COURT OF QUEEN'S BENCH OF ALBERTA IN BANKRUPTCY AND INSOLVENCY CALGARY IN THE MATTER OF THE PROPOSAL ONE EARTH OIL & GAS INC.

Transcription

1 COURT FILE NUMBER COURT COURT OF QUEEN'S BENCH OF ALBERTA IN BANKRUPTCY AND INSOLVENCY J UDICIAL CENTRE CALGARY PROCEEDING IN THE MATTER OF THE PROPOSAL ONE EARTH OIL & GAS INC. DOCUMENT ORDER I hereby certify this to be a true copy of the original_ncil22 ADDRESS FOR SERVICE AND CONTACT Peter S. Jull, Q. C. Dated thi I NFORMATION OF PARTY FILING THIS DLA Piper (Canada) LLP DOCUMENT Barristers and Solicitors 1000, Street SW Calgary, Alberta T2P 0C1 Phone: Fax: File No.: /tpw erk f tho Ourt DATE ON WHICH ORDER WAS PRONOUNCED: Wednesday, April 27, 2016 NAME OF JUSTICE WHO MADE THIS ORDER: The Honourable Mr. Justice P.R. Jeffrey UPON THE APPLICATION of One Earth Oil & Gas Inc. ("One Earth") pursuant to section of the Bankruptcy and Insolvency Act, R.S.C c. B-3 ("BIA") AND UPON HAVING READ THE Application and Report of the Proposal Trustee dated March 24, 2016, Form 40 Report of Trustee on the Proposal dated April 14, 2016 and the Affidavit of Stephen Austin sworn April 21, 2016 and the Supplemental Affidavit of Stephen Austin sworn April 26, 2016 (the "Supporting Documentation") AND UPON HEARING counsel for One Earth, the Proposal Trustee and Gift Lake Resource Development LLP AND UPON HEARING any other counsel present; IT IS HEREBY ORDERED THAT: 1 Service of the notice of the application in respect to this Order (the "Application") and the Supporting Documentation is hereby abridged and the Application is properly returnable today, service of the Application and the Supporting Documentation is good and sufficient, and no other

2 2 persons are entitled to be served with or be given notice of the Application or served with a copy of the Supporting Documentation. 2. All capitalized terms used herein and not otherwise defined shall have the meaning ascribed to them in the form of the offer to purchase dated March 11, 2016 between One Earth as Vendor and Prosper Petroleum Ltd. ("Prosper") as Purchaser (the "Proper Agreement"). 3. One Earth is authorized pursuant to section of the BIA to sell, dispose and transfer 50% of its interest in the leases, lands and wells in what is described as the area described in Schedule "A" and Schedule "B" in the Prosper Agreement and in the Land Schedule attached as Exhibit "B" to the Supplemental Affidavit of Stephen Austin sworn April 26, 2016 (the "Assets") and to execute nunc pro tunc and deliver the Prosper Agreement to Prosper and to enter into a purchase and sale agreement (the "PSA") generally in accordance with the terms of the Prosper Agreement and conclude any and all transactions contemplated by the Prosper Agreement (the "Transactions") and to take all such steps and execute all such deeds, documents and instruments as may reasonably be necessary to consummate the Transactions contemplated by the Prosper Agreement in accordance with the terms of the Prosper Agreement. The parties may make any amendments to the Prosper Agreement which do not materially change the terms of the Prosper Agreement. 4. The Prosper Agreement and the PSA are hereby approved and ratified and it is hereby declared that the Transactions are commercially reasonable. 5. Upon the Proposal Trustee filing a certificate (the "Certificate of Closing") certifying that the Prosper Agreement and the Transactions have closed substantially in accordance with the terms, conditions and covenants contained in the Prosper Agreement and that the payment of the purchase price as due and owing by Prosper to One Earth pursuant to the Prosper Agreement has been tendered, then: (a) (b) the Assets shall be vested in the name of Prosper or its permitted nominee, free of all estate, right, title, interest, royalty, rental, and equity of redemption of One Earth and any and all persons who claim by, through or under One Earth and subject only to the permitted encumbrances identified in the Prosper Agreement (the "Permitted Encumbrances"); One Earth and all Persons who claim by, through or under One Earth in respect of the Assets, save and except the Permitted Encumbrances, shall stand absolutely barred and foreclosed from all estate, right, title, interest, royalty, rental and equity of redemption of the Assets and, to the extent that any such Person remains in possession or control of

