* Says deal means position in cardium oil play

* Can apply technology used in Bakken

* Berens shares up 32 pct, PetroBakken up 1 pct (Adds details, background throughout)

CALGARY, Alberta, Jan 4 - PetroBakken Energy Ltd (PBN.TO) said on Monday it is buying smaller Berens Energy Ltd (BEN.TO) for C$271 million ($261 million) to establish a position in a prolific but technically challenging oil prospect in Alberta.

PetroBakken will acquire natural gas production in central Alberta as well as a toehold in the emerging cardium light oil play, which is similar to the Bakken region in southern Saskatchewan, where the company cut its teeth in applying horizontal drilling and rock-fracturing technology.

The deal caps off a six-week process for Berens, a junior oil and gas producer, during which it weighed strategic alternatives with the help of financial advisers.

Under the deal, PetroBakken will pay C$2.70 per Berens share, a 33 percent premium over the stock's closing price last Thursday.

It will also assume C$65 million in Berens debt, bringing the total value of the deal to C$336 million.

PetroBakken said it will gain as many as 100 potential drilling locations in the cardium oil play along with production of 3,650 barrels of oil equivalent a day, nearly four-fifths of which is natural gas.

Proved plus probable reserves are pegged at more than 11 million barrels of oil equivalent. The acreage is in the West Pembina region.

Shares in Berens were up 65 Canadian cents, or 32 percent, at C$2.68 on the Toronto Stock Exchange. PetroBakken gained 41 Canadian cents, or 1 percent, to C$32.74.

The deal looks pricey at about C$92,000 per barrel of production and C$30 per barrel of proved and probable reserves. But with 17.5 million barrels of unbooked cardium potential factored, in the cost is reasonable, UBS Securities analyst Andrew Potter wrote in a research note.

PetroBakken said it expected to be producing 46,600 barrels of oil equivalent a day by the end of 2010, excluding output from properties it is currently selling.

It said the deal will allow it to use horizontal drilling and production know-how it has acquired in the Bakken Play, which is similar to technology used to produce gas from shale formations.

Berens has agreed to pay PetroBakken a break fee of C$10 million should the sale fall through. The deal is expected to close by the end of February.

($1=$1.04 Canadian) (Reporting by Jeffrey Jones and Koustav Samanta; editing by Peter Galloway)