Endev Energy Inc. - MRRS Decision

Headnote

Mutual Reliance Review System for ExemptiveRelief Applications -- take-over bid offer and auditor's consent-- applicant required to provide an auditor's report as partof take-over bid circular -- auditors were Arthur Anderson --Arthur Anderson ceases practising public accounting and no longerconsents to the use of previously issued auditors' reports --applicant's inability to obtain consent letter form Arthur Andersonan exceptional situation outside control of applicant -- inthe absence of a consent from Arthur Anderson, applicant includedin the take-over bid circular certain prominent disclosure --applicant exempt from consent requirement in connection withthe take-over bid.

Applicable Statutory Provision

Securities Act, R.S.O. 1990, c. S.5, as amended,s. 104(2)(c).

Applicable Regulatory Provision

Regulation made under the Securities Act, R.R.O.1990, Reg. 1015, as amended, s. 196.

IN THE MATTER OF

THE SECURITIES LEGISLATIONOF

BRITISH COLUMBIA, ALBERTA,SASKATCHEWAN,

MANITOBA, ONTARIO, QUÉBEC,NOVA SCOTIA,

AND NEWFOUNDLAND AND LABRADOR

AND

IN THE MATTER OF

THE MUTUAL RELIANCE REVIEWSYSTEM

FOR EXEMPTIVE RELIEF APPLICATIONS

AND

IN THE MATTER OF

ENDEV ENERGY INC.

MRRS DECISION DOCUMENT

1. WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") ineach of British Columbia, Alberta, Saskatchewan, Manitoba,Ontario, Québec, Nova Scotia, and Newfoundland andLabrador (the "Jurisdictions") has received an applicationfrom Endev Energy Inc. ("Endev") for a decisionunder the securities legislation of the Jurisdictions (the"Legislation") that Endev be exempt from the requirementin the Legislation to include a consent (the "ConsentRequirement") of Endev's former auditors, Arthur AndersenLLP ("Arthur Andersen") to the incorporation byreference of the auditors' reports of Arthur Andersen on thefinancial statements of NCE Energy Assets (1993) Fund, NCEOil and Gas (1993) Fund, NCE Energy Assets (1994) Fund, NCEOil and Gas (1994) Fund, NCE Energy Assets (1995) Fund, NCEOil and Gas (1995) Fund, NCE Energy Assts (1996) Fund, NCEOil and Gas (1996) Fund, and NCE Oil and Gas (1997) Fund (collectively,the "Partnerships") for each of the fiscal yearsended in the five year period ended December 1, 2001 in atake-over bid circular dated June 17, 2003 (the "Circular")in connection with a proposed take-over bid (the "Bid")by Endev for all of the outstanding common shares of MoxieExploration Ltd. ("Moxie");

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

3. AND WHEREAS, unless otherwise defined,the terms herein have the meaning set out in National Instrument14-101 Definitions or in Québec Commission Notice14-101;

4. AND WHEREAS Endev has represented to theDecision Makers that:

4.1 Endev is incorporated under the lawsof the Province of Alberta and Endev's head office is locatedin Calgary, Alberta;

4.2 Endev is a reporting issuer in all theprovinces of Canada, its common shares are listed on theToronto Stock Exchange, and it is qualified to file a short-formprospectus in each of the Jurisdictions in accordance withthe requirements of the National Instrument 44-101 -- ShortForm Prospectus Distributions ("NI 44-101");

4.3 Endev is required to include the Partnership'sfinancial statements in the Circular as, in April, 2002,Endev acquired all the assets of the Partnerships, and sincethat time, Endev has utilized those assets in their continuingoil and gas operations;

4.4 Moxie is a reporting issuer in BritishColumbia, Alberta, Saskatchewan, Manitoba, Ontario, andQuébec, its common shares are listed on the TSX VentureExchange, and its head office is located in Calgary, Alberta;

4.5 on May 27, 2003, Endev and Moxie enteredinto a pre-acquisition agreement (the "Pre-AcquisitionAgreement") under which Endev agreed to purchase allof the issued and outstanding shares (the "Shares")of Moxie on a basis of a combined share and cash considerationof $0.46 for each Share;

