AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 8, 2003
REGISTRATION NO. 333-104919
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM F-9
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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CANADIAN NATURAL RESOURCES LIMITED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
ALBERTA 1311 NOT APPLICABLE
(PROVINCE OR OTHER JURISDICTION (PRIMARY STANDARD (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) INDUSTRIAL CLASSIFICATION IDENTIFICATION NO.,
CODE NUMBER) IF APPLICABLE)
----------------------------------
SUITE 2500, 855 - 2ND STREET, S.W., CALGARY, ALBERTA, CANADA, T2P 4J8
(403) 517-6700
(ADDRESS AND TELEPHONE NUMBER OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------------------------
CT CORPORATION SYSTEM, 111 8TH AVENUE, 13TH FLOOR
NEW YORK, NEW YORK 10011
(212) 894-8700
(NAME, ADDRESS AND TELEPHONE NUMBER (INCLUDING AREA CODE) OF
AGENT FOR SERVICE IN THE UNITED STATES)
----------------------------------
COPIES TO:
NANCY M. PENNER EDWIN S. MAYNARD CHRISTOPHER J. CUMMINGS
PARLEE MCLAWS LLP PAUL, WEISS, RIFKIND, WHARTON & SHEARMAN & STERLING
3400 PETRO-CANADA CENTRE GARRISON, LLP COMMERCE COURT WEST
150 - SIXTH AVENUE, S.W. 1285 AVENUE OF THE AMERICAS 199 BAY STREET,
CALGARY, ALBERTA, CANADA NEW YORK, N.Y. 10019-606 SUITE 4405, P.O. BOX 247
T2P 3Y7 (212) 373-3000 TORONTO, ONTARIO, CANADA
(403) 294-7000 M5L 1E8
(416) 360-8484
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement.
PROVINCE OF ALBERTA, CANADA
(PRINCIPAL JURISDICTION REGULATING THIS OFFERING)
It is proposed that this filing shall become effective (check appropriate box
below):
A. [_] upon filing with the Commission, pursuant to Rule 467(a) (if in
connection with an offering being made contemporaneously in the United
States and Canada).
B. [X] at some future date (check appropriate box below)
1. [_] pursuant to Rule 467(b) on ( ) at ( ) (designate a time not
sooner than 7 calendar days after filing).
2. [_] pursuant to Rule 467(b) on ( ) at ( ) (designate a time 7
calendar days or sooner after filing) because the securities
regulatory authority in the review jurisdiction has issued a
receipt or notification of clearance on ( ).
3. [X] pursuant to Rule 467(b) as soon as practicable after
notification of the Commission by the Registrant or the
Canadian securities regulatory authority of the review
jurisdiction that a receipt or notification of clearance has
been issued with respect hereto.
4. [_] after the filing of the next amendment to this Form (if
preliminary material is being filed).
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to the home jurisdiction's shelf prospectus
offering procedures, check the following box. [X]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE AS PROVIDED IN RULE 467 UNDER THE SECURITIES
ACT OF 1933 OR ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A)
OF THE ACT, MAY DETERMINE.
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PART I
INFORMATION REQUIRED TO BE
DELIVERED TO OFFEREES OR PURCHASERS
BASE SHELF PROSPECTUS
THIS SHORT FORM PROSPECTUS HAS BEEN FILED UNDER LEGISLATION IN ALBERTA THAT
PERMITS CERTAIN INFORMATION ABOUT THESE SECURITIES TO BE DETERMINED AFTER THE
PROSPECTUS HAS BECOME FINAL AND PERMITS THE OMISSION FROM THIS PROSPECTUS OF
THAT INFORMATION. THE LEGISLATION REQUIRES THE DELIVERY TO PURCHASERS OF A
PROSPECTUS SUPPLEMENT CONTAINING THIS OMITTED INFORMATION WITHIN A SPECIFIED
PERIOD OF TIME AFTER AGREEING TO PURCHASE ANY OF THESE SECURITIES.
This short form prospectus constitutes a public offering of these securities
only in those jurisdictions where they may be lawfully offered for sale and
therein only by persons permitted to sell such securities. NO SECURITIES
REGULATORY AUTHORITY HAS EXPRESSED AN OPINION ABOUT THESE SECURITIES AND IT IS
AN OFFENCE TO CLAIM OTHERWISE.
INFORMATION HAS BEEN INCORPORATED BY REFERENCE IN THIS SHORT FORM PROSPECTUS
FROM DOCUMENTS FILED WITH SECURITIES COMMISSIONS OR SIMILAR AUTHORITIES IN
CANADA. Copies of the documents incorporated herein by reference may be obtained
on request without charge from the Secretary of Canadian Natural Resources
Limited, 2500, 855 - 2 Street S.W., Calgary, Alberta, T2P 4J8. Telephone (403)
517-6700.
MAY 8, 2003
[LOGO OMITTED]
CANADIAN NATURAL RESOURCES LIMITED
DEBT SECURITIES
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Canadian Natural Resources Limited may offer for sale from time to time, debt
securities in the aggregate principal amount of up to US$2,000,000,000 or its
equivalent in any other currency or units based on or relating to foreign
currencies during the 25 month period that this prospectus (including any
amendments hereto) remains effective.
We will provide the specific terms of these securities and all information
omitted from this prospectus in supplements to this prospectus. You should read
this prospectus and the supplements carefully before you invest.
--------------
NEITHER THE U.S. SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
--------------
WE ARE PERMITTED TO PREPARE THIS PROSPECTUS IN ACCORDANCE WITH CANADIAN
DISCLOSURE REQUIREMENTS, WHICH ARE DIFFERENT FROM THOSE OF THE UNITED STATES. WE
PREPARE OUR FINANCIAL STATEMENTS IN ACCORDANCE WITH CANADIAN GENERALLY ACCEPTED
ACCOUNTING PRACTICES, AND THEY ARE SUBJECT TO CANADIAN AUDITING AND AUDITOR
INDEPENDENCE STANDARDS. THEY MAY NOT BE COMPARABLE TO FINANCIAL STATEMENTS OF
UNITED STATES COMPANIES.
OWNING THE DEBT SECURITIES MAY SUBJECT YOU TO TAX CONSEQUENCES BOTH IN THE
UNITED STATES AND CANADA. THIS PROSPECTUS OR ANY APPLICABLE PROSPECTUS
SUPPLEMENT MAY NOT DESCRIBE THESE TAX CONSEQUENCES FULLY. YOU SHOULD READ THE
TAX DISCUSSION IN ANY APPLICABLE PROSPECTUS SUPPLEMENT.
YOUR ABILITY TO ENFORCE CIVIL LIABILITIES UNDER THE UNITED STATES FEDERAL
SECURITIES LAWS MAY BE AFFECTED ADVERSELY BECAUSE WE ARE INCORPORATED IN
ALBERTA, SOME OF OUR OFFICERS AND DIRECTORS AND SOME OF THE EXPERTS NAMED IN
THIS PROSPECTUS ARE CANADIAN RESIDENTS, AND MANY OF OUR ASSETS ARE LOCATED IN
CANADA.
THE DEBT SECURITIES OFFERED HEREBY HAVE NOT BEEN QUALIFIED FOR SALE UNDER THE
SECURITIES LAWS OF ANY PROVINCE OR TERRITORY OF CANADA AND ARE NOT BEING AND MAY
NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN CANADA OR TO ANY RESIDENT OF
CANADA IN CONTRAVENTION OF THE SECURITIES LAWS OF ANY PROVINCE OR TERRITORY OF
CANADA.
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TABLE OF CONTENTS
PAGE
----
ABOUT THIS PROSPECTUS........................................................2
WHERE YOU CAN FIND MORE INFORMATION..........................................3
RESERVES INFORMATION.........................................................4
FORWARD LOOKING STATEMENTS...................................................5
DEFINITIONS..................................................................6
CANADIAN NATURAL RESOURCES LIMITED...........................................7
USE OF PROCEEDS..............................................................8
CREDIT RATINGS...............................................................8
INTEREST COVERAGE............................................................9
DESCRIPTION OF DEBT SECURITIES...............................................9
CERTAIN INCOME TAX CONSIDERATIONS...........................................24
RISK FACTORS................................................................25
PLAN OF DISTRIBUTION........................................................28
LEGAL MATTERS...............................................................29
EXPERTS.....................................................................29
DOCUMENTS FILED AS PART OF THE REGISTRATION STATEMENT.......................29
APPENDIX A - CANADIAN NATURAL RESOURCES LIMITED UNAUDITED
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR
ENDED DECEMBER 31, 2002....................................................A-1
ABOUT THIS PROSPECTUS
In this prospectus, unless otherwise specified or the context otherwise
indicates, references to "Canadian Natural", "us", "we" or "our" mean Canadian
Natural Resources Limited and its subsidiaries, including its material operating
subsidiaries and, where applicable, their respective interests in partnerships
and other entities. References to "Rio Alto" mean Rio Alto Exploration Ltd., its
subsidiaries and its interests in partnerships and other entities at the time of
the acquisition by Canadian Natural but excluding all operations and assets in
which Rio Alto had an ownership interest, directly or indirectly located outside
of Canada. References to "Ranger" mean Ranger Oil Limited, its subsidiaries and
its interests in partnerships and other entities at the time of acquisition by
Canadian Natural. Unless otherwise specified, all dollar amounts contained in
this prospectus are expressed in Canadian dollars, and references to "dollars",
"Cdn$" or "$" are to Canadian dollars and all references to "US$" are to United
States dollars.
All financial information included and incorporated by reference in this
prospectus is determined using generally accepted accounting principles which
are in effect from time to time in Canada, referred to as "Canadian GAAP". "U.S.
GAAP" means generally accepted accounting principles which are in effect from
time to time in the United States.
This prospectus is part of a registration statement on Form F-9 relating to the
debt securities that we filed with the U.S. Securities and Exchange Commission
(the "SEC"). Under the shelf registration statement, we may, from time to time,
sell any combination of the debt securities described in this prospectus in one
or more offerings up to an aggregate principal amount of US$2,000,000,000. This
prospectus provides you with a general description of the debt securities that
we may offer. Each time we sell debt securities under the registration
statement, we will provide a prospectus supplement that will contain specific
information about the terms of that offering of debt securities. The prospectus
supplement may also add, update or change information contained in this
prospectus. Before you invest, you should read both this prospectus and any
applicable prospectus supplement together with additional information described
under the heading "Where You Can Find More Information". This prospectus does
not contain all of the information set forth in the registration statement,
certain parts of which are omitted in accordance
2
with the rules and regulations of the SEC. You may refer to the registration
statement and the exhibits to the registration statement for further information
with respect to us and the debt securities.
WHERE YOU CAN FIND MORE INFORMATION
We file with the Alberta Securities Commission (the "ASC"), a commission of
authority in the Province of Alberta similar to the SEC, material change, annual
and quarterly reports and other information. We are subject to the informational
requirements of the U.S. Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and, in accordance with the Exchange Act, we file reports and
furnish other information with the SEC. Under the multijurisdictional disclosure
system adopted by the United States, these reports and other information
(including financial information) may be prepared in accordance with the
disclosure requirements of Canada, which differ from those in the United States.
You may read any document we furnish to the SEC at the SEC's public reference
room at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. You may also
obtain copies of the same documents from the public reference room of the SEC by
paying a fee. The SEC also maintains an internet site that contains reports and
other information about issuers like us, that file electronically with the SEC.
The site address is www.sec.gov.
Under the multijurisdictional disclosure system adopted by the United States and
the provinces of Canada, the SEC and the ASC allow us to "incorporate by
reference" certain information we file with them, which means that we can
disclose important information to you by referring you to those documents.
Information that is incorporated by reference is an important part of this
prospectus. We incorporate by reference the documents listed below, which were
filed with the ASC under the SECURITIES ACT (Alberta):
o our Annual Information Form dated April 14, 2003 and
management's discussion and analysis of financial condition
and results of operations for the year ended December 31, 2002
incorporated by reference in the Annual Information Form;
o our Information Circular dated March 28, 2003 relating to the
Annual Meeting of our Shareholders to be held on May 8, 2003,
excluding those portions thereof which appear under the
headings "Performance Graph", "Report on Executive
Compensation by the Compensation Committee" and "Statement of
Corporate Governance Practices" (which portions shall be
deemed not to be incorporated by reference in this
prospectus);
o our audited comparative consolidated financial statements as
at and for the year ended December 31, 2002, together with the
auditors' report thereon;
o the audited comparative consolidated financial statements of
Rio Alto Exploration Ltd. as at and for the year ended
December 31, 2001, together with the auditors report thereon;
o our base shelf prospectus dated August 16, 2002, limited to
Appendix B, "Rio Alto Exploration Ltd. - Consolidated Balance
Sheet and Statements of Income (Loss) and Retained Earnings
and Cash Flow" and "Notes to the Consolidated Financial
Statements"; and
o our press release dated May 7, 2003, limited to those portions
beginning with the heading "Management's Discussion and
Analysis" on page 9 and including "Financial Statements",
through to page 35 inclusive.
Any documents of the type referred to in the preceding paragraph (except
prospectuses and press releases), or similar material, including an Annual
Information Form filed by us, all material change reports (excluding
confidential reports, if any), all updated interest coverage ratio information,
as well as all prospectus supplements disclosing additional or updated
information, filed by us with securities commissions or similar authorities in
the relevant provinces of Canada subsequent to the date of this prospectus and
prior to 25 months from the date hereof shall be deemed to be incorporated by
reference into this prospectus. The documents are available through the internet
on the System for Electronic Document Analysis and Retrieval (SEDAR) which can
be accessed at www.sedar.com.
3
We also incorporate by reference all future annual reports and any other
information we file with the SEC pursuant to Section 13(a), 13(c) or 15(d) of
the Exchange Act, unless expressly provided to the contrary in such report,
until we sell all of the debt securities. These documents are available through
the internet at www.sec.gov.
A prospectus supplement containing the specific variable terms of an offering of
debt securities will be delivered to purchasers of such debt securities together
with this prospectus and will be deemed to be incorporated by reference into
this prospectus as of the date of such prospectus supplement and only for the
purposes of the offering of the debt securities covered by that prospectus
supplement.
ANY STATEMENT CONTAINED IN THIS PROSPECTUS OR IN A DOCUMENT INCORPORATED OR
DEEMED TO BE INCORPORATED BY REFERENCE IN THIS PROSPECTUS SHALL BE DEEMED TO BE
MODIFIED OR SUPERSEDED FOR PURPOSES OF THIS PROSPECTUS TO THE EXTENT THAT A
STATEMENT CONTAINED IN THIS PROSPECTUS OR IN ANY OTHER SUBSEQUENTLY FILED
DOCUMENT WHICH ALSO IS OR IS DEEMED TO BE INCORPORATED BY REFERENCE IN THIS
PROSPECTUS MODIFIES OR SUPERSEDES THAT STATEMENT. ANY STATEMENT OR DOCUMENT SO
MODIFIED OR SUPERSEDED SHALL NOT, EXCEPT TO THE EXTENT SO MODIFIED OR
SUPERSEDED, BE INCORPORATED BY REFERENCE AND CONSTITUTE A PART OF THIS
PROSPECTUS.
