Mr. John Wright reports

PETROBANK REPORTS Q1 2012 FINANCIAL RESULTS AND OPERATIONAL UPDATE

Petrobank Energy and Resources Ltd. has released its 2012 first quarter financial and operating results highlighted by funds flow from operations of $1.69 per diluted share, an increase of 8 per cent from the first quarter of 2011.

Petrobank's results include the financial and operating results of PetroBakken Energy Ltd., 59 per cent owned by Petrobank at March 31, 2012. PetroBakken announced first quarter financial and operating results on May 2, 2012.

In this report, quarterly comparisons are first quarter 2012 compared with first quarter 2011 unless otherwise noted. All financial figures are unaudited and in Canadian dollars unless otherwise noted.

Highlights

First quarter 2012 financial and operating highlights:

• Funds flow from operations increased 8 per cent from the first quarter of 2011 to $181.3-million, or $1.69 per diluted share, primarily as a result of PetroBakken's higher production and gross operating netbacks.

• PetroBakken's first quarter production, after dispositions, averaged 46,722 barrels of oil equivalent per day (86 per cent light oil and liquids weighted), a 12-per-cent increase over the first quarter of 2011.

• Capital expenditures before dispositions totalled $224.3-million in the first quarter with PetroBakken drilling 68 (47 net) wells.

• Petrobank sold the May River property for gross proceeds of $225-million and PetroBakken completed four transactions to sell non-core assets in the first quarter for total gross proceeds of $624-million.

• Both Petrobank and PetroBakken improved their financial liquidity significantly with Petrobank having over $100-million of cash at March 31 and PetroBakken's currently available credit facility capacity rising to more than $1.1-billion.

Petrobank stand-alone highlights:

• Kerrobert production averaged 193 barrels of upgraded THAI oil per day in Q1 2012 and continued to increase with April, 2012, production averaging 278 bopd.

• The company the May River property, including the Conklin demonstration project, on Feb. 28, 2012, for cash proceeds of approximately $225-million, net of closing adjustments, and concurrently cancelled its credit facility and withdrew its May River regulatory application.

• It initiated purchases under its normal course issuer bid and has repurchased and cancelled approximately 2.2 million shares at an average cost of $14.84 per share.

• Through its automatic share repurchase and PetroBakken share sale plan, it has sold 944,600 shares of PetroBakken for cash proceeds of approximately $12.9-million.

• It is revising its 2012 development plan to bring certain incremental conventional cold heavy oil production on stream. Additionally, it intends to place its horizontal wells at Dawson on conventional cold production in order to precondition the reservoir prior to initiation of its THAI project.

Operational update and revised 2012 development plan

Kerrobert THAI project

Petrobank is pleased to report that THAI production continues to increase. Production in April, 2012, averaged 278 bopd compared with 264 bopd in March and 193 bopd in the first quarter of 2012. These production volumes represent actual sale volumes for each period reported. Its operating philosophy remains unchanged with a focus on gradually increasing production, reducing pump and surface downtime, and reducing per-barrel operating costs.

It plans to drill a water disposal well near its Kerrobert project this summer which will significantly reduce water disposal costs.

Dawson THAI demonstration project

Petrobank deferred completion of the Dawson demonstration project in late 2011 to save on costs associated with winter start-up of a THAI project. Since that time, it has continued to review the Dawson reservoir and project plans. Based on this analysis, it has determined that the Dawson reservoir would benefit from being preconditioned for THAI operations by producing conventional cold heavy oil from its current horizontal production wells. It expects to begin the two-well THAI demonstration project in 2013 and the full field THAI development application is expected to be filed after the THAI demonstration project is on production.

Saskatchewan conventional cold heavy oil production

Petrobank has identified multiple opportunities to use some of the existing wells on its Saskatchewan lands for conventional cold heavy oil production. Some of these wells offset its Kerrobert THAIA project and others are on the company's Plover and Luseland properties. While Petrobank's primary focus is THAI production, it will take advantage of existing opportunities on its lands to increase production. Success with these completions and reactivations may lead to additional conventional drilling opportunities.

