. ,. ., 41J12SW9467 63.3175 ABERDEEN 010 9 ©c^r*. NO SECURITIES COMMISSION GR OTHER SIMILAR AUTHORITY IN C©iNADA, HAS IN AN^tfAY PASSED UPON THE MERITS OF THE SECURITIES OFFERED HEREUNDER, AND AN:^EPRESENTATION TO THE CONTRARY is AN OFFENSE. S. ? l 75 CAVALIER ENERGY INC. Suite 420, 120 Adelaide Street West Toronto, Ontario \ PROSPECTUS COMMON SHARES (without par value) MHW ISSUE: 1,000,000 Common Shares CAVALIER ENERGY INC. {the "Company") offers 1,000,000 common shares {"Shares") consisting of 990,000 treasury shares and 10,000 shares donated for the benefit of the Company, through Rosmar Corporation Limited {"Rosmar") acting as Agent on its behalf. The Offering, which is to be by way of a distribution over-the-counter, will continue for a period {the "Offering Period") of 90 days from the earlier to be received of the date of acceptance for filing of this Prospectus by the Ontario Securities Commission and the Nova Scotia Securities Commission, until all of the 1,000,000 shares have been sold or until Rosinar exercises its guarantee as below set out, whichever shall first occur. None of the shares offered by the Company will be sold to the public at a price to net the Company less than $l per share. The costs of this issue are estimated not to exceed $35,000. In consideration for acting on behalf of the Company and the guarantee to provide the Company with at least the sum of $350,000, Rosmar will be paid a commission of 251 and selling expenses of 15% of the selling price of the shares sold pursuant to this Offering save that the fee so payable to Rosmar will, if necessary, be reduced so that in no case will the Company receive less than $1.00 with respect to each share sold by it. Sales of shares may also be made through other Registered Dealers appointed by Rosmar to act as sub-agents and who will be paid commissions by Rosmar out of commissions payable to it by the Company as above stated. Rosmar has agreed, following completion of the Offering Period, to purchase such number of shares of the Company so that the purchase price thereof when added to the monies received by the Company from the sale of its shares during the Offering Period, will, after payment of the fees to Rosmar as above referred to, equal the sum of ^350,000. The price to be paid by Rosmar for shares so purchased by it will b6 settled by Rost.ar but in any event will not be less than $1.00 per share or 75^ of the closing selling price for shares of the Company on the last day©of Offering Period, whichever is greater. Any chares so purchased by Rosmar from the Company may bc offered for sale over-the-counter in the Pro vinces of Ontario and Nova Scotia but at a price not exceeding the amount paid therefor plus 25%. The purpose of this issue is to provide funds for the construction of a gas processing plant to process gas reserves of the Company, gathering facilities for such plants, to drill further wells, to engage in further exploration for oil and gas and for the general expenses of the Company, all as detailed under "Use of Proceeds". THERE IS HO MARKET FOR SHARES OF THE COMPANY. THESE SECURITIES ARE SPECULATIVE. Particular reference should be made to the captions "History and Business", the various property sections thereunder, "Offering" and "Speculative Aspects." Prospectus dated March 26th, 19 41J12SW9467 63.3175 ABERDEEN 0 10C Page HISTORY AND BUSINESS . .. ... * l OIL AND GAS PROPERTIES . .................... 2 General ..............................•...•••••••••••••••* 2 Reserves ................................'•••••••••••••••* 2 Acreage ...............,............................. -.... 3 Alberta .................................................. 6 Saskatchewan .................................••.••••••••* 9 Royalty Interests ........................................ l0 Capped Wells ............................................* H Producing Gas Wells ...................................... H Producing Oil Wells ..........................•••••••••••* H Crude Oil and Natural Gas Production ..................... 12 Daysland ....................................••••••••••••* 12 Title to Properties .............. ....................... 12 Andaman islands .......................................... 12 Phillipine Islands ....................................... 14 MINING PROPERTIES . ... ..... .................................. 14 Aberdeen Additional Township ........................ i *. * * 14 Benneweis Township Property .............................. 15 Kootenay Lake ...............................tt*.......... 15 AGREEMENT WITH SYNGAS RECYCLING CORPORATION . .. 16 USE OP PROCEEDS . .. .. .. .. .. .. .. .. .. *. i 8 OFFERING . .................................. 20 DESCRIPTION OF CAPITAL STOCK . .. .. ... ....... ..... .. ... .. 