Upon a new Annual Information Form and related annual financial statements being
filed with, and where required, accepted by, the applicable securities
regulatory authorities during the currency of this prospectus, the previous
Annual Information Form, annual financial statements and the accompanying
management's discussion and analysis and any interim financial statements and
the accompanying management's discussion and analysis, material change reports
and management proxy circulars filed prior to the commencement of the then
current fiscal year will be deemed no longer to be incorporated into this
prospectus for purposes of future offers and sales of debt securities under this
prospectus. Upon interim consolidated financial statements and the accompanying
management's discussion and analysis being filed by us with the applicable
securities regulatory authorities during the currency of this prospectus, all
interim consolidated financial statements and the accompanying management's
discussion and analysis filed prior to the new interim consolidated financial
statements shall be deemed no longer to be incorporated into this prospectus for
purposes of future offers and sales of debt securities under this prospectus.
In addition, you may obtain a copy of the Annual Information Form and other
information mentioned above by writing or calling us at the following address
and telephone number:
Canadian Natural Resources Limited
2500, 855 - 2 Street S.W.
Calgary, Alberta
Canada T2P 4J8
(403) 517-6700
Attention: Secretary
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS OR ANY APPLICABLE PROSPECTUS SUPPLEMENT AND ON THE
OTHER INFORMATION INCLUDED IN THE REGISTRATION STATEMENT OF WHICH THIS
PROSPECTUS FORMS A PART. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
DIFFERENT OR ADDITIONAL INFORMATION. WE ARE NOT MAKING AN OFFER OF THESE DEBT
SECURITIES IN ANY JURISDICTION WHERE THE OFFER IS NOT PERMITTED BY LAW. YOU
SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN OR INCORPORATED BY REFERENCE
IN THIS PROSPECTUS OR ANY APPLICABLE PROSPECTUS SUPPLEMENT IS ACCURATE AS OF ANY
DATE OTHER THAN THE DATE ON THE FRONT OF THE APPLICABLE PROSPECTUS SUPPLEMENT.
RESERVES INFORMATION
The SEC permits oil and natural gas companies, in their filings with the SEC, to
disclose only proved reserves that a company has demonstrated by actual
production or conclusive formation tests to be economically and legally
producible under existing economic and operating conditions. Canadian securities
laws permit oil and natural gas companies, in their filings with Canadian
securities regulators, to disclose probable reserves. Probable reserves are of a
higher risk and are generally believed to be less likely to be recovered than
proved reserves. Certain reserve
4
information to describe our reserves, included in the documents incorporated by
reference, such as "probable" and "proved plus probable" reserve information, is
prohibited in filings with the SEC by U.S. companies. For additional differences
between Canadian and U.S. standards of reporting reserves, see "Definitions" and
"Risk Factors--There are differences in United States and Canadian practices for
reporting reserves and production" in this prospectus.
In this prospectus and in any applicable prospectus supplement, we follow the
Canadian practice of reporting our reserves and production using gross volumes
which are volumes prior to deduction of royalties and similar payments. The
practice in the United States is to report reserves and production using net
volumes, after deduction of applicable royalties and similar payments.
In addition, in this prospectus and in any applicable prospectus supplement,
"proved reserves" are calculated in accordance with Canadian practices and use
escalated prices and costs. This method is different from the method of
estimating reserves of U.S. companies required by the SEC. The SEC requires that
U.S. companies calculate reserves by using constant prices and costs in effect
on the date of the reserve report. Proved reserves, as disclosed in our Annual
Information Form incorporated by reference in this prospectus, have been
calculated under both escalated and constant prices and costs.
FORWARD LOOKING STATEMENTS
This prospectus contains or incorporates by reference forward looking statements
within the meaning of the United States Private Litigation Reform Act of 1995.
All statements other than statements of historical fact included or incorporated
by reference in this prospectus that address activities, events or developments
that we expect or anticipate may or will occur in the future are forward looking
statements, and indicate such things as:
o oil and natural gas reserve quantities and the discounted
present value of future net cash flows from these reserves;
o the amount and nature of our capital expenditures;
o plans for drilling wells;
o prices for oil and natural gas produced;
o timing and amount of future production, forecasts of capital
expenditures and the sources of financing thereof;
o operating and other costs;
o business strategies and plans of management;
o anticipated benefits and enhanced shareholder value resulting
from prospect development and acquisitions.
Such forward looking statements are subject to risks, uncertainties and other
factors, many of which are beyond our control, including:
o the impact of general economic and business conditions in
Canada, the United States and internationally which will,
among other things, impact demand for and market prices of our
products;
o industry conditions, including fluctuations in the price of
oil and natural gas, royalties payable in respect of our oil
and natural gas production, and changes in governmental
regulation of the oil and natural gas industry, including
environmental regulation;
o the need to obtain required approvals from regulatory
authorities;
5
o the marketability of oil and natural gas, including the
proximity to and capacity of oil and natural gas pipelines and
processing equipment;
o the success of exploration and development activities;
o the timing and success of integrating the business and
operations of acquired companies;
o uncertainty of estimates of oil and natural gas reserves;
o impact of competition, availability and cost of seismic,
drilling and other equipment;
o operating hazards and other difficulties inherent in the
exploration for and production and sale of oil and natural
gas;
o fluctuations in foreign exchange or interest rates and stock
market volatility;
o political instability and other risks of international
operations; and
o uncertainties inherent in attracting capital.
These and additional factors are described in more detail in our management's
discussion and analysis of financial condition and results of operations
incorporated by reference in our Annual Information Form dated April 14, 2003,
which is filed with the securities commissions or similar authorities in the
provinces of Canada and incorporated by reference in this prospectus. Events or
circumstances could cause our actual results to differ materially from those
estimated or projected and expressed in, or implied by, these forward looking
statements. You should also carefully consider the matters discussed under "Risk
Factors" in this prospectus.
DEFINITIONS
In this prospectus and in any applicable prospectus supplement:
o "Bbl", "MBbl" and "MMBbl" mean barrels, thousand barrels and
million barrels, respectively;
o "Mcf", "MMcf" and "Bcf" mean thousand cubic feet, million
cubic feet and billion cubic feet, respectively;
o "Bbls/d", "MMcf/d" and "Boe/d" mean barrels per day, million
cubic feet per day and barrels of oil equivalent per day,
respectively; and
o "Boe" means barrels of oil equivalent, based on a conversion
ratio of 6 Mcf of natural gas production to one barrel of oil,
"MBoe" means thousand barrels of oil equivalent and "MMBoe"
means million barrels of oil equivalent.
In this prospectus and in any applicable prospectus supplement, "proved
reserves" are defined in accordance with Canadian securities legislation and
policies as those reserves estimated as recoverable under current technology and
existing economic conditions in the case of constant price and cost analyses and
anticipated economic conditions in the case of escalated price and cost
analyses, from that portion of a reservoir which can be reasonably evaluated as
economically productive on the basis of analysis of drilling, geological,
geophysical and engineering data, including the reserves to be obtained by
enhanced recovery processes demonstrated to be economic and technically
successful in the subject reservoir.
6
In this prospectus and in any applicable prospectus supplement, "undeveloped
land" is determined in accordance with Canadian practices and refers to
undrilled acreage. Net acres of undeveloped land are calculated by multiplying
the total number of acres in which we have a working interest by our percentage
interest in that land.
CANADIAN NATURAL RESOURCES LIMITED
OVERVIEW
We are a Canadian-based senior, independent energy company engaged in the
acquisition, exploration, development, production, marketing and sale of crude
oil and natural gas. Our core areas of operations are in the Western Canadian
Sedimentary Basin, the United Kingdom sector of the North Sea and Offshore West
Africa. Our head and principal office is located at 2500, 855 - 2 Street SW,
Calgary, Alberta, T2P 4J8.
Our common shares are listed for trading on the Toronto Stock Exchange and on
the New York Stock Exchange under the trading symbol "CNQ".
OBJECTIVES AND STRATEGY
We initiate, operate and maintain a large working interest in a majority of the
prospects in which we participate. Our objective is to increase cash flow and
earnings through the development of our existing crude oil and natural gas
properties and by the discovery and acquisition of new reserves.
Our strategy to achieve our objectives is based on maximizing operational
flexibility and ensuring financial strength.
In maximizing operational flexibility, we:
o continue to build a diversified asset base balanced among
light, Pelican Lake, primary heavy and thermal heavy grades of
crude oil and natural gas;
o view our opportunities from a short, medium and long-term
potential; and
o maximize our working interest ownership and our ability to
operate all of our properties in each of our core areas.
In maximizing financial strength, we:
o recognize the need for a strong balance sheet to withstand
potentially volatile commodity prices;
o implement effective cost-control measures on all aspects of
our operations; and
o exercise a disciplined approach to funding our capital
expenditure programs in order to maintain financial
flexibility.
Our operating philosophy is to minimize capital and operating costs. We believe
this objective is achieved by maintaining core focus regions and understanding,
controlling and dominating the land base and infrastructure.
We have grown through a combination of internal growth and strategic
acquisitions. We make acquisitions with a view to either entering new core
regions or increasing dominance in an existing core region. The acquisition of
Ranger in July 2000 complemented many of our existing Canadian production areas
and also provided an entry into two new core focus areas, the United Kingdom
sector of the North Sea and Offshore West Africa, principally in Angola and Cote
d'Ivoire. The acquisition of Rio Alto in July 2002, provided us with a new core
region in Northwest Alberta for natural gas exploration and exploitation
activities. In this new core region we own approximately 2.9 million net acres
of undeveloped lands which will provide additional opportunities for us to
increase our production and reserves of natural gas and natural gas liquids.
7
We believe that a balanced asset base provides less risk when compared to an
overweighted exposure to one commodity. It is the strength of our asset base and
our adherence to our defined and disciplined long-term growth strategy which we
believe provide opportunities for profitable growth. Our operations are centered
on balanced product offerings, which together provide complementary
infrastructure and balance throughout the business cycle.
Our business approach is to maintain large project inventories and production
diversification among each of the commodities we produce; namely natural gas,
light oil, Pelican Lake oil, primary heavy oil and thermal heavy oil. Our
operations are centred on balanced product offerings, which together provide
complementary infrastructure and balance throughout the business cycle. Natural
gas is the largest single commodity sold, accounting for 49 percent of 2002
production. Virtually all of our natural gas and natural gas liquids production
is located in the Canadian provinces of Alberta and British Columbia and is
marketed in Canada and the United States. Light oil, representing 21 percent of
2002 production, is located principally in our North Sea and Offshore West
Africa properties, with additional production in the Provinces of Saskatchewan,
British Columbia and Alberta. Primary and thermal heavy oil operations in the
Provinces of Alberta and Saskatchewan account for 23 percent of 2002 production.
Other heavy oil, which accounts for 7 percent of 2002 production, is produced
from the Pelican Lake area in central Alberta. This production, which has medium
oil netback characteristics, is developed through a staged horizontal drilling
program. Midstream assets, comprised of three crude oil pipelines and an
electricity co-generation facility, provide cost effective infrastructure
supporting the heavy and medium oil operations. We expect our ownership of oil
sands leases near Fort McMurray, Alberta to provide a basis for long-term
synthetic oil production growth.
USE OF PROCEEDS
Unless otherwise indicated in an applicable prospectus supplement relating to a
series of debt securities, we will use the net proceeds we receive from the sale
of the debt securities for general corporate purposes relating to our primary
areas of operations in North America, the North Sea and Offshore West Africa,
which may include financing our capital expenditure program and working capital
requirements in those areas. We may also use the net proceeds for the repayment
of indebtedness. We may, from time to time, issue debt instruments and incur
additional indebtedness other than through the issue of debt securities pursuant
to this prospectus.
We may invest funds in short-term marketable securities.
CREDIT RATINGS
Our unsecured long-term debt securities are rated "Baa1" by Moody's Investors
Service, Inc. ("Moody's"), "BBB+" with a stable outlook by Standard & Poor's
Corporation ("S&P") and "BBB high" with a stable trend by Dominion Bond Rating
Service Limited ("DBRS"). Credit ratings are intended to provide investors with
an independent measure of credit quality of any issue of securities.
Moody's credit ratings are on a long-term debt rating scale that ranges from Aaa
to C, which represents the range from highest to lowest quality of such
securities rated. According to the Moody's rating system, debt securities rated
Baa1 are considered as medium-grade obligations, i.e. they are neither highly
protected nor poorly secured. Interest payments and principal security appear
adequate for the present but certain protective elements may be lacking or may
be characteristically unreliable over any great length of time. Such securities
lack outstanding investment characteristics and in fact have speculative
characteristics as well. Moody's applies numerical modifiers 1, 2 and 3 in each
generic rating classification from Aa through Caa in its corporate bond rating
system. The modifier 1 indicates that the issue ranks in the higher end of its
generic rating category, the modifier 2 indicates a mid-range ranking and the
modifier 3 indicates that the issue ranks in the lower end of its generic rating
category.
S&P's credit ratings are on a long-term debt rating scale that ranges from AAA
to D, which represents the range from highest to lowest quality of such
securities rated. According to the S&P rating system, debt securities rated BBB
exhibit adequate protection parameters. However, adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity of the
obligor to meet its financial commitments on the notes. The ratings from AA to B
may be modified by the addition of a plus (+) or minus (-) sign to show relative
standing within the major rating categories.
8
DBRS' credit ratings are on a long-term debt rating scale that ranges from AAA
to D, which represents the range from highest to lowest quality of such
securities rated. According to the DBRS rating system, debt securities rated BBB
are of adequate credit quality. The assignment of a "(high)" or "(low)" modifier
within each rating category indicates relative standing within such category.
The "high" and "low" grades are not used for the AAA category.
The credit ratings accorded to our debt securities by the rating agencies are
not recommendations to purchase, hold or sell the debt securities inasmuch as
such ratings do not comment as to market price or suitability for a particular
investor. Any rating may not remain in effect for any given period of time or
may be revised or withdrawn entirely by a rating agency in the future if in its
judgment circumstances so warrant, and if any such rating is so revised or
withdrawn, we are under no obligation to update this prospectus.
INTEREST COVERAGE
The following coverage ratios have been prepared in accordance with Canadian
securities law requirements and are included in this prospectus in accordance
with Canadian disclosure requirements.
The following coverage ratios are calculated on a consolidated basis for the
twelve month period ended December 31, 2002, based on audited financial
information. The following ratios do not give effect to the issue of any debt
securities pursuant to this prospectus.
DECEMBER 31, 2002
-----------------
Interest coverage on long-term debt (times):
Net earnings(1) ....................................... 7.2
Cash flow(2) .......................................... 15.3
NOTES:
(1) Interest coverage on long-term debt on an earnings basis is equal to
net earnings plus income taxes and interest expense, divided by
interest expense.
(2) Interest coverage on long-term debt on a cash flow basis is equal to
cash flow plus current income taxes and interest expense, divided by
interest expense.
The pro forma net earnings coverage ratio for the year ended December 31, 2002
after giving effect to the acquisition of Rio Alto would be 5.5. The pro forma
earnings coverage ratio does not purport to be indicative of the actual earnings
coverage ratio that would have occurred if the acquisition of Rio Alto had
actually occurred on January 1, 2002, nor to be indicative of earnings coverage
ratios for any future periods. See our unaudited pro forma consolidated
statement of earnings attached as Appendix A to this prospectus.
Under U.S. GAAP, our preferred securities would be included as a non-current
liability rather than shareholders' equity and preferred securities dividends
would be included as interest expense rather than charges against shareholders'
equity. Accordingly, under U.S. GAAP, the net earnings coverage ratio for the
year ended December 31, 2002 and the pro forma net earnings coverage ratio for
the year ended December 31, 2002 would be 6.8 and 5.2, respectively, and the
cash flow coverage ratio for the year ended December 31, 2002 would be 14.4.
