Petrobank Energy and Resources Ltd.

Petrobank Energy and Resources Ltd.

March 04, 2005 05:00 ET

Petrobank Announces $24 Million WHITESANDS Financing and Commencement of Construction


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: PETROBANK ENERGY AND RESOURCES LTD.

TSX SYMBOL: PBG
TSX SYMBOL: PBG.NT.A

MARCH 4, 2005 - 05:00 ET

Petrobank Announces $24 Million WHITESANDS Financing
and Commencement of Construction

CALGARY, ALBERTA--(CCNMatthews - March 4, 2005) - Not for distribution
to United States newswire services or for dissemination in the United
States.

Petrobank Energy and Resources Ltd. ("Petrobank" or the "Company")
(TSX:PBG)(TSX:PBG.NT.A) today announced that it has entered into an
agreement with Richardson Capital Limited, acting on behalf of the RFG
Private Equity Funds, (the "Investor") in respect of an investment in
Petrobank and its wholly owned subsidiary, WHITESANDS Insitu Ltd.
("WHITESANDS"). The Investor will acquire a 16% interest in WHITESANDS
for $14 million and will also acquire 3,000,000 common shares of
Petrobank at a price of $3.25 per share for aggregate proceeds of $23.75
million. After this transaction, Petrobank will retain an 84% interest
in WHITESANDS and 100% of all international THAI™ development
opportunities.

John Wright, Chief Executive Officer of Petrobank, commented "Richardson
Capital Limited has a well known track record of making successful
investments in early stage oil sands companies. We are delighted to have
them as an investor in both Petrobank and WHITESANDS. We hope to
leverage their financial depth and our technical and operational
strengths to launch THAI™ into the Canadian oil sands."

Completion of these transactions is subject to certain conditions
including: finalization of due diligence by March 11, 2005; entering
into definitive agreements by March 15, 2005; and TSX approval. Closing
is anticipated to occur on April 6, 2005. TD Securities Inc. and
Tristone Capital Inc. acted as agents on these transactions.

WHITESANDS Operational Update

WHITESANDS owns 45 sections (28,800 acres) of oil sands leases in the
Christina Lake region of Alberta and is implementing the WHITESANDS
project which will be the first field scale test of the patented
THAI™ (Toe-to-Heel-Air-Injection) in-situ heavy oil recovery process.
THAI™ is a revolutionary combustion technology for the in-situ
recovery of bitumen and heavy oil that combines a vertical air injection
well with a horizontal production well. THAI™ integrates existing
proven technologies and provides the opportunity to create a step change
in the development of heavy oil resources globally. THAI™ has many
potential benefits over other in-situ recovery methods, such as SAGD
(Steam Assisted Gravity Drainage). These indicated benefits include
higher resource recovery, lower production and capital costs, minimal
usage of natural gas and fresh water, a partially upgraded crude oil
product, reduced diluent requirements for transportation, and lower
greenhouse gas emissions. The THAI™ process also has the potential to
operate in lower pressure, lower quality, thinner and deeper reservoirs
than current steam-based recovery processes. Petrobank owns the
intellectual property rights to the THAI™ and related CAPRI™
technologies.

Field activities at our WHITESANDS - THAI™ project have now
commenced. In December 2004 we drilled 6 vertical stratigraphic wells on
the pilot site and civil work is essentially complete. The results from
these 6 wells strongly reinforced the resource assessment completed
earlier in 2004 by Fekete Associates, which estimated an in-place
bitumen resource of 1.3 billion barrels. Today, we expect to spud the
first of 3 exploration wells over the central portion of our leases to
further high-grade the resource potential on our lands. In mid-March, we
plan to commence drilling the pilot's 3 horizontal production wells, 3
vertical air injection wells and 3 observation wells, with full facility
construction to follow this summer. The targeted start-up date for the
pilot is on schedule for the fourth quarter of 2005.

"WHITESANDS has received all required regulatory approvals and
engineering work is complete. The project has year round access and
utilizes conventional oilfield design and materials. Full-scale
construction of the pilot has commenced and we expect initial results by
year-end 2005. The WHITESANDS pilot project represents the first step in
the development of THAI™ which has the potential to revolutionize the
Canadian in-situ oil sands and global heavy oil recovery businesses,"
said Chris J. Bloomer, President and CEO, WHITESANDS Insitu Ltd.

Certain statements in this release are "forward-looking statements"
within the meaning of the United States Private Securities Litigation
Reform Act of 1995. Specifically, this press release contains
forward-looking statements relating to, prospects for technologies which
remain unproven and the expected amount and timing of capital projects.
The reader is cautioned that assumptions used in the preparation of such
information, although considered reasonable at the time of preparation,
may prove to be incorrect. Actual results achieved during the forecast
period will vary from the information provided herein as a result of
numerous known and unknown risks and uncertainties and other factors.
Such factors include, but are not limited to: the ability to
economically test, develop and utilize the technologies described
herein, the feasibility of the technologies, general economic, market
and business conditions; fluctuations in oil and gas prices; the results
of exploration and development of drilling and related activities;
fluctuation in foreign currency exchange rates; the uncertainty of
reserve estimates; changes in environmental and other regulations; risks
associated with oil and gas operations; and other factors, many of which
are beyond the control of the Company. There is no representation by
Petrobank that actual results achieved during the forecast period will
be the same in whole or in part as those forecast.

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Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Petrobank Energy and Resources Ltd.
    John D. Wright
    President and CEO
    (403) 750-4400
    or
    Petrobank Energy and Resources Ltd.
    Chris J. Bloomer
    Vice-President Heavy Oil and CFO
    (403) 750-4400
    or
    Petrobank Energy and Resources Ltd.
    Corey C. Ruttan
    Director Corporate Finance and Investor Relations
    (403) 750-4400
    (403) 266-5794 (FAX)
    Email: ir@petrobank.com
    Website: www.petrobank.com