greater certainty,Ryan) is and has been a reporting issuer in Québecin good standing for the twelve months immediatelypreceding the first trades (and for the purpose ofdetermining the period of time that the issuer orone of the parties to the Arrangement has been a reportingissuer in Québec, the period of time that Ryanwas a reporting issuer may be included); no unusual effort is madeto prepare the market or to create a demand for theNabors Shares; no extraordinary commissionor consideration is paid to a person or company inrespect of the trade; and if the selling ExchangeableShareholder is an insider or officer of Nabors orCancor, the selling Exchangeable Shareholder has noreason to believe that Nabors or Canco are in defaultof the legislation;

8.2 the Enserco Decision be varied by:

8.2.1 deleting the condition to the relieffrom the Continuous Disclosure Requirements at paragraph6.4.7 in the Enserco Decision; and

8.2.2 inserting the following as paragraph6.4.7 in the Enserco Decision:

6.4.7 Canco does not issue any securitiesto the public other than exchangeable shares in connectionwith the arrangements involving Canco and Enserco EnergyService Company Inc. and Canco and Ryan Energy TechnologiesInc.

October 8, 2002.

"Stephen P. Sibold"                    "EricT. Spink"