DESCRIPTION OF DEBT SECURITIES
In this section, "we", "us", "our" or "Canadian Natural" refers only to Canadian
Natural Resources Limited without its subsidiaries or interest in partnerships
and other entities. The following describes certain general terms and provisions
of the debt securities. The particular terms and provisions of the series of
debt securities offered by any prospectus supplement, and the extent to which
the general terms and provisions described below may apply to them, will be
described in the applicable prospectus supplement. Accordingly, for a
description of the terms of a particular series of debt securities, reference
must be made to both the applicable prospectus supplement relating to them and
the description of the debt securities set forth in this prospectus.
9
The debt securities will be issued under a trust indenture (the "Indenture")
dated July 24, 2001 between us and The Bank of Nova Scotia Trust Company of New
York, as trustee (the "Trustee"). The Indenture is subject to and governed by
the United States Trust Indenture Act of 1939, as amended. A copy of the form of
the Indenture has been filed with the SEC as an exhibit to the registration
statement of which this prospectus is a part. The following summaries of the
Indenture and the debt securities are brief summaries of certain provisions of
the Indenture and do not purport to be complete; these statements are subject to
the detailed referenced provisions of the Indenture, including the definition of
capitalized terms used under this caption. Wherever particular sections or
defined terms of the Indenture are referred to, these sections or defined terms
are incorporated in this prospectus by reference as part of the statement made,
and the statement is qualified in its entirety by the reference to the
Indenture. References in parentheses are to section numbers in the Indenture.
GENERAL
The Indenture does not limit the aggregate principal amount of debt securities
(which may include debentures, notes and other unsecured evidences of
indebtedness) that may be issued under the Indenture, and provides that debt
securities may be issued from time to time in one or more series and may be
denominated and payable in foreign currencies. The debt securities offered
pursuant to this prospectus will be issued in an amount up to US$2,000,000,000
or the equivalent. The Indenture also permits us to increase the principal
amount of any series of debt securities previously issued and to issue that
increased principal amount. (Section 3.1)
The applicable prospectus supplement will contain a description of the following
terms relating to the debt securities being offered:
(a) the title of the debt securities of such series;
(b) any limit on the aggregate principal amount of the debt
securities of such series;
(c) the date or dates, if any, on which the principal (and
premium, if any) of the debt securities of such series will
mature and the portion (if less than all of the principal
amount) of the debt securities of such series to be payable
upon declaration of acceleration of maturity and/or the method
by which such date or dates shall be determined;
(d) the rate or rates (which may be fixed or variable) at which
the debt securities of such series will bear interest, if any,
the date or dates from which that interest will accrue and on
which that interest will be payable and the Regular Record
Dates for any interest payable on the debt securities of such
series which are Registered Securities and/or the method by
which such date or dates shall be determined;
(e) if applicable, any mandatory or optional redemption or sinking
fund provisions, including the period or periods within which,
the price or prices at which and the terms and conditions upon
which the debt securities of such series may be redeemed or
purchased at the option of Canadian Natural or otherwise;
(f) if applicable, whether the debt securities of such series will
be issuable in registered form or bearer form or both, and, if
issuable in bearer form, the restrictions as to the offer,
sale and delivery of the debt securities of such series in
bearer form and as to exchanges between registered and bearer
form;
(g) whether the debt securities of such series will be issuable in
the form of one or more Registered Global Securities and, if
so, the identity of the Depository for those Registered Global
Securities;
(h) the denominations in which any of the debt securities of such
series which are in registered form will be issuable, if other
than denominations of US$1,000 and any multiple thereof, and
the denominations in which any of the debt securities of such
series which are in bearer form will be issuable, if other
than the denomination of US$1,000;
10
(i) each office or agency where the principal of and any premium
and interest on the debt securities of such series will be
payable, and each office or agency where the debt securities
of such series may be presented for registration of transfer
or exchange;
(j) if other than United States dollars, the foreign currency or
the units based on or relating to foreign currencies in which
the debt securities of such series are denominated and/or in
which the payment of the principal of and any premium and
interest on the debt securities of such series will or may be
payable;
(k) any index pursuant to which the amount of payments of
principal of and any premium and interest on the debt
securities of such series will or may be determined;
(l) any applicable Canadian and U.S. federal income tax
consequences;
(m) whether and under what circumstances we will pay Additional
Amounts on the debt securities of such series in respect of
certain taxes (and the terms of any such payment) and, if so,
whether we will have the option to redeem the debt securities
of such series rather than pay the Additional Amounts (and the
terms of any such option);
(n) any deletions from, modifications of or additions to the
Events of Default or covenants of Canadian Natural with
respect to such debt securities, whether or not such Events of
Default or covenants are consistent with the Events of Default
or covenants set forth herein; and
(o) any other terms of the debt securities of such series.
Unless otherwise indicated in the applicable prospectus supplement, the
Indenture does not afford the Holders the right to tender debt securities to us
for repurchase, or provide for any increase in the rate or rates of interest per
annum at which the debt securities will bear interest, in the event we become
involved in a highly leveraged transaction or in the event that we undergo a
change in control.
Debt securities may be issued under the Indenture bearing no interest or
interest at a rate below the prevailing market rate at the time of issuance and
may be offered and sold at a discount below their stated principal amount. The
Canadian and U.S. federal income tax consequences and other special
considerations applicable to those discounted debt securities or other debt
securities offered and sold at par which are treated as having been issued at a
discount for Canadian and/or U.S. federal income tax purposes will be described
in the prospectus supplement relating to the debt securities.
RANKING AND OTHER INDEBTEDNESS
The debt securities will be unsecured obligations of ours and, unless otherwise
provided in the prospectus supplement relating to such debt securities, will
rank PARI PASSU with all our other unsecured and unsubordinated debt from time
to time outstanding and PARI PASSU with other debt securities issued under the
Indenture. The debt securities will be structurally subordinated to all existing
and future liabilities of any of our corporate or partnership subsidiaries,
including trade payables and other indebtedness.
Certain of our subsidiaries, CNR International (U.K.) Limited, CNR International
(U.K.) Investments Limited and CNR International (U.K.) Developments Limited
(collectively, the "UK Subsidiaries") and a U.S. subsidiary, Ranger Oil Company,
have guaranteed US$223 million of our notes issued in the United States,
consisting of US$143 million in senior notes and US$80 million in subordinated
notes (collectively, the "Ranger U.S. Private Notes") which became our direct
obligations upon our amalgamation with Ranger Oil Limited on October 1, 2000.
Until our indebtedness that has been guaranteed by the subsidiaries has been
repaid or until the guarantees have been removed, the Ranger U.S. Private Notes
will continue to rank structurally senior, with respect to the assets of the UK
Subsidiaries and Ranger Oil Company, to all debt securities issued under the
Indenture. See "Risk Factors - The debt securities will be structurally
subordinate to any indebtedness of our subsidiaries".
11
REGISTERED GLOBAL SECURITIES
Unless otherwise indicated in a prospectus supplement, a series of debt
securities will be issued in the form of one or more Registered Global
Securities which will be registered in the name of and be deposited with a
Depository, or its nominee, each of which will be identified in the prospectus
supplement relating to that series. Unless and until exchanged, in whole or in
part, for debt securities in definitive registered form, a Registered Global
Security may not be transferred except as a whole by the Depository for a
Registered Global Security to a nominee of that Depository, by a nominee of that
Depository to that Depository or another nominee of that Depository or by that
Depository or any nominee of that Depository to a successor of that Depository
or a nominee of a successor of that Depository. (Section 3.5)
The specific terms of the depository arrangement with respect to any portion of
a particular series of debt securities to be represented by a Registered Global
Security will be described in the prospectus supplement relating to that series.
Canadian Natural anticipates that the following provisions will apply to all
depository arrangements.
Upon the issuance of a Registered Global Security, the Depository or its nominee
will credit, on its book entry and registration system, the respective principal
amounts of the debt securities represented by that Registered Global Security to
the accounts of those persons having accounts with that Depository or its
nominee ("participants") as shall be designated by the underwriters, investment
dealers or agents participating in the distribution of those debt securities or
by us if those debt securities are offered and sold directly by us. Ownership of
beneficial interests in a Registered Global Security will be limited to
participants or persons that may hold beneficial interests through participants.
Ownership of beneficial interests in a Registered Global Security will be shown
on, and the transfer of the ownership of those beneficial interests will be
effected only through, records maintained by the Depository therefor or its
nominee (with respect to beneficial interests of participants) or by
participants or persons that hold through participants (with respect to
interests of persons other than participants).
The laws of some states in the United States require certain purchasers of
securities to take physical delivery of the debt securities in definitive form.
These depository arrangements and these laws may impair the ability to transfer
beneficial interests in a Registered Global Security.
So long as the Depository for a Registered Global Security or its nominee is the
registered owner of the debt securities, that Depository or its nominee, as the
case may be, will be considered the sole owner or Holder of the debt securities
represented by that Registered Global Security for all purposes under the
Indenture. Except as provided below, owners of beneficial interests in a
Registered Global Security will not be entitled to have debt securities of the
series represented by that Registered Global Security registered in their names,
will not receive or be entitled to receive physical delivery of debt securities
of that series in definitive form and will not be considered the owners or
Holders of those debt securities under the Indenture.
Principal, premium, if any, and interest payments on a Registered Global
Security registered in the name of a Depository or its nominee will be made to
that Depository or nominee, as the case may be, as the registered owner of that
Registered Global Security. Neither we, the Trustee nor any paying agent for
debt securities of the series represented by that Registered Global Security
will have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial interests in that Registered Global
Security or for maintaining, supervising or reviewing any records relating to
those beneficial interests.
We expect that the Depository for a Registered Global Security or its nominee,
upon receipt of any payment of principal, premium or interest, will immediately
credit participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of that Registered
Global Security as shown on the records of that Depository or its nominee. We
also expect that payments by participants to owners of beneficial interests in
that Registered Global Security held through those participants will be governed
by standing instructions and customary practices, as is the case with securities
held for the accounts of customers registered in "street name", and will be the
responsibility of those participants.
If the Depository for a Registered Global Security representing debt securities
of a particular series is at any time unwilling or unable to continue as
Depository, or if the Depository is no longer eligible to continue as
Depository, and a successor Depository is not appointed by us within 90 days, or
if an Event of Default described in clauses (a)
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or (b) of the first sentence under "Events of Default" below with respect to a
particular series of debt securities has occurred and is continuing, we will
issue Registered Securities of that series in definitive form in exchange for
that Registered Global Security. In addition, we may at any time and in its sole
discretion determine not to have the debt securities of a particular series
represented by one or more Registered Global Securities and, in that event, will
issue Registered Securities of that series in definitive form in exchange for
all of the Registered Global Securities representing debt securities of that
series. (Section 3.5)
DEBT SECURITIES IN DEFINITIVE FORM
If indicated in an applicable prospectus supplement, the debt securities may be
issued in definitive form without coupons. (Section 3.1) Debt securities in
definitive form may be presented for exchange and for registration of transfer
in the manner, at the places and, subject to the restrictions set forth in the
Indenture and in the applicable prospectus supplement, without service charge,
but upon payment of any taxes or other governmental charges due in connection
therewith. We have appointed the Trustee as Security Registrar. Debt securities
in bearer form and the coupons appertaining thereto, if any, will be
transferable by delivery. (Section 3.5)
Unless otherwise indicated in the applicable prospectus supplement, payment of
the principal of and any premium and interest on debt securities in definitive
form will be made at the office or agency of the Trustee at One Liberty Plaza,
New York, New York 10006, except that, at our option, payment of any interest
may be made (a) by check mailed to the address of the Person entitled thereto as
that Person's address will appear in the Security Register or (b) by wire
transfer to an account maintained by the Person entitled thereto as specified in
the Security Register. (Sections 3.1, 3.7 and 9.1)
NEGATIVE PLEDGE
The Indenture includes our covenant that, so long as any of the debt securities
remain outstanding, we will not, and will not permit any Subsidiary to, create,
assume or otherwise have outstanding any Security Interest, except for Permitted
Encumbrances, on or over its or their respective assets (present or future)
securing any Indebtedness of any Person without also at the same time or prior
to that time securing equally and ratably with other Indebtedness all of the
debt securities then Outstanding under the Indenture. (Section 9.1)
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definitions of all
such terms.
The term "CAPITAL LEASE OBLIGATION" means the obligation of a Person, as lessee,
to pay rent or other amounts to the lessor under a lease of real or personal
property which is required to be classified and accounted for as a capital lease
on a consolidated balance sheet of such Person in accordance with GAAP.
The term "CONSOLIDATED NET TANGIBLE ASSETS" means the total amount of assets on
a consolidated basis (less applicable reserves and other properly deductible
items) after deducting therefrom:
(a) all current liabilities (excluding any current liabilities
which are by their terms extendible or renewable at the option
of the obligor thereon to a time more than 12 months after the
time as of which the amount thereof is being computed);
(b) all goodwill, trade names, trademarks, patents, unamortized
debt discount and expense and other like intangibles (and for
greater certainty does not include deferred foreign exchange
gains or losses on long-term monetary items); and
(c) appropriate adjustments on account of minority interests of
other Persons holding stock of our Subsidiaries,
all as set forth on our most recent quarterly balance sheet and our consolidated
Subsidiaries and computed in accordance with GAAP.
13
The term "CURRENT ASSETS" means current assets as determined in accordance with
GAAP.
The term "FINANCIAL INSTRUMENT OBLIGATIONS" means obligations arising under:
(a) interest rate swap agreements, forward rate agreements, floor,
cap or collar agreements, futures or options, insurance or
other similar agreements or arrangements, or any combination
thereof, entered into by a Person of which the subject matter
is interest rates or pursuant to which the price, value or
amount payable thereunder is dependent or based upon interest
rates in effect from time to time or fluctuations in interest
rates occurring from time to time;
(b) currency swap agreements, cross-currency agreements, forward
agreements, floor, cap or collar agreements, futures or
options, insurance or other similar agreements or
arrangements, or any combination thereof, entered into by a
Person of which the subject matter is currency exchange rates
or pursuant to which the price, value or amount payable
thereunder is dependent or based upon currency exchange rates
in effect from time to time or fluctuations in currency
exchange rates occurring from time to time; and
(c) commodity swap or hedging agreements, floor, cap or collar
agreements, commodity futures or options or other similar
agreements or arrangements, or any combination thereof,
entered into by a Person of which the subject matter is one or
more commodities or pursuant to which the price, value or
amount payable thereunder is dependent or based upon the price
of one or more commodities in effect from time to time or
fluctuations in the price of one or more commodities occurring
from time to time.
The term "GAAP" means generally accepted accounting principles which are in
effect from time to time in Canada.
The term "INDEBTEDNESS" means at any time, and whether or not contingent, all
items of indebtedness in respect of any amounts borrowed which, in accordance
with GAAP, would be recorded as indebtedness in the consolidated financial
statements of Canadian Natural as at the date as of which Indebtedness is to be
determined, and in any event including, without duplication (i) any obligation
for borrowed money, (ii) any obligation evidenced by bonds, debentures, notes,
guarantees or other similar instruments, including, without limitation, any such
obligations incurred in connection with the acquisition of property, assets or
businesses, (iii) any Purchase Money Obligation, (iv) any reimbursement
obligation with respect to letters of credit, bankers' acceptances or similar
facilities, (v) any obligation issued or assumed as the deferred purchase price
of property or services, (vi) any Capital Lease Obligation, (vii) any obligation
to pay rent or other payment amounts with respect to any Sale and Leaseback
Transaction, (viii) any payment obligation under Financial Instrument
Obligations at the time of determination, (ix) any indebtedness in respect of
any amounts borrowed or any Purchase Money Obligation secured by any Security
Interest existing on property owned subject to such Security Interest, whether
or not the indebtedness or Purchase Money Obligation secured thereby shall have
been assumed and (x) guarantees, indemnities, endorsements (other than
endorsements for collection in the ordinary course of business) or other
contingent liabilities in respect of obligations of another Person for
indebtedness of that other Person in respect of any amounts borrowed by that
other Person.
