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Petrobank Announces Record First Quarter Results
[May 13, 2008]

Petrobank Announces Record First Quarter Results


(Marketwire Canada (English) Via Acquire Media NewsEdge)
CALGARY, ALBERTA--(Marketwire - May 13, 2008) - Petrobank Energy and Resources Ltd. ("Petrobank" or the "Company") (TSX:PBG) (OSLO:PBG) is pleased to announce record first quarter 2008 financial and operating results.

HIGHLIGHTS

- Average production in the first quarter of 2008 increased to 22,524 barrels of oil equivalent per day ("boepd") compared to 6,139 boepd in the first quarter 2007, a 267% increase. Canadian Business Unit ("CBU") production increased by 239% to 13,889 boepd and production from the Latin American Business Unit ("LABU") increased by 323% to 8,635 barrels of oil per day ("bopd").

- The Peerless Energy Inc. ("Peerless") acquisition was completed on January 28, 2008 for $338.8 million, including net debt assumed. Peerless 3P reserves at December 31, 2007 totalled 18.7 million boe with net present value, before tax, discounted at 10% of $445.6 million. Production and financial results for Peerless have been included in Petrobank's results starting January 28, 2008.

- Funds flow from operations increased by 577% to $123.5 million in the first quarter 2008 or $1.36 per diluted share compared to $18.2 million ($0.25 per diluted share) in the first quarter of 2007.


- First quarter 2008 net income increased by 850% to $35.5 million compared to $3.7 million in the first quarter of 2007. On a per diluted share basis, net income increased by 700% to $0.40.

FINANCIAL & OPERATING HIGHLIGHTS

The following table provides a summary of Petrobank's financial and operating results for the three months ended March 31, 2008 and 2007. Consolidated financial statements with Management's Discussion and Analysis ("MD&A") are available on our website at www.petrobank.com under the "Investor Relations - Financial Reports" section.

(All references to $ are Canadian dollars unless otherwise noted)

Three months ended March 31, 2008 2007 % change
----------------------------------------------------------------------------
Financial
($000s, except where noted)
Oil and natural gas revenue 173,604 29,471 489
Funds flow from operations (1) 123,488 18,235 577
Per share - basic ($) 1.53 0.25 512
- diluted ($) 1.36 0.25 444
Net income 35,537 3,739 850
Per share - basic ($) 0.44 0.05 780
- diluted ($) 0.40 0.05 700
Capital expenditures 200,270 72,612 176
Total assets 1,737,225 480,896 261
Net debt (1) 181,306 93,932 93
Common shares outstanding, end of
period (000s)
Basic 82,489 72,433 14
Diluted (2) 96,889 76,689 26
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Operations
Canadian Business Unit ("CBU") operating
netback ($/boe except where noted) (1) (3)
Oil and NGL revenue ($/bbl) 91.87 62.87 46
Natural gas revenue ($/mcf) 7.73 7.05 10
Oil and natural gas revenue 83.55 50.80 64
Royalties 6.74 5.78 17
Production expenses 9.35 8.42 11
----------------------------------------------------------------------------
Operating netback (4) 67.46 36.60 84
Latin American Business Unit ("LABU")
operating netback ($/bbl) (1)
Oil revenue 86.53 58.44 48
Royalties 8.25 4.67 77
Production expenses 10.86 8.26 31
----------------------------------------------------------------------------
Operating netback (4) 67.42 45.51 48
Average daily production (3)
CBU - oil and NGL (bbls) 11,351 1,692 571
CBU - natural gas (mcf) 15,229 14,429 6
----------------------------------------------------------------------------
Total CBU (boe) 13,889 4,097 239
LABU - oil (bbls) 8,635 2,042 323
----------------------------------------------------------------------------
Total Company conventional (boe) 22,524 6,139 267
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Non-GAAP measure. See "Non-GAAP Measures" section within Management's
Discussion and Analysis ("MD&A").
(2) Assumes 8.8 million common shares will be issued upon conversion of the
Company's convertible debentures which were issued in May 2007.
(3) Six mcf of natural gas is equivalent to one barrel of oil equivalent
("boe"). Heavy Oil Business Unit ("HBU") bitumen volumes are excluded
from average daily production as Whitesands operations are considered
to be in the pre-operating stage and accordingly are capitalized.
(4) Excludes hedging activities.

