Stratic Energy Corporation and EnQuest PLC

Headnote

National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- relief from various disclosure requirements for an information circular to be sent to a Canadian target company's shareholders in connection with a proposed arrangement with a foreign entity -- Foreign entity will provide disclosure in accordance with UK reporting requirements.

Relief from the requirements of National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities -- issuer has less than 10% of its securityholders resident in Canada -- less than 10% of the issuer's issued and outstanding securities are held by residents of Canada -- issuer exempt from requirements of NI 51-101 provided that the issuer complies with the oil and gas disclosure requirements of the Financial Services Authority of the United Kingdom and the ongoing requirements of the London Stock Exchange.

Applicable Legislative Provisions

National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities.

National Instrument 51-102 Continuous Disclosure Obligations.

Citation: Stratic Energy Corporation, Re, 2010 ABASC 442

September 21, 2010

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ALBERTA AND ONTARIO

(the Jurisdictions)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

STRATIC ENERGY CORPORATION (Stratic) AND

ENQUEST PLC (EnQuest and, together with

Stratic, the Filers)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application from the Filers for a decision under the securities legislation of the Jurisdictions (the Legislation) exempting:

(a) Stratic from the requirement to include the following disclosure in the Stratic Circular (as herein defined):

(i) disclosure in respect of the reserves data and other oil and gas information of EnQuest (the Circular Oil and Gas Relief); and

(ii) unaudited interim financial statements of EnQuest for the three months ended June 30, 2010 (with comparative financial information for the corresponding period in the immediately preceding financial year, if any) (the Quarterly Financial Statement Relief); and

(b) EnQuest from the requirements of National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities (NI 51-101) as amended, restated or replaced from time to time (the On-Going Oil and Gas Relief).

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 Filers have 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 in this decision.

Representations

This decision is based on the following facts represented by the Filers:

1. Stratic is a corporation incorporated under the Business Corporations Act (Yukon) (YBCA). The Canadian head office of Stratic is located in Calgary, Alberta and its principal operational office is located in London, UK.

2. Stratic is an international oil and gas company involved in the production, development, appraisal and exploration of hydrocarbons with its principal assets located in the UK sector of the North Sea.

3. Stratic is a reporting issuer under the securities legislation of Alberta, Ontario and British Columbia and is not, to its knowledge, in default of any requirements under the Legislation.

4. The common shares of Stratic (Stratic Shares) are listed on the TSX Venture Exchange and on the Alternative Investment Market of the London Stock Exchange.

5. EnQuest is a company incorporated under the laws of England and Wales. The head office of EnQuest is located in London, UK.

6. EnQuest is an independent oil and gas production and development company focused on the UK Continental Shelf (UKCS), which includes the UK sector of the North Sea.

7. EnQuest was incorporated on January 29, 2010 to acquire the UKCS assets and operations of Petrofac Limited (Petrofac) and Lundin Petroleum AB (Lundin), which acquisitions were effected on April 5, 2010 and April 6, 2010 through the acquisition by EnQuest of the entire issued share capital of the two subsidiary companies through which Petrofac and Lundin held such assets and operations, namely Petrofac Energy Developments Limited (PEDL) and Lundin North Sea BV (LNS).

8. EnQuest is not a reporting issuer in any Canadian jurisdiction and is not, to its knowledge, in default of any requirements under the Legislation.

9. The majority of the executive officers and the directors of EnQuest are not residents of Canada, EnQuest has no material assets located in Canada, and the business of EnQuest is administered wholly outside of Canada.

10. Following its acquisition of PEDL and LNS on April 5, 2010 and April 6, 2010, EnQuest completed an initial public offering of EnQuest Shares pursuant to a prospectus (the UK Prospectus) dated March 18, 2010 prepared in accordance with the prospectus rules of the Financial Services Authority of the United Kingdom (FSA) made under applicable UK law.

11. The UK Prospectus was reviewed and approved by the FSA, acting in its securities regulatory capacity as the United Kingdom Listing Authority (UKLA), in accordance with applicable UK laws and regulatory requirements.