The term "PERMITTED ENCUMBRANCES" means any of the following:
(a) any Security Interest existing as of the date of the first
issuance by us of the debt securities issued pursuant to the
Indenture;
(b) any Security Interest on pipelines, pumping stations or other
pipeline facilities, drilling equipment, production equipment
and platforms; tank cars, tankers, barges, ships, trucks,
automobiles, airplanes or other marine, automotive,
aeronautical or other similar moveable facilities or
equipment, computer systems and associated programs; office
equipment; weather stations; townsites; housing facilities,
recreation halls, stores and other related facilities;
gassification or natural gas liquefying facilities and burning
towers, flares or stacks; retail service stations, bulk
plants, storage facilities, terminals or warehouses; or
similar facilities and equipment of or
14
associated with any of the foregoing; provided, in each case,
that such Security Interest is incurred to finance the
acquisition of such property or assets within 90 days after
such acquisition and such Security Interest shall be limited
to the specified property or assets being financed;
(c) (i) any Security Interest on any specific properties or any
interest therein, construction thereon or improvement thereto,
and on any receivables, inventory, equipment, chattel paper,
contract rights, intangibles and other assets, rights or
collateral specifically connected with such properties,
incurred (A) to secure all or any part of the financing for
acquisition, surveying, exploration, drilling, extraction,
development, operation, production, construction, alteration,
repair or improvement of, in, under or on such properties and
the plugging and abandonment of wells located thereon (it
being understood that, in the case of oil and natural gas
producing properties (including oil sands properties), or any
interest therein, financing incurred for "development" shall
include financing incurred for all facilities relating to such
properties or to projects, ventures or other arrangements of
which such properties form a part or which relate to such
properties or interests), or (B) for acquiring ownership of
any Person which owns any such property or interest therein,
provided that such Security Interest is limited to such
property or such interest therein owned by any such Person;
and (ii) any Security Interest on an oil and/or natural gas
producing property (including oil sands properties) to secure
Indebtedness incurred in connection with or necessarily
incidental to commitments for the purchase or sale of, or the
transportation or distribution of, the products derived from
such property;
(d) any Security Interest in favor of Canadian Natural or any of
its wholly-owned Subsidiaries;
(e) any Security Interest existing on the property of any Person
at the time such Person becomes a Subsidiary, or arising
thereafter pursuant to contractual commitments entered into
prior to and not in contemplation of such Person becoming a
Subsidiary;
(f) any Security Interest on property of a Person which Security
Interest exists at the time such Person is merged into, or
amalgamated or consolidated with, Canadian Natural or a
Subsidiary, or such property is otherwise acquired by Canadian
Natural or a Subsidiary, provided such Security Interest does
not extend to property owned by Canadian Natural or such
Subsidiary immediately prior to such merger, amalgamation,
consolidation or acquisition;
(g) any Security Interest on Current Assets securing any
Indebtedness to any bank or banks or other lending institution
or institutions incurred in the ordinary course of business
and for the purpose of carrying on the same, repayable on
demand or maturing within 12 months of the date when such
Indebtedness is incurred or the date of any renewal or
extension thereof, provided that such security is given at the
time that the Indebtedness is incurred;
(h) any Security Interest in respect of (i) liens for taxes and
assessments not at the time overdue or any liens securing
workmen's compensation assessments, unemployment insurance or
other social security obligations; provided, however, that if
any such liens, duties or assessments are then overdue,
Canadian Natural or the Subsidiary, as the case may be, shall
be prosecuting an appeal or proceedings for review with
respect to which it shall have secured a stay in the
enforcement of any such obligations, (ii) any liens for
specified taxes and assessments which are overdue but the
validity of which is being contested at the time by Canadian
Natural or the Subsidiary, as the case may be, in good faith,
and with respect to which Canadian Natural or the Subsidiary
shall have secured a stay of enforcement thereof, if
applicable, (iii) any liens or rights of distress reserved in
or exercisable under any lease for rent and for compliance
with the terms of such lease, (iv) any obligations or duties,
affecting the property of Canadian Natural or that of a
Subsidiary to any municipality or governmental, statutory or
public authority, with respect to any franchise, grant,
license, lease or permit and any defects in title to
structures or other facilities arising solely from the fact
that such structures or facilities are constructed or
installed on lands held by Canadian Natural or the Subsidiary
under government permits, licenses, leases or other grants,
which obligations, duties and defects in the aggregate do not
materially impair the use of such property, structures or
facilities for the purpose for which they are held by Canadian
Natural or the
15
Subsidiary, (v) any deposits or liens in connection with
contracts, bids, tenders or expropriation proceedings, surety
or appeal bonds, costs of litigation when required by law,
public and statutory obligations, liens or claims incidental
to current construction, builders', mechanics', laborers',
materialmen's, warehousemen's, carrier's and other similar
liens, (vi) the right reserved to or vested in any
municipality or governmental or other public authority by any
statutory provision or by the terms of any lease, license,
franchise, grant or permit, that affects any land, to
terminate any such lease, license, franchise, grant or permit
or to require annual or other periodic payments as a condition
to the continuance thereof, (vii) any Security Interest the
validity of which is being contested at the time by Canadian
Natural or a Subsidiary in good faith or payment of which has
been provided for by deposit with the Trustee of an amount in
cash sufficient to pay the same in full, (viii) any easements,
rights-of-way and servitudes (including, without in any way
limiting the generality of the foregoing, easements,
rights-of-way and servitudes for railways, sewers, dykes,
drains, pipelines, natural gas and water mains or electric
light and power or telephone conduits, poles, wires and
cables) that, in the opinion of Canadian Natural, will not in
the aggregate materially and adversely impair the use or value
of the land concerned for the purpose for which it is held by
Canadian Natural or the Subsidiary, as the case may be, (ix)
any security to a public utility or any municipality or
governmental or other public authority when required by such
utility or other authority in connection with the operations
of Canadian Natural or the Subsidiary, as the case may be, and
(x) any liens and privileges arising out of judgments or
awards with respect to which Canadian Natural or the
Subsidiary shall be prosecuting an appeal or proceedings for
review and with respect to which it shall have secured a stay
of execution pending such appeal or proceedings for review;
(i) any Security Interest arising under partnership agreements,
oil and natural gas leases, overriding royalty agreements, net
profits agreements, production payment agreements, royalty
trust agreements, master limited partnership agreements,
farm-out agreements, division orders, contracts for the sale,
purchase, exchange, transportation, gathering or processing of
oil, natural gas or other hydrocarbons or by-product thereof,
unitizations and pooling designations, declarations, orders
and agreements, development agreements, operating agreements,
production sales contracts (including security in respect of
take or pay or similar obligations thereunder), area of mutual
interest agreements, natural gas balancing or deferred
production agreements, injection, repressuring and recycling
agreements, salt water or other disposal agreements, seismic
or geophysical permits or agreements, which in each of the
foregoing cases is customary in the oil and natural gas
business, and other agreements which are customary in the oil
and natural gas business, provided in all instances that such
Security Interest is limited to the assets that are the
subject of the relevant agreement;
(j) any Security Interest on cash or marketable securities of
Canadian Natural or any Subsidiary granted in the ordinary
course of business in connection with Financial Instrument
Obligations;
(k) any Security Interest in respect of the sale (including any
forward sale) or other transfer, in the ordinary course of
business, of (i) oil, natural gas, other hydrocarbons or
by-product thereof, or other minerals, whether in place or
when produced, for a period of time until, or in an amount
such that, the purchaser will realize therefrom a specified
amount of money (however determined) or a specified amount of
such minerals and (ii) any other interests in property of a
character commonly referred to as a "production payment";
(l) any extension, renewal, alteration or replacement (or
successive extensions, renewals, alterations or replacements)
in whole or in part, of any Security Interest referred to in
the foregoing clauses (a) through (k) inclusive, provided the
principal amount thereof is not increased and provided that
such extension, renewal, alteration or replacement shall be
limited to all or a part of the property or other assets which
secured the Security Interest so extended, renewed, altered or
replaced (plus improvements on such property or other assets);
and
(m) any Security Interests that would otherwise be prohibited
(including any extensions, renewals, alterations or
replacements thereof) provided that the aggregate Indebtedness
outstanding and
16
secured under this clause (m) does not (calculated at the time
of the granting of the Security Interest) exceed an amount
equal to 10 percent of Consolidated Net Tangible Assets.
The term "PERSON" means any individual, corporation, limited liability company,
partnership, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
The term "PURCHASE MONEY OBLIGATION" means any monetary obligation created or
assumed as part of the purchase price of real or tangible personal property,
whether or not secured, any extensions, renewals or refundings of any such
obligation, provided that the principal amount of such obligation on the date of
such extension, renewal or refunding is not increased and further provided that
any security given in respect of such obligation shall not extend to any
property other than the property acquired in connection with which such
obligation was created or assumed and fixed improvements, if any, thereto or
erected or constructed thereon.
The term "SALE AND LEASEBACK TRANSACTION" means any direct or indirect
arrangement (excluding, however, any such arrangement between Canadian Natural
and a Subsidiary or between one or more Subsidiaries) pursuant to which property
is sold or transferred and is thereafter leased back from the purchaser or
transferee thereof.
The term "SECURITY INTEREST" means any security by way of an assignment,
mortgage, charge, pledge, lien, encumbrance, title retention agreement or other
security interest whatsoever, howsoever created or arising, whether absolute or
contingent, fixed or floating, perfected or not; however, for purposes of the
"Negative Pledge" covenant only, such term shall not include any encumbrance
that may be deemed to arise solely as a result of entering into an agreement,
not in violation of the terms of the Indenture, to sell or otherwise transfer
assets or property.
The term "SHAREHOLDERS' EQUITY" means, with respect to any Person, at any date,
the aggregate of the Dollar amount of outstanding share capital, the amount,
without duplication, of any surplus, whether contributed or capital, and
retained earnings, subject to any currency translation adjustment, all as set
forth in such Person's most recent annual consolidated balance sheet.
The term "SIGNIFICANT SUBSIDIARY" means a Subsidiary that constitutes a
"significant subsidiary" as defined in Rule 1-02 of Regulation S-X of the
Exchange Act.
The term "SUBSIDIARY" means any corporation or other Person of which there are
owned, directly or indirectly, by or for Canadian Natural or by or for any
corporation or other Person in like relation to Canadian Natural, Voting Shares
or other interests which, in the aggregate, entitle the holders thereof to cast
more than 50 percent of the votes which may be cast by the holders of all
outstanding Voting Shares of such first mentioned corporation or other Person
for the election of its directors or, in the case of any Person which is not a
corporation, Persons having similar powers or (if there are no such persons)
entitle the holders thereof to more than 50 percent of the income or capital
interests (however called) thereon and includes any corporation in like relation
to a Subsidiary; provided, however, that such term will not include, for
purposes of the "Negative Pledge" covenant only, any Subsidiary if the assets of
the Subsidiary do not at the time exceed 2 percent of Consolidated Net Tangible
Assets.
The term "VOTING SHARES" means shares of capital stock of any class of a
corporation and other interests of any other Persons having under all
circumstances the right to vote for the election of the directors of such
corporation or in the case of any Person which is not a corporation, Persons
having similar powers or (if there are no such Persons) income or capital
interests (however called), provided that, for the purpose of this definition,
shares or other interests which only carry the right to vote conditionally on
the happening of an event shall not be considered Voting Shares whether or not
such event shall have happened.
EVENTS OF DEFAULT
The occurrence of any of the following events with respect to the debt
securities of any series will constitute an "Event of Default" with respect to
the debt securities of that series:
(a) default by Canadian Natural in payment of all or any part of
the principal of any of the debt securities of that series
when the same becomes due under any provision of the Indenture
or of those debt securities;
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(b) default by Canadian Natural in payment of any interest due on
any of the debt securities of that series, or Additional
Amounts on any of the debt securities of that series when they
become due and payable, and continuance of that default for a
period of 30 days;
(c) default by Canadian Natural in observing or performing any of
the covenants described below under "Consolidation, Merger,
Amalgamation and Sale of Assets";
(d) default by Canadian Natural in observing or performing any
other of its covenants or conditions contained in the
Indenture or in the debt securities of that series and
continuance of that default for a period of 60 days after
written notice as provided in the Indenture;
(e) default by Canadian Natural or any Subsidiary in payment of
the principal of, premium, if any, or interest on any
Indebtedness for borrowed money having an outstanding
principal amount in excess of the greater of $75 million and 2
percent of the Shareholders' Equity of Canadian Natural in the
aggregate at the time of default or default in the performance
of any other covenant of Canadian Natural or any Subsidiary
contained in any instrument under which that indebtedness is
created or issued and the holders thereof, or a trustee, if
any, for those holders, declare that indebtedness to be due
and payable prior to the stated maturities of that
indebtedness ("accelerated indebtedness"), and such
acceleration shall not be rescinded or annulled, or such
default under such instrument shall not be remedied or cured,
whether by payment or otherwise, or waived by the holders of
such indebtedness, provided that if such accelerated
indebtedness is the result of an event of default which is not
related to the failure to pay principal or interest on the
terms, at the times and on the conditions set forth in such
instrument, it will not be considered an Event of Default
under this clause (e) until 15 days after such acceleration;
(f) certain events of bankruptcy, insolvency, winding up,
liquidation or dissolution relating to Canadian Natural or any
Significant Subsidiary;
(g) the taking or entry of certain judgments or decrees against
Canadian Natural or any Subsidiary for the payment of money in
excess of the greater of $75 million and 2 percent of the
Shareholders' Equity of Canadian Natural in the aggregate, if
Canadian Natural or such Subsidiary, as the case may be, fails
to file an appeal or, if Canadian Natural or such Subsidiary,
as the case may be, does file an appeal, that judgment or
decree is not and does not remain vacated, discharged or
stayed as provided in the Indenture; or
(h) any other Event of Default provided with respect to debt
securities of that series. (Section 5.1)
If an Event of Default described in clause (a) or (b) above occurs and is
continuing with respect to debt securities of any series, unless the principal
of all of the debt securities of that series shall have already become due and
payable, the Trustee may, in its discretion, and shall upon request in writing
made by the Holders of not less than 25 percent in aggregate principal amount of
the debt securities of that series then Outstanding, declare the principal of
(and premium, if any, on) all the debt securities of that series then
Outstanding and the interest accrued thereon and all other money, if any, owing
under the provisions of the Indenture in respect of those debt securities to be
due and payable immediately on demand. If an Event of Default described in
clause (d) or (h) above occurs and is continuing with respect to the debt
securities of one or more series, unless the principal of all of the debt
securities of the affected series shall have already become due and payable, the
Trustee may, in its discretion, and shall upon request in writing made by the
Holders of not less than 25 percent in aggregate principal amount of the debt
securities of all such affected series then Outstanding (voting as one class),
declare the principal of (and premium, if any, on) all the debt securities of
all the affected series then Outstanding and the interest accrued thereon and
all other money, if any, owing under the provisions of the Indenture in respect
of those debt securities to be due and payable immediately on demand. If an
Event of Default described in clause (c), (e), (f) or (g) above occurs and is
continuing, unless the principal of all debt securities then Outstanding shall
have already become due and payable, the Trustee may, in its discretion, and
shall upon request in writing made by the Holders of not less than 25 percent in
aggregate principal amount of all the debt securities then Outstanding (voting
as one class), declare the principal of (and premium, if any, on) all the debt
securities then Outstanding and the interest accrued thereon and all other
18
money, if any, owing under the provisions of the Indenture in respect of those
debt securities to be due and payable immediately on demand. (Section 5.2)
Upon certain conditions, any declaration of this kind may be cancelled if all
Events of Default with respect to the debt securities of all those affected
series then Outstanding shall have been cured or waived as provided in the
Indenture by the Holders of not less than a majority in aggregate principal
amount of the debt securities of the affected series then Outstanding (voting as
one class, except in the case of Events of Default described in clauses (a) and
(b) of the first sentence of the preceding paragraph, as to which each series so
affected will vote as a separate class). See "Modification and Waiver" below.
