Oil sands junior takes ‘poison pill’

Petrobank Energy and Resources, which is making strides in developing a new technology to recover heavy oil and reduce project capital costs, has put a firewall around itself to fend off any hostile takeover attempt.

The Calgary-based start-up said it instituted a shareholder rights plan although it is not aware of any pending or likely bid to “encourage the fair treatment of shareholders in connection with any takeover offer.”

Petrobank said current Canadian law would not afford its shareholders or board members sufficient time to consider a bid.

The plan will be put to a vote of shareholders before the annual meeting on June 22, 2007.

In addition, Petrobank said it has closed an C$87.8 million bought-deal financing to fund debt repayment and accelerate development of its Whitesands project.

The technology it is pioneering is called THAI, which involves igniting oxygen through a vertical air injection well to melt bitumen deposits, which can then be recovered through a horizontal production well.

It estimates front-end costs for Whitesands will be C$10,000 per flowing barrel compared with C$76,000 for the Nexen-OPTI Canada Long Lake project and more than C$100,000 for more conventional mining and upgrading projects now in the works.

But some analysts are taking a cautious view of the claims because the Whitesands pilot project is producing some water and sand in its 1,000 barrels per day of mostly bitumen.

Petrobank plans to start testing two more well pairs in January and hopes for an early start on a commercial operation to recover 658 million barrels of bitumen.

—Gary Park