3 any of the Assets, they shall forthwith deliver possession of same to Prosper or its permitted nominee; and (c) Prosper or its nominee shall be entitled to enter into, hold and enjoy the Assets for its own use and benefit without any interference of or by One Earth or any Person claiming by, through or under One Earth. 6. If there is any security, charge or other restriction against the Assets, it is hereby ordered that the other properties and interests of One Earth are hereby made subject to the security, charge or other restriction in favour of the creditor whose security, charge or other restriction is affected by this Order. 7. Upon closing of the Transactions, subject only to the Permitted Encumbrances and approval of the transfer of applicable licences, permits and approvals by the Alberta Energy Regulator (the "AER") pursuant to section 24 of the Oil and Gas Conservation Act (the "OGCA") and section 18 of the Pipeline Act, all of One Earth's right, title and interest in the Assets shall vest in Prosper free and clear from all security interests, claim, estate, security, right, title, interest and liens, including but not limited to claims, hypothecs, mortgages, charges, liens (whether contractual, statutory or otherwise), security interests, assignments, actions, levies, taxes, judgments, writs of execution, trusts or deemed trusts (whether contractual, statutory or otherwise), options, agreements, disputes, debts, encumbrances or other rights, limitations or restrictions of any nature whatsoever, against One Earth including without limitation any rights or interests of any of the stakeholders or creditors of One Earth, whether or not they have attached or been perfected, registered or filed, whether secured or unsecured or otherwise, whether liquidated, unliquidated or contingent (all of the foregoing being collectively referred to hereinafter as the "Claims"), whether such claims against One Earth came into existence prior to, subsequent to, or as a result of any previous Order of this Court, by or of all persons or entities of any kind whatsoever, including, without limitation, all individuals, firms, corporations, partnerships, joint ventures, trusts, unincorporated organizations, governmental and administrative bodies, agencies, authorities or tribunals and all other neutral persons or corporations, whether acting in their capacity as principals or agents, trustees, executives, administrators or other legal representatives (collectively, the "Claimants"), including for greater certainty and without limiting the generality of the foregoing: (a) any Claims held by or in favour of the persons served (either directly or through their solicitors) with the Application; and

4 - 4 - (b) the beneficiary of any Claims created or provided for pursuant to any previous Order in these proceedings including, without limitation, the Order of this Court dated November 30, One Earth is authorized to deliver to Prosper, at the closing of the Transactions, as contemplated by the Prosper Agreement, one or more general conveyances and/or specific conveyances signed by One Earth and upon the filing of the Certificate of Closing, together with any applicable registration fees, all appropriate government authorities are hereby directed to register all transfers or conveyances, as may be required to convey clear title to the Assets to Prosper, except for the Permitted Encumbrances, provided that the transfer of any applicable AER licences, permits or approvals is subject to approval by the AER pursuant to section 24 of the OGCA and section 18 of the Pipeline Act and noting that nothing in this Order requires the AER to grant such approval. Furthermore, in relation to the Assets situated in the Province of Alberta, and for greater certainty: (a) The Registrars of the North and South Alberta Land Registration Districts shall, notwithstanding section 191(1) of the Land Titles Act of Alberta, cancel and discharge all Claims registered against the interests of One Earth other than those set out in Appendix "A" in respect of the freehold assets of One Earth located in the Province of Alberta. For further certainty, such Registrars shall not cancel and discharge the registration of any Claims registered against the estates or interests other than the estate or interest of One Earth. (b) The Minister of Energy for Alberta, acting pursuant to the Mines and Minerals Act, R.S.A. 2000, c. M-17, shall cancel and discharge all Claims registered against the interests of One Earth other than those set out in Appendix "A" in respect of the Assets and, without limiting the generality hereof, the Minister shall cancel and discharge all security notices and all assignments under section 426 (formerly section 177) of the Bank Act (Canada). For further certainty, the Minister of Energy shall not cancel and discharge the registration of any Claims registered against estates or interests other than the estate or interest of One Earth; and (c) The Minister of Energy for Alberta, acting pursuant to the Mines and Minerals Act, R.S.A. 2000, c. M-17, shall cancel and discharge all Claims in the nature of builders' liens against the interest of One Earth set out in Appendix "A" in and to the Assets located in the Province of Alberta. For further certainty, the Minister of Energy shall not cancel and discharge the registration of such builders' liens registered against estates or interests other than the estate or interest of One Earth.

5 -5-9. For greater certainty, subject only to the Permitted Encumbrances, Prosper shall, by virtue of the completion of the Transactions, have no liability of any kind whatsoever to any Claimants. 10. The Transactions shall not be void or voidable at the instance of the Claimants and shall not constitute nor shall be deemed to be a settlement, fraudulent preference, assignment, fraudulent conveyance, or other challengeable or reviewable transaction under the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, as amended, or any other applicable federal or provincial legislation, and the Transactions or any actions taken therewith, shall not constitute conduct meriting an oppression remedy One Earth or the Proposal Trustee is at liberty to reapply for further advice, assistance, and direction, as may be necessary to give full force and effect to the terms of this Order. 12. Service of this Order on the Service List (as such term is defined in the Application) by , facsimile, registered mail, courier, or personal delivery shall constitute good and sufficient service of this Order and no persons other than those on the Service List are entitled to be served with a copy of this Order. Justice ueen's Bench of Alberta