Reference is made to the applicable prospectus supplement or supplements
relating to any series of Original Issue Discount Securities for the particular
provisions relating to the acceleration of a portion of the principal amount
thereof upon the occurrence and continuance of an Event of Default with respect
thereto. (Section 5.3)
The Indenture provides that the Trustee will be under no obligation to exercise
any of its rights or powers under the Indenture at the request or direction of
the Holders, unless those Holders shall have provided to the Trustee reasonable
indemnity. (Section 6.2) Subject to those provisions for indemnity and certain
other limitations contained in the Indenture, the Holders of a majority in
aggregate principal amount of the debt securities of all affected series then
Outstanding (voting as one class) will have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred on the Trustee, with respect to the
debt securities of those affected series. (Section 5.13)
The Indenture provides that no Holder of the debt securities of any series will
have any right to institute any proceeding with respect to the Indenture or for
any remedy thereunder, unless (a) that Holder shall have previously given to the
Trustee written notice of a continuing Event of Default with respect to the debt
securities of that series, (b) the Holders of not less than 25 percent in
aggregate principal amount of the debt securities of all affected series then
Outstanding (voting as one class) shall have made written request, and provided
reasonable indemnity, to the Trustee to institute that proceeding, (c) the
Trustee shall have failed to institute that proceeding within 60 days after that
notification, request and offer of indemnity and (d) the Trustee shall not have
received from the Holders of a majority in aggregate principal amount of the
debt securities of all affected series then Outstanding (voting as one class) a
direction inconsistent with that request during such 60 day period. (Section
5.8) However, the Holder of any Security will have an absolute right to receive
payment of the principal of and any premium and interest on that Security on or
after the due dates expressed in that Security and to institute suit for the
enforcement of any of these payments. (Section 5.9) The Indenture requires
Canadian Natural to furnish to the Trustee annually an Officers' Certificate as
to the compliance by Canadian Natural with certain covenants, conditions or
other requirements contained in the Indenture and as to any non-compliance
therewith. (Section 9.2)
The Indenture provides that the Trustee may withhold notice to the Holders of
the debt securities of one or more series of any default affecting those series
(except defaults as to payment of principal or interest) if it, in good faith,
considers that withholding to be in the best interests of the Holders of the
debt securities of those series. (Section 6.14)
CONSOLIDATION, MERGER, AMALGAMATION AND SALE OF ASSETS
Canadian Natural shall not enter into any transaction (whether by way of
reorganization, reconstruction, consolidation, amalgamation, merger, lease,
transfer, sale or otherwise) whereby all or substantially all of its assets
would become the property of any other Person (the "Successor Corporation")
unless (a) the Successor Corporation shall, prior to or contemporaneously with
the consummation of that transaction, execute those instruments, which may
include a supplemental indenture, and do those things as shall be necessary or
advisable to establish that upon the consummation of that transaction (i) the
Successor Corporation will have assumed all of the covenants and obligations of
Canadian Natural under the Indenture in respect of the debt securities of every
series, and (ii) the debt securities of every series will be valid and binding
obligations of the Successor Corporation entitling the Holders thereof, as
against the Successor Corporation, to all the rights of Holders of debt
securities under the Indenture; (b) the Successor Corporation is a corporation,
partnership, or trust organized and validly existing under the laws of Canada or
any province thereof or of the United States, any state thereof or the District
of Columbia, (c) Canadian Natural has delivered to the Trustee, within 60 days
thereof, an Officer's Certificate and an Opinion of Counsel each stating that
such transaction and such supplemental indenture comply with this covenant and
all conditions
19
precedent to Section 7.1 relating to such transaction have been complied with,
and (d) immediately before and after giving effect to such transaction, no Event
of Default, and no event which, after notice or lapse of time or both, would
become an Event of Default, shall have occurred and be continuing. (Section 7.1)
ADDITIONAL AMOUNTS
Unless otherwise specified in the applicable prospectus supplement, all payments
made by Canadian Natural under or with respect to the debt securities will be
made free and clear of and without withholding or deduction for or on account of
any present or future tax, duty, levy, impost, assessment or other governmental
charge (including penalties, interest and other liabilities related thereto)
imposed or levied by or on behalf of the Government of Canada or of any province
or territory thereof or by any authority or agency therein or thereof having
power to tax (hereinafter "Canadian Taxes"), unless Canadian Natural is required
to withhold or deduct Canadian Taxes by law or by the interpretation or
administration thereof. If Canadian Natural is so required to withhold or deduct
any amount for or on account of Canadian Taxes from any payment made under or
with respect to the debt securities, Canadian Natural will pay to each Holder as
additional interest such additional amounts ("Additional Amounts") as may be
necessary so that the net amount received by each Holder after such withholding
or deduction (and after deducting any Canadian Taxes on such Additional Amounts)
will not be less than the amount the Holder would have received if such Canadian
Taxes had not been withheld or deducted. However, no Additional Amounts will be
payable with respect to a payment made to a Holder (such Holder, an "Excluded
Holder") in respect of the beneficial owner thereof:
(i) with which Canadian Natural does not deal at arm's
length (within the meaning of the INCOME TAX ACT
(Canada)) at the time of making such payment;
(ii) which is subject to such Canadian Taxes by reason of
the Holder being a resident, domicile or national of,
or engaged in business or maintaining a permanent
establishment or other physical presence in or
otherwise having some connection with Canada or any
province or territory thereof otherwise than by the
mere holding of debt securities or the receipt of
payments thereunder; or
(iii) which is subject to such Canadian Taxes by reason of
the Holder's failure to comply with any
certification, identification, information,
documentation or other reporting requirements if
compliance is required by law, regulation,
administrative practice or an applicable treaty as a
precondition to exemption from, or a reduction in the
rate of deduction or withholding of, such Canadian
Taxes.
Canadian Natural will also:
(i) make such withholding or deduction; and
(ii) remit the full amount deducted or withheld to the
relevant authority in accordance with applicable law.
Canadian Natural will furnish to the Holders of the debt securities, within 60
days after the date the payment of any Canadian Taxes is due pursuant to
applicable law, certified copies of tax receipts or other documents evidencing
such payment by Canadian Natural.
Canadian Natural will indemnify and hold harmless each Holder (other than an
Excluded Holder) and upon written request reimburse each such Holder for the
amount of:
(i) any Canadian Taxes so levied or imposed and paid by
such Holder as a result of payments made under or
with respect to the debt securities;
(ii) any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto;
and
20
(iii) any Canadian Taxes imposed with respect to any
reimbursement under clause (i) or (ii) above, but
excluding any such Canadian Taxes on such Holder's
net income.
Wherever in the Indenture there is mentioned, in any context, the payment of
principal (and premium, if any), interest or any other amount payable under or
with respect to a Security, such mention shall be deemed to include mention of
the payment of Additional Amounts to the extent that, in such context,
Additional Amounts are, were or would be payable in respect thereof. (Section
9.8)
TAX REDEMPTION
The debt securities will be subject to redemption in whole, but not in part, at
the option of Canadian Natural, at any time, on not less than 30 nor more than
60 days prior written notice, at 100 percent of the principal amount, together
with accrued interest thereon to the redemption date, in the event that we have
become or would become obligated to pay, on the next date on which any amount
would be payable with respect to the debt securities, any Additional Amounts as
a result of an amendment to or change in the laws (including any regulations
promulgated thereunder) of Canada (or any political subdivision or taxing
authority thereof or therein), or any amendment to or change in any official
position regarding the application or interpretation of such laws or
regulations, which change is announced or becomes effective on or after the date
of this prospectus. (Section 10.8)
MODIFICATION AND WAIVER
The Indenture permits Canadian Natural and the Trustee to enter into
supplemental indentures without the consent of the Holders of the debt
securities to, among other things: (a) secure the debt securities of one or more
series, (b) evidence the assumption by the Successor Corporation of Canadian
Natural's covenants and obligations under the Indenture and the debt securities
then Outstanding, (c) add covenants or Events of Default for the benefit of the
Holders of one or more series of the debt securities, (d) cure any ambiguity or
correct or supplement any defective provision in the Indenture which correction
will not be prejudicial to the interests of the Holders of the debt securities,
(e) establish the form and terms of the debt securities of any series, (f)
evidence the acceptance of appointment by a successor Trustee, (g) to comply
with any requirements of the SEC in order to effect and maintain the
qualification of the Indenture under the Trust Indenture Act of 1939, as
amended, (h) to supplement any of the provisions of the Indenture to the extent
necessary to permit or facilitate defeasance and discharge of any series of debt
securities, provided, however, such action shall not adversely affect the
interests of the Holders of any debt securities in any material respect, and (i)
make any other modifications which will not be prejudicial to the interests of
the Holders of the debt securities. (Section 8.1)
The Indenture also permits Canadian Natural and the Trustee, with the consent of
the Holders of a majority in aggregate principal amount of the debt securities
of each series then Outstanding and affected (voting as one class), to add any
provisions to, or change in any manner or eliminate any of the provisions of,
the Indenture or modify in any manner the rights of the Holders of the debt
securities of each such affected series; provided, however, that Canadian
Natural and the Trustee may not, among other things, without the consent of the
Holder of each Security then Outstanding and affected thereby: (a) change the
Stated Maturity of the principal amount of, or any installment of the principal
of or the interest on, that Security, (b) reduce the principal amount of or the
rate of interest on or any premium payable upon the redemption of that Security,
(c) reduce the amount of principal of an Original Issue Discount Security
payable upon acceleration of the Maturity thereof, (d) change the place or
currency of payment of the principal of or any premium or interest on that
Security, (e) impair the right to institute suit for the enforcement of payment
of this kind with respect to that Security on or after the Stated Maturity
thereof, (f) reduce the percentage in principal amount of the Outstanding
Securities of the affected series, the consent of whose Holders is required for
modification or amendment of the Indenture, or for any waiver with respect to
defaults, breaches, Events of Default or declarations of acceleration, (g)
change the time at which any Security may or shall be redeemable or repayable,
(h) change any obligation of Canadian Natural to pay additional amounts provided
for pursuant to Section 3.1, with certain exceptions, or (i) modify any
provisions of the Indenture relating to modifying or amending the Indenture or
the waiving of past defaults or covenants except as otherwise specified in the
Indenture. (Section 8.2)
Prior to the acceleration of the Maturity of any debt securities, the Holders of
a majority in aggregate principal amount of the debt securities of all series at
the time Outstanding with respect to which a default or breach or an Event of
Default shall have occurred and be continuing (voting as one class) may on
behalf of the Holders of all
21
such affected debt securities waive any past default or breach or Event of
Default and its consequences, except a default in the payment of the principal
of or premium or interest on any Security of any series or an Event of Default
in respect of a covenant or provision of the Indenture or of any Security which
cannot be modified or amended without the consent of the Holder of each Security
affected. (Section 5.14)
DEFEASANCE AND COVENANT DEFEASANCE
Unless otherwise specified in the applicable prospectus supplement, the
Indenture provides that, at the option of Canadian Natural, Canadian Natural
will be discharged from any and all obligations with respect to the debt
securities of any series (except for certain obligations to register the
transfer or exchange of the debt securities of that series, to replace
mutilated, destroyed, lost or stolen debt securities of that series, to maintain
paying agencies, to compensate and indemnify the Trustee and to maintain the
trust and payments under the trust described below and the defeasance provisions
of the Indenture) (hereinafter called a "defeasance") upon the irrevocable
deposit with the Trustee, in trust, of money, and/or Government Obligations
which, through the payment of the principal thereof and the interest thereon in
accordance with their terms, will provide money, in an amount sufficient, in the
opinion of a nationally recognized firm of independent chartered accountants, to
pay all the principal of and any premium and interest on the debt securities of
that series on the Stated Maturity of those payments in accordance with the
terms of the debt securities of that series. (Sections 12.2 and 12.4) Such a
defeasance may be effected only if, among other things, (i) Canadian Natural has
delivered to the Trustee an Opinion of Counsel in the United States (who may be
counsel for Canadian Natural) stating that Canadian Natural has received from,
or there has been published by, the Internal Revenue Service a ruling, since the
date of the Indenture, or there has been a change in the applicable laws or
regulations, in either case to the effect that the Holders of the debt
securities of that series will not recognize income, gain or loss for United
States federal income tax purposes as a result of that defeasance and will be
subject to United States federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if that defeasance had
not occurred, and (ii) Canadian Natural has delivered to the Trustee an Opinion
of Counsel in Canada (who may be counsel for Canadian Natural) or a ruling from
the Canada Customs and Revenue Agency to the effect that the Holders of the debt
securities of that series will not recognize income, gain or loss for Canadian
federal or provincial income or other Canadian tax purposes as a result of that
defeasance and will be subject to Canadian federal or provincial income and
other Canadian tax (including withholding tax) on the same amounts, in the same
manner and at the same times as would have been the case if that defeasance had
not occurred (and for the purposes of such opinion, such Canadian counsel shall
assume that Holders of the debt securities include holders who are not resident
in Canada). (Section 12.4) In addition, Canadian Natural may also obtain a
discharge of the Indenture with respect to the debt securities of all series
issued under the Indenture by depositing with the Trustee, in trust, an amount
of money and government securities as shall be sufficient to pay, at Stated
Maturity or upon redemption, all of those debt securities, provided that those
debt securities are by their terms to become due and payable within one year or
are to be called for redemption within one year.
(Section 4.1)
The Indenture also provides that Canadian Natural may omit to comply with the
restrictive covenants described under the caption "Negative Pledge" and certain
other covenants and no Event of Default shall arise with respect to the debt
securities of that series by reason of this failure to comply (hereinafter
called a "covenant defeasance"), upon the irrevocable deposit with the Trustee,
in trust, of money and/or Government Obligations which, through the payment of
the principal thereof and the interest thereon in accordance with their terms,
will provide money, in an amount sufficient, in the opinion of a nationally
recognized firm of independent chartered accountants, to pay all the principal
of and any premium and interest on the debt securities of that series on the
Stated Maturity of those payments in accordance with the terms of the debt
securities of that series. (Sections 12.3 and 12.4) Canadian Natural's other
obligations with respect to the debt securities of that series would remain in
full force and effect. A covenant defeasance may be effected only if, among
other things, (i) Canadian Natural has delivered to the Trustee an Opinion of
Counsel in the United States (who may be counsel for Canadian Natural) to the
effect that the Holders of debt securities of that series will not recognize
income, gain or loss for United States federal income tax purposes as a result
of the covenant defeasance and will be subject to United States federal income
tax on the same amounts, in the same manner and at the same times as would have
been the case if that covenant defeasance had not occurred, and (ii) Canadian
Natural has delivered to the Trustee an Opinion of Counsel in Canada (who may be
counsel for Canadian Natural) or a ruling from the Canada Customs and Revenue
Agency to the effect that the Holders of the debt securities of that series will
not recognize income, gain or loss for Canadian federal or provincial income or
other Canadian tax purposes as a result of that covenant defeasance and will be
subject to Canadian federal or provincial income and other Canadian tax
(including withholding tax) on the same amounts, in the same manner and
22
at the same times as would have been the case if that covenant defeasance had
not occurred (and for the purposes of such opinion, such Canadian counsel shall
assume that Holders of the debt securities include holders who are not resident
in Canada). (Section 12.4)
In the event that Canadian Natural exercises its option to effect a covenant
defeasance with respect to the debt securities of any series and the debt
securities of that series are thereafter declared due and payable because of the
occurrence of another Event of Default, the amount of money and securities on
deposit with the Trustee would be sufficient, in the opinion of a nationally
recognized firm of independent chartered accountants, to pay the amounts due on
the debt securities of that series at their respective Stated Maturities, but
may not be sufficient, in the opinion of a nationally recognized firm of
independent chartered accountants, to pay the amounts due on the debt securities
of that series at the time of the acceleration resulting from that Event of
Default. However, Canadian Natural would remain liable for this deficiency.
