Securities Law & Instruments

Headnote

Section 83.1(1) - Corporation deemed to be reporting issuer at the time an arrangement becomes effective.

Applicable Ontario Statutory Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., s. 83.1(1).

IN THE MATTER OF

THE SECURITIES ACT R.S.O. 1990

CHAPTER S.5, AS AMENDED (the "Act")

AND

IN THE MATTER OF

CYRIES ENERGY INC. AND

PROEX ENERGY LTD.

 

ORDER

(Subsection 83.1(1))

UPON the application of Cyries Energy Inc. ("Cyries") and ProEx Energy Ltd. ("ProEx") (collectively, the "Issuers") for an order pursuant to subsection 83.1(1) of the Act deeming the Issuers to be reporting issuers for the purposes of Ontario securities law at the effective date of a statutory arrangement involving Cyries and ProEx;

AND UPON considering the application and the recommendation of the staff of the Ontario Securities Commission (the "Commission");

AND UPON ProEx and Cyries representing to the Commission as follows:

    1. Progress Energy Ltd. ("Progress"), Cequel Energy Inc. ("Cequel"), Progress Energy Trust (the "Trust"), Progress Acquisition Corp., Cequel Acquisition Corp., Cyries and ProEx intend to be arranged under a proposed plan of arrangement (the "Arrangement") pursuant to the terms of an arrangement agreement dated April 25, 2004 between Cequel and Progress. The Arrangement is being effected pursuant to section 193 of the Business Corporations Act (Alberta) (the "ABCA").

    2. Progress is a corporation incorporated and subsisting pursuant to the provisions of the ABCA.

    3. The head and principal office of Progress is located at 1400, 440 --2nd Avenue S.W., Calgary, Alberta, T2P 5E9, and its registered office is located at 1400, 350 --7th Avenue S.W., Calgary, Alberta T2P 3N9.

    4. Progress is an oil and gas exploration, development and production company.

    5. The authorized capital of Progress includes an unlimited number of common shares ("Progress Common Shares"). As at May 25, 2004, 33,938,556 Progress Common Shares were issued and outstanding. Progress has also reserved a total of 2,500,123 Progress Common Shares for issuance pursuant to outstanding options and warrants to purchase Progress Common Shares.

    6. The Progress Common Shares are listed on the Toronto Stock Exchange (the "TSX").

    7. Progress is a reporting issuer in the Provinces of British Columbia, Alberta, Manitoba, Ontario, Quebec and Nova Scotia and has been for more than 12 months.

    8. Progress has filed all the information that it has been required to file as a reporting issuer in each of the Provinces of British Columbia, Alberta, Manitoba, Ontario, Quebec and Nova Scotia and is not to its knowledge in default of the securities legislation in any of these jurisdictions.

    9. Cequel is a corporation amalgamated and subsisting pursuant to the provisions of the ABCA.

    10. The head and principal office of Cequel is located at 3200, 500 -- 4th Avenue S.W., Calgary, Alberta, T2P 2V6 and its registered office is located at 3700, 400 --3rd Avenue S.W., Calgary, Alberta T2P 4H2.

    11. Cequel is an oil and gas exploration, development and production company.

    12. The authorized capital of Cequel includes an unlimited number of common shares ("Cequel Common Shares"). As at May 25, 2004, 58,209,452 Cequel Common Shares were issued and outstanding. Cequel has also reserved a total of 10,650,747 Cequel Common Shares for issuance pursuant to outstanding options and warrants to purchase Cequel Common Shares.

    13. The Cequel Common Shares are listed on the TSX.

    14. Cequel is a reporting issuer in the Provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Nova Scotia and Newfoundland and Labrador and has been for more than 12 months.

    15. Cequel has filed all the information that it has been required to file as a reporting issuer in each of the Provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Nova Scotia and Newfoundland and Labrador and is not to its knowledge in default of the securities legislation in any of these jurisdictions.

