Deal pushes up Petrobank share value

Petrobank Energy and Resources Ltd. shares rose Tuesday in the wake of a corporate reorganization that will result in its shareholders getting stock in PetroBakken Energy Ltd., a related public company.

Petrobank shares rose 99 cents or eight per cent to $13.19, while PetroBakken shares fell 38 cents to $12 on the Toronto Stock Exchange.

Under the proposal, announced late Monday, a reorganized Petrobank will keep about $100 million in cash and a heavy oil business that includes patented production technology.

Petrobank shareholders will get stock in a reorganized company by the same name as well as a proportionate share of its 57 per cent stake in PetroBakken, which is focused on conventional light oil in the Bakken and Cardium formations.

Petrobank’s shareholders will receive slightly more than one Petro Bakken share for each Petrobank share they have at the time of the conversion. The boards of both companies are supporting the transaction, but the reorganizations will require shareholder approvals.

“PetroBakken is anticipated to benefit from the reorganization through an increase to our publicly traded float, which should provide additional liquidity in the market, and the elimination of any share price trading discounts due to the perceived overhang of a control block owned by the parent company,” PetroBakken said.