APF Energy Trust - MRRS Decision

Headnote

Mutual Reliance Review System for ExemptiveRelief Applications -- Application for relief from the registrationand prospectus requirements in connection with the distributionand resale of units of the applicant trust pursuant to a distributionreinvestment plan -- relief granted subject to conditions.

Applicable Ontario Statutory Provisions

Securities Act, R.S.O. 1990, c. S.5, as am.,ss. 74(1), s. 25 and s. 53.

Ontario Rules

Rule 45-502 -- Dividend or Interest Reinvestmentand Stock Dividend Plans.

IN THE MATTER OF

THE SECURITIES LEGISLATIONOF

BRITISH COLUMBIA, SASKATCHEWAN,MANITOBA,

ONTARIO, QUEBEC, NEW BRUNSWICK,NOVA SCOTIA,

PRINCE EDWARD ISLAND AND NEWFOUNDLANDAND LABRADOR,

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEWSYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

APF ENERGY TRUST

MRRS DECISION DOCUMENT

WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") in eachof British Columbia, Saskatchewan, Manitoba, Ontario, Québec,New Brunswick, Nova Scotia, Prince Edward Island and Newfoundlandand Labrador, (the "Jurisdictions") has received anapplication from APF Energy Trust (the "Trust") fora decision, pursuant to the securities legislation of the Jurisdictions(the "Legislation"), that the requirements containedin the Legislation to be registered to trade in a security andto file and obtain a receipt for a preliminary prospectus anda final prospectus (the "Registration and Prospectus Requirements")shall not apply to certain trades in units of the Trust issuedpursuant to a distribution reinvestment plan;

AND WHEREAS under the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Ontario Securities Commission is the principal regulatorfor 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 Trust has representedto the Decision Makers that:

1. The Trust is an unincorporated open-endinvestment trust formed under the laws of the Province ofAlberta and is governed by an amended and restated trust indenturedated January 3, 2003. The head office of the Trust is locatedat 2100, 144 - 4^th Avenue S.W., Calgary, AlbertaT2P 3N4.

2. The Trust was formed for the purposes ofissuing trust units (the "Units") to the publicand using the funds so raised to purchase royalties on oiland natural gas properties. The Trust's primary assets areroyalties granted by APF Energy Inc. ("APF Energy")and APF Energy Limited Partnership on their respective oiland gas properties.

3. Computershare Trust Company of Canada isthe trustee of the Trust and the holders of the Units arethe sole beneficiaries of the Trust.

4. The Trust has been a reporting issuer orthe equivalent under the Legislation since December 17, 1996and is not in default of any requirements of the Legislation.The Trust is a "qualifying issuer" within the meaningof Multilateral Instrument 45-102 Resale of Securities.

5. The Trust is not a "mutual fund"under the Legislation as the holders of Units are not entitledto receive on demand an amount computed by reference to thevalue of a proportionate interest in the whole or in partof the net assets of the Trust, as contemplated by the definitionof "mutual fund" in the Legislation.

6. The Trust is authorized to issue a maximumof 500,000,000 Units, each of which represents an equal undividedbeneficial interest in the Trust. All Units share equallyin all distributions from the Trust and all Units carry equalvoting rights at meetings of holders of Units ("Unitholders").As of July 25, 2003 there were 32,387,491 Units issued andoutstanding. The Trust is also authorized to issue an unlimitednumber of special voting units ("Special Voting Units")entitling the holders ("Special Unitholders") tothe number of votes at a meeting of Unitholders as is prescribedby the Board of Directors of APF Energy in the resolutionauthorizing issuance of the Special Voting Units. The SpecialVoting Units do not confer any other rights on the SpecialUnitholders. None of the Special Voting Units have been issued.

7. The Units are listed and posted for tradingon the Toronto Stock Exchange (the "TSX").

8. The Trust makes and expects to continueto make monthly cash distributions to its Unitholders in anamount per Unit equal to a pro rata share of all amountsreceived by the Trust in each month including, without limitation,dividends, interest or other distributions on securities heldby the Trust, less: (i) costs and expenses of the Trust; (ii)all amounts which relate to the redemption of Units and whichhave become payable in cash by the Trust in the applicabledistribution period; and (iii) any other interest expensesincurred by the Trust between distributions.

9. The Trust intends to establish a distributionreinvestment plan (the "Plan") pursuant to whicheligible Unitholders may, at their option, direct that cashdistributions paid by the Trust in respect of their existingUnits ("Cash Distributions") be applied to the purchaseof additional Units ("Additional Units") to be heldfor their account under the Plan (the "Distribution ReinvestmentOption").

