Petrobank Energy and Resources Ltd.
TSX : PBG

Petrobank Energy and Resources Ltd.

February 28, 2012 15:00 ET

Petrobank Announces Closing of Our May River Property Disposition and Cancellation of Credit Facility

CALGARY, ALBERTA--(Marketwire - Feb. 28, 2012) - Petrobank Energy and Resources Ltd. (TSX:PBG) announces that we have closed the previously disclosed sale of our May River property to Grizzly Oil Sands Ulc. for cash proceeds of approximately $225 million after normal closing adjustments. After repayment of existing bank debt and expected transaction costs, Petrobank will have no debt, approximately $140 million of cash and a working capital deficit estimated at $10 million at February 28, 2012. Due to this high level of cash liquidity, we have elected to cancel our $200 million syndicated credit facility immediately, which will result in further savings of approximately $1.5 million per year in stand-by fees on the unused facility. Petrobank continues to have significant financial flexibility with approximately $140 million of cash on hand and PetroBakken shares having a current value of over $1.8 billion, and, based on PetroBakken's current dividend level, we receive annual dividends of approximately $105 million (comprised of 50% cash plus 50% in additional PetroBakken shares based on our current participation in PetroBakken's dividend reinvestment plan).

Forward Looking Statements: Certain information provided in this press release constitutes forward-looking statements. Specifically, this press release contains forward-looking statements relating to our expected receipt of PetroBakken dividends. The forward-looking statements are based on certain key expectations and assumptions, including expectations and assumptions concerning PetroBakken's intention to maintain its current dividend rate and its dividend reinvestment plan. Although we believe that the expectations and assumptions on which the forward-looking statements are based are reasonable, undue reliance should not be placed on the forward-looking statements because we can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to the risk that the PetroBakken board of directors will change its dividend polices as a result of the oil and gas industry in general (e.g., operational risks in development, exploration and production), general economic conditions or other factors. Except as may be required by applicable securities laws, Petrobank assumes no obligation to publicly update or revise any forward-looking statements made herein or otherwise, whether as a result of new information, future events or otherwise.

Petrobank Energy and Resources Ltd. is a Calgary-based oil and natural gas exploration and production company with operations in western Canada. The Company operates high-impact projects through two business units and a technology subsidiary. Petrobank's 59% owned TSX-listed subsidiary, PetroBakken Energy Ltd. (TSX:PBN), is an oil and gas exploration and production company combining light oil Bakken and Cardium resource plays with conventional light oil assets. Whitesands Insitu Partnership, a partnership between Petrobank and its wholly-owned subsidiary Whitesands Insitu Inc., applies Petrobank's patented THAI® heavy oil recovery process in the field. THAI® is an evolutionary in-situ combustion technology for the recovery of bitumen and heavy oil. THAI® and CAPRI® are registered trademarks of Archon Technologies Ltd., a wholly-owned subsidiary of Petrobank Energy and Resources Ltd., for specialized methods for recovery of oil from subterranean formations through in-situ combustion techniques and methodologies with or without upgrading catalysts. Used under license by Petrobank Energy and Resources Ltd.

Contact Information

  • Petrobank Energy and Resources Ltd.
    John D. Wright
    President and Chief Executive Officer
    403.750.4400

    Petrobank Energy and Resources Ltd.
    Chris J. Bloomer
    Senior Vice President and Chief Operating Officer, Heavy Oil
    403.750.4400

    Petrobank Energy and Resources Ltd.
    Peter Cheung
    Vice President Finance and Chief Financial Officer
    403.750.4400
    ir@petrobank.com
    www.petrobank.com