2009-10-28-2009-08-04-2009-10-01

Acquired company with assets in SK, AB, gaining 20,400 BOE/d, 109 billion BOE 2P.

Petrobank Energy and Resources Ltd. (Toronto: PBG) has acquired TriStar Oil & Gas Ltd. (Toronto: TOG) for C$584.5 million in cash plus additional stock and merged the company into its Canadian business unit to create a new entity, PetroBakken Energy Ltd., (Toronto: PBN) to focus on light oil exploration and production in the Bakken play. Petrobank capitalized PetroBakken with its Canadian business unit assets and C$400 million of cash, which then acquired all the outstanding shares of TriStar. Petrobank received 109.8 million common shares of PetroBakken, or approximately 64%. TriStar shareholder received C$14.75 cash, or 0.5350 of a PetroBakken share, or a combination being approximately C$3.75 per share in cash and 0.3989 of a PetroBakken share per TriStar share, representing a 29% premium to TriStar's 10-day weighted average. In total, TriStar shareholders received approximately C$580 million in cash and 61,762,500 shares of PetroBakken, representing 36% of PetroBakken. TriStar assets included more than 900,000 net acres in southeastern Sasketchewan and Alberta. Proved plus probable reserves were 109 billion barrels of oil equivalent. Production for second-quarter 2009 averaged 20,401 barrels of oil equivalent per day (80% light oil). It had more than 1,500 gross drilling locations. Petrobank president and CEO John Wright says, "This is a unique opportunity to bring together two like-minded organizations to create a premier southeast Saskatchewan light-oil producer offering exceptional growth potential, focused on applying leading-edge technology to major resource plays, with our primary attention directed initially at the Bakken formation. At Petrobank, our Canadian business unit has consistently delivered exceptional per-share production and reserves growth and we have positioned PetroBakken to continue this legacy of growth, while also providing an attractive dividend yield." TriStar president and CEO Brett Herman says, "TriStar has achieved significant growth over the past three years, assembling a high-quality, long-life asset base with tremendous upside. We believe the consolidation of the southeast Saskatchewan and Bakken assets of Petrobank and TriStar, and the combination of each company's strong technical staff is the next step in the evolution of our company. With recent technological innovations, together, we have just begun to unlock the true potential of the Bakken." Current production for PetroBakken following the combination is approximately 43,630 barrels of oil equivalent per day. PetroBakken will have production of 37,000 barrels of oil per day exiting 2009 following the planned Alberta asset dispositions (95% light oil) including more than 27,000 barrels from the Bakken. Its land inventory consists of more than 1 million net acres with some 800,000 net acres in southeastern Saskatchewan, making PetroBakken the single largest landholder in this region. Of this, more than 280,000 net acres (440 net sections) are in the Bakken play fairway with significant further exposure to Bakken exploration activity, including 80,000 net acres in Montana. Upside includes more than 2,000 development drilling locations, including 1,300 Bakken locations. Additionally, PetroBakken has finalized a C$1.05 billion borrowing base credit facility, with C$925 million drawn. Following the acquisition, PetroBakken plans to divest a package of Alberta-based assets consisting of approximately 9,500 barrels of oil equivalent per day (44% light oil, 56% natural gas), and 40.1 million barrels of oil equivalent of proved plus probable reserves to further enhance the focus of PetroBakken on southeastern Saskatchewan light oil resource plays. Following the divestitures, PetroBakken will primarily be a pure-play, southeastern Saskatchewan, light oil-focused company with 2009 exit production of more than 37,000 barrels of oil equivalent per day, more than 95% light oil and more than 70% of which will be from the Bakken. TD Securities Inc. was financial advisor and Haywood Securities Inc., Merrill Lynch Canada Inc. and UBS Securities Canada Inc. were strategic advisors to Petrobank and PetroBakken. Macquarie Capital Markets Canada Ltd. and BMO Capital Markets were financial advisors to TriStar and CIBC World Markets Inc., GMP Securities LP and National Bank Financial Inc. were strategic advisors. FirstEnergy Capital Corp. and TD Securities are managing the sales process for PetroBakken's Alberta assets.