BNK Petroleum Inc.

Headnote

Multilateral Instrument 11-202 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions - Filer acquired existing business under plan of arrangement - Filer operates business through wholly owned subsidiary - No change in substance of business operations since plan of arrangement - Filer required under GAAP to present historical comparative financial information for wholly-owned subsidiary - Basic qualification criteria for filing short form prosepectus met other than section 2.2(d) of National Instrument 44-101 Short Form Prospectus Distribution to have current annual financial statements and a current AIF - Filer agrees to file modified AIF and alternative financial statements to provide Filer's financial history - Short form prospectus will incorporate modified AIF and alternative financial statements by reference - Relief granted subject to conditions.

Applicable Legislative Provisions

National Instrument 44-101 Short Form Prospectus Distributions, s. 8.1.

Citation: BNK Petroleum Inc., Re, 2008 ABASC 657

November 28, 2008

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ALBERTA AND ONTARIO

(THE JURISDICTIONS)

AND

IN THE MATTER OF

PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

BNK PETROLEUM INC.

(THE FILER OR BNK)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) that pursuant to section 8.1 of National Instrument 44-101 Short Form Prospectus Distributions (NI 44-101), the Filer shall be exempted from the qualification criteria requirements of section 2.2(d) of NI 44-101 and that the Filer shall be qualified to file a prospectus in the form of a short form prospectus for distribution of any of its securities pursuant to NI 44-101 (the Exemption Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

(a) the Alberta Securities Commission is the principal regulator for this application,

(b) the Filer has been provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia, and

(c) the decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

Representations

This decision is based on the following facts represented by the Filer.

1. The Filer is an oil and gas exploration and production company focused on finding and exploiting large oil and gas resource plays. The Filer operates through its wholly-owned subsidiary, BNK Petroleum Holdings Inc., which holds an approximate 50% interest in the Tishomingo gas field in Oklahoma and varied interests in three other areas in the Northern and Central regions of the United States, where it is currently pursuing the exploration, development and production of shale and tight sand gas plays (the US Business).

2. The principal Canadian office of the Filer is located in Calgary, Alberta.

3. The Filer was incorporated on May 26, 2008 under the Business Corporations Act (British Columbia) and acquired its existing business in connection with a court approved plan of arrangement on July 2, 2008 whereby Bankers Petroleum Ltd. (Bankers) transferred the shares of its wholly-owned subsidiary, BNK Petroleum Holdings Inc. (BNK Holdings) to BNK (the Arrangement). All of the liabilities and assets of the US Business are held, directly and indirectly, by BNK Holdings, which as a result of the Arrangement is a wholly-owned subsidiary of BNK.

4. The Filer's financial year end is December 31.

5. The Filer is, to the best of its knowledge, not in default of any requirement of Canadian securities law.

6. The Filer is an electronic filer under National Instrument 13-101 System for Electronic Document Analysis and Retrieval.

7. The Filer became a reporting issuer as a result of the Arrangement on July 2, 2008. The Filer is a reporting issuer in British Columbia, Alberta and Ontario.

8. The Filer has filed with the securities regulatory authority in each of the jurisdictions in which it is a reporting issuer all periodic and timely disclosure documents that it is required to have filed in such jurisdictions: (i) under applicable securities legislation; (ii) pursuant to an order issued by the securities regulatory authorities; or (iii) pursuant to an undertaking to the securities regulatory authorities.

9. The common shares of the Filer are currently listed on the Toronto Stock Exchange under the symbol "BKX" and the Filer's operations have not ceased nor are the Filer's principal assets cash, cash equivalents or its exchange listing.

10. Although the outstanding shares of BNK Holdings are now held by the Filer as opposed to Bankers, there has not been a change in the substance of the business operations of BNK Holdings as a result of the Arrangement and therefore the Filer is required under Canadian generally accepted accounting principles to present comparative financial information utilizing the historical financial information of BNK Holdings.

11. The Filer may wish to access equity markets by way of a short form prospectus offering (an Offering) prior to such time as it would be otherwise eligible to do so under NI 44-101.

12. The Filer meets all of the basic qualification criteria in Section 2.2 of NI 44-101, except for section 2.2(d).

13. In contemplation of an Offering, and provided that the relief sought in connection with this Application is granted, the Filer proposes to file a modified annual information form (the Modified AIF) which will comply with applicable disclosure requirements set forth in Form NI 51-102F2 Annual Information Form and Form NI 41-101F1 Information Required in a Prospectus, with the securities regulatory authority in each of the Jurisdictions.

14. In contemplation of an Offering, and provided that the relief sought in connection with this Application is granted, the Filer proposes to file the interim financial statements for each of the quarters ended March 31 and June 30 as well as audited annual financial statements of BNK Holdings for the years ended December 31, 2005, 2006 and 2007 together with the audit report thereon and the notes thereto (the Alternative Financial Statements).

15. There have been no significant acquisitions in addition to, or significant dispositions from, the US Business since the end of the last audited fiscal year, December 31, 2007.

16. Investors can rely on the Alternative Financial Statements to provide the financial history of the predecessor entity to the Filer, being BNK Holdings.

17. Should the Filer decide to proceed with an Offering, subject to market conditions, it shall proceed to file a short form prospectus which would incorporate by reference the Modified AIF and the Alternative Financial Statements.

18. The Filer has not been exempted from the requirements of National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102) to file annual financial statements or an annual information form; however, the Filer has not yet been required under NI 51-102 to file such financial statements and annual information form.

Decision

Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Maker to make the decision.

The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted:

1. provided that the Filer will file, as soon as possible and in any event no later than the filing of a notice of intention, the Modified AIF and the Alternative Financial Statements with the securities regulators in the jurisdictions where the Filer is a reporting issuer;

2. provided that the Modified AIF and the Alternative Financial Statements are incorporated by reference into any short form prospectus which may be filed by the Filer prior to the filing of the filer's annual information form and annual financial statements for the year ended December 31, 2008; and

3. provided that the Filer's business continues to be, in all material respects, the same as that described in the Modified AIF.