Petrobank Energy and Resources Ltd.

Petrobank Energy and Resources Ltd.

June 15, 2009 17:28 ET

Petrobank Convertible Note Conversion Incentive Period

CALGARY, ALBERTA--(Marketwire - June 15, 2009) -


Petrobank Energy and Resources Ltd. ("Petrobank") (TSX:PBG) announces a conversion incentive period for holders of Petrobank's US$250,000,000 principal amount convertible notes ("Notes") due 2012, such Notes issued pursuant to the loan agreement ("Loan Agreement") between Petrobank and Norsk Tillitsmann ASA, dated May 2, 2007.

Any Notes converted into common shares of Petrobank, in accordance with the conversion right granted to holders of Notes pursuant to the Loan Agreement, until 9:30 a.m. (EST) on June 16, 2009 (the "Conversion Incentive Period"), will be entitled to receive:

(i) that number of common shares of Petrobank such Note holder is entitled to receive pursuant to their existing conversion right, resulting in a maximum amount of 8,774,947 common shares being issued, and

(ii) an additional incentive cash payment in US$ (subject to a maximum of US$12,500 and a minimum of US$7,500, per US$100,000 principal amount of Notes), converted based on the following formula per US$100,000 principal amount of Notes:

US$10,000 + ((US$34.67 - VWAP) x (3509.9789 per Note x (1- Reference Delta))

Where the VWAP is calculated as the US dollar equivalent of the arithmetic average of the volume weighted average trading price of Petrobank's common shares on the Toronto Stock Exchange for the three day trading period commencing June 16, 2009 to, and including, June 18, 2009, and where the Reference Delta is 85%.

The incentive payment will not impact the rights of holders of Notes who do not wish to convert their Notes during the Conversion Incentive Period. The Conversion Incentive Period is entirely voluntary and holders of Notes will not be obliged to convert their Notes during the Conversion Incentive Period. The Conversion Incentive Period process will be managed for Petrobank by ABG Sundal Collier Norge ASA. Petrobank is pleased to announce that holders of US$172.2 million principal amount of Notes, representing 69% of the total Notes outstanding, have already agreed to convert their Notes within the Conversion Incentive Period.

The incentive cash payment reflects the current value of the Notes and to Petrobank effectively represents the value of future interest payments that would otherwise remain due with respect to the Notes. The transaction allows Petrobank to eliminate up to US$250 million of our debt obligations, strengthen our balance sheet and enhance liquidity.

Petrobank Energy and Resources Ltd. is a Calgary-based oil and natural gas exploration and production company with operations in western Canada and Latin America. The Company operates high-impact projects through three business units and a technology subsidiary. The Canadian Business Unit is focused on developing a solid production platform from the Bakken light oil play in southeast Saskatchewan, and exploiting a large undeveloped land base through the application of new technology to large oil and gas resource opportunities. The Latin American Business Unit, operated by Petrobank's 66.7% owned TSX-listed subsidiary, Petrominerales Ltd. (TSX:PMG), is a Latin American-based exploration and production company producing oil in Colombia with 16 exploration blocks covering a total of 1.9 million acres in the Llanos and Putumayo Basins of Colombia and 2.6 million acres in the Ucayali Basin of Peru. Whitesands Insitu Partnership, a partnership between Petrobank and its wholly-owned subsidiary Whitesands Insitu Inc., owns 75 net sections of oil sands leases in Alberta, 36 sections of oil sands licenses in Saskatchewan 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. THAI™ and CAPRI™ are registered trademarks of Archon Technologies Ltd., a wholly-owned subsidiary of Petrobank.

Forward-Looking Statements. Certain information provided in this press release constitutes forward-looking statements. The words "anticipate", "expect", "project", "estimate", "forecast" and similar expressions are intended to identify such forward-looking statements. Specifically, this press release contains forward-looking statements relating to a voluntary Conversion Incentive Period with respect to Petrobank's Notes. 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. You can find a discussion of those risks and uncertainties in our Canadian securities filings. Such factors include, but are not limited to: general economic, market and business conditions; fluctuations in oil prices; the results of exploration and development drilling, recompletions and related activities; timing and rig availability, outcome of exploration contract negotiations; 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. 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.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy the securities in any jurisdiction. The shares offered have not and will not be registered under the United States Securities Act of 1933, as amended, or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirement.

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.
    Corey C. Ruttan
    Senior Vice President and Chief Financial Officer
    (403) 750-4400
    Petrobank Energy and Resources Ltd.
    R. Gregg Smith
    Senior Vice President and Chief Operating Officer, Canada
    (403) 750-4400
    (403) 266-5794 (FAX)