12. The ordinary shares of EnQuest (EnQuest Shares) are traded on the main market of the London Stock Exchange (LSE) and admitted to the Official List of the UKLA. The EnQuest Shares are also listed on NASDAQ OMX Stockholm.

13. EnQuest is subject to the reporting requirements of the FSA and the ongoing requirements of the LSE (collectively, the UK Requirements).

14. EnQuest does not have a class of securities registered under section 12 of the United States Securities Exchange Act of 1934, as amended, and is not required to file reports under section 15(d) thereof.

15. There is no market in Canada for EnQuest's securities and none is expected to develop. EnQuest does not currently intend to list any securities on any exchange or marketplace in Canada.

16. On August 2, 2010 Stratic and EnQuest entered into an agreement (the Arrangement Agreement) providing for the proposed acquisition by EnQuest of all of the outstanding Stratic Shares pursuant to a statutory plan of arrangement under the YBCA (the Arrangement) under which each Stratic Share would be exchanged for 0.089626 EnQuest Share.

17. Completion of the Arrangement is subject to a number of conditions, including the approval of the holders of the Stratic Shares (Stratic Shareholders) by special resolution to be considered at a special meeting (the Stratic Meeting) to be called and held to consider the Arrangement and the approval of the Supreme Court of the Yukon Territory pursuant to the YBCA.

18. At the date of the Arrangement Agreement, EnQuest had a market capitalization of approximately $1.47 billion and the aggregate purchase price for the Stratic Shares (based on the then market value of the EnQuest Shares) was approximately $46.4 million.

19. There are currently approximately 775 million EnQuest Shares outstanding. It is anticipated that approximately 24.5 million EnQuest Shares will be issued to the Stratic Shareholders on completion of the Arrangement. Accordingly, on completion of the Arrangement it is anticipated that the former Stratic Shareholders will own approximately 3.1% of the EnQuest Shares that are then outstanding.

20. Upon completion of the Arrangement, residents of Canada will not own, directly or indirectly, more than 10%, on a fully-diluted basis, of the total number of equity securities of EnQuest.

21. EnQuest will become a reporting issuer in the Jurisdictions on completion of the Arrangement.

22. EnQuest is currently a "designated foreign issuer" (Designated Foreign Issuer) under National Instrument 52-107 Acceptable Accounting Principles, Auditing Standards and Reporting Currency (NI 52-107) and, on completion of the Arrangement, expects to be a Designated Foreign Issuer under both NI 52-107 and National Instrument 71-102 Continuous Disclosure and Other Exemptions Relating to Foreign Issuers (NI 71-102).

23. Stratic will, in connection with the Arrangement and in accordance with applicable corporate and securities laws, prepare and send to the Stratic Shareholders, and electronically file through the System for Electronic Document Analysis and Retrieval (SEDAR) established under National Instrument 13-101, an information circular (the Stratic Circular), which will provide notice of the Stratic Meeting and describe, among other things, the Arrangement and the EnQuest Shares to be issued in consideration for Stratic Shares thereunder.

24. The Stratic Circular will disclose that annual reports, financial statements, information circulars and other materials contemplated by NI 71-102 and currently distributed to holders of EnQuest Shares pursuant to the UK Requirements will be provided, as applicable, to the holders of EnQuest Shares that are resident in Canada, unless EnQuest is not a Designated Foreign Issuer at the relevant time in which case EnQuest will be required to comply with the applicable requirements of the Legislation.

25. Pursuant to the form requirements for an information circular in the Jurisdictions, the Stratic Circular is required to include, for EnQuest, the disclosure (including financial statements) prescribed under the Legislation and described in the form of prospectus that EnQuest would be eligible to use immediately prior to the sending and filing of the Stratic Circular for a distribution of its securities, which in the circumstances is the disclosure in respect of EnQuest described in Form 41-101F1 Information Required in a Prospectus (the Prospectus Form).

26. The Prospectus Form provides that the Stratic Circular must include, for EnQuest, the information prescribed by Form 51-101F1 Statement of Reserves Data and Other Oil and Gas Information (Form 51-101F1), Form 51-101F2 Report on Reserves Data by Independent Qualified Reserves Evaluator or Auditor and Form 51-101F3 Report of Management and Directors on Oil and Gas Disclosure with an effective date of December 31, 2009.