PROVISION OF FINANCIAL INFORMATION
We will file with the Trustee, within 15 days after we file them with the SEC,
copies of our annual report and other information (or copies of such portions of
any of the foregoing as the SEC may by rules and regulations prescribe) which we
are required to file with the SEC pursuant to Section 13 or 15(d) of the
Exchange Act. Notwithstanding that we may not be required to remain subject to
the reporting requirements of Section 13 or 15(d) of the Exchange Act or
otherwise report on an annual and quarterly basis on forms provided for such
annual and quarterly reporting pursuant to rules and regulations promulgated by
the SEC, we will continue to provide the Trustee (i) within 140 days after the
end of each fiscal year, the information required to be contained in annual
reports on Form 20-F or Form 40-F as applicable (or any successor form) and (ii)
within 60 days after the end of each of the first three fiscal quarters of each
fiscal year, the information required to be contained in reports on Form 6-K (or
any successor form), which, regardless of applicable requirements shall, at a
minimum, consist of such information required to be provided in quarterly and
annual reports under the laws of Canada or any province thereof to security
holders of a corporation with securities listed on the TSX Inc., whether nor not
we have any or our securities listed on such exchange. Such information will be
prepared in accordance with Canadian disclosure requirements and Canadian GAAP.
(Section 9.3)
RESIGNATION OF TRUSTEE
The Trustee may resign or be removed with respect to one or more series of debt
securities and a successor Trustee may be appointed to act with respect to such
series. (Section 6.10) In the event that two or more persons are acting as
Trustee with respect to different series of debt securities, each such Trustee
shall be a Trustee of a trust under the Indenture separate and apart from the
trust administered by any other such Trustee (Section 6.11), and any action
described herein to be taken by the "Trustee" may then be taken by each such
Trustee with respect to, and only with respect to, the one or more series of
debt securities for which it is Trustee.
PAYMENT AND PAYING AGENTS
Unless otherwise provided in the applicable prospectus supplement, principal,
premium, if any, and interest, if any, on debt securities will be payable at an
office or agency of the Trustee in New York, New York, except that at our option
interest, if any, may be paid (i) by check mailed to the address of the Person
entitled thereto as such address shall appear in the Security Register or (ii)
by wire transfer to an account located in the United States maintained by the
Person entitled thereto as specified in the Security Register. Unless otherwise
provided in the applicable prospectus supplement, payment of any instalment of
interest on debt securities will be made to the Person in whose name such debt
security is registered at the close of business on the Regular Record Date for
such interest. (Section 3.7)
Any Paying Agents outside the United States and any other Paying Agents in the
United States initially designated by us for the debt securities will be named
in the applicable prospectus supplement. We may at any time designate additional
Paying Agents or rescind the designation of any Paying Agent or approve a change
in the office through which any Paying Agent acts, except that we will be
required to maintain a Paying Agent in each Place of Payment for such series.
23
CONSENT TO SERVICE AND JURISDICTION
We have designated CT Corporation System, 111-8th Avenue, 13th Floor, New York,
New York 10011 as our authorized agent for service of process in the United
States in any action, suit or proceeding arising out of or relating to the
Indenture or the debt securities. Any such action may be brought in any Federal
court (or, if such court refuses to take jurisdiction, in any New York state
court) located in the Borough of Manhattan in The City of New York, or brought
under United States federal or state securities laws or brought by the Trustee,
and that Canadian Natural has irrevocably submitted to the jurisdiction of such
courts. (Section 1.18)
GOVERNING LAW
The Indenture and the debt securities will be governed by and construed in
accordance with the laws of the State of New York. (Section 1.12)
ENFORCEABILITY OF JUDGMENTS
Since a significant portion of all of our assets, as well as the assets of a
number of our directors and officers, are outside the United States, any
judgment obtained in the United States against us or certain of our directors or
officers, including judgments with respect to the payment of principal on any
debt securities, may not be collectible within the United States.
We have been informed by Parlee McLaws LLP that the laws of the Province of
Alberta and the federal laws of Canada applicable therein permit an action to be
brought in a court of competent jurisdiction in the Province of Alberta on any
final and conclusive judgment in PERSONAM of any federal or state court located
in the State of New York (a "New York Court") against us, which judgment is
subsisting and unsatisfied for a sum certain with respect to enforceability of
the Indenture and the debt securities that is not impeachable as void or
voidable under the internal laws of the State of New York if (i) the New York
Court rendering such judgment had jurisdiction over the judgment debtor, as
recognized by the courts of the Province of Alberta (and submission by us in the
Indenture to the jurisdiction of the New York Court will be sufficient for that
purpose with respect to the debt securities), (ii) the judgment debtor was
properly served in connection with any action leading to such judgment, (iii)
such judgment was not obtained by fraud or in a manner contrary to natural
justice and the enforcement thereof would not be inconsistent with public
policy, as such terms are understood under the laws of the Province of Alberta
and enforcement thereof will not be contrary to any order made by the Attorney
General of Canada under the FOREIGN EXTRATERRITORIAL MEASURES ACT (Canada) or by
the Competition Tribunal under the COMPETITION ACT (Canada), (iv) the
enforcement of such judgment would not be contrary to the laws of general
application limiting the enforcement of creditors' rights including any other
rule of law, whether equitable, legal or statutory, bankruptcy, reorganization,
winding up, moratorium and similar laws and does not constitute, directly or
indirectly, the enforcement of foreign revenue, expropriatory or penal laws in
the Province of Alberta, (v) no new admissible evidence relevant to the action
is discovered prior to the rendering of judgment by the court in the Province of
Alberta, (vi) interest payable on the debt securities is not characterized by a
court in the Province of Alberta as interest payable at a criminal rate within
the meaning of section 347 of the CRIMINAL CODE (Canada) and (vii) the action to
enforce such judgment is commenced within the appropriate limitation periods,
except that any court in the Province of Alberta may only give judgment in
Canadian dollars. We have been advised by such counsel that there is doubt as to
the enforceability in Canada in original actions, or in motions to enforce
judgments of United States courts, of civil liabilities predicated solely upon
United States federal securities laws.
CERTAIN INCOME TAX CONSIDERATIONS
The applicable prospectus supplement will describe the material Canadian federal
income tax consequences to an investor who is a citizen or resident of the
United States purchasing the debt securities, including whether payments of
principal, premium, if any, and interest will be subject to Canadian
non-resident withholding tax.
The applicable prospectus supplement will also describe certain United States
federal income tax consequences of the purchase, ownership and disposition of
the debt securities by an investor who is a United States person (as defined in
the applicable prospectus supplement), including, to the extent applicable,
certain relevant United States
24
federal income tax rules pertaining to capital gains and ordinary income
treatment, original issue discount, backup withholding and the foreign tax
credit, and any consequences relating to debt securities payable in a currency
other than U.S. dollars, issued at an original discount for United States
federal income tax purposes or containing early redemption provisions or other
special terms.
RISK FACTORS
PROSPECTIVE PURCHASERS OF THE DEBT SECURITIES SHOULD CONSIDER CAREFULLY THE RISK
FACTORS SET FORTH BELOW AS WELL AS THE OTHER INFORMATION CONTAINED IN AND
INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND IN THE PROSPECTUS SUPPLEMENT
BEFORE PURCHASING THE DEBT SECURITIES IN THIS OFFERING.
A SUBSTANTIAL OR EXTENDED DECLINE IN OIL AND GAS PRICES COULD HAVE A MATERIAL
ADVERSE EFFECT ON US.
Our financial condition will be substantially dependent on, and highly sensitive
to, the prevailing prices of crude oil and natural gas. Fluctuations in crude
oil or natural gas prices could have a material adverse effect on our operations
and financial condition and the value and amount of our reserves. Prices for
crude oil and natural gas fluctuate in response to changes in the supply of and
demand for, crude oil and natural gas, market uncertainty and a variety of
additional factors beyond our control. Oil prices are determined by
international supply and demand. Factors which affect crude oil prices include
the actions of the Organization of Petroleum Exporting Countries, the condition
of the Canadian, United States and Asian economies, government regulation,
political stability in the Middle East and elsewhere, the foreign supply of oil,
the price of foreign imports, the availability of alternate fuel sources and
weather conditions. Natural gas prices realized by us will be affected primarily
in North America by supply and demand, weather conditions and prices of
alternate sources of energy. Any substantial or extended decline in the prices
of crude oil or natural gas could result in a delay or cancellation of existing
or future drilling, development or construction programs or curtailment in
production at some properties or resulting unutilized long-term transportation
commitments, all of which could have a material adverse effect on our revenues,
profitability and cash flows.
We conduct an annual assessment of the carrying value of our assets in
accordance with Canadian generally accepted accounting principles. If oil and
natural gas prices decline, the carrying value of our assets could be subject to
downward revisions, and our earnings could be adversely affected.
Approximately 23 percent of our 2002 production on a Boe basis was heavy oil.
The market prices for heavy oil differ from the established market indices for
light and medium grades of oil, due principally to the higher transportation and
refining costs associated with heavy oil. As a result, the price received for
heavy oil is generally lower than the price for medium and light oil, and the
production costs associated with heavy oil are relatively higher than for
lighter grades. Future differentials are uncertain and any increase in the heavy
oil differentials could have a material adverse effect on our business.
OUR BUSINESS IS SUBJECT TO ENVIRONMENTAL LEGISLATION IN ALL JURISDICTIONS IN
WHICH WE OPERATE AND ANY CHANGES IN SUCH LEGISLATION COULD NEGATIVELY AFFECT OUR
RESULTS OF OPERATIONS.
All phases of the oil and natural gas business are subject to environmental
regulation pursuant to a variety of Canadian, United States, United Kingdom,
European Union and other federal, provincial, state and municipal laws and
regulations, as well as international conventions (collectively, "environmental
legislation").
Environmental legislation imposes, among other things, restrictions, liabilities
and obligations in connection with the generation, handling, storage,
transportation, treatment and disposal of hazardous substances and waste and in
connection with spills, releases and emissions of various substances to the
environment. Environmental legislation also requires that wells, facility sites
and other properties associated with our operations be operated, maintained,
abandoned and reclaimed to the satisfaction of applicable regulatory
authorities. In addition, certain types of operations, including exploration and
development projects and significant changes to certain existing projects, may
require the submission and approval of environmental impact assessments or
permit applications. Compliance with environmental legislation can require
significant expenditures and failure to comply with environmental legislation
25
may result in the imposition of fines and penalties. The costs of complying with
environmental legislation in the future may have a material adverse effect on
our financial condition or results of operations.
We anticipate that changes in environmental legislation may require, among other
things, reductions in emissions to the air from our operations which may result
in increased capital expenditures. Future changes in environmental legislation
could occur and result in stricter standards and enforcement, larger fines and
liability, and increased capital expenditures and operating costs, which could
have a material adverse effect on our financial condition or results of
operations.
IF WE FAIL TO ACQUIRE OR FIND ADDITIONAL RESERVES, OUR RESERVES AND PRODUCTION
WILL DECLINE MATERIALLY FROM CURRENT LEVELS.
Our future oil and natural gas reserves and production, and therefore our cash
flows and results of operations, are highly dependent upon our success in
exploiting our current reserve base and acquiring or discovering additional
reserves. Without additions to our reserves through exploration, acquisition or
development activities, our reserves and production will decline over time as
reserves are depleted. The business of exploring for, developing or acquiring
reserves is capital intensive. To the extent our cash flows from operations are
insufficient to fund our capital expenditures and external sources of capital
become limited or unavailable, our ability to make the necessary capital
investments to maintain and expand our oil and natural gas reserves will be
impaired. In addition, we may be unable to find and develop or acquire
additional reserves to replace our oil and natural gas production at acceptable
costs.
WE OPERATE IN A HIGHLY COMPETITIVE INDUSTRY.
The energy industry is highly competitive in all aspects, including the
exploration for, and the development of, new sources of supply, the construction
and operation of crude oil and natural gas pipelines and facilities, the
acquisition of oil and natural gas interests and the transportation and
marketing of crude oil, natural gas, natural gas liquids and electricity. We
will compete not only among participants in the energy industry, but also
between petroleum products and other energy sources. Our competitors will
include integrated oil and natural gas companies and numerous other senior oil
and natural gas companies, some of which may have greater financial and other
resources than us.
WE ARE SUBJECT TO A NUMBER OF BUSINESS RISKS THAT COULD AFFECT OUR RESULTS OF
OPERATIONS.
Other business risks include operational risks, the cost of capital available to
fund exploration and development programs, regulatory issues and taxation and
the requirements of new environmental laws and regulations. Exploring for,
producing and transporting petroleum substances involves many risks, which even
a combination of experience, knowledge and careful evaluation may not be able to
overcome. These activities are subject to a number of hazards which may result
in fires, explosions, spills, blow-outs or other unexpected or dangerous
conditions causing personal injury, property damage, environmental damage and
interruption of operations. Our liability, property and business interruption
insurance may not provide adequate coverage in certain unforeseen circumstances.
OUR OWNERSHIP INTERESTS IN FOREIGN OIL AND NATURAL GAS PROPERTIES INVOLVE A
NUMBER OF RISKS AND COULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS.
Our foreign investments involve risks typically associated with investments in
developing countries such as uncertain political, economic, legal and tax
environments. These risks may include, among other things, currency restrictions
and exchange rate fluctuations, loss of revenue, property and equipment as a
result of hazards such as expropriation, nationalization, war, insurrection and
other political risks, risks of increases in taxes and governmental royalties,
renegotiation of contracts with governmental entities and quasi-governmental
agencies, changes in laws and policies governing operations of foreign-based
companies and other uncertainties arising out of foreign government sovereignty
over our international operations. In addition, if a dispute arises in our
foreign operations, we may be subject to the exclusive jurisdiction of foreign
courts or may not be successful in subjecting foreign persons to the
jurisdiction of a court in the United States or Canada.
26
Our private ownership of oil and natural gas properties in Canada differs
distinctly from our ownership interests in foreign oil and natural gas
properties. In some foreign countries in which we do and may do business in the
future, the state generally retains ownership of the minerals and consequently
retains control of, and in many cases participates in, the exploration and
production of reserves. Accordingly, operations outside of Canada may be
materially affected by host governments through royalty payments, export taxes
and regulations, surcharges, value added taxes, production bonuses and other
charges. In addition, changes in prices and costs of operations, timing of
production and other factors may affect estimates of oil and natural gas reserve
quantities and future net cash flows attributable to foreign properties in a
manner materially different than such changes would affect estimates for
Canadian properties. Agreements covering foreign oil and natural gas operations
also frequently contain provisions obligating us to spend specified amounts on
exploration and development or to perform certain operations, or forfeit all or
a portion of the acreage subject to the contract.