2012 capital plan and production

Petrobank forecasts that its 2012 development capital will remain unchanged at approximately $34-million. Capital in the company's original plan which was allocated to May River and completing the Dawson demonstration project has been reallocated to reduce operating costs, add conventional cold heavy oil production and precondition the reservoir for its Dawson THAI project.

Normal course issuer bid and Petrobakken share sale plan

In March, the company repurchased 1,246,000 common shares under its NCIB at an average cost of $16.05 per share. In April, it entered into an automatic share repurchase and PetroBakken share sale plan pursuant to which its designated broker has been instructed to automatically sell one PetroBakken share for each Petrobank share purchased under the plan, subject to certain trading parameters set forth in the plan and to daily and total trading limits imposed by the rules and policies of the Toronto Stock Exchange. The broker may repurchase and sell up to 6,027,401 Petrobank shares and PetroBakken shares, respectively. The plan will cease on the earlier of the termination of the plan by Petrobank, the purchase of the maximum number of shares under the NCIB or the expiry of the NCIB on Sept. 13, 2012. Under the plan, the broker has repurchased 944,600 Petrobank shares and sold 944,600 PetroBakken shares for net proceeds to Petrobank of approximately $380,000. Since January, 2012, Petrobank has also received approximately 1.8 million PetroBakken shares under PetroBakken's dividend reinvestment plan, including approximately 1.3 million shares for the March and April, 2012, dividends.

Petrobank's liquidity and capital resources

Petrobank and PetroBakken manage their capital structure independently, generate their own cash flows and have the ability to finance their operations through the issuance of secured and unsecured debt as well as equity financing. Petrobank's capital resources are focused on financing corporate and heavy oil business unit expenditures. At March 31, 2012, on a stand-alone basis independent of PetroBakken, Petrobank's HBU and corporate operating segment had cash and cash equivalents of $116.8-million and a net working capital surplus (including cash) of $103.9-million.

Based on Petrobank's current ownership and PetroBakken's current annual dividend of 96 cents per PetroBakken share, Petrobank expects to receive approximately $106-million of dividends annually from PetroBakken, paid monthly. PetroBakken instituted a DRIP in early 2012, which allows shareholders to reinvest monthly cash dividends in new shares at a 5-per-cent discount to the then-current market price. Due to Petrobank's significant positive working capital balance, it elected to participate at a 100-per-cent level in PetroBakken's DRIP starting with the March dividend. It believes that receiving additional shares in PetroBakken is an attractive investment at this time. Petrobank may change its participation level in the future.

Petrobank currently expects to finance its working capital requirements and HBU capital expenditure program with available cash and cash from operations.

                         SUMMARY OF RESULTS
                    Three months ended March 31
     (in thousands of dollars, except per share amounts)

                                                2012        2011
Financial                                                                   
Oil and natural gas sales                   $330,361    $281,297
Funds flow from operations                   181,290     168,384
Per share -- basic                              1.70        1.58
Per share -- diluted                            1.69        1.57
Adjusted net income (loss) attributable                                     
to Petrobank shareholders                     82,307         (21)
Per share -- basic                              0.77        0.00
Per share -- diluted                            0.76        0.00
Operations                                                                  
PetroBakken operating netback ($/boe)                                       
Oil, NGL and natural gas revenue               77.36       74.46
Royalties                                      11.92       11.84
Production expenses                            12.61       10.20
Operating netback                              52.83       52.42
Average daily production                                                 
PetroBakken -- oil and NGL (bbl)              40,336      36,140
PetroBakken -- natural gas (Mcf)              38,320      32,534
Total conventional (boe)                      46,722      41,562

Investor conference call

Management of Petrobank will be holding a conference call for investors, financial analysts, media and any interested persons on Tuesday, May 15, 2012, at 9 a.m. MT (11 a.m. ET) to discuss Petrobank's first quarter financial and operating results. The investor conference call details are as follows:

• Live call dial-in number(s): 416-695-6616/800-952-6845;

• Replay dial-in numbers: 905-694-9451/800-408-3053;

• Replay pass code 4657181.

The live audio webcast is available on the company's website.

We seek Safe Harbor.