OPERATIONAL UPDATE

CANADIAN BUSINESS UNIT

Petrobank's Canadian Business Unit production averaged 13,889 boepd in the first quarter, a 239% increase from the 4,097 boepd produced in the first quarter of 2007 and a 68% increase from the 8,254 boepd produced in the fourth quarter of 2007. On January 28, 2008, we closed the acquisition of Peerless for $339 million, including net debt assumed. Production for this quarter only includes two months of the Peerless production acquired. Canadian Business Unit production averaged 16,238 boepd in March 2008, including 12,400 boepd of high netback, Bakken production.

In February 2008, we purchased an additional 7.5 sections of Bakken acreage at the Crown land sale, further increasing our Bakken land base to 214 sections (137,000 net acres). Of this, 186 net sections were undeveloped with an estimated drilling inventory of over 660 (624 net) locations based on only four wells per section. Our plan is to drill 154 of these locations (net) in 2008, which we expect will make Petrobank the most active operator in the play.

In the first quarter of 2008 we drilled 45.2 net Bakken locations. After an earlier than expected spring break-up from late March through mid-April, we have now recommenced our extensive Bakken development drilling program with seven active rigs operating on the trend, resulting in two to three new wells per week. In addition, we have started construction of our first satellite facility which will process production from our Creelman area with a pipeline connection to our main Midale facility to capture the associated natural gas and liquids production. This facility is expected to be fully operational by the end of July. We also expect to have the Peerless Innes facility pipeline connected to our Midale facility in the same time frame. Our previously announced Freestone facility will now be an oil battery and gas conservation facility with a pipeline connection to our main Midale facility for natural gas liquids extraction and gas processing. This Freestone facility is expected to be completed by the end of the third quarter of 2008 and will likely also process gas for other third parties. These infrastructure enhancements will allow us to maximize our liquids rich natural gas production and reserves from the play while significantly reducing operating costs and improving our overall project economics.

The Bakken formation produces light oil in close proximity to Canada's main oil pipelines. Operating netbacks are high, particularly when considering the current environment of record oil prices, the attractive Saskatchewan royalty regime, and relatively low operating costs. The operating netback for our operated Bakken oil production during the first quarter of 2008 was $79.19 per barrel, with WTI averaging US$97.82 per barrel during this period.

During the balance of 2008, in addition to our ongoing development of our Bakken field we plan to initiate the testing of exciting new exploration and applied technology ideas in southeast Saskatchewan, northwest Alberta, northeast British Columbia, and Princeton, British Columbia.

HEAVY OIL BUSINESS UNIT

Whitesands Project

At Whitesands we continue to produce partially upgraded oil via the THAI(TM) process. THAI(TM) continues to meet or exceed our technical expectations and our plans to expand Whitesands and develop the Dawson and May River projects are proceeding. However, operations at Whitesands have been hampered by excess sand production, which is due to the liner slot size used in the original three wells and is not related to the THAI(TM) process. The long term plan for all future wells is to implement a revised down-hole completion design in conjunction with simplified surface facilities, which should eliminate the large majority of the produced sand and allow us to produce our new wells at higher rates and increased on-stream factors. In the interim, we will continue to make temporary modifications to our operating procedures and surface equipment to deal with this sand production from the existing wells.

Facility upgrades at Whitesands to better manage produced sand and to improve gas sweetening were fully operational by the end of the first quarter. The wellhead de-sand facilities, which were mechanically complete at the end of 2007, have improved on-stream factors. The extended well on-stream times have also more fully demonstrated a unique production characteristic of the initial three wells, whereby they periodically unload large liquid and sand volumes that overload the surface facilities. While the new sand handling facilities have been able to manage production cycles, enabling longer run times, they still require downtime for cleanouts and to solve mechanical and operations procedures. The present facilities design, while improving operations, will be modified for future facilities. During the quarter we installed temporary facilities, similar to our revised design for the May River and Dawson projects, which utilizes primary gas separation followed by tank separation of oil, water and sand, rather than using one pressure vessel. Each well was tested several times with positive results, confirming our future design path. Extreme cold weather during the first quarter, along with commissioning and operating problems with the new incinerator brought on-stream in February, constrained operations and slowed the rate of increase of air injection and production.

