Petrobank Closes $120M Credit Facility

Petrobank Energy and Resources Ltd. said that it has closed a $120 million credit facility underwritten by the Toronto-Dominion Bank. The facility consists of a $40 million committed reserve-based revolver, a $10 million revolving demand loan, and a nine-month, $70 million bridge loan. The facility will be used to fund ongoing development and exploration expenditures in Canada, drilling additional delineation wells on the Company's 60 sections of oil sands leases, and to replace existing debt including the Company's outstanding subordinated notes, which mature on July 31, 2006. The facility bears interest at rates between LIBOR plus 110 and 215 basis points depending on debt-to-EBITDA levels.

Canadian Drilling Program

In addition to its ongoing development programs at Jumpbush and Red Willow in Alberta, Petrobank plan to use a portion of the proceeds from this facility to accelerate activity in southeast Saskatchewan targeting the Bakken formation. The company will have two rigs working this area by the end of August. The first phase of drilling incorporates an 18-well program and to-date we have developed an inventory of 25 additional Bakken locations. Petrobank has an extensive land base in southeastern Saskatchewan including a fee-simple land position where we own the underlying mineral rights. This has allowed Petrobank, through various farm-outs where we retain a gross overriding royalty, to monitor and participate in the evolution of the Bakken light oil play with little capital exposure to-date. Concurrently, the company has been actively acquiring additional lands within the Bakken fairway to compliment its existing position and now have 138,000 gross acres or 118,600 net acres in areas with Bakken potential.

Expanded WHITESANDS Resource Delineation Plan

A portion of the proceeds from this facility will also be used to fund the ongoing bitumen resource delineation drilling program of Petrobank’s 60 sections of oil sands leases owned by our 84% owned subsidiary, WHITESANDS Insitu Ltd. The company plans to drill up to nine wells later this summer with additional wells to be drilled early this winter. A recoverable reserve and resource assessment was performed by McDaniel Associates Ltd. ("McDaniel") effective May 1, 2006 that estimated an initial gross recoverable bitumen volume of up to 537 million barrels. The total bitumen-in-place volume on the lands is estimated to be 1.6 billion barrels as reported in a May 2006 Fekete Associates Ltd. resource evaluation. Petrobank believes there is considerable upside to the recoverable resource estimates as the McDaniel report included only those sections of the lands with at least one drillhole and excluded a number of sections with McMurray channel indicated by our 3-D seismic and areas on trend with known McMurray channel. This additional drilling is expected to delineate significant new recoverable bitumen resources. Following the results from the summer drilling program, additional lands will be delineated with future drilling programs.

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. The Canadian Business Unit combines conventional oil and gas operations with two higher potential coalbed methane opportunities. The Latin American Business Unit is operated by Petrobank's 81% owned, TSX-listed subsidiary, Petrominerales Ltd. (trading symbol: PMG), which produces oil through two Incremental Production Contracts in Colombia and has contracts on five new exploration blocks and five Technical Evaluation Agreements covering a total of 2.5 million acres in the Llanos and Putumayo Basins. WHITESANDS Insitu Ltd., Petrobank's 84% owned subsidiary, owns 38,400 acres of oil sands leases with an estimated 1.6 billion barrels of bitumen-in-place and operates the WHITESANDS project to field-demonstrate 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 combines a vertical air injection well with a horizontal production well. THAI(TM) integrates existing proven technologies and provides the opportunity to create a step change in the development of heavy oil resources globally.