PetroBank

[dan_s]

May Creek is the "Big Project" for their Heavy Oil Division. Production is expect to begin in 2012 and ramp up to 100,000 bopd over two years. - Dan

Contingent resources, as evaluated by McDaniel, are those quantities of bitumen estimated to be potentially recoverable using SAGD technology 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.

CALGARY, ALBERTA--(Marketwire - June 28, 2011) - Petrobank Energy and Resources Ltd. (TSX:PBG - News) is pleased to announce an increase in our May River best estimate contingent resources to 624.1 million barrels effective June 1, 2011. To date this year, we have drilled 10 oil sands exploration wells at our May River property, which is comprised of 62 sections near Conklin, Alberta. This drilling further defined our resource and prompted the Company to request that our independent reserves evaluator, McDaniel & Associates Consultants Ltd. ("McDaniel"), update our May River property resource estimate.

All references to $ are Canadian dollars unless otherwise noted. Contingent resources set forth herein are in respect of our May River property only and exclude reserves and resources for PetroBakken and all other Petrobank properties.

HIGHLIGHTS

-- May River best estimate contingent resources increased 11% to 624.1 million barrels at June 1, 2011 (see "Resources and Contingent Resources"). -- May River best estimate contingent bitumen resources before tax net present value discounted at 8% increased 28% to $3.8 billion at June 1, 2011. -- May River proved plus probable reserves remains relatively unchanged at 90.6 million barrels. These reserves are not included in our contingent resource estimates. -- THAI(R) best estimate Exploitable Bitumen-in-Place ("EBIP") evaluated at 1.9 billion barrels versus steam assisted gravity drainage ("SAGD") best estimate EBIP of 1.6 billion barrels (see "Exploitable Bitumen-in- Place").

Based on the success of the current Whitesands Demonstration Project, Petrobank is planning a greenfield commercial THAI® project, the May River Project, with a central processing facility two kilometres from our current site. The project will be constructed in phases with the first module (Phase-1) having the capacity to produce 10,000 to 15,000 bbl/d of partially upgraded bitumen. Expansion will continue in stages with the production capacity ultimately reaching 100,000 bbl/d. Operationally, it will also allow design improvements and new production processes to be incorporated into the project. By including our overall plan for the 100,000 bbl/day project we also expect to improve the timing of the necessary regulatory approvals for the first phase and future phases.

[dan_s]

PetroBank owns 59% of PetroBakken (PBKEF.PK). PetroBakken pays a monthly dividend of 8 cents per share. At the current price of $13.60/share that equates to an annual yield of more than 7%.

I just updated my PetroBakken forecast model. It is generating more than enough cash flow to support the dividend payments.

[pattaro]

Dan,

I've been positioning PBG since 19 and would buy more except there seems to be no support. I like the stock longterm, but am wondering if you see a bottom or support near term for additional purcjhases.

[dan_s]

The price of PetroBakken is the real support level for PetroBank. PetroBakken will report some weather related delays in Q2 but strong production growth is expected in Q3 and Q4. Some new gas processing facilities are coming on-line in their Bakken fields that will allow them to capture more liquids. You can check my forecast model for PetroBakken under the PetroBank logo. I updated it yesterday. The fundamentals look solid and the stock is now yielding over 7% annually so that should provide some support as well.

Each share of PetroBank = one share of PetroBakken plus their Heavy Oil business.

PetroBank needs to deliver on their goal of ramping up production at Kerrobert, their first real heavy oil project using the THAI process. If Kerrobert does ramp up to 7,000 bopd over 18 months, as promised, this stock will take off. Production is expected to ramp up starting in July.

Their Dawson Project in the Peace River region of Alberta should be on-line during the 4th quarter of 2011. Dawson is designed to ramp up to 10,000 bopd with production growth to accelerate late in 2012.

I'm not a very good "chart reader" so maybe others can help there.

[gjames]

Dan:
Thanks again for ALL of your helpful insight and commentary! Not much of a chart reader either, but if you are charting the US traded PBEGF, it is almost back down to the levels it traded at during the panic of late '08/early '09. Also traded at this level for all of '06 and early '07 before it went on a run to $60. Gotta think there's pretty solid support somewhere near current price.

[setliff]

pbg.to is at strong support on the weekly chart from 13-14. last three days action may be the beginning of a period of consolidation and bottoming.