CALGARY — News that Petrobank Energy and Resources Ltd. is spinning off its 66 per cent interest in Latin American crude producer Petrominerales Ltd. sent shares in both companies soaring Wednesday.
Shares in Petrobank (TSX:PMG), which produces heavy oil in western Canada, rose 4.5 per cent to $42.96 on the Toronto Stock Exchange with one million shares changing hands in afternoon trading.
Petrominerales (TSX:PBG), active in Colombia and Peru, rose 5.3 per cent to $28.20 on a volume of 2.3 million shares.
Under the reorganization, announced Tuesday night, Petrobank shareholders will receive about 0.62 shares of the spun-off Petrominerales. They will also get one replacement Petrobank share.
Existing Petrominerales shareholders will receive one share of the new entity.
“This transaction is designed to enhance long-term value for Petrobank and Petrominerales shareholders,” Petrobank said in a statement.
“The reorganization is consistent with our long-held corporate goal of enhancing shareholder value by creating strong, independent companies.”
The deal is expected to close by year-end. Executives and board members at Petrominerales will remain the same.
Petrobank also owns 58 per cent of a relatively new light-oil focused company called PetroBakken Energy Ltd. (TSX:PBN), which was created out of last year’s merger between Petrobank’s Western Canadian business and TriStar Oil & Gas.
Petrobank uses its patented Toe-to-Heel-Air-Injection, or THAI, process, to extract thick heavy oil from deep underground.
In that method, air is shot underground to ignite a flame in the reservoir, which softens the gooey bitumen enough for it to flow to the surface.