OUR OIL AND NATURAL GAS RESERVE DATA AND FUTURE NET REVENUE ESTIMATES ARE
UNCERTAIN.
There are numerous uncertainties inherent in estimating quantities of reserves,
including many factors beyond our control. The reserve information set forth and
incorporated by reference in this prospectus is our estimate. In general,
estimates of economically recoverable oil and natural gas reserves and the
future net cash flow therefrom are based upon a number of factors and
assumptions made as of the date on which the reserve estimates were determined,
such as geological and engineering estimates which have inherent uncertainties,
the assumed effects of regulation by governmental agencies and estimates of
future commodity prices and operating costs, all of which may vary considerably
from actual results. All such estimates are, to some degree, uncertain and
classifications of reserves are only attempts to define the degree of
uncertainty involved. For these reasons, estimates of the economically
recoverable oil and natural gas reserves attributable to any particular group of
properties, the classification of such reserves based on risk of recovery and
estimates of future net revenues expected therefrom, prepared by different
engineers or by the same engineers at different times, may vary substantially.
Our actual production, revenues, taxes and development, abandonment and
operating expenditures with respect to its reserves will likely vary from such
estimates, and such variances could be material.
Estimates with respect to reserves that may be developed and produced in the
future are often based upon volumetric calculations and upon analogy to similar
types of reserves, rather than upon actual production history. Estimates based
on these methods generally are less reliable than those based on actual
production history. Subsequent evaluation of the same reserves based upon
production history will result in variations, which may be material, in the
estimated reserves.
THERE ARE DIFFERENCES IN UNITED STATES AND CANADIAN PRACTICES FOR REPORTING
RESERVES AND PRODUCTION.
We report our production and reserve quantities in accordance with Canadian
practices. These practices are different than the practices used to report
production and reserve estimates in reports and other materials filed with the
SEC by United States companies. The primary differences are summarized below:
o we follow the Canadian practice of reporting gross production
and reserve volumes, which are prior to the deduction of
royalties and similar payments. In the United States, net
production and reserve volumes are reported after deduction of
these amounts.
o we follow the Canadian practice of using escalating prices and
costs when we estimate the quantities of our reserves. In the
United States, reserve estimates are calculated using prices
and costs held constant at amounts in effect at the date of
the reserve report.
o we incorporate in this prospectus filings made with Canadian
securities authorities that include estimates of probable
reserves. The SEC prohibits the inclusion of estimates of
probable reserves in filings made with the SEC.
As a consequence, our production volumes and reserve estimates may not be
comparable to those made by United States companies subject to SEC reporting and
disclosure requirements.
27
THE DEBT SECURITIES WILL BE STRUCTURALLY SUBORDINATED TO ANY INDEBTEDNESS OF OUR
SUBSIDIARIES.
We carry on our business through corporate and partnership subsidiaries. The
majority of our assets are held in one or more corporate or partnership
subsidiaries. Our results of operations and ability to service indebtedness,
including the debt securities, are dependent upon the results of operations of
these subsidiaries and the payment of funds by these subsidiaries to us in the
form of loans, dividends or otherwise. In the event of the liquidation of any
corporate or partnership subsidiary, the assets of the subsidiary would be used
first to repay the indebtedness of the subsidiary, including trade payables or
obligations under any guarantees, prior to being used by us to pay our
indebtedness, including any debt securities. Such indebtedness and any other
future indebtedness of our subsidiaries would be structurally senior to the debt
securities. The Indenture pursuant to which the debt securities will be issued
does not limit our ability or the ability of our subsidiaries to incur
additional unsecured indebtedness. See "Description of Debt Securities--Ranking
and Other Indebtedness".
PLAN OF DISTRIBUTION
We may sell the debt securities to or through underwriters or dealers or to one
or more other purchasers directly or through agents.
The applicable prospectus supplement will describe the terms of the offering,
including the name or names of any underwriters or agents, the purchase price or
prices of the debt securities to be offered, the proceeds to us from the sale of
the debt securities to be offered, any initial public offering price, any
underwriting discount or commission and any discounts, concessions or
commissions allowed or reallowed or paid by any underwriter to other dealers.
Any initial public offering price and any discounts, concessions or commissions
allowed or reallowed or paid to dealers may be changed from time to time.
The debt securities may be sold from time to time in one or more transactions at
a fixed price or fixed prices, which may be changed, or at market prices
prevailing at the time of sale, at prices related to these prevailing market
prices or at negotiated prices.
If indicated in the applicable prospectus supplement, we may authorize dealers
or other persons acting as our agents to solicit offers by certain institutions
to purchase the debt securities directly from us pursuant to contracts providing
for payment and delivery on a future date. These contracts will be subject only
to the conditions described in the applicable prospectus supplement or
supplements, which will also describe the commission payable for solicitation of
these contracts.
We may enter into agreements to indemnify underwriters, dealers and agents who
participate in the distribution of the debt securities against certain
liabilities, including liabilities under the U.S. Securities Act of 1933, as
amended, or to contribution with respect to payments which the underwriters,
dealers or agents may be required to make in respect of these liabilities. The
underwriters, dealers and agents with whom we enter into agreements may be
customers of, engage in transactions with or perform services for us in the
ordinary course of business.
The debt securities will not be qualified for sale under the securities laws of
any province or territory of Canada and may not be offered, sold or delivered,
directly or indirectly, in Canada or to any resident of Canada in contravention
of the securities laws of any province or territory of Canada. Each underwriter
and each dealer participating in the distribution of debt securities will agree
that it will not, directly or indirectly, offer, sell or deliver any such debt
securities purchased by it in connection with that distribution in Canada or to
any resident of Canada in contravention of the securities laws of any province
or territory of Canada.
Each series of the debt securities will be a new issue of securities with no
established trading market. Unless otherwise specified in an applicable
prospectus supplement relating to a series of debt securities, the debt
securities will not be listed on any securities exchange or on any automated
dealer quotation system. Some broker-dealers may make a market in the debt
securities, but they will not be obligated to do so and may discontinue any
market-making activities at any time without notice. We cannot assure you that
there will be liquidity in the trading market for the debt securities of any
series or that an active public market for the debt securities of any series
will
28
develop. If an active public trading market for the debt securities of any
series does not develop, the market price and liquidity of the series of debt
securities may be adversely affected.
LEGAL MATTERS
Unless otherwise specified in the applicable prospectus supplement relating to a
series of debt securities, the validity of the debt securities will be passed
upon for us by Parlee McLaws LLP, Calgary, Alberta, and by Paul, Weiss, Rifkind,
Wharton & Garrison LLP, New York, New York. As to all matters of Canadian
federal and Alberta law, Paul, Weiss, Rifkind, Wharton & Garrison LLP may rely
upon the opinion of Parlee McLaws LLP. As to all matters of U.S. federal and New
York law, Parlee McLaws LLP may rely upon the opinion of Paul, Weiss, Rifkind,
Wharton & Garrison LLP.
The partners and associates of Parlee McLaws LLP and Paul, Weiss, Rifkind,
Wharton & Garrison LLP as a group beneficially own, directly or indirectly, less
than one percent of our outstanding securities.
EXPERTS
Our consolidated balance sheets as at December 31, 2002 and 2001 and the
consolidated statements of earnings, retained earnings and cash flows for each
of the years in the three year period ended December 31, 2002 have been audited
by PricewaterhouseCoopers LLP, Chartered Accountants, Calgary, Alberta as stated
in their report incorporated by reference in this prospectus. The consolidated
balance sheets of Rio Alto Exploration Ltd. as at December 31, 2001 and 2000 and
the consolidated statements of income, retained earnings and cash flow for the
years ended December 31, 2001 and 2000 have been audited by
PricewaterhouseCoopers LLP, Chartered Accountants, Calgary, Alberta as stated in
their report incorporated by reference in this prospectus.
The information relating to our proved and probable reserves incorporated by
reference in this prospectus has been compiled by us based on a report prepared
by independent petroleum engineering consultants retained by us as to 89 percent
of our reserves and our own evaluation. A report estimating our proved and
probable reserves was obtained from Sproule Associates Limited. The report dated
February 12, 2003 was made for the year ended December 31, 2002.
We are advised that, as of the date hereof, none of the directors and officers
of Sproule Associates Limited beneficially own, directly or indirectly, any of
our outstanding securities.
DOCUMENTS FILED AS PART OF THE REGISTRATION STATEMENT
The following documents have been filed with the SEC as part of the registration
statement of which this prospectus is a part insofar as required by the SEC's
Form F-9:
o the documents listed in the second paragraph under "Where You
Can Find More Information" in this prospectus to the extent
not previously filed with the SEC;
o the consents of our accountants PricewaterhouseCoopers LLP and
the accountants of Rio Alto Exploration Ltd.,
PricewaterhouseCoopers LLP;
o the consent of our counsel Parlee McLaws LLP;
o the consent of our independent petroleum consultants Sproule
Associates Limited;
o powers of attorney from directors and officers of Canadian
Natural;
o the trust indenture relating to the debt securities;
o statement of eligibility of the trustee on Form T-1;
29
o interest coverage ratios; and
o the appointment of agent for service of process and
undertaking on Form F-X.
30
APPENDIX A
CANADIAN NATURAL RESOURCES LIMITED
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
COMPILATION REPORT
To the Directors of Canadian Natural Resources Limited.
We have reviewed, as to compilation only, the accompanying unaudited PRO FORMA
consolidated statements of earnings and cash flow from operations of Canadian
Natural Resources Limited (the "Corporation") for the year ended December 31,
2002 which has been prepared for inclusion in this shelf prospectus of the
Corporation. In our opinion, the unaudited PRO FORMA consolidated statements of
earnings and cash flow from operations have been properly compiled to give
effect to the acquisition by the Corporation of Rio Alto Exploration Ltd. and
the assumptions described in the notes thereto. These financial statements are
the responsibility of the Corporation's management.
/s/ PRICEWATERHOUSECOOPERS LLP
Chartered Accountants
Calgary, Alberta, Canada
May 1, 2003
COMMENTS FOR UNITED STATES READERS ON DIFFERENCES BETWEEN CANADIAN AND
UNITED STATES REPORTING STANDARDS
The above opinion, provided solely pursuant to Canadian requirements, is
expressed in accordance with standards of reporting generally accepted in
Canada. Such standards contemplate the expression of an opinion with respect to
the compilation of PRO FORMA financial statements. United States standards do
not provide for the expression of an opinion on the compilation of PRO FORMA
financial statements. To report in conformity with United States standards on
the reasonableness of PRO FORMA adjustments and their application to the PRO
FORMA financial statements would require an examination or review which would be
substantially greater in scope than the review as to compilation only that we
have conducted. Consequently, under United States standards, we would be unable
to express an opinion with respect to the compilation of the accompanying
unaudited PRO FORMA consolidated statements of earnings and cash flow from
operations.
/s/ PRICEWATERHOUSECOOPERS LLP
Chartered Accountants
Calgary, Alberta Canada
May 1, 2003
CANADIAN NATURAL RESOURCES LIMITED
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 2002
(millions of Canadian dollars)
CANADIAN NATURAL RIO ALTO
RESOURCES EXPLORATION PRO FORMA PRO FORMA
LIMITED LTD. ADJUSTMENTS CONSOLIDATED
---------------------------------------------------------------------------
YEAR ENDED SIX MONTHS ENDED (NOTE 2)
DECEMBER 31, 2002 JUNE 30, 2002
REVENUE 4,083.2 363.3 (37.4) 4,409.1
Less: royalties (600.3) (91.3) 14.1 (677.5)
---------------------------------------------------------------------------
3,482.9 272.0 (23.3) 3,731.6
---------------------------------------------------------------------------
EXPENSES
Production 933.9 57.6 (7.6) 983.9
Depletion, depreciation and amortization 1,314.2 176.6 55.7 1,546.5
Administration 61.3 35.5 (21.6) 75.2
Interest 158.9 20.6 20.3 199.8
Foreign exchange (gain) loss (31.7) 0.2 (4.7) (36.2)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
2,436.6 290.5 42.1 2,769.2
---------------------------------------------------------------------------
EARNINGS BEFORE TAXES 1,046.3 (18.5) (65.4) 962.4
Taxes other than income tax 62.9 62.9
Current income tax (recovery) 7.6 (5.1) 2.5
Future income tax (recovery) 401.0 (1.3) (29.1) 370.6
---------------------------------------------------------------------------
NET EARNINGS 574.8 (12.1) (36.3) 526.4
Dividend on preferred securities (6.0) (6.0)
Revaluation of preferred securities 1.0 1.0
---------------------------------------------------------------------------
NET EARNINGS ATTRIBUTABLE TO COMMON SHAREHOLDERS 569.8 (12.1) (36.3) 521.4
===========================================================================
A-2
CANADIAN NATURAL RESOURCES LIMITED
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF CASH FLOW FROM OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2002
(millions of Canadian dollars)
CANADIAN NATURAL RIO ALTO
RESOURCES EXPLORATION PRO FORMA PRO FORMA
LIMITED LTD. ADJUSTMENTS CONSOLIDATED
----------------------------------------------------------------------
SIX MONTHS (NOTE 2)
YEAR ENDED ENDED JUNE 30,
DECEMBER 31, 2002 2002
OPERATING ACTIVITIES
Net earnings 574.8 (12.1) (36.3) 526.4
Non-cash items
Depletion, depreciation and amortization 1,314.2 176.6 55.7 1,546.5
Unrealized foreign exchange loss (35.1) 0.2 -- (34.9)
Deferred petroleum revenue tax (recovery) 9.5 -- -- 9.5
Future income tax (recovery) 401.0 (1.3) (29.1) 370.6
----------------------------------------------------------------------
Cash flow provided from operations 2,264.4 163.4 (9.7) 2,418.1
Deferred charges (84.1) -- -- (84.1)
Net change in non-cash working capital (156.9) 48.8 30.6 (77.5)
----------------------------------------------------------------------
2,023.4 212.2 20.9 2,256.5
----------------------------------------------------------------------
A-3
CANADIAN NATURAL RESOURCES LIMITED
NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(tabular amounts in millions of Canadian dollars)
(unaudited)
1. BASIS OF PRESENTATION
These PRO FORMA consolidated financial statements have been prepared by
management for inclusion in the base shelf prospectus in accordance
with generally accepted accounting principles in Canada.
The PRO FORMA consolidated financial statements have been prepared
from:
(a) the audited consolidated financial statements of the
Corporation as at and for the year ended December 31, 2002,
which include the results of Rio Alto Exploration Ltd. ("Rio
Alto") from July 1, 2002, the date of the acquisition; and
(b) the unaudited interim consolidated financial statements of Rio
Alto as at and for the six months ended June 30, 2002.
The PRO FORMA consolidated statements of earnings and cash flow from
operations give effect to the transaction as if it had occurred at the
beginning of the period.
The PRO FORMA consolidated statement of earnings and cash flow from
operations are not necessarily indicative of the results of operations
that would have occurred if the events reflected therein had been in
effect on the dates indicated or of the results of operations that may
be obtained in the future. In preparing the PRO FORMA consolidated
statement of earnings and cash flow from operations, no adjustments
have been made to reflect the operating synergies, general and
administrative cost savings or tax benefits expected to result from the
combination of the corporation and Rio Alto.