10. Alternatively, the Plan will enable eligibleUnitholders who wish to reinvest their Cash Distributionsto authorize and direct the trust company that is appointedas agent under the Plan (the "Plan Agent"), to pre-sellthrough a designated broker (the "Plan Broker"),for the account of the Unitholders who so elect, a numberof Units equal to the number of Additional Units issuableon such reinvestment, and to settle such pre-sales with theAdditional Units issued on the applicable distribution paymentdate in exchange for a premium cash payment equal to 102%of the reinvested Cash Distribution (the "Premium DistributionOption"). The Plan Broker will be entitled to retainfor its own account the difference between the proceeds realizedin connection with the pre-sales of such Units and the cashpayment to the Plan Agent in an amount equal to 102% of thereinvested Cash Distributions.

11. Eligible Unitholders who have directedthat their Cash Distributions be reinvested in AdditionalUnits under either the Distribution Reinvestment Option orthe Premium Distribution Option ("Participants")may also be able to directly purchase Additional Units underthe Plan by making optional cash payments within the limitsestablished thereunder (the "Cash Payment Option").The Trust shall have the right to determine from time to timewhether the Cash Payment Option will be available. The CashPayment Option will only be available to Unitholders thatare Participants.

12. All Additional Units purchased under thePlan will be purchased by the Plan Agent directly from theTrust on the relevant distribution payment date at a pricedetermined by reference to the Average Market Price, beingthe arithmetic average of the daily volume weighted averagetrading prices of the Units on the TSX for a defined periodprior to the distribution payment date.

13. Additional Units purchased under the DistributionReinvestment Option or the Premium Distribution Option willbe purchased at a 5% discount to the Average Market Price.Additional Units purchased under the Cash Payment Option willbe purchased at the Average Market Price.

14. The Plan Broker's prima facie returnunder the Premium Distribution Option will be approximately3% of the reinvested Cash Distributions (based on pre-salesof Units having a market value of approximately 105% of thereinvested Cash Distributions and a fixed cash payment tothe Plan Agent, for the account of applicable Participants,of an amount equal to 102% of the reinvested Cash Distributions).The Plan Broker may, however, realize more or less than thisprima facie amount, as the actual return will varyaccording to the prices the Plan Broker is able to realizeon the pre-sales of Units. The Plan Broker bears the entirerisk of adverse changes in the market, as Participants whohave elected the Premium Distribution Option are assured apremium cash payment equal to 102% of the reinvested CashDistributions.

15. All activities of the Plan Broker on behalfof the Plan Agent that relate to pre-sales of Units for theaccount of Participants who elect the Premium DistributionOption will be in compliance with applicable Legislation andthe rules and policies of the TSX (subject to any exemptiverelief granted). The Plan Broker will also be a member ofthe Investment Dealers Association of Canada and will be registeredunder the legislation of any Jurisdiction where the firsttrade in Additional Units pursuant to the Premium DistributionOption makes such registration necessary.

16. Unitholders who are resident in the UnitedStates will not be permitted under U.S. federal securitieslaws to participate in the Plan.

17. Participants may elect either the DistributionReinvestment Option or the Premium Distribution Option inrespect of their Cash Distributions. Eligible Unitholdersmay elect to participate in either the Distribution ReinvestmentOption or the Premium Distribution Option at their sole optionand are free to terminate their participation under eitheroption, or to change their election, in accordance with theterms of the Plan.

18. Under the Distribution Reinvestment Option,Cash Distributions will be paid to the Plan Agent and appliedby the Plan Agent to the purchase of Additional Units, whichwill be held under the Plan for the account of Participantswho have elected to participate in that component of the Plan.

19. Under the Premium Distribution Option,Cash Distributions will be paid to the Plan Agent and appliedby the Plan Agent to the purchase of Additional Units forthe account of Participants who have elected to participatein that component of the Plan, but the Additional Units purchasedthereby will be automatically transferred to the Plan Brokerto settle pre-sales of Units made by the Plan Broker on behalfof the Plan Agent for the account of such Participants inexchange for a premium cash payment equal to 102% of the reinvestedCash Distributions.

20. Under the Cash Payment Option, a Participantmay, through the Plan Agent, purchase Additional Units upto a specified maximum dollar amount per distribution periodand subject to a minimum amount per remittance. The aggregatenumber of Additional Units that may be purchased under theCash Payment Option by all Participants in any financial yearof the Trust will be limited to a maximum of 2% of the numberUnits issued and outstanding at the start of the financialyear.

