Petrobank Energy and Resources Ltd.

Petrobank Energy and Resources Ltd.

April 20, 2007 18:00 ET

Petrobank Announces Pricing of US$250 Million Convertible Notes

CALGARY, ALBERTA--(CCNMatthews - April 20, 2007) -


Petrobank Energy and Resources Ltd. ("Petrobank" or the "Company") (TSX:PBG) (OSLO:PBG) is pleased to announce that it has priced its previously announced private placement of convertible notes due 2012 (the "Notes") with an offering size of US$250 million principal amount (the "Offering"). This amount includes the exercise of an option that Petrobank had granted to the Lead Manager of the Offering for an additional US$50 million. The Offering is being conducted through a syndicate led by ABG Sundal Collier Norge ASA and including Haywood Securities Inc. and TD Securities Inc.

The Notes, which are to be issued by the Company and are convertible into common shares of the Company, have an annual coupon of 3.00% and a conversion price of US$28.4902 (Cdn.$31.9859) per Note, representing a conversion premium of 40% to the volume weighted average share price during the marketing period of the Notes.

The Company will have an option to call the Notes after 3 years from the date of issue, should the price of the Company's common shares exceed 120% of the prevailing conversion price of the Notes over a specified time period. The reference price of the Company's common shares has been set at Cdn.$22.8471 (the volume weighted average price during the marketing period of the Notes) and the exchange rate used to determine the number of common shares underlying the Notes is Cdn.$1.1227 / US$1.00. The transaction is expected to close on or about May 4, 2007.

The proceeds of the Offering will be used for general corporate purposes, including but not limited to, expenditures on the Company's WHITESANDS heavy oil project and an acceleration of the Company's recently expanded Bakken light oil resource play in southeast Saskatchewan. A portion of the proceeds of the Offering may also be used to increase the Petrobank's ownership interest in its WHITESANDS Insitu Ltd. 84% owned subsidiary.

The Notes are offered solely to investors outside of Canada on a private placement basis. ABG Sundal Collier acted as Sole Bookrunner for the Offering. The Offering is subject to certain approvals, including the approval of the Toronto Stock Exchange.

Petrobank Energy and Resources Ltd.

Petrobank Energy and Resources Ltd. is a Calgary-based oil and natural gas exploration and production company with operations in western Canada and Colombia. The Company operates high-impact projects through three business units. The Canadian Business Unit is developing a solid production platform from low risk gas opportunities in central Alberta and an extensive inventory of Bakken light oil locations in southeast Saskatchewan, complemented by new exploration projects and a large undeveloped land base. The Latin American Business Unit is operated by Petrobank's 80.7% owned, TSX-listed subsidiary, Petrominerales Ltd. (trading symbol: PMG), which produces oil through two Incremental Production Contracts in Colombia and has exploration contracts covering 1.5 million acres in the Llanos and Putumayo Basins. WHITESANDS Insitu Ltd., Petrobank's 84% owned subsidiary, owns 39,680 acres of oil sands leases with an estimated 2.6 billion barrels of gross bitumen-in-place and operates the WHITESANDS project which is field-demonstrating Petrobank's patented THAI™ heavy oil recovery process. THAI™ is an evolutionary in-situ combustion technology for the recovery of bitumen and heavy oil that integrates existing proven technologies and provides the opportunity to create a step change in the development of heavy oil resources globally.

Forward-Looking Statements

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 and 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.

Important Notes

Neither the Notes nor the underlying common shares have been, nor will be, registered under the US Securities Act of 1933, as amended (the US Securities Act") and neither the Notes nor the underlying common shares may be offered or sold within the United States or to US Persons (as defined in Regulation S under the US Securities Act ("Regulation S")), except pursuant to an exemption from, or in a transaction not subject to, registration under the US Securities Act. There will be no public offer of the Notes in the United States. The communication does not constitute an offer of securities for sale in the United States or Canada. Neither this press release nor any copy of it is for distribution, directly or indirectly, in, or into the United States or to any US Person (as defined in Regulation S) or into Canada, any failure to comply with this restriction may constitute a violation of US or Canadian Securities Laws. Regulation S Restrictions apply, no offer into the US or to US Persons.

The securities are not being offered in, or to any resident of Canada, and no solicitations or expressions of interest will be accepted from any resident of Canada. There are restrictions governing the resale in Canada of the Notes and underlying common shares. If any conversion rights are exercised within such period of 4 months and 1 day following the closing of the Offering, any certificates issued in respect of the common shares will bear the legend set forth in the terms and conditions governing the Notes.

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
    Vice-President Heavy Oil and Chief Financial Officer
    (403) 750-4400
    Petrobank Energy and Resources Ltd.
    Corey C. Ruttan
    Vice-President Finance
    (403) 750-4400
    (403) 266-5794 (FAX)