/NOT FOR DISTRIBUTION TO UNITED STATES NEWS WIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED STATES OF AMERICA/
CALGARY, Feb. 21 /CNW/ - Fairmount Energy Inc. ("Fairmount" or the "Company") (TSX-V - FMT) is pleased to present a summary of its operating and financial results for the three and nine months ended December 31, 2007. For a complete copy of Fairmount's second quarter report including financial statements and management's discussion and analysis ("MD & A") please visit www.sedar.com. Certain information contained in this press release, including estimated and anticipated production levels, development plans, drilling locations, and capital expenditures, constitute forward looking information which are subject to risks and uncertainties. See "Forward - Looking Information".
Current Company Production from All Areas:
Current production is estimated at 635 boe/day representing a 72% increase in production over the average production for the third quarter ended December 31, 2007 of 369 boe/day. Another 145 boe/day is anticipated to come on production by the end of February.
Third Quarter Highlights:
- Production increased 30% as compared to the third quarter of last
year from an average of 284 boe/day in the third quarter of last year
to 369 boe/day in the third quarter of this year.
- New Gold Creek well (0.30 net) drilled during the quarter was tested
at a combined flow rate of 900 mcf/day plus 60 bbl/day of natural gas
liquids.
- Completed a private placement of 3,572,000 common shares on a flow-
through basis at a price of $1.40 per Flow-Through Share for gross
proceeds of $5,000,800 on November 15, 2007.
- $4,000,000 increase in revolving operating demand loan facility to
$14,000,000 for general corporate purposes, including capital
expenditures. Non-revolving acquisition and development demand loan
facility for up to $4,000,000 also renewed.
- Subsequent to quarter end the Company drilled one (one net)
successful natural gas well in a new exploration area. Additional
drilling is planned after spring break up to delineate this
discovery.
Operations
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Three Months Ended
December September June March
31, 30, 30, 31,
2007 2007 2007 2007
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Wells drilled - gross 3 0 1 3
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Wells drilled - net 1.8 0.0 0.1 1.6
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Natural gas production
- mcf/day 1,307 1,333 1,402 1,000
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Oil production bbl/day 13 19 17 15
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NGL production bbl/day 138 116 140 107
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Average daily
production - boe/day 369 357 390 289
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Average selling price
- natural gas $/mcf $6.07 $5.17 $7.06 $7.32
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Average selling price
- oil $/bbl $86.70 $78.61 $69.99 $66.68
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Average selling price
- NGL's $/bbl $48.01 $40.26 $41.99 $37.93
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Average selling price
- $/boe $42.55 $36.51 $43.41 $42.89
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Three Months Ended
December September June March
31, 30, 30, 31,
2006 2006 2006 2006
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Wells drilled - gross 6 5 13 4
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Wells drilled - net 1.9 0.8 5.6 1.2
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Natural gas production
- mcf/day 865 857 574 490
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Oil production bbl/day 25 23 19 13
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NGL production bbl/day 114 84 67 73
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Average daily
production - boe/day 284 250 182 167
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Average selling price
- natural gas $/mcf $6.85 $5.73 $5.90 $7.43
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Average selling price
- oil $/bbl $67.06 $78.64 $80.73 $68.71
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Average selling price
- NGL's $/bbl $32.86 $36.46 $33.96 $39.01
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Average selling price
- $/boe $40.09 $39.13 $39.58 $44.95
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Gold Creek
The Gold Creek area is located on the southern flank of the Peace River Arch, near Grande Prairie, Alberta. Fairmount has working interests ranging from 30% to 84% in 13.75 contiguous sections of land in the Gold Creek area. Fairmount is the operator of all of its existing Gold Creek wells.
Gold creek contributed 133 boe/day of production for the quarter ended December 31, 2007. Subsequent to quarter end the compression facility expansion was completed and put into service. Current production at Gold Creek is approximately 405 boe/day with the company estimating another 145 boe/day behind pipe and anticipated to be on production by the end of February. Fairmount and partners own gathering and compression facilities sufficient to process 12.5 mmcf/day of raw gas allowing capacity for future wells in the Gold Creek area.
Fairmount commenced a 3 well (1.3 net) drilling program at Gold Creek in November, 2007. To date, two wells have been drilled with one well (0.50 net) being dry and abandoned and one well (0.30 net) being successfully completed in three different zones. The successful well tested at a combined flow rate of 900 mcf/day plus 60 bbl/day of natural gas liquids. Construction of the pipeline for this well is underway with this well expected to be on production by the end of February.
The Company is not the operator of the third well (0.50 net) planned for this program but it is anticipated the well will be drilled during March, 2008.
Based on the results of the seven wells drilled to date on this property, geologic mapping, and/or 3D seismic Fairmount has identified an additional 6 drilling locations on existing Company lands.
Harmattan
Fairmount's Harmattan property is located approximately 105 kilometers north west of the city of Calgary. Fairmount has an interest in approximately 20 sections of land at Harmattan, with an average working interest of approximately 8%. Most wells at Harmattan are oil wells with associated gas and natural gas liquids production. Fairmount owns 10% of the gathering and field compression facilities at Harmattan.
The Harmattan property has exceeded initial expectations with economic hydrocarbons being found in multiple formations over our lands. The initial target was the Lower Cardium formation, however, 20 wells have been successfully completed and are producing from the Upper Cardium. Fifteen of these wells are dual producers from both of these zones.
In total Fairmount has drilled 44 wells (3.8 net) at Harmattan as at December 31, 2007 with the Company estimating 8 to 10 additional locations remain for future development drilling. Current production at Harmattan is estimated at 180 boe/day and the Company expects to maintain production at about this level for the next two to three years as additional wells are drilled and re-completions are performed.
