Kulczyk Oil Ventures Inc.

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- application for relief from the requirement in section 3.1 of National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency that financial statements be prepared in accordance with Canadian GAAP -- issuer wants to prepare its financial statements in accordance with International Financial Reporting Standards -- issuer has implemented a comprehensive changeover plan, has assessed readiness of key persons, and has considered implications of adopting International Financial Reporting Standards -- exemption granted, subject to conditions.

Applicable Legislative Provisions

National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency, s. 3.1.

Citation: Kulczyk Oil Ventures Inc., Re, 2010 ABASC 231

May 19, 2010

Background

The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) exempting the Filer from the requirement in section 3.1 of National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency (NI 52-107) that financial statements be prepared in accordance with Canadian GAAP (the Exemption Sought), in order that the Filer may prepare its financial statements for financial periods beginning on or after January 1, 2010 in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IFRS-IASB).

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 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 (the Passport Jurisdiction); 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 a corporation incorporated under the Business Corporations Act (Alberta).

2. The Filer's head office is located in Calgary, Alberta.

3. The Filer is a reporting issuer in the Jurisdictions and the Passport Jurisdiction.

4. The Filer is not in default of its reporting issuer obligations under the Legislation or the securities legislation of the Passport Jurisdiction.

5. The Filer has recently filed application documents, including a prospectus, to obtain a listing on the Warsaw Stock Exchange (the WSE).

6. The Filer is an oil and gas exploration and production company whose principal assets are located in Brunei and Syria.

7. The Filer and its subsidiaries are subject to a diverse set of financial reporting requirements; the Filer prepares its financial statements in accordance with Canadian GAAP; however, Triton Hydrocarbons Pty Ltd., a private Australian company which the Filer acquired in September 2009, prepares its financial statements in accordance with Australian generally accepted accounting standards, which is similar to IFRS-IASB. The majority of the Filer's international operations are conducted through Cyprus entities that apply local IFRS that are also very similar to IFRS-IASB.

8. Upon the completion of its listing on the WSE, which is expected to occur in May 2010, the Filer intends to complete its acquisition of 70% of KUB-Gas LLC (KUB-Gas), an oil and gas exploration company located in Ukraine.

9. In connection with the application process for listing on the WSE, the Filer was required to prepare financial statements for KUB-Gas for the years ending December 31, 2006, 2007 and 2008 and the interim period ended September 30, 2009 in accordance with IFRS-IASB, and when the Filer becomes listed on the WSE, it would be beneficial to the Filer and users of its financial statements for the Filer to prepare all of its future financial statements in accordance with IFRS-IASB as other issuers listed on the WSE prepare their financial statements in accordance with IFRS-IASB.

10. The Filer has not previously prepared financial statements that contain an explicit and unreserved statement of compliance with IFRS.

11. The Canadian Accounting Standards Board has confirmed that publicly accountable enterprises will be required to prepare their financial statements in accordance with IFRS-IASB for financial statements relating to fiscal years beginning on or after January 1, 2011.

12. NI 52-107 sets out acceptable accounting principles for financial reporting under the Legislation by domestic issuers, foreign issuers, registrants and other market participants. Under NI 52-107, a domestic issuer must use Canadian GAAP with the exception that an SEC registrant may use US GAAP. Under NI 52-107, only foreign issuers may use IFRS-IASB.

13. In CSA Staff Notice 52-321 Early Adoption of International Financial Reporting Standards, Use of US GAAP and Reference to IFRS-IASB, staff of the Canadian Securities Administrators recognized that some issuers may wish to prepare their financial statements in accordance with IFRS-IASB for periods beginning prior to January 1, 2011 and indicated that staff were prepared to recommend exemptive relief on a case by case basis to permit a domestic issuer to do so, despite section 3.1 of NI 52-107.

14. Subject to obtaining the Exemption Sought, the Filer intends to prepare its financial statements in accordance with IFRS-IASB for periods beginning on and after January 1, 2010 with a date of transition to IFRSs of January 1, 2009.

15. The Filer believes that the adoption of IFRS-IASB will avoid potential confusion for the users of its financial statements because the reporting requirements of its primary regulators would be satisfied using one accounting standard. Additionally, the use of a single accounting standard would eliminate complexity and cost from the Filer's financial statement preparation process.

16. The Filer has implemented a comprehensive IFRS-IASB conversion plan as part of its listing process for the WSE.

17. The Filer has carefully assessed the readiness of its staff, board of directors, audit committee, auditors, investors and other market participants for the adoption by the Filer of IFRS-IASB for financial periods beginning on and after January 1, 2010 and has concluded that they will be adequately prepared for the Filer's adoption of IFRS-IASB for periods beginning on January 1, 2010.

18. The Filer has considered the implications of adopting IFRS-IASB for financial periods beginning on or after January 1, 2010 on its obligations under securities legislation including, but not limited to, those relating to CEO and CFO certifications, business acquisition reports, offering documents, and previously released material forward looking information.

19. The Filer disclosed relevant information about its conversion to IFRS-IASB as contemplated by CSA Staff Notice 52-320 Disclosure of Expected Changes in Accounting Policies Relating to Changeover to International Financial Reporting Standards in its management's discussion and analysis for the year ended December 31, 2009, including:

(a) the key elements and timing of the Filer's changeover plan;

(b) the accounting policy and implementation decisions the Filer has made or will have to make;

(c) the exemptions available under IFRS 1 First-time Adoption of International Financial Reporting Standards that the Filer expects to apply in preparing financial statements in accordance with IFRS-IASB; and

(d) major identified differences between the Filer's current accounting policies and those the Filer is required or expects to apply in preparing financial statements in accordance with IFRS-IASB.

20. The Filer will update the information set out in paragraph 19 including quantitative information regarding the impact of adopting IFRS-IASB on the key line items in the Filer's interim financial statements for the period ending March 31, 2010.

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 provided that:

(a) the Filer prepares its annual financial statements for years beginning on or after January 1, 2010 in accordance with IFRS-IASB;

(b) the Filer prepares its interim financial statements for interim periods beginning on or after January 1, 2010 in accordance with IFRS-IASB, except that if the Filer files interim financial statements prepared in accordance with Canadian GAAP for one or more interim periods in the financial year in which it adopts IFRS-IASB, the Filer will restate and re-file those interim financial statements in accordance with IFRS-IASB at the time of filing its first IFRS-IASB financial statements together with the related restated interim management's discussion and analysis as well as the certificates required by National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings;

(c) the Filer provides the communication set out in paragraphs 19 and 20;

(d) the Filer's first annual IFRS-IASB financial statements and first IFRS-IASB interim financial statements include an opening IFRS statement of financial position as at the date of transition to IFRSs, January 1, 2009, that is presented with equal prominence to other statements that comprise those financial statements;

(e) in the Filer's first annual IFRS-IASB financial statements, the opening IFRS statement of financial position as at the date of transition to IFRSs is audited;

(f) if the Filer presents the components of profit or loss in a separate income statement, the separate income statement is displayed immediately before the statement of comprehensive income;

(g) the Filer's annual IFRS-IASB financial statements disclose an explicit and unreserved statement of compliance with IFRS; and

(h) the Filer's IFRS-IASB interim financial statements disclose compliance with International Accounting Standard 34 Interim Financial Reporting.