Cub Energy Inc.

Headnote

Multilateral Instrument 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Exemption from requirement in section 4.3(a) of National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards (NI 52-107) that an auditor's report filed in connection with certain financial statements must express an unmodified opinion.

Applicable Legislative Provisions

National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards, s. 5.1.

February 9, 2012

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ONTARIO

(the "Jurisdiction")

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

CUB ENERGY INC.

(the "Filer")

DECISION

Background

The principal regulator in the Jurisdiction has received an application from the Filer for a decision under the securities legislation of the Jurisdiction of the principal regulator (the "Legislation") exempting the Filer from the requirement set out in subsection 4.3(a) of National Instrument 52-107 -- Acceptable Accounting Principles and Auditing Standards ("NI 52-107") that an auditor's report filed in connection with certain financial statements must express an unmodified opinion in order that the Filer may file audited financial statements of Gastek LLC ("Gastek") accompanied by an auditor's report containing a limitation of scope reservation (the "Exemption Sought").

Under National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions (for a passport application):

(a) The Ontario Securities Commission (the "Commission") is the principal jurisdiction for the application; and

(b) The Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System is intended to be relied upon in each of British Columbia and Alberta (the "Non-Principal Passport Jurisdictions").

Interpretation

Terms defined in National Instrument 14-101 Definitions and NI 52-107 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:

The Filer

1. The Filer exists pursuant to articles of incorporation dated April 3, 2008 filed in accordance with the Business Corporations Act (Ontario). By articles of amendment dated January 26, 2012, the name of the Filer was changed to its current name, "Cub Energy Inc."

2. The registered and head office of the Filer is located in Toronto, Ontario.

3. The Filer's common shares are listed on the TSX Venture Exchange (the "TSXV") and the Filer is a reporting issuer in Ontario and the other Jurisdictions.

Gastek LLC

4. Gastek LLC ("Gastek") is a limited liability company existing under the laws of the State of California, and created on May 3, 2005;

5. Gastek is not a reporting issuer in any jurisdiction of Canada. Gastek is not in default of securities legislation in any jurisdiction.

6. Gastek's sole material asset is an indirect 30% interest in the capital of KUB-Gas Ltd. ("KUB"). Kulczyk Oil Ventures Inc. ("Kulczyk"), a reporting issuer in Canada, indirectly owns the remaining 70% interest in the capital of KUB.

KUB-Gas Ltd.

7. KUB is a private Ukrainian company based in Lugansk, Ukraine whose principal asset consists of a 100% interest in four gas fields located in eastern Ukraine in the Dnieper-Donets Basin.

8. KUB is not a reporting issuer in any jurisdiction of Canada. KUB is not in default of securities legislation in any jurisdiction.

Proposed Transaction

9. On October 30, 2011, the Filer, Gastek and Gastek's sole member entered into letter of intent pursuant to which the Filer would acquire Gastek in exchange for the issuance by the Filer of approximately 120% of its issued and outstanding capital to the sole member of Gastek (the "Proposed Transaction").

10. The Proposed Transaction will be a reverse takeover as defined in National Instrument 51-102 -- Continuous Disclosure Obligations ("NI 51-102")) and within the meaning of TSXV policy 5.2 -- Changes of Business and Reverse Takeovers.

11. In connection with the Proposed Transaction, the Filer will be filing its filing statement (the "Filing Statement") in the form of TSXV Form 3D2 -- Information Required in a Filing Statement for a Reverse Takeover or Change of Business ("Form 3D2") pursuant to the policies of the TSXV. TSXV Form 3D2 requires disclosure of financial statements of the Filer and Gastek prescribed by National Instrument 41-101 -- General Prospectus Requirements ("NI 41-101") and Form 41-101F1 -- Information Required in a Prospectus ("Form 41-101F1").

12. In addition to applying to the principal regulator for the Exemption Sought, the Filer has also applied to the Exchange for a waiver from the equivalent requirements of Form 3D2.

