Petrobank Energy and Resources Ltd.

Petrobank Energy and Resources Ltd.

December 22, 2006 08:39 ET

Petrobank Energy and Resources Ltd. Adopts Shareholder Rights Plan and Completes Financing

CALGARY, ALBERTA--(CCNMatthews - Dec. 22, 2006) - Petrobank Energy and Resources Ltd. (TSX:PBG) (OSLO:PBG) ("Petrobank" or the "Company") announced today that its Board of Directors has adopted a Shareholder Rights Plan (the "Rights Plan") designed to encourage the fair treatment of shareholders in connection with any take-over offer for the Company. The Rights Plan addresses the Company's concerns that existing Canadian legislation does not allow sufficient time, if a take-over bid is made, for either the Board of Directors or the shareholders to properly consider the bid, or for the Board of Directors to seek alternatives to such a bid. Given Petrobank's corporate structure and the diversity of our assets, the Board of Directors considers the additional time afforded by the Rights Plan to be critical to ensure all alternatives can be fully explored in an attempt to maximize value for all shareholders in the event of an unsolicited take-over bid.

The Rights Plan is effective immediately and will provide the Board of Directors and the shareholders more time to fully consider any unsolicited take-over bid for the Company. It will also allow more time for the Board of Directors to pursue, if appropriate, other alternatives to maximize shareholder value. Shareholders will be asked to confirm the Rights Plan at the Company's 2007 annual and special meeting of shareholders to be held before June 22, 2007 and upon receipt of such confirmation, the Rights Plan will have an initial term that would expire at the annual meeting of shareholders of the Company to be held in 2010 unless terminated earlier. The Rights Plan may be extended for an additional three years after 2010 by resolution of shareholders at such meeting.

The rights issued under the Rights Plan become exercisable only when a person, including any party related to it, acquires or announces its intention to acquire 20% or more of the Company's outstanding common shares without complying with the "Permitted Bid" provisions of the Rights Plan or without approval of the Board of Directors. Should such an acquisition occur, each right would, upon exercise, entitle a rightsholder, other than the acquiring person and related persons, to purchase common shares of the Company at one half of the prevailing market price at the time.

Under the Rights Plan, a Permitted Bid is a bid made for all of the Company's common shares to all shareholders that is open for not less than 60 days. If, at the end of the 60 days, at least 50% of the outstanding shares, other than those owned by the offeror and certain related parties, have been tendered to the bid, the offeror may take up and pay for the shares but must extend the bid for a further 10 days to allow other shareholders to tender.

The Board of Directors is not aware of any pending or threatened take-over bids for the Company that have been made or are contemplated.

Additional details regarding the Rights Plan will be provided in the Management Information Circular that will be available for viewing on SEDAR and mailed to the shareholders of the Company prior to the Company's 2007 annual and special meeting of shareholders.

Bought-Deal Financing

Petrobank is also pleased to announce that all required documentation in connection with the bought deal financing previously announced on November 29, 2006 has now been received and the final portion of the transaction has closed. The bought deal financing consisted of 3,000,000 common shares (the "Common Shares") of Petrobank at a price of $17.75 per Common Share and 1,500,000 Common Shares issued on a flow-through basis (the "Flow-Through Shares") at a price of $23.00 per Flow-Through Share, resulting in gross proceeds of approximately $87,750,000 (the "Offering"). The Offering was conducted through a syndicate of investment dealers, led by Haywood Securities Inc. and including TD Securities Inc., and Fraser MacKenzie Ltd.

Petrobank will use the proceeds of the Offering initially for the repayment of debt. This financing also enables the Company to accelerate the development of the WHITESANDS project and expand our conventional exploration and development programs in Canada, primarily focused on our growing platform of opportunities in the Bakken and Torquay light oil plays in Southeast Saskatchewan.

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 along with light oil resource plays 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 and Technical Evaluation Agreements covering a total of 2.0 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 1.6 billion barrels of bitumen-in-place and operates the WHITESANDS project to field-demonstrate 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 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.

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.

Contact Information

  • Petrobank Energy and Resources Ltd.
    John D. Wright
    President and Chief Executive Officer
    (403) 920-0134
    Petrobank Energy and Resources Ltd.
    Chris J. Bloomer
    Vice-President Heavy Oil and Chief Financial Officer
    (403) 750-4497
    Petrobank Energy and Resources Ltd.
    Corey C. Ruttan
    Vice-President Finance
    (403) 920-0135
    (403) 266-5794 (FAX)