Exploration

Petrobank continues to expand our exploration prospect base in areas where we have internal technical strengths and a strong land position. The Company’s large undeveloped land position of 351,000 net acres provides a significant platform for future growth.

With a strategy of adding value through the drill bit, Petrobank is aggressively moving forward on new, potentially high-impact exploration prospects in two key areas of northwestern Alberta. Petrobank will begin to test the multi-zone oil and gas potential of these areas with at least two exploration wells in 2007.

Petrobank’s extensive undeveloped land position also includes non-expiring fee-title lands in Alberta, Saskatchewan and Manitoba. These lands have allowed us to monitor industry results and generate a significant amount of royalty income in the Sinclair and Innes areas. This has also allowed us to participate in the evolving Bakken light oil play and we have significantly increased our exposure to this play through recent Crown land sales.

• Acquired 30 square kilometres of 3-D seismic and a further 23 square kilometre 3-D seismic program is planned later in 2007
• Plan to drill at least two, 100 percent working interest, wells in 2007

Petrobank is balancing its lower risk activities with higher impact exploration potential in one of the more exciting industry plays in recent years. In 2006, Petrobank acquired Crown lands to gain entry to a new exploration area in northwest Alberta with the main targets being light sweet oil and natural gas opportunities in stacked horizons. From regional mapping and 3-D seismic acquired in 2007 over the most prospective lands, Petrobank’s exploration lands appear to be on trend with recent large discoveries in the area. We have acquired 11 sections of land encompassing various play types and we plan to drill our first two exploration wells in the second and third quarters of 2007.