Exemption Sought

13. Form 3D2, section 4.10(2)(a)(ii) of NI 51-102 and item 5.2 of Form 51-102F3 require that financial statements prescribed by NI 41-101 and Form 41-101F1 be filed for the reverse takeover acquirer, Gastek (the "Gastek Statements").

14. Pursuant to section 4.2 of NI 41-101 and to item 47.4 of Form 3D2, the Gastek Statements for the years ended 2010, 2009 and 2008 must be audited in accordance with NI 52-107.

15. Pursuant to subsection 4.3(a) of NI 52-107, the annual Gastek Statements must be accompanied by an auditor's report that expresses an unmodified opinion.

16. Prior to June 11, 2010, the date that Kulczyk acquired its 70% interest in KUB, KUB was not affiliated with a reporting issuer in any jurisdiction and its securities were not listed on any stock exchange. As a private company in Ukraine, KUB was not subject to any statutory obligations to have its financial statements audited or reviewed, nor had it ever prepared financial statements in conformance with Canadian generally accepted accounting principles or International Financial Reporting Standards ("IFRS").

17. Due to circumstances beyond the control of the Filer and Gastek, the annual financial statements of KUB for the years ended December 31, 2008 and 2009 (the "Qualified KUB Statements") are accompanied by an auditor's report containing an opinion that is qualified because of a scope limitation (the "Scope Limitation") arising from insufficient audit evidence with respect to certain revenue and expense items.

18. The qualification to the Qualified KUB Statements will flow through to the audit report that will be issued for the consolidated financial statements of Gastek for the years ending 2008 and 2009 (the "Qualified Gastek Statements").

19. The audit report for KUB for the year ended December 31, 2010 contains no reservation. Consequently, the annual financial statements of KUB for the year ended December 31, 2010 and the interim financial statement of KUB for the period ending September 30, 2011 are free of any qualification. Consequently, the corresponding financial statements of Gastek will also be free of any qualification.

20. Insufficient audit evidence was available to support revenues of KUB amounting to approximately US$1.16 million for the year ended December 31, 2009. Equal and offsetting amounts of general and administrative expenses were recorded, and as such, the effect on net income of these non-auditable amounts is zero for each period presented.

21. KUB did not maintain sufficient accounting records for the above described transactions nor did underlying documentation exist to be able to support such transactions, and as such, the audit evidence available was not sufficient for KUB's auditors to satisfy themselves as to the accuracy of the amounts recorded. Alternative and analytical procedures were suggested and attempted, however, as the underlying documentation pertaining to such transactions never existed and cannot be created, sufficient appropriate audit evidence could not be produced, notwithstanding the effort expended by Gastek and the Filer, or by Kulczyk and its auditors since November 2009 to rectify KUB's accounting records in respect of such transactions.

22. The auditor's report accompanying the Qualified KUB Statements contains a clear description of the items and amounts to which the Scope Limitation applies, and the audit report accompanying the Qualified Gastek Statements will contain the same description. Additionally, the financial statements section of the Filing Statement and the basis of presentation note to the pro forma financial statements will disclose that the auditor's report is qualified and will direct readers to the auditor's report for further information.

23. The Scope Limitation qualification within the auditor's report accompanying the Qualified KUB Statements did not result in the auditor being unable to form an opinion on such financial statements as a whole, nor in the issuance of an adverse opinion.

24. To the best knowledge of the Filer, the Filer believes that the Qualified KUB Statements present fairly, in all material respects, the consolidated financial position of KUB as at December 31, 2009 and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with IFRS.

25. Subsequent to the completion of the Disposition, KUB has taken steps to ensure that accurate and complete account records have been maintained and retained by KUB such that no further similar qualifications of opinion or other similar communications due to a scope limitation arising from the auditor's examination of such records is reasonably expected to recur.

Decision

The principal regulator is satisfied that the decision meets the test set out in the Legislation for the principal regulator to make the decision. The decision of the principal regulator under the Legislation is that the Exemption Sought is granted.

DATED this 9thT day of February, 2012