    16. ProEx is a corporation incorporated pursuant to the provisions of the ABCA for the purposes of participating in the Arrangement. ProEx has not carried on any active business since incorporation.

    17. The head and principal office of ProEx is located at 1400, 440 -- 2nd Avenue S.W., Calgary, Alberta, T2P 5E9 and its registered office is located at 1400, 350 -- 7th Avenue S.W., Calgary, Alberta, T2P 3N9.

    18. Pursuant to the Arrangement, ProEx will acquire, directly and indirectly, certain oil and gas assets from Progress. Upon completion of the Arrangement, ProEx will be engaged in the exploration for, and acquisition, development and production of, oil and natural gas reserves in the western Canadian sedimentary basin.

    19. The authorized capital of ProEx includes an unlimited number of common shares ("ProEx Common Shares").

    20. ProEx has obtained the conditional approval of the TSX for the listing on the TSX of the ProEx Common Shares to be issued in connection with the Arrangement subject to, among other things, completion of the Arrangement and evidence of registration or qualification of ProEx or its securities with the Commission. The ProEx Common Shares issuable from time to time will also be listed on the TSX, subject to receipt of final approval from the TSX.

    21. ProEx is not a reporting issuer in any of the jurisdictions of Canada. ProEx will become a reporting issuer in the Provinces of British Columbia, Alberta, Saskatchewan, Quebec, Nova Scotia and Newfoundland and Labrador pursuant to the Arrangement.

    22. Cyries is a corporation incorporated pursuant to the provisions of the ABCA for the purposes of participating in the Arrangement. Cyries has not carried on any active business since incorporation.

    23. The head and principal office of Cyries is located at 3200, 500 -- 4th Avenue S.W., Calgary, Alberta, T2P TV6 and its registered office is located at 3700, 400 -- 3rd Avenue S.W., Calgary, Alberta, T2P 4H2.

    24. Pursuant to the Arrangement, Cyries will acquire, directly and indirectly, certain oil and gas assets from Cequel. Upon completion of the Arrangement, Cyries will be engaged in the exploration for, and acquisition, development and production of, oil and natural gas reserves in the western Canadian sedimentary basin.

    25. The authorized capital of Cyries includes an unlimited number of common shares (the "Cyries Common Shares").

    26. Cyries has obtained the conditional approval of the TSX for the listing on the TSX of the Cyries Common Shares to be issued in connection with the Arrangement subject to, among other things, completion of the Arrangement and evidence of registration or qualification of Cyries or its securities with the Commission. The Cyries Common Shares issuable from time to time will also be listed on the TSX, subject to receipt of final approval from the TSX.

    27. Cyries is not a reporting issuer in any of the jurisdictions of Canada. Cyries will become a reporting issuer in the Provinces of British Columbia, Alberta, Saskatchewan, Quebec, Nova Scotia and Newfoundland and Labrador pursuant to the Arrangement.

    28. An information circular ("Information Circular") dated May 28, 2004 has been mailed in connection with the annual and special meeting (the "Cequel Meeting") of Cequel securityholders (the "Cequel Securityholders") and the annual and special meeting (the "Progress Meeting") of Progress securityholders ("Progress Securityholders"). The Information Circular contains prospectus-level disclosure concerning the respective business and affairs of Progress, Cequel, the Trust, ProEx and Cyries and a detailed description of the Arrangement, and has been mailed to Progress Securityholders and Cequel Securityholders in connection with the Cequel Meeting and the Progress Meeting. The Information Circular has been prepared in conformity with the provisions of the ABCA and applicable securities laws and policies. The Information Circular will be filed under the Issuers' SEDAR profiles immediately after the Arrangement becomes effective.

AND UPON the Commission being satisfied that to do so would not be prejudicial to the public interest;

IT IS HEREBY ORDERED pursuant to subsection 83.1(1) of the Act that the Issuers be deemed reporting issuers at the time of the Arrangement becoming effective for the purposes of Ontario securities law.

June 29, 2004.

"Paul Bates"
"H. Lorne Morphy"