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Press release from Marketwire

Petrobank Consolidates Heavy Oil Assets

Tuesday, October 19, 2010

Petrobank Consolidates Heavy Oil Assets08:00 EDT Tuesday, October 19, 2010CALGARY, ALBERTA--(Marketwire - Oct. 19, 2010) - Petrobank Energy and Resources Ltd. ("Petrobank") (TSX:PBG) is pleased to announce that we have concluded the acquisition of Baytex Energy Ltd.'s ("Baytex") and Shell Canada Ltd.'s ("Shell") respective 50% interests in the Kerrobert and Dawson projects. The total net cash paid for these transactions is approximately $15 million, before closing adjustments. These acquisitions effectively consolidate and increase our Canadian heavy oil lands and add a combined additional 41 MMbbls of conventional heavy Exploitable Oil-in-Place(1)("EOIP") at Dawson and Kerrobert as estimated by McDaniel & Associates Consultants Ltd. at December 31, 2009. We have now established full development discretion on all our domestic projects.Kerrobert AcquisitionPetrobank has acquired Baytex's 50% working interest in the Phase-1 project lands and wells. Baytex retains a gross overriding royalty on their working interest, commencing 12 months after first production from the Kerrobert expansion project. This agreement carves out the Kerrobert expansion from the existing Joint Venture Agreement with Baytex, which remains in place for the Phase-2 lands, discretionary lands, and the Area of Mutual Interest. With this transaction we have 100% working interest in 38 MMbbls of conventional heavy EOIP.Petrobank has commenced the full development of the Kerrobert Phase-1 expansion. Regulatory approval was received on August 6, 2010 and we plan to spud our first expansion well before October 31, 2010. The Phase-1 expansion includes a further 10 THAI(TM)well-pairs and surface facilities. We are targeting the start-up pre-heat ignition cycle (PHIC) during Q1 2011. Air injection and production are now expected to begin during Q2 2011.Dawson AcquisitionPetrobank has acquired Shell's 50% working interest in the Dawson project and a 100% working interest in an additional 27 sections (6,912 hectares) of land prospective for Bluesky heavy oil resource adjacent to the Dawson project. With this transaction we have 100% working interest in 44 MMbbls of conventional heavy EOIP. Petrobank will proceed with the two well Dawson project immediately following regulatory approval and we are targeting a minimum of 10 additional well-pairs as part of a near term expansion of the Dawson project.Petrobank has acquired the interests in Kerrobert and Dawson with cash on hand. We expect to fund the capital expenditures related to the acquired 50% working interest from cash flow from operations and our undrawn credit facility. Petrobank is in discussions to restructure and significantly increase our credit facility amount to better reflect our asset values and to position Petrobank to pursue further opportunities for growth.As part of our strategy to acquire additional heavy oil resources, Petrobank is pleased to finalize these strategic acquisitions to increase our domestic portfolio to 81 MMbbls of conventional heavy EOIP, expanding our land position by 27 sections, and achieving 100% control of two key THAI(TM)projects. In addition to these assets Petrobank also owns 100% in 62 sections of oil sands leases containing proved and probable reserves plus best estimate contingent resources of 669.1 MMbbls. We are now able to aggressively exploit our sizeable domestic resource base with our ground breaking THAI(TM)technology.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, operated by Petrobank's 58% owned TSX-listed subsidiary, PetroBakken Energy Ltd. (TSX:PBN), is a premier light oil production company combining, high growth, long-life Bakken reserves and production with legacy conventional light oil assets, delivering industry leading operating netbacks, strong cash flows and production growth. PetroBakken is applying leading edge technology to a multi-year inventory of Bakken and Cardium light oil development locations, along with a significant inventory of opportunities in the Horn River and Montney gas resource plays in northeast BC. PetroBakken's strategy is to deliver accretive production and reserves growth, along with an attractive dividend yield. The Latin American Business Unit, operated by Petrobank's 66% owned TSX listed subsidiary, Petrominerales Ltd. (TSX:PMG), is a Latin America-based exploration and production company producing oil in Colombia with 17 exploration blocks covering a total of 2.1 million acres in the Llanos and Putumayo Basins and five exploration blocks in Peru covering a total of 9.4 million gross (5.4 million net) acres in the Ucayali and Titicaca Basins. 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(TM)heavy oil recovery process. THAI(TM)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(TM)and CAPRI(TM)are registered trademarks of Archon Technologies Ltd., a wholly-owned subsidiary of Petrobank.1 Exploitable Oil-In-Place is the estimated volume of oil, before any production has been removed, which is contained in a subsurface stratigraphic interval that meets or exceeds certain reservoir characteristics considered necessary for the application of known recovery technologies. Examples of such reservoir characteristics include continuous net pay, porosity, and mass bitumen content.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 the scope and timing of development of our projects. The forward-looking statements contained in this document are based on certain key expectations and assumptions made by Petrobank, including with respect to the remaining forward-looking statements, expectations and assumptions concerning the success of future evaluation, and development activities, the successful application of technology, prevailing commodity prices and the negotiation of future licensing arrangements. 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: risks associated with the inability of the parties to the acquisitions to satisfy all conditions to the acquisitions, 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 and licensing 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 forecasted. 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.FOR FURTHER INFORMATION PLEASE CONTACT: Petrobank Energy and Resources Ltd. John D. Wright President and Chief Executive Officer (403) 750-4400 or Petrobank Energy and Resources Ltd. Chris J. Bloomer Senior Vice President and Chief Operating Officer, Heavy Oil (403) 750-4400 or Petrobank Energy and Resources Ltd. Peter Cheung Vice President and Chief Financial Officer (403) 750-4400 ir@petrobank.com www.petrobank.com