Crossfield
Fairmount has a land position of approximately 6 sections with an average working interest of approximately 50% in the Crossfield area, north west of Calgary. Fairmount is the operator of the Crossfield property with 2 wells (0.78 net) on production for the quarter ended December 31, 2007. Production from these two wells averaged approximately 31 boe/day for the quarter.
Financial Results and selected financial information
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Three Months Ended
December September June March
$ except number 31, 30, 30, 31,
of shares 2007 2007 2007 2007
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Natural gas sales 729,918 633,856 900,622 658,422
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Crude oil and natural
gas liquids sales 714,465 565,123 641,013 455,324
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Interest income 3,511 3,840 4,667 6,956
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Royalties (317,908) (345,581) (420,662) (321,739)
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Revenue 1,142,088 865,907 1,133,766 806,166
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Production expenses 288,903 315,449 215,645 262,958
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General and
administrative
expenses 247,875 344,248 394,290 220,661
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Depletion,
depreciation &
accretion 834,993 764,453 789,912 569,914
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Interest expense 164,867 179,169 135,604 21,405
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Net income (loss)
before income taxes (463,674) (820,840) (503,684) (376,085)
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Recovery of future
income taxes - - - 1,475,074
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Net income (loss) (463,674) (820,840) (503,684) 1,098,989
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Net income (loss)
per share
- basic $(0.03) $(0.06) $(0.04) $0.08
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- diluted $(0.03) $(0.06) $(0.04) $0.08
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Weighted average
common shares
outstanding:
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- Basic 15,457,889 13,671,889 13,671,889 13,671,889
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- Diluted 15,457,889 13,671,889 13,671,889 13,920,761
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Three Months Ended
December September June March
$ except number 31, 30, 30, 31,
of shares 2006 2006 2006 2006
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Natural gas sales 545,097 451,908 308,034 334,794
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Crude oil and natural
gas liquids sales 501,836 447,225 347,115 345,055
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Interest income 3,120 1,212 33,036 42,076
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Royalties (183,887) (153,217) (160,254) (189,450)
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Revenue 873,118 752,819 539,712 545,758
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Production expenses 207,473 168,924 119,307 75,234
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General and
administrative
expenses 170,267 231,169 159,191 245,451
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Depletion,
depreciation &
accretion 517,116 536,860 343,194 274,213
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Interest expense 23,049 28,786 6,980 16,547
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Net income (loss)
before income taxes (116,835) (284,342) (130,143) (140,498)
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Recovery of future
income taxes - - - 1,316,700
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Net income (loss) (116,835) (284,342) (130,143) 1,176,202
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Net income (loss)
per share
- basic $(0.01) $(0.03) $(0.01) $0.10
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- diluted $(0.01) $(0.03) $(0.01) $0.10
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Weighted average
common shares
outstanding:
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- Basic 12,949,824 11,116,889 11,116,889 11,088,236
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- Diluted 12,949,824 11,116,889 11,116,889 11,433,660
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Forward - Looking Information
This press release contains forward-looking information, including but not limited to future exploration and development plans and anticipated production levels. This information relates to future events or the Company's future performance. All information other than information of historical fact are forward-looking information. In some cases, forward-looking information can be identified by terminology such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential", "continue", or the negative of these terms or other comparable terminology. By its nature, forward-looking information involves numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other forward-looking information will not occur. Forward-looking information are based on assumptions, including, among other things, the Company's ability to benefit from the combination of growth opportunities and the ability to grow through the capital markets; the Company's acquisition strategy, the criteria to be considered in connection therewith and the benefits to be derived therefrom; sustainability and growth of production and reserves through prudent management and acquisitions; the emergence of accretive growth opportunities; the impact of Canadian governmental regulation on the Company; the strategy of the Company regarding commodity price risk management, changes in oil and natural gas prices and the impact of such changes on financial performance; the level of capital expenditures devoted to development activity rather than exploration; the use of development activity and/or acquisitions to replace and add to reserves; the quantity of oil and natural gas reserves and oil and natural gas production levels; and currency exchange and interest rates.
Although the Company believes that the expectations reflected in the forward-looking information are reasonable, there can be no assurance that such expectations will prove to be correct. The Company can not guarantee future results, levels of activity, performance, or achievements. Moreover, neither the Company nor any other person assumes responsibility for the accuracy and completeness of the forward-looking information. Some of the risks and other factors, some of which are beyond the Company's control, which could cause results to differ materially from those expressed in the forward-looking information contained in this press release include, but are not limited to, general economic conditions in Canada, the United States and globally; industry conditions, including fluctuations in the price of crude oil, natural gas and natural gas liquids and services used by the Company; uncertainties associated with estimating reserves; royalties payable in respect of oil and gas production; governmental regulation of the oil and gas industry, including income tax and environmental regulation; fluctuation in foreign exchange or interest rates; stock market volatility and market valuations; the impact of environmental events; the need to obtain required approvals from regulatory authorities; unanticipated operating events which can reduce production or cause production to be shut-in or delayed; failure to obtain industry partner and other third party consents and approvals, when required; and third party performance of obligations under contractual arrangements. Subject to the company's obligations under applicable securities laws, the Company is not under any duty to update any of the forward-looking information after the date of this press release to conform such information to actual results or to changes in the Company's expectations.
Per barrel of oil equivalent amounts have been calculated using a conversion rate of six thousand cubic feet of natural gas to one barrel of oil equivalent (6:1). Barrel of oil equivalents ("boe") may be misleading, particularly if used in isolation. A boe conversion of ratio 6 mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
The TSX Venture Exchange does not accept responsibility for the adequacy
or accuracy of this release.