Statement of Claim No. 127                  Suit No. 8901-15660
                                            ------------------------------------
                  NOTICE                        In the Court of Queen's Bench
                                                         of Alberta

                                                JUDICIAL DISTRICT OF CALGARY
     To the Defendant(s):                   ------------------------------------
                                            BETWEEN:
COLUMBIA GAS DEVELOPMENT OF
CANADA LTD., AMOCO PRODUCTION               CANADA SOUTHERN PETROLEUM LTD.
COMPANY, DOME PETROLEUM LIMITED,
AMOCO CANADA PETROLEUM COMPANY                                         Plaintiff
LTD., MOBIL OIL CANADA LTD., and ESSO
RESOURCES OF CANADA LTD.                                    and

                                            COLUMBIA GAS DEVELOPMENT OF CANADA
     You  are  hereby  notified  that  the  LTD., AMOCO PRODUCTION COMPANY, DOME
Plaintiff    may    enter    judgment   in  PETROLEUM LIMITED, AMOCO CANADA
accordance    with    this   Statement  of  PETROLEUM COMPANY LTD., MOBIL OIL
Claim  or  such  judgment  as,   according  CANADA LTD., and ESSO RESOURCES OF
to  the  practice  of  the  Court,  he  is  CANADA LTD.
entitled to, without any further notice to
you unless  within fifteen (15) days after                            Defendants
service
                                            ------------------------------------

hereof  upon  you,  excluding  the  day of          STATEMENT OF CLAIM
service, you cause  to  be  filed  in  the
office of  the Clerk  of  the  Court  from  ------------------------------------
which   the   Statement   of   Claim   has
issued either:                              This Statement of Claim is issued by

   (1)  A Statement of Defence; or          POOLE LAYCRAFT McMAHON

                                            Solicitor for the Plaintiff who
   (2)  A  Demand   that   notice  of  any  resides at
   application to be made in the action be  CALGARY, ALBERTA
   given to you;
                                                                             and
     And  unless  within  the  same time a
copy  of  your  Statement  of  Defence  or  whose address for service is in the
Demand  be  served  upon  the Plaintiff or  care of said solicitor at 
his Solicitor at  his  stated  address for  #212, 908 - 17th Avenue S.W. 
service.                                    CALGARY, ALBERTA
                                            T2T 0A3
                                             
                                            and is addressed to the Defendant
                                            whose residence as far as known to
                                            the Plaintiff is
                                            CALGARY, ALBERTA
  
                                            ------------------------------------

                                                Solicitor's File No. 1387/JPM


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                    IN THE COURT OF QUEEN'S BENCH OF ALBERTA
                          JUDICIAL DISTRICT OF CALGARY

BETWEEN:

                         CANADA SOUTHERN PETROLEUM LTD.

                                                                       Plaintiff

                                     - and -

                    COLUMBIA GAS DEVELOPMENT OF CANADA LTD.,
                 DOME PETROLEUM LIMITED, AMOCO CANADA PETROLEUM
                    COMPANY LTD., MOBIL OIL CANADA LTD., and
                          ESSO RESOURCES OF CANADA LTD.

                                                                      Defendants

                               STATEMENT OF CLAIM



1. The Plaintiff  Canada  Southern  Petroleum Ltd.  (hereinafter  referred to as
Canada Southern) is a body corporate,  incorporated pursuant to the laws of Nova
Scotia (formerly incorporated under the laws of Canada),  registered to carry on
business in the Province of Alberta with head office in the City of Calgary,  in
the Province of Alberta.

2. The Defendant Columbia Gas Development of Canada Ltd.  ("Columbia") is a body
corporate  incorporated  pursuant to the laws of Canada,  registered to carry on
business in the  Province of  Alberta,  with head office  located in the City of
Calgary, in the Province of Alberta.

3.  The  Defendant  Dome  Petroleum   Limited   ("Dome")  is  a  body  corporate
incorporated pursuant to the laws of Canada,  registered to carry on business in
the Province of Alberta, with head office located in the City of Calgary, in the
Province of Alberta.

4. The Defendant Amoco Canada Petroleum  Company Ltd. ("Amoco Canada") is a body
corporate  incorporated  pursuant to the laws of Canada,  registered to carry on
business in the  Province of  Alberta,  with head office  located in the City of
Calgary, in the Province of Alberta.


<PAGE>

5.  The  Defendant  Mobil  Oil  Canada  Ltd.   ("Mobil")  is  a  body  corporate
incorporated pursuant to the laws of Canada,  registered to carry on business in
the  Province  of  Alberta,  with  head  office in the City of  Calgary,  in the
Province of Alberta. Mobil is a  successor-in-interest  to Canadian Superior Oil
Company, which, in turn, is the successor to Alminex Limited.