4.6 Endev and Moxie announced the proposedtransaction after the close of markets on May 27, 2003;

4.7 under the terms of the Pre-AcquisitionAgreement, Endev is required to mail the Circular to allholders of the Shares on or before June 17, 2003;

4.8 the proposed acquisition of the Sharesconstitutes a "significant probable acquisition"by Endev within the meaning of section 1.4 of NI 44-101.Accordingly, Endev is required to include or incorporateby reference in the Circular, among other things:

4.8.1 the audited financial statementsof Moxie and the notes thereto as at and for the fiscalyear ended December 31, 2002, together with the reportof the auditors thereon (collectively the "Moxie2002 Audited Financial Statements"); and

4.8.2 the financial information as atand for each of the fiscal years ended in the five yearperiod ended December 1, 2001 as contained in the auditedconsolidated financial statements of the Partnershipsand the notes thereto as at and for the fiscal year thenended, together with the reports of the auditors thereon(collectively, the "Partnerships 2001 Audited FinancialStatements");

4.9 the audit report in respect of the Moxie2002 Audited Financial Statements was delivered by Ernst& Young LLP. The consent of Ernst & Young LLP asrequired by the Legislation and subsection 10.4(1) of NI44-101 has been filed together with the Circular;

4.10 the audit report in respect of thePartnerships 2001 Audited Financial Statements was deliveredby Arthur Andersen;

4.11 on June 3, 2002 Arthur Andersen ceasedpractising public accounting. As a result, Arthur Andersenwill no longer consent to the use of previously issued auditors'reports for the purposes of securities filings;

4.12 the inability of Endev to obtain aconsent letter from Arthur Andersen to the inclusion ofits auditor's report on the Partnerships 2001 Audited FinancialStatements is an exceptional situation that is outside ofthe control of Endev;

4.13 the Canadian Securities Administrators(the "CSA") issued CSA Staff Notices 43-304, 62-302,and 81-308 Prospectus Filing Matters -- Arthur AndersonLLP Consent (the "Andersen Notice") to provideguidance to issuers with respect to the inclusion in, amongother things, securities exchange take-over bid circularsof financial statements previously audited by Arthur Andersen;

4.14 the Andersen Notice states that CSAstaff will consider applications from issuers to waive therequirement to obtain the consent of Arthur Andersen foraudit reports relating to financial statements incorporatedby reference in a prospectus, provided that the prospectusincludes certain prominent disclosure; and

4.15 in the absence of a consent from ArthurAndersen, Endev has included in the Circular the disclosureset forth in Appendix A attached hereto and included a cross-referenceto such disclosure in the relevant paragraph of the listof documents incorporated by reference in the Circular;

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

6. 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;

7. THE DECISION of the Decision Makers underthe Legislation is that Endev is exempt from the Consent Requirementin connection with the Bid.

June 18, 2003.

APPENDIX A

"Note with Respect to Arthur AndersenLLP

Arthur Andersen LLP is no longer engaged inthe practice of public accounting in Canada. Accordingly, Endevis unable to obtain the consent of Arthur Andersen LLP withrespect to the incorporation by reference in the Circular ofthe auditors' report of Arthur Andersen LLP on the consolidatedfinancial statements of the NCE Partnerships in each case forthe years ended December 31, 2001. Because Arthur Andersen LLPhas not provided this consent, Shareholders of Moxie will nothave the statutory rights of action for damages against ArthurAndersen LLP prescribed by applicable securities legislation.Generally, in accordance with applicable securities legislation,holders of securities may only exercise a statutory right ofaction against a person or company that has prepared a report,opinion or statement that is included in a take-over bid circularif that person or company has filed a consent in respect ofsuch report, opinion or statement and such right of action mayonly be exercised in respect of the report opinion or statementthat has been made by such person or company. In addition, ArthurAndersen LLP may not have sufficient assets available to satisfyany judgments against it.