21. No brokerage fees or service charges willbe payable by Participants in connection with the purchaseof Additional Units under the Plan.

22. Additional Units purchased and held underthe Plan will be registered in the name of the Plan Agent(or its nominee) and credited to appropriate Participants'account, and all Cash Distributions on Units so held underthe Plan will be automatically reinvested in Additional Unitsin accordance with the terms of the Plan and the current electionof that Participant.

23. The Plan permits full investment of reinvestedCash Distributions and optional cash payments under the CashPayment Option (if available) because fractions of Units,as well as whole Units, may be credited to Participants' accountswith the Plan Agent.

24. The Trust reserves the right to determine,for any distribution payment date, the amount of Unitholders'equity that may be issued pursuant to the Plan.

25. If, in respect of any distribution paymentdate, fulfilling all of the elections under the Plan wouldresult in the Trust exceeding either the limit on Unitholders'equity set by the Trust or the aggregate annual limit on AdditionalUnits issuable pursuant to the Cash Payment Option, then electionsfor the purchase of Additional Units on such distributionpayment date will be accepted: (i) first, from Participantselecting the Distribution Reinvestment Option; (ii) second,from Participants electing the Premium Distribution Option;and (iii) third, from Participants electing the Cash PaymentOption (if available). If the Trust is not able to acceptall elections in a particular category, then purchases ofAdditional Units on the applicable distribution payment datewill be pro rated among all Participants in that categoryaccording to the number of Additional Units sought to be purchased.

26. If the Trust determines not to issue anyUnitholders' equity through the Plan on a particular distributionpayment date, then all Participants will receive the CashDistribution announced by the Trust for that distributionpayment date.

27. A Participant may terminate its participationin the Plan at any time by submitting a termination form tothe Plan Agent, provided that a termination form receivedbetween a distribution record date and a distribution paymentdate will not become effective until after that distributionpayment date.

28. The Trust reserves the right to amend,suspend or terminate the Plan at any time, provided that suchaction shall not have a retroactive effect that would prejudicethe interests of the Participants. All Participants will besent written notice of any such amendment, suspension or termination.

29. The distribution of Additional Units bythe Trust under the Plan cannot be made in reliance on certainregistration and prospectus exemptions contained in the Legislationas the Plan involves the reinvestment of distributable incomedistributed by the Trust and not the reinvestment of dividendsor interest of the Trust.

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

AND WHEREAS each of the Decision Makersis satisfied that the test contained in the Legislation thatprovides the Decision Makers with the jurisdiction to make theDecision has been met;

THE DECISION of the Decision Makers pursuantto the Legislation is that the trades of Additional Units bythe Trust to Participants pursuant to the Plan shall not besubject to the Registration and Prospectus Requirements of theLegislation provided that:

(a) at the time of the trade the Trust isa reporting issuer or the equivalent under the Legislationand is not in default of any requirements of the Legislation;

(b) no sales charge is payable in respectof the trade;

(c) the Trust has caused to be sent to theperson or company to whom the Additional Units are traded,not more than 12 months before the trade, a statement describing:

(i) their right to withdraw from the Planand to make an election to receive Cash Distributions insteadof Additional Units, and

(ii) instructions on how to exercise theright referred to in paragraph (i) above;

(d) the aggregate number of Additional Unitsissued under the Cash Payment Option of the Plan in any financialyear of the Trust shall not exceed 2% of the aggregate numberof Units outstanding at the start of that financial year;

(e) except in Québec, the first tradein Additional Units acquired pursuant to this Decision willbe a distribution or primary distribution to the public unlessthe conditions in paragraphs 2 through 5 of subsection 2.6(3)of Multilateral Instrument 45-102 Resale of Securitiesare satisfied; and

(f) in Québec, the alienation of AdditionalUnits acquired pursuant to this Decision shall be deemed tobe a distribution or primary distribution to the public unlessall of the following are true:

(i) the Trust is and has been a reportingissuer in Québec for the 12 months preceding thealienation;

(ii) no unusual effort is made to preparethe market or to create a demand for the Additional Unitsthat are the subject of the alienation;

(iii) no extraordinary commission or otherconsideration is paid in respect of the alienation;

(iv) if the seller of the Additional Unitsis an insider of the issuer, the seller has no reasonablegrounds to believe that the Trust is in default of any requirementof the Legislation of Québec.

August 27, 2003.