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Publish Date : 31-Oct-2012

Petrobank Energy and Resources Ltd. is pleased to announce that we have entered into an agreement with PetroBakken Energy Ltd., our 57% owned subsidiary, to complete a corporate reorganization that will see Petrobank shareholders effectively receive Petrobank’s proportionate interest in our PetroBakken share holdings while maintaining their interest in the remaining Petrobank assets (the “Reorganization”). Petrobank and PetroBakken have signed an arrangement agreement detailing the terms and conditions of the Reorganization. The Board of Directors of each Company have approved the Reorganization, which is anticipated to become effective on December 31, 2012 (the “Effective Date”).

Pursuant to the Reorganization, a new Alberta corporation will be formed (“New Petrobank”) which will, through a series of transactions, directly or indirectly acquire all of Petrobank’s assets and liabilities, including our heavy oil assets, the THAI and related patents and cash (anticipated to be over $100 million) (the “Heavy Oil Business”), but excluding our investment in PetroBakken (the “PetroBakken Shares”). Existing Petrobank shareholders will receive one share of New Petrobank for every share of Petrobank held on the Effective Date.

Following this distribution of Petrobank’s Heavy Oil Business to New Petrobank, Petrobank and PetroBakken will, through a series of transactions, amalgamate, with the resulting company to continue under the name “PetroBakken Energy Ltd.” (“New PetroBakken”). Existing PetroBakken shareholders will receive one share of New PetroBakken for every share of PetroBakken held on the Effective Date and Petrobank shareholders will receive, in aggregate, a number of New PetroBakken shares equal to the number of PetroBakken Shares held by Petrobank on the Effective Date. The number of New PetroBakken shares to be received for each Petrobank share held will be equal to the PetroBakken/Petrobank exchange ratio (“the Exchange Ratio”) on the Effective Date, which will be calculated by dividing the number of PetroBakken shares owned by Petrobank by the number of Petrobank shares outstanding. As of the date of this press release, Petrobank owns 106.3 million PetroBakken shares and has 96.3 million basic shares outstanding and 100.4 million fully diluted shares outstanding, which would result in an Exchange Ratio ranging between 1.10 and 1.06.

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