Petrobank Energy and Resources Ltd.

Petrobank Energy and Resources Ltd.

November 22, 2006 00:01 ET

Petrobank Increases Recoverable Bitumen by 121 Million Barrels to 658 Million Barrels

CALGARY, ALBERTA--(CCNMatthews - Nov. 22, 2006) - Petrobank Energy and Resources Ltd. ("Petrobank")(TSX:PBG)(OSLO:PBG) reports that as a result of a recent five well drilling program the gross working interest recoverable bitumen estimate has increased by 23% to up to 658 million barrels on a portion of the 62 sections of oil sands leases owned by our 84% owned subsidiary, WHITESANDS Insitu Ltd. ("WHITESANDS").

As of November 1, 2006
May 1, 2006 Nov. 1, 2006
Gross (1)(2) Gross (1)(2)(3) Change
Reserve Category (MBbl) (MBbl) (MBbl)
Probable Reserves (2P) 24,672 24,672 -
Probable plus Possible Reserves (3P) 70,040 70,040 -
Low Estimate Contingent Resources 266,038 334,816 68,778
Best Estimate Contingent Resources 364,330 467,275 102,945
High Estimate Contingent Resources 466,837 588,101 121,264
(1) As of November 1, 2006 Gross resources include the working interest
reserves and resources before deductions of royalties payable to others.
(2) Contingent resources, as evaluated by McDaniel, are those quantities
of bitumen estimated to be potentially recoverable from known
accumulations but are classified as a resource rather than a reserve
primarily due to the absence of regulatory approvals, detailed design
estimates and near term development plans.
(3) Probable and possible reserves and net present values were not
updated in the November 1, 2006 report

During the second quarter of 2006, we reported estimated reserve and contingent recoverable resources on a portion of the 62 sections of oil sands leases owned by our 84% owned subsidiary, WHITESANDS Insitu Ltd. based on a McDaniel Associates Ltd. ("McDaniel") report effective May 1, 2006. The report estimated an initial gross recoverable bitumen volume (including 3P reserves), based on Steam Assisted Gravity Drainage ("SAGD") technology, of up to 537 million barrels. The evaluation only included recoverable resource on an equivalent of 13 sections of our lands (those with at least one drillhole) and excluded a number of sections with McMurray channel indicated by our 3-D seismic and/or areas on trend with known McMurray channel. As a result, we completed an initial five-well drilling program to further delineate our land base and expand the estimated recoverable resource. These five new wells all intersected significant McMurray channel of a quality equal to or better than our existing wells. These five wells were cored, logged and incorporated into the updated November 1, 2006 McDaniel report resulting in a 23% or 121 million barrel increase in our high estimate of recoverable gross working interest bitumen resources.

An additional ten well drilling program planned for this winter is also expected to delineate significant new recoverable bitumen resources and we will request a further update to the McDaniel report to reflect the impact of this program.

While SAGD is the recognized technology used to define in-situ oil sands reserves at the present time, THAI™ has many potential benefits over SAGD including expected higher resource recovery (70%-80% versus 30%-50% for SAGD), 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. The successful application of THAI™ is expected to have an enormous impact on resource recovery and estimates of reserve volumes along with net present values.

We believe that THAI™ can also be applied to other heavy oil deposits beyond the Canadian oil sands and it is our strategy to next initiate projects in mobile oil reservoirs in Canada and/or internationally. Our goal is to capture a global portfolio of heavy oil resources where the application of our THAI™ technology can lead to greatly improved recovery rates and significant long-term value growth for the Company. In support of this activity, we are evaluating, with our Latin American subsidiary Petrominerales Ltd., two recently acquired Technical Evaluation Areas in Colombia covering 0.8 million acres with a potential for THAI™ suitable heavy oil accumulations.

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) 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 Ruttan
    Vice-President Finance
    (403) 750-4400
    (403) 266-5794 (FAX)