6 APPENDIX "A" to the Order dated April 27, 2016 Lands outside GLMS Land Description Rights Lease Lease Date Working Interest Encumbrance Twp 81 Rge 14 W5M: 13 All Oil Sands below top Peace River April 22, % CSS Twp 81 Rge 14 W5M: 24 All Oil Sands below top Peace River April 22, % CSS Twp 80 Rge 11 WSM: Twp 81 Rge 11 W5M: 5-8 All Oil Sands below top Peace River July 13, % CSS Twp 80 Rge 11 WSM: Ptn S & All Oil Sands below top Peace River March 9, % CSS NW 9 (Portions lying outside Utikoomak Lake Indian Reserve No. 155) Twp 80 Rge 11 W5M: Ptn S & All Oil Sands below top Peace River March 9, % CSS N 16 (Portions lying outside Utikoomak Lake Indian Reserve No. 155) Twp 80 Rge 11 WSM: 19 All Oil Sands below top Peace River March 9, % CSS Twp 80 Rge 11 W5M: 20 All Oil Sands below top Peace River March 9, % CSS Twp 80 Rge 11 WSM: 21 All Oil Sands below top Peace River March 9, % CSS Twp 80 Rge 11 WSM: N, SW & Ptn SE 27 (Portions lying outside Utikoomak Lake Indian Reserve No. 155) All Oil Sands below top Peace River March 9, % CSS Twp 80 Rge 11 WSM: 28 All Oil Sands below top Peace River March 9, % CSS Twp 82 Rge 12 W5M: 21, 22 All Oil Sands below top Peace River April 22, % CSS Twp 82 Rge 13 W5M: 27 All Oil Sands below top Peace River April 22, % CSS Twp 82 Rge 13 W5M: 34 All Oil Sands below top Peace River April 22, % CSS Twp 82 Rge 12 W5M: 9, 10, All Oil Sands below top Peace River April 22, % CSS 15, 16 Twp 82 Rge 12 W5M: 17, 20 All Oil Sands below top Peace River April 22, % CSS Twp 82 Rge 13 W5M: 3, 4, 5 All Oil Sands below top Peace River April 22, % CSS Twp 82 Rge 13 WSM: 6 All Oil Sands below top Peace River April 22, % CSS Twp 82 Rge 13 W5M: 7 All Oil Sands below top Peace River April 22, % CSS Twp 82 Rge 13 WSM: 18 All Oil Sands below top Peace River April 22, % CSS Twp 82 Rge 12 W5M: 1, 2, 11- All Oil Sands below top Peace River April 22, % CSS 14 Twp 82 Rge 12 W5M: 18, 19 All Oil Sands below top Peace River April 22, % CSS

7 Twp 82 Rge 12 WSM: 29, 30 All Oil Sands below top Peace River Twp 82 Rge 13 W5M: 22 All Oil Sands below top Peace River Twp 82 Rge 13 W5M: 25, 26 All Oil Sands below top Peace River Twp 82 Rge 13 WSM: All Oil Sands below top Peace River Twp 82 Rge 12 W5M: 23, 24 All Oil Sands below top Peace River Twp 82 Rge 13 W5M: 19 All Oil Sands below top Peace River Twp 82 Rge 13 W5M: 24 All Oil Sands below top Peace River Twp 82 Rge 13 WSM: All Oil Sands below top Peace River Twp 82 Rge 12 W5M: 3, 4 All Oil Sands in Peace River All Oil Sands below top Debolt River Twp 82 Rge 13 W5M: 8-11, All Oil Sands below top Debolt 15-17, 20, 21 River Twp 82 Rge 12 W5M: 5-8 All Oil Sands below top Debolt Twp 82 Rge 13 WSM: 1, 2, 12- River April 22, % CSS April 22, % CSS April 22, % CSS April22, % CSS April 22, % CSS April 22, % CSS April22, % CSS April 22, % CSS March 27, % CSS April 16, % CSS May 27, % CSS Lands within GLMS Land Description Rights Lease Lease Date Working Interest Encumbrance Twp 81 Rge 12 W5M: 31 Twp 81 Rge 13 W5M: 25, 26, 35,36 All Oil Sands below top Debolt to base Pekisko December 22, % CSS 3% GOR ON 100% PRODUCTION PAID TO Gift Lake Resource Development Twp 81 Rge 12 WSM: 32, 33 Twp 81 Rge 13 WSM: 27, 28, 32, 33, 34 All Oil Sands below top Peace River All Oil Sands below top of Debolt to base Pekisko LP March 27, % CSS 3% GOR ON 100% PRODUCTION PAID TO Gift Lake Resource Development LP May 27, % CSS 3% GOR ON 100% PRODUCTION PAID TO Gift Lake Resource Development LP

8 Twp 81-Rge 12 W5M: 30 Twp 81 Rge 13 W5M: 22, 23, All Oil Sands below top of Peace River March 3, % CSS 3% GOR ON % PRODUCTION PAID TO Gift _./- Lake Resource Development LP NOTE: all Land within the GLMS will be subject to the Surface Rights Framework Agreement with the G.ft Lake Metis Settlement and Gift