27. EnQuest does not file information prescribed by Form 51-101F1 but instead prepares and publicly discloses information about its oil and gas activities in accordance with the UK Requirements (the UK Oil and Gas Requirements).

28. The UK Prospectus contains disclosure (the Prospectus O&G Disclosure) about EnQuest's reserves and other oil and gas information as at January 1, 2010 and includes a competent person's report from Gaffney, Cline & Associates Ltd., all prepared in accordance with the UK Oil and Gas Requirements.

29. The Prospectus Form provides that the Stratic Circular must include, for EnQuest:

(a) annual financial statements for the three years ended December 31, 2009, 2008 and 2007 and balance sheets as at December 31, 2009 and 2008 that have been audited in accordance with NI 52-107; and

(b) unaudited interim financial statements for the three- and six-month periods ended June 30, 2010 (with comparative financial information for the corresponding periods in the immediately preceding financial year, if any) and an unaudited balance sheet as at June 30, 2010.

30. As EnQuest was only formed in 2010 the annual financial statements of EnQuest to be included in the Stratic Circular will consist of three years of financial statements for each of PEDL and LNS, being the predecessor entities of EnQuest that, prior to their acquisition by EnQuest from Petrofac and Lundin, respectively, held the assets which now form the basis of EnQuest's business, as follows:

(a) consolidated income statement, cash flow statement and statement of changes in equity of LNS for the years ended December 31, 2009, 2008 and 2007;

(b) consolidated balance sheet of LNS as at December 31, 2009, 2008 and 2007;

(c) consolidated income statement, statement of comprehensive income, statement of cash flows statement and statement of changes in equity of PEDL for the years ended December 31, 2009, 2008 and 2007; and

(d) consolidated statement of financial position (balance sheet) of PEDL as at December 31, 2009, 2008 and 2007,

together, in each case, with notes thereto (collectively, the Predecessor Financial Statements).

31. The Predecessor Financial Statements were prepared in accordance with International Financial Reporting Standards as adopted by the European Union and are accompanied by accountant's reports (each, an Accountant's Report) in accordance with applicable UK prospectus requirements and the Standards of Investment Reporting issued by the Auditing Practices Board in the UK, and will be included in the Stratic Circular in reliance on those provisions of NI 52-107 which permit, in the case of financial statements of Designated Foreign Issuers, the use of accounting principles and auditing standards that meet the foreign disclosure requirements of the United Kingdom of Great Britain and Northern Ireland.

32. EnQuest is required under UK Requirements to publish its financial results on a semi-annual basis and is neither required nor in a position to prepare quarterly information. EnQuest's most recently prepared interim financial statements are for the half-year ended June 30, 2010 (the Half-Year Statements), which in accordance with UK Requirements do not include any results for the quarter then ended.

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 Circular Oil and Gas Relief and the Interim Financial Statement Relief is granted, provided that:

(a) at the time the Stratic Circular is sent to the Stratic Shareholders, EnQuest expects that upon completion of the Arrangement it will be a Designated Foreign Issuer; and

(b) the Stratic Circular includes:

(i) the Prospectus O&G Disclosure;

(ii) the Predecessor Financial Statements and accompanying Accountant's Reports;

(iii) the Half-Year Statements; and

(iv) disclosure of all material changes in the affairs of EnQuest since the date of the Half-Year Statements to the date of the Stratic Circular.

The further decision of the Decision Makers under the Legislation is that the On-Going Oil and Gas Relief is granted, provided that:

(a) residents of Canada do not directly or indirectly own more than 10%, on a fully diluted basis, of the total number of equity securities of EnQuest;

(b) EnQuest is subject to and complies with applicable UK Oil and Gas Requirements in connection with its oil and gas activities;

(c) EnQuest issues in Canada, and files on SEDAR, a news release stating that it will comply with the UK Requirements in connection with its oil and gas activities rather than with NI 51-101; and

(d) EnQuest files the disclosure required under the UK Oil and Gas Requirements with the Decision Makers as soon as practicable after such disclosure is filed pursuant to the UK Requirements.