Petrobank to combine with unit, to separate heavy oil business

Tue Oct 30, 2012 7:10am EDT
 
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Oct 30 (Reuters) - Petrobank Energy and Resources Ltd said it will merge with its light-oil focused unit PetroBakken Energy Ltd and transfer its heavy oil business to a new entity to arrest a fall in its market valuation.

Shares of Petrobank, which owns 57 percent of PetroBakken, have fallen 14 percent in the last six months, while those of PetroBakken are down 13 percent.

"The reorganization will eliminate the recent negative market valuation of the heavy oil business," Petrobank said in a statement late on Monday.

Petrobank will form a new entity called New Petrobank, which will buy the heavy oil business of the company. Petrobank, which has a market value of C$1.18 billion, did not specify if the new company would be publicly listed.

Petrobank shareholders will receive one share of the new company for each Petrobank share held.

Petrobank will merge with PetroBakken, valued at C$2.52 billion, and the new entity will retain the unit's name.

Petrobank shares closed at C$12.20 and shares of PetroBakken closed at C$12.38 on the Toronto Stock Exchange on Monday.