Produced oil continues to show a substantial degree of upgrading at the wellhead, ranging between 11 and 17 degrees API and is currently averaging 12 degrees API, compared to the native 8 degree API bitumen in-situ. In addition, we have segregated oil with an API gravity of over 30 degrees from our secondary separation. This lighter oil is carried by the overhead gas stream as a vapour, condensing in the secondary separators. This lighter fraction is indicative of significant in-situ thermal cracking. Produced gas analysis also indicates ongoing high temperature combustion with significant levels of free hydrogen production, which will be beneficial for the CAPRI(TM) process. Finally, initial analysis of our 4D seismic survey acquired early in the first quarter has provided a clear indication of the area affected by the THAI(TM) process, further demonstrating the toe-to-heel flow direction.

Early in the second quarter we received the license to the drill our first THAI(TM)/CAPRI(TM) well, P3B, as a replacement for our existing P3 well; the well pad is complete, the rig is on-site and we expect to begin drilling later this week. Because of the unique nature of this well, additional review with the regulatory authorities was required, further delaying the timing for approval of the well license. The first THAI(TM)/CAPRI(TM) integrated liner for P3B has been successfully manufactured and is being transported to the site this week. This major accomplishment is a world-first and has proven the design and manufacturing feasibility of integrating a catalyst within a production liner. The liner also incorporates narrower slots designed to minimize sand production.

In advance of drilling P3B we shut-in the P3 well and initiated a workover operation to pull the production, steam control, and thermocouple instrument tubing strings from the horizontal section of the well. We have been able to successfully remove all of the production tubing and the majority of the instrument and control tubing. Examination of the tubing showed it to be in good condition and we plan to attempt to retrieve the remaining tubing, log the original liner and evaluate the well for further utilization.

Our regulatory application for the three well expansion project, adjacent to the existing Whitesands site, is in the approval process. We are ready to commence drilling these THAI(TM)/CAPRI(TM) wells and expect to receive an indication of final timing from the regulatory authorities later this month. With prompt approval, these wells could be drilled in the third quarter of 2008.

May River Project

The May River Project is our commercial expansion plan for the THAI(TM) technology on the Whitesands leases. Recent plant production experience and engineering to date provided the basis for simplifying our central May River processing facility design. The central facilities for the project will be located approximately two kilometres from the current Whitesands site. May River is planned to be built in phases, beginning with initial production capacity of 10,000 to 15,000 bopd of partially upgraded oil, ultimately building capacity to 100,000 bopd. The regulatory applications for the first phase are expected to be filed in the third quarter of 2008. With timely receipt of regulatory approvals, construction could begin in early 2009 with project startup in late 2009.

Dawson Project

The Dawson project is a joint venture involving our first Alberta-based, third party THAI(TM) license. This project is located in Alberta's Peace River area and is the first THAI(TM) project in a conventional heavy oil reservoir, another important step in taking the technology to a global market. We are planning to implement a two-well project that will incorporate our simplified facilities design. With timely regulatory approval we could commence construction at Dawson later in 2008. This summer, we expect to drill a stratigraphic well which will be used to confirm horizontal well locations and will also be used as a thermal observation well.

Sutton Creek, Saskatchewan

In 2007 we acquired a township of land (36 square miles or 23,040 acres) with oil sands potential at Sutton Creek, Saskatchewan. This new land position is located within a new and promising oil sands fairway. A 2D seismic survey is planned for the area in the second half of 2008 as ground conditions permit.

Technology Development - Archon Technologies Ltd.

We achieved a major milestone with the successful manufacturing of the first THAI(TM)/CAPRI(TM) liner. This significant innovation further demonstrates our ability to convert the intellectual property being generated by Archon into practical solutions for the oil industry.

We have also evaluated a number of heavy oil reservoirs with potential third party licensing partners, and have conducted laboratory reactor tests of their oil to determine the combustion characteristics and the degree of potential upgrading. These evaluations have demonstrated the feasibility of THAI(TM) in a wide range of heavy oil reservoirs domestically and internationally.