The PRO FORMA consolidated statement of earnings and cash flow from
operations should be read in conjunction with the unaudited interim
consolidated financial statements of Rio Alto for the six months ended
June 30, 2002 and the audited consolidated financial statements of the
Corporation for the year ended December 31, 2002.
2. PRO FORMA ADJUSTMENTS AND ASSUMPTIONS
The PRO FORMA consolidated financial statements include the following
adjustments and assumptions:
(a) The Corporation paid cash of $850.0 million and issued
10,008,218 common shares with an attributed value of $522.4
million to acquire all of the issued and outstanding common
shares of Rio Alto by way of a plan of arrangement (the "Plan
of Arrangement"). Rio Alto was engaged in the exploration for
and production of oil and natural gas in western Canada and
South America. Under the Plan of Arrangement, subsidiaries of
Rio Alto which held South American properties were sold to a
new company, Rio Alto Resources International Inc. ("Rio Alto
International"), and each shareholder of Rio Alto received one
share of Rio Alto International per Rio Alto common share
held.
The acquisition was accounted for based on the purchase
method. Results of Rio Alto are consolidated with the results
of the Corporation effective July 1, 2002. The allocation of
the purchase price to assets acquired and liabilities assumed
based on their fair values is set out in the following table:
A-4
JULY 1, 2002
------------
Purchase price:
Cash consideration $ 850.0
Share consideration 522.4
Cash acquired (6.8)
Non-cash working capital deficit assumed 91.3
Long-term debt assumed 936.3
------------
Total purchase price $ 2,393.2
============
Purchase price allocated as follows:
Property, plant and equipment $ 3,411.8
Future site restoration (43.5)
Future income tax (975.1)
-------------
$ 2,393.2
=============
(b) The PRO FORMA consolidated statement of earnings and cash flow
from operations reflect only the North American operations of
Rio Alto. Revenues, royalties, production expense, depletion,
depreciation and amortization, administration, foreign
exchange, interest and future income tax expense have been
adjusted.
(c) Depletion, depreciation and amortization has been adjusted to
reflect the PRO FORMA value of the property, plant and
equipment at the assumed acquisition date.
(d) Administration expense for the six months ended December 31,
2002 has been reduced by $20.9 million to reflect one-time
transaction costs that were incurred in Rio Alto as a result
of its acquisition by the Corporation.
(e) Interest expense has been adjusted to reflect the additional
debt incurred as a result of the acquisition.
(f) Royalties have been adjusted to reflect that the Alberta
Royalty Tax Credit would have been lower by approximately $0.3
million for the year ended December 31, 2002, if the
Corporation and Rio Alto had been associated throughout the
period.
(g) Future income tax expense has been adjusted for the impact of
the above items that affect current period earnings.
A-5
3. NET EARNINGS AND CASH FLOW FROM OPERATIONS PER COMMON SHARE
PRO FORMA net earnings per common share attributable to common
shareholders and PRO FORMA cash flow from operations per common share
attributable to common shareholders have been calculated using the
weighted average number of the Corporation's common shares outstanding
during the period plus the additional common shares of the Corporation
to be issued as part of the acquisition as if the additional common
shares were outstanding throughout the period.
YEAR ENDED DECEMBER 31, 2002
-----------------------------------------------
CANADIAN
NATURAL
RESOURCES PRO FORMA PRO FORMA
LIMITED ADJUSTMENTS CONSOLIDATED
--------- ----------- ------------
Common shares, issued and outstanding (thousands) 133,776 133,776
Weighted average common shares outstanding (thousands)
Basic 127,883 4,963 132,846
Diluted 133,308 4,963 138,271
Net earnings per common share attributable to common shareholders
basic $4.46 $3.92
diluted $4.31 $3.81
Cash flow from operations per common share attributable to common
shareholders
basic $17.63 $18.12
diluted $16.99 $17.49
A-6
PART II
INFORMATION NOT REQUIRED TO BE DELIVERED
TO OFFEREES OR PURCHASERS
INDEMNIFICATION
Under the BUSINESS CORPORATIONS ACT (ALBERTA) (the "ABCA"), the
Registrant may indemnify a present or former director or a person who acts or
acted at the Registrant's request as a director or officer of a body corporate
of which the Registrant is or was a shareholder or creditor, and his heirs and
legal representatives, against all costs, charges and expenses, including an
amount paid to settle an action or satisfy a judgment, reasonably incurred by
him in respect of any civil, criminal or administrative action or proceeding to
which he is made a party by reason of being or having been a director or officer
of the Registrant or that body corporate, if the director or officer acted
honestly and in good faith with a view to the best interests of the Registrant,
and, in the case of a criminal or administrative action or proceeding that is
enforced by a monetary penalty, had reasonable grounds for believing that his
conduct was lawful. Such indemnification may be in connection with a derivative
action only with court approval. A director or officer is entitled to
indemnification from the Registrant as a matter of right if he or she was
substantially successful on the merits, fulfilled the conditions set forth
above, and is fairly and reasonably entitled to indemnity.
The by-laws of the Registrant provide that, subject to the limitations
contained in the ABCA, the Registrant shall indemnify a director or officer, a
former director or officer, or a person who acts or acted at the Registrant's
request as a director or officer of a body corporate of which the Registrant is
or was a shareholder or creditor, and his heirs, executors, administrators and
other legal representatives, to the fullest extent which may from time to time
be permitted by the ABCA, from and against, (a) all costs, charges and expenses
that he incurs in respect of any civil, criminal or administrative action or
proceeding that is proposed or commenced against him by reason of being or
having been a director or officer of the Registrant, and (b) all other costs,
charges and expenses that he sustains or incurs in respect of the affairs of the
Registrant, except in respect of an action by or on behalf of the Registrant, or
such body corporate, to procure a judgment in its favor.
The by-laws of the Registrant provide that the Registrant may, subject
to the limitations contained in the ABCA, purchase and maintain insurance for
the benefit of any director or officer as such against any liability incurred by
him in his capacity as a director or officer of the Registrant or as a director
or officer of any body corporate where he acts or acted in that capacity at the
Registrant's request. The Registrant has not purchased any director and officer
liability insurance from a third party but rather self-insures against any such
liabilities.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling the
Registrant pursuant to the foregoing provisions, the Registrant has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is therefore unenforceable.
II-1
EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------ -----------
4.1 The Annual Information Form of the Registrant, dated April 14,
2003, for the fiscal year ended December 31, 2002
(incorporated by reference to the Registrant's Annual Report
on Form 40-F for the fiscal year ended December 31, 2002, as
filed with the Securities and Exchange Commission on April 17,
2003).
4.2 The Information Circular of the Registrant, dated March 28,
2003, issued in connection with the Annual Meeting of
Shareholders of the Registrant to be held on May 8, 2003,
excluding those portions which appear under the headings
"Performance Graph," "Report on Executive Compensation by the
Compensation Committee" and "Statement of Corporate Governance
Practices" (which portions shall be deemed not to be
incorporated by reference in this Registration Statement on
Form F-9) (incorporated by reference to the Registrant's
Report on Form 6-K, as filed with the Securities and Exchange
Commission on April 17, 2003).
4.3 "Management's Discussion and Analysis" of the Registrant for
the fiscal year ended December 31, 2002 (incorporated by
reference to the Registrant's Annual Report on Form 40-F for
the fiscal year ended December 31, 2002, as filed with the
Securities and Exchange Commission on April 17, 2003).
4.4 The annual audited comparative consolidated financial
statements of the Registrant, together with the notes thereto
and Auditors' Report thereon, as at and for the fiscal year
ended December 31, 2002 (incorporated by reference to the
Registrant's Annual Report on Form 40-F for the fiscal year
ended December 31, 2002, as filed with the Securities and
Exchange Commission on April 17, 2003).
4.5 The annual audited comparative consolidated financial
statements of Rio Alto Exploration Ltd., together with the
notes thereto and Auditors' Report thereon, as at and for the
fiscal year ended December 31, 2001 (incorporated by reference
to the Registrant's Registration Statement on Form F-9, as
filed with the Securities and Exchange Commission on August
12, 2002).
4.6 The Base Shelf Prospectus of the Registrant, dated as of
August 16, 2002, limited to Appendix B, "Rio Alto Exploration
Ltd. - Consolidated Balance Sheet and Statements of Income
(Loss) and Retained Earnings and Cash Flow" and "Notes to the
Consolidated Financial Statements" (incorporated by reference
to Amendment No. 1 to the Registrant's Registration Statement
on Form F-9, as filed with the Securities and Exchange
Commission on August 16, 2002).
4.7 The Press Release of the Registrant, dated May 7, 2003,
limited to those portions beginning with the heading
"Management's Discussion and Analysis" on page 9 and including
"Financial Statements" through to page 35 inclusive
(incorporated by reference to the Registrant's Report on Form
6-K, as filed with the Securities and Exchange Commission on
May 8, 2003).
5.1 Consent of PricewaterhouseCoopers LLP.
5.2 Consent of PricewaterhouseCoopers LLP.
5.3 Consent of Parlee McLaws LLP.
5.4 Consent of Sproule Associates Limited.
II-2
6.1* Powers of Attorney.
7.1 Indenture dated as of July 24, 2001, between the Registrant
and The Bank of Nova Scotia Trust Company New York, as Trustee
(incorporated by reference to the Registrant's Registration
Statement on Form F-9, as filed with the Securities and
Exchange Commission on August 12, 2002).
7.2 Statement of Eligibility of the Trustee of Form T-1
(incorporated by reference to the Registrant's Registration
Statement on Form F-9, as filed with the Securities and
Exchange Commission on August 12, 2002).
9.1* Interest Coverage calculations as at December 31, 2002.
================================================================================
* Previously filed.
II-3
PART III
UNDERTAKING AND CONSENT TO SERVICE OF PROCESS
ITEM 1. UNDERTAKING
The Registrant undertakes to make available, in person or by telephone,
representatives to respond to inquiries made by the Commission staff, and to
furnish promptly, when requested to do so by the Commission staff, information
relating to the securities registered pursuant to Form F-9 or to transactions in
said securities.
ITEM 2. CONSENT TO SERVICE OF PROCESS
The Registrant has previously filed with the Commission a written
irrevocable consent and power of attorney on Form F-X.
Any change to the name or address of the agent for service of process
of the Registrant shall be communicated promptly to the Securities and Exchange
Commission by an amendment to the Form F-X referencing the file number of the
relevant registration statement.
III-1
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form F-9 and has duly caused this Amendment to
its Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Calgary, Province of Alberta, Canada,
on May 8, 2003.
CANADIAN NATURAL RESOURCES LIMITED
By: /s/ John G. Langille
---------------------------------------
John G. Langille
President
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
SIGNATURE CAPACITY DATE
--------- -------- ----
* Chairman and Director May 8, 2003
-----------------------------
Allan P. Markin
* Senior Vice-President, May 8, 2003
----------------------------- Finance (Principal
Douglas A. Proll Financial Officer and
Principal Accounting
Officer)
* Director May 8, 2003
-----------------------------
James T. Grenon
Director
-----------------------------
N. Murray Edwards
* President and Director May 8, 2003
----------------------------- (Principal Executive
John G. Langille Officer)
III-2
SIGNATURE CAPACITY DATE
--------- -------- ----
Director
-----------------------------
Keith A. J. MacPhail
* Director May 8, 2003
-----------------------------
James S. Palmer
* Director May 8, 2003
-----------------------------
Eldon R. Smith, M.D.
* Director May 8, 2003
-----------------------------
David A. Tuer
Director
-----------------------------
Gordon D. Giffin
*By: /s/ John G. Langille
-----------------------
John G. Langille
Attorney-in-fact
AUTHORIZED REPRESENTATIVE
Pursuant to the requirements of Section 6(a) of the Securities Act of
1933, the Authorized Representative has duly caused this Amendment to its
Registration Statement to be signed on its behalf by the undersigned, solely in
its capacity as the duly authorized representative of Canadian Natural Resources
Limited in the United States, on May 8, 2003.
CANNAT ENERGY INC.
By: /s/ John G. Langille
---------------------------------------
President
III-3
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------ -----------
4.1 The Annual Information Form of the Registrant, dated April 14,
2003, for the fiscal year ended December 31, 2002
(incorporated by reference to the Registrant's Annual Report
on Form 40-F for the fiscal year ended December 31, 2002, as
filed with the Securities and Exchange Commission on April 17,
2003).
4.2 The Information Circular of the Registrant, dated March 28,
2003, issued in connection with the Annual Meeting of
Shareholders of the Registrant to be held on May 8, 2003,
excluding those portions which appear under the headings
"Performance Graph," "Report on Executive Compensation by the
Compensation Committee" and "Statement of Corporate Governance
Practices" (which portions shall be deemed not to be
incorporated by reference in this Registration Statement on
Form F-9) (incorporated by reference to the Registrant's
Report on Form 6-K, as filed with the Securities and Exchange
Commission on April 17, 2003).
4.3 "Management's Discussion and Analysis" of the Registrant for
the fiscal year ended December 31, 2002 (incorporated by
reference to the Registrant's Annual Report on Form 40-F for
the fiscal year ended December 31, 2002, as filed with the
Securities and Exchange Commission on April 17, 2003).
4.4 The annual audited comparative consolidated financial
statements of the Registrant, together with the notes thereto
and Auditors' Report thereon, as at and for the fiscal year
ended December 31, 2002 (incorporated by reference to the
Registrant's Annual Report on Form 40-F for the fiscal year
ended December 31, 2002, as filed with the Securities and
Exchange Commission on April 17, 2003).
4.5 The annual audited comparative consolidated financial
statements of Rio Alto Exploration Ltd., together with the
notes thereto and Auditors' Report thereon, as at and for the
fiscal year ended December 31, 2001 (incorporated by reference
to the Registrant's Registration Statement on Form F-9, as
filed with the Securities and Exchange Commission on August
12, 2002).
4.6 The Base Shelf Prospectus of the Registrant, dated as of
August 16, 2002, limited to Appendix B, "Rio Alto Exploration
Ltd. - Consolidated Balance Sheet and Statements of Income
(Loss) and Retained Earnings and Cash Flow" and "Notes to the
Consolidated Financial Statements" (incorporated by reference
to Amendment No. 1 to the Registrant's Registration Statement
on Form F-9, as filed with the Securities and Exchange
Commission on August 16, 2002).
4.7 The Press Release of the Registrant, dated May 7, 2003,
limited to those portions beginning with the heading
"Management's Discussion and Analysis" on page 9 and including
"Financial Statements" through to page 35 inclusive
(incorporated by reference to the Registrant's Report on Form
6-K, as filed with the Securities and Exchange Commission on
May 8, 2003).
5.1 Consent of PricewaterhouseCoopers LLP.
5.2 Consent of PricewaterhouseCoopers LLP.
5.3 Consent of Parlee McLaws LLP.
5.4 Consent of Sproule Associates Limited.
6.1* Powers of Attorney.
7.1 Indenture dated as of July 24, 2001, between the Registrant
and The Bank of Nova Scotia Trust Company New York, as Trustee
(incorporated by reference to the Registrant's Registration
Statement on Form F-9, as filed with the Securities and
Exchange Commission on August 12, 2002).
7.2 Statement of Eligibility of the Trustee of Form T-1
(incorporated by reference to the Registrant's Registration
Statement on Form F-9, as filed with the Securities and
Exchange Commission on August 12, 2002).
9.1* Interest Coverage calculations as at December 31, 2002.
================================================================================
* Previously filed.