Petrobank sells May River oilsands property for $225 million

CALGARY – Petrobank Energy and Resources Ltd. (TSX:PBG) says it has struck a deal with Grizzly Oil Sands Ulc. to sell its May River property, which includes the Conklin, Alta. demonstration heavy oil recovery project.

Petrobank said late Tuesday the sale price is $225 million, money that will be used to repay bank debt and improve its balance sheet.

The company suspended operations at Conklin last fall while it looked at integrating the project into its nearby May River oilsands development or shutting it down.

“This sale allows us to focus our resources and expertise on our near and medium-term conventional heavy oil growth opportunities,” the Calgary company said in a release after stock markets closed.

“Petrobank’s 2012 focus is the commercialization of our Kerrobert THAI project targeting increased production and reduced per-barrel operating costs. The May River disposition provides additional balance sheet flexibility to further evaluate our properties at Dawson, Plover and Luseland, as well as pursue additional opportunities.

The transaction is slated to close by the end of February.

Petrobank operates in Western Canada through two business units and a technology subsidiary.

Petrobank’s 59 per cent owned unit PetroBakken Energy Ltd. (TSX:PBN), produces light oil in the Bakken and Cardium plays in Saskatchewan and Alberta.

The company’s Whitesands partnership applies the THAI heavy oil recovery process in the field.

Petrobank has been using its oilsands projects to showcase its Toe-To-Heel Air Injection, or THAI, method of drawing bitumen out of the ground using no water and minimal natural gas.

The THAI process uses air to ignite a flame underground, which softens the gooey bitumen enough for it to flow to the surface.