As part of our ongoing research and development process we are working with other research institutions. Recently we entered into a research program with the University of Bath and the University of Birmingham to evaluate the optimization of CAPRI(TM) for the in-situ upgrading of heavy oil. This project has received $1.5 million in funding from the Engineering and Physical Sciences Research Council (EPRSC) (UK).

Archon is continuing to evaluate a number of innovative engineering, environmental, and other value added technology options to improve operational efficiency and flexibility and to reduce the environmental impact of commercial developments. Other technologies include enriched oxygen injection, utilizing produced gas to cogenerate enough power to be energy self sufficient, sulphur recovery, and partial surface upgrading. These technologies can be incorporated into commercial designs and will have a major impact in further reducing our overall environmental footprint and greenhouse gas emissions.

LATIN AMERICAN BUSINESS UNIT - Petrominerales Ltd. (TSX:PMG) (owned 76.4%)

A full operational update of our 76.4% owned Latin American Business Unit, Petrominerales Ltd., was published on May 6, 2008 and can be found at www.petrominerales.com and www.sedar.com. Highlights of the first quarter include:

- Crude oil production increased by 323%, averaging 8,635 bopd in the first quarter of 2008, mainly due to production from our Corcel-A1, Corcel-A2, Orito-121 and Orito-161 wells.

- Operating netbacks increased by 73% to US$67.15 per barrel in the first quarter of 2008.

- Petrominerales funds flow from operations increased by 769% to US$45.2 million.

- Petrominerales net income increased by 1,227% to US$22.2 million.

ANNUAL AND SPECIAL MEETING

We remind shareholders that Petrobank's annual and special meeting (the "Meeting") will be held tomorrow (Wednesday, May 14, 2008) at 3:00 p.m. (Calgary time) in the Devonian Room of the Calgary Petroleum Club, 319 Fifth Avenue SW, Calgary, Alberta, Canada, T2P 0L5.

In addition, the Meeting will be webcast live and available for replay at http://www.petrobank.com/inv-corporatepresentation.html. To listen to the Meeting live please enter http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2280960 in your web browser. After the formal business of the Meeting and corporate presentation, management of the Company will provide a question and answer period. For shareholders participating by webcast, you may e-mail questions to agm2008@petrobank.com. Petrobank's management will endeavor to answer as many questions as possible during the time frame allotted.

Petrobank Energy and Resources Ltd.

Petrobank Energy and Resources Ltd. is a Calgary-based oil and natural gas exploration and production company with operations in western Canada and Colombia. The Company operates high-impact projects through three business units and a technology subsidiary. The CBU is developing a solid production platform from low risk gas opportunities in central Alberta and an extensive inventory of Bakken light oil locations in southeast Saskatchewan, complemented by new exploration projects and a large undeveloped land base. The LABU, operated by Petrobank's 76.4% owned TSX-listed subsidiary, Petrominerales Ltd. (trading symbol: PMG), is a Latin American-based exploration and production company producing oil from three blocks in Colombia and has contracts on 15 exploration blocks covering a total of 1.6 million acres in the Llanos and Putumayo Basins. Whitesands Insitu Partnership, a partnership between Petrobank and its wholly-owned subsidiary Whitesands Insitu Inc., owns oil sands leases containing up to 805 million barrels of proved, probable, possible and contingent recoverable resources, based on conventional (SAGD) technology, 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.

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 results of operations and the timing of certain projects. 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: 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 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 forecast. 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.

Barrels of Oil Equivalent ("boe")

Disclosure provided herein in respect of boe units may be misleading, particularly if used in isolation. A boe conversion relationship of 6 mcf to 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the well head.

Contact:

John D. WrightPetrobank Energy and Resources Ltd.President and Chief Executive Officer(403) 750-4400

Chris J. BloomerPetrobank Energy and Resources Ltd.Vice-President Heavy Oil(403) 750-4400

Corey C. RuttanPetrobank Energy and Resources Ltd.Vice-President Finance and Chief Financial Officer(403) 750-4400(403) 266-5794 (FAX)Email: ir@petrobank.comWebsite: www.petrobank.com

? 2007 - Marketwire

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