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PETROBANK ANNOUNCES THIRD QUARTER RESULTS AND
CONTINUED SUCCESS AT WHITESANDS
Calgary, Alberta – November 13, 2006 – (TSX: PBG, OSLO: PBG) Petrobank Energy and Resources Ltd.
(“Petrobank” or the “Company”) is pleased to announce third quarter financial and operating results. The
Company’s third quarter 2006 interim report, including financial statements and management’s discussion
and analysis, is available on the Company’s website at http://www.petrobank.com, filed on SEDAR at
http://www.sedar.com, and filed on the Oslo Børs website at http://www.oslobors.no.
HIGHLIGHTS
The third quarter results are highlighted as follows:
• At our WHITESANDS project we began combustion operations and produced first
oil from the world’s first THAI™ well pair, initiated the Pre-Ignition Heating
Cycle (“PIHC”) on the second of three well pair and drilled five successful
exploration wells on our oil sands leases.
• The Company drilled 46 (40.5 net) conventional oil and gas wells in Canada.
• Conventional production averaged 4,939 boepd in the third quarter of 2006, a 40
percent increase over the comparative 2005 period.
• Funds flow from operations increased 67 percent to $14.8 million.
• Net income increased by 63 percent to $5.2 million.
• In July 2006, the Company closed a new $120 million credit facility and used a portion of the
proceeds to repay the remaining $50 million of 9% subordinated notes that were outstanding.
THAI™ combustion operations at WHITESANDS during the third quarter of 2006 continued to confirm
the effectiveness of the THAI™ technology in our first well pair. Two additional key operational
milestones were achieved in the third quarter with the initiation of the Pre-Ignition Heating Cycle
(“PIHC”) on the second well pair and the shipment of the first produced oil from the project.
Air injection and combustion was initiated on the first of the three project wells on July 20, 2006, and we
have been continually injecting air into the vertical well of this center well pair. During the first three
weeks of air injection, in-situ combustion ignition was confirmed as we measured various indicators of
the combustion reaction, including significantly rising temperatures in the reservoir zone, production of
combustion gases and rising horizontal well bore temperatures. This trend continued through the third
quarter with recorded reservoir temperatures reaching as high as 800 degrees Centigrade. Combustion gas
analysis consistently demonstrated a high ratio of carbon dioxide to carbon monoxide, indicating a very
high level of conversion of oxygen, hydrocarbon gases indicative of thermocracking of oil in-situ, and
free hydrogen generated from high temperature reactions, all indicators of efficient high temperature
combustion. These data also suggest that we are upgrading the oil in-situ. We are very early in the process
of building out the combustion front in the first THAI™ well pair and estimate that only approximately
7,000 m3 of the reservoir has been affected by combustion at the toe of the horizontal well, which is less
than one percent to total reservoir volume expected to be affected by combustion over the life of each
THAI™ well pair.
Since initiating THAI™ production operations, the gross production capability from the first horizontal
well has consistently exceeded 1,000 barrels of fluid per day with the potential production capability
double our initial forecast rate. High productive capacity has meant that we have had to manage
operations to match well flow with current plant capability. The composition of produced fluids
continues to be variable, consisting of a combination of condensed steam from the Pre-Ignition Heating
Cycle (“PIHC”), reservoir water, bitumen, and sand. Bitumen production rates, while variable, increased
over the quarter. During October we saw a significant rise in bitumen production and we produced
approximately 4,000 barrels of bitumen. This production was not rateable on a daily basis since the plant
facilities were not on stream for the entire period. However, during this period, when producing at high
gross fluid rates, we experienced an average 30 percent bitumen cut. While facility bottlenecks and well
and plant maintenance operations during the quarter reduced the ability to produce continuously and at
the higher rates, air injection operations were not curtailed and have increased over the quarter, indicating
an expanding area of combustion.
Surface facilities have been able to handle a wide range of fluid rates and temperatures, however we have
experienced facilities downtime and reduced production due to equipment commissioning issues,
adjustments to manage higher than design well production capability, and sand production. These
facilities issues necessitate ongoing operational adjustments and sand clean-out procedures in the surface
facilities and the horizontal well. As reported previously, the produced sand is very fine-grained,
indicating that a sand-bridging structure within the reservoir has yet to be fully established. This is most
likely a result of our transition from the earlier steam injection operations to combustion operations, and
may have been impacted by earlier horizontal well procedures at the beginning of the THAI™ production
phase. While we expect the produced sand to be minimized as the combustion front expands and a
consistent rateable flow regime is established, we are also enhancing our sand handling capability to
minimize plant down time. These facilities modifications are underway and are expected to be in place by
the end of November.
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