6.  The  Defendant  Esso  Resources   Limited   ("Esso")  is  a  body  corporate
incorporated pursuant to the laws of Canada,  registered to carry on business in
the  Province  of  Alberta,  with  head  office in the City of  Calgary,  in the
Province of Alberta.

7. Amoco Canada, Dome,  Columbia,  Esso and Mobil are currently working interest
owners in properties known as the Kotanelee area located in the Yukon Territory.
Columbia has been the managing operator of the Kotanelee lands since on or about
February 1, 1977.

8.  Canada  Southern  is formerly a working  interest  owner and is  currently a
carried interest owner in those same properties in the Kotanelee area.

9. The parties,  or their predecessors or assignors,  entered into agreements in
writing  dated  May  28,  1959  and  April  1,  1966,  which  provided  for  the
exploration,  operation,  management and  development of the Kotanelee field and
specified the working interests and carried interests to be held by the parties.
The l959  Agreement  contained a detailed  Operating  Procedure  and  Accounting
Procedure.  The April 1, 1966  agreement  added a schedu1e  of Carried  Interest
Provisions to the 1959 Agreement.

10. On or about  February 1, 1977,  Canada  Southern  together with Dome,  Amoco
Canada and the  predecessor  of Mobil,  entered  into a written  agreement  with
Columbia.  Canada Southern  agreed to reduce its 50% carried  interest in and to
the  Kotanelee  field  to a 33 1/3%  carried  interest  and  assigned  a 16 2/3%
interest to Co1umbia. Columbia undertook to drill a test well under the terms of
the agreement and to act as the operator of the lands.


<PAGE>

11. As to Canada  Southern's  carried interest,  the agreements  provided that a
portion of certain  expenditures  made for the joint  account  would be deducted
from  revenues  from  production  before  any  payments  would be made to Canada
Southern by the Defendants.  Columbia has reported that the expenditures for the
joint account, for exploration and development costs,  including gathering lines
and  dehydration  equipment,  amount to over  $61,000,000,  which  amount is not
admitted by Canada Southern.

12. In early 1987, Columbia, as managing operator,  advised Canada Southern, for
the first time,  that interest  would accrue on all  expenditures  for the joint
account and would be charged against Canada Southern's  carried interest.  There
is no provision in the agreements expressly allowing interest to accrue upon the
expenditures  for the joint account and no interest was shown  previously on any
statements of operations provided to Canada Southern.

13. Essentially,  Columbia,  and the other Defendants,  are contending that they
are entitled to receive  interest upon their  investment in the Kotanelee  lands
before Canada Southern will receive any revenue from gas produced.

14.  Canada  Southern  denies  that the working  interest  owners may accrue and
charge  interest  on  expenditures  for the joint  account  and states  that any
attempt to charge  interest is contrary to the terms of the agreements  relating
to the Kotanelee field.

15. Further,  Canada Southern stated that the  expenditures  for gathering lines
and  dehydration  equipment  are,  as has always  been  reported  in the past by
Columbia, expenditures made for the joint account,  notwithstanding any contrary
position that may be taken by certain of the Defendants.

16. This actual  controversy  and dispute  will have a dramatic  effect upon the
expected  revenues to be received by Canada  Southern from  production  from the
Kotanelee field.

         WHEREFORE the Plaintiff Canada Southern Petroleum Ltd.  claims  against
the Defendants and each of them:

         (a)      A declaration  that interest  cannot accrue or be charged upon
                  expenditures for the joint account made by the Defendants;


<PAGE>

         (b)      A  declaration  that  expenditures  for  gathering  lines  and
                  dehydration equipment are expenditures for the joint account;

         (c)      Costs of this action; and

         (d)      Such  further and other  relief as this  Honourable  Court may
                  deem fit.

         DATED at the City of Calgary, in the Province of Alberta, this 27th day
of October,  1989, AND DELIVERED by Messrs.  Poole Laycraft McMahon,  Barristers
and  Solicitors,  solicitors  for the Plaintiff  whose address for service is in
care of the said solicitors at #212, 908 - 17th Avenue S.W.,  Calgary,  Alberta,
T2T 0A3.

         ISSUED  out of the  office of the  Clerk of the  Court in the  Judicial
District  of  Calgary,  Province  of  Alberta,  at the City of  Calgary,  in the
Province of Alberta, this 27th day of October, 1989.




                                                  /s/ James McLaughlin
                                                  Clerk of the Court