21 CAPITALIZATION . .. .. .. .. .. .. *. * * * 2 i MANAGEMENT . ... .. .. ..... ...............* i..................... 21 REMUNERATION OF MANAGEMENT .... 23 PRINCIPAL SHAREHOLDERS ........ .. 2 4 ESCROWED SHARES ..................... .. ... .. .... .... .*..'* * 2 4 DIVIDENDS ..................*........ - . .. ..* 2 S AUDITORS ...................*...... .. * . i . .* 2 5 REGISTRAR AND TRANSFER AGENT .........................*....... o 2 5 PRIOR SALES OF SHARES . .....................................*'' 2 5 Private Placement ........................................ 26 PW)NS . , . 26 PRELIMINARY EXPENSES . , . 27 PROMOTER AND INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS . .. .. .. .. .. .. .. .. .. ... ... 27 SPECULATIVE ASPECTS .. .. .... ............................. 28 MATERIAL CONTRACTS . ,.. .. ..... .. ... .. .... .. .. .. ... .. .. 29 PURCHASER'S STATUTORY RIGHTS OF WITHDRAWAL AND RESCISSION . ..... .. ........ .. ... .. .. ... ... .. ... 30 AUDITORS REPORT .... ................................ ... .... 31 ~ FINANCIAL STATEMT-.'VS ............. ......... .................... 32 SIGNATURE PAGE . ... ..... ..... ............................ 43 \\, s - l - CAVALIER ENERGY INC. HISTORY AND BUSINESS The Company is the surviving Company resulting from a pooling of interests by way of amalgamation of Allied Roxana Minerals Ltd. ("Allied") a company incorporated under the laws of the Province of Albert-a, Embassy Petroleums Ltd. ("Embassy"), a company incorporated under the Canada Corporations Act, Dormark Oils Ltd. ("Dormark") a company incorporated under the laws of the Province of Saskatchewan and Safari Explorations Limited ("Safari") , a company incorporated under the laws of the Province of Ontario. Because of the differing jurisdictions of incorpor ation of each of the predecessor companies, it was necessary for each of Allied, Embassy and Dormark to sell their assets to 275053 Ontario Limited, 275054 Ontario Limited and 275055 Ontario Limited, Ontario corporations which had never before carried on business, incorporated for the sole purpose of ac quiring the same. The three purchasing Ontario Corporations subsequently amalgamated with Safari Explorations Limited and the four companies continue as one company under the name CAVALIER ENERGY INC. (the "Company"). Articles of Amalgamation effective February 25, 1974 were issued pursuant to the provisions of The Business Corporations Act (Ontario) to give effect to the Amal gamation Agreement. The business of the Company is to engage in the acquisition, exploration, Evaluation, development and operation of petroleum and natural gas and mines, mineral lands and deposits. The Head Office of the Company is located at Suite 420, 120 Adelaide Street Wes!:, Toronto, Ontario and the Calgary office is located at Suite 1800 Elveden House, 717-7th Avenue South West, Calgary, Alberta. The Company employs 8 persons on a full time basis at its Calgary office. The premises occupied by it are leased from British Pacific Building Limited and constitute approximately 3,000 square feet. The annual rental is S20,980.92 plus parking and maintenance and tax escalation. The lease expires on November 30, 1976 but may be renewed for a further five year term at a rental, terms and conditions to be mutually agreed upon. At its head office, the Company pays a monthly con tribution of $200 to D'Eldona Gold Mines Limited for rent. A number of the properties in which the Company holds varying interests as detailed below, have producing gas wells and oil wells, proven developed reserves, proven undeveloped reserves and probable reserves of natural gas "lid petroleum substances. Prior to the amalgamation above referred to, Allied, Embassy, Dormark and Safari shared participations in many of the same projects. In the majority of these projects, Allied was designated as the "Operator". Although a number of other companies also hold interests in such projects, the Company has substantial interests therein. - 2 - OIL AND GAS PROPERTIES General As of the .date of this Prospectus, tha Company held interests in Petroleum and Natural Gas Rights to 880,283 gross acres, amounting to 313,349 net acres of properties in Alberta, Saskatchewan, Nova Scotia and *:he North West Territories. As used in this Prospectus, the terra "Gross Acres" is dexi.^d as the total acreage in which the Company has an interest and the term "Net Acres" is defined as the total of the gross acreage in each parcel multiplied by the percentage interest owned therein by the Company. A report covering the estimated proven developed and probable additional reserves of crude oil, natural gas, natural gas liquids and sulphur of the Company as of December 31, 1973 has been prepared by McDaniel Consultants (1965) Ltd., independ