Nexen Inc.

Decision

Headnote

Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdiction - Issuer exempt from requirements in NI 51-101 that qualified reserves evaluator or auditor be independent from the issuer, that an independent qualified reserves evaluator or auditor execute the required annual filing - the issuer is allowed to file modified Forms 51-101F2 and 51-101F3 as necessary to reflect the relief, all subject to conditions -- the issuer internally generates reserves data -- the issuer has policies and procedures in place to ensure the integrity of its internally generated reserves data -- exemption granted from section 3.2 and limited exemption granted from items 2 and 3 of section 2.1 of NI 51-101.

Applicable Legislative Provisions

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

Citation: Nexen Inc., Re, 2010 ABASC 585

December 17, 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

NEXEN INC. (the Filer)

DECISION

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) that the Filer be exempted from the requirements contained in the Legislation:

(a) that the qualified reserves evaluators or auditors appointed under section 3.2 of NI 51-101 Standards of Disclosure for Oil and Gas Activities (NI 51-101) be independent of the Filer and that each of the qualified reserves evaluators or auditors who execute the report required under item 2 of section 2.1 of NI 51-101 (the Evaluator Report) be independent of the Filer (collectively, the Independent Evaluator Requirement); and

(b) that the Evaluator Report be in accordance with Form 51-101F2 and that the report required under item 3 of section 2.1 of NI 51-101 (the Management Report) be in accordance with Form 51-101F3 (the Related Form Requirements), to the extent necessary for such reports to reflect changes which are consequential to the exemption from the Independent Evaluator Requirement.

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 each of the provinces and territories of Canada other than Alberta and Ontario; 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, MI 11-102, NI 51-101 or CSA Staff Notice 51-324 Glossary to NI 51-101 Standards of Disclosure for Oil and Gas Activities have the same meaning if used in this decision, unless otherwise defined herein.

Representations

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

1. The head office of the Filer is located in Calgary, Alberta.

2. The Filer is a reporting issuer or equivalent in each of the provinces and territories of Canada and is not in default of securities legislation in any of the provinces or territories of Canada.

3. The Filer is an oil and gas issuer that, on a consolidated basis, produced an average of more than 100,000 BOEs of oil and gas (converted in the ratio 6 Mcf of gas to 1 bbl of oil) per day in its most recent financial year.

4. The Filer's internally-generated reserves data are not materially less reliable than independently-generated reserves data for the following reasons:

(a) the Filer has qualified reserves evaluators and auditors within the meaning of NI 51-101;

(b) the Filer has a well-established reserves evaluation process that is at least as rigorous as would be the case were it to rely upon independent reserves evaluators or auditors; and

(c) the Filer has implemented a technical quality assurance program in connection with the preparation of its internally generated reserves data.

5. The Filer has adopted written evaluation practices and procedures consistent with the COGE Handbook.

Decision

Each of the Decision Makers is satisfied that the decision satisfies 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 Filer is exempt from the Independent Evaluator Requirement and the Related Form Requirements:

(a) Internal Procedures -- for so long as the Filer maintains internal procedures that will permit preparation of the Evaluator Report and the Management Report, modified as contemplated in this decision;

(b) Form of Reports -- provided that the Evaluator Report and the Management Report filed by the Filer pursuant to section 2.1 of NI 51-101 are modified to reflect that the qualified reserves evaluators or auditors are not independent of the Filer;

(c) Explanatory and Cautionary Disclosure -- provided that the Filer discloses:

(i) at least annually, the Filer's reasons for considering the reliability of internally-generated reserves data to be not materially less than would be afforded by strict adherence to the requirements of NI 51-101, including a discussion of:

A. factors supporting the involvement of independent qualified evaluators or auditors and why such factors are not considered compelling in the case of the Filer; and

B. the manner in which the Filer's internally-generated reserves data are determined, reviewed and approved, its relevant disclosure control procedures and the related role, responsibilities and composition of responsible management, the board of directors of the Filer and (if applicable) the reserves committee of the board of directors of the Filer; and

(ii) in each document that discloses any information derived from internally-generated reserves data and reasonably proximate to that disclosure, the fact that the reserves data was internally-generated; and

(d) Disclosure of Conflicting Independent Reports -- provided that the Filer discloses and updates its public disclosure if, despite this decision, it obtains a final report on reserves data from an independent qualified reserves evaluator or auditor that contains information that is materially different from the Filer's public disclosure record in respect of such reserves data.

This decision:

(a) takes effect immediately and supersedes the decision dated 29 September 2008 issued in respect of the Filer under the Process for Exemptive Relief Applications in Multiple Jurisdictions as it relates to the Independent Evaluator Requirement; and

(b) will terminate one year after the effective date of any change to the Independent Evaluator Requirement unless:

(i) the principal regulator otherwise agrees in writing; or

(ii) the change is a clerical or other minor amendment.

"Glenda A. Campbell, QC"
Vice-Chair
Alberta Securities Commission
 
"Stephen R. Murison"
Vice-Chair
Alberta Securities Commission