/NOT FOR DISTRIBUTION TO UNITED STATES NEWS WIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED STATES OF AMERICA/
CALGARY, Feb. 19 /CNW/ - Fairmount Energy Inc. ("Fairmount" or the "Company") (TSX-V - FMT) is pleased to provide the following updates.
Current production update
The Company estimates total current production from all areas at approximately 635 boe/day with a further 145 boe/day behind pipe awaiting completion of tie in operations in Gold Creek.
Gold Creek Facilities Expansion Complete - Increased production at Gold
Creek
The previously announced expansion of the compression facilities at Gold Creek is now complete and running resulting in Fairmount and its partners owning gathering and compression facilities sufficient to process 12.5 mmcf/day of raw gas from its current and future wells in the Gold Creek area.
The completion of the facility expansion will allow Fairmount to increase production at Gold Creek by 420 boe/day (net) to bring total production at Gold Creek to approximately 550 boe/day (net) by the end of February.
Gold Creek Drilling Program Update
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. 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 six drilling locations on existing Company lands.
Fairmount commenced a 3 well (1.0 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 tie in for this well is underway with production anticipated by the end of February.
The Company is not the operator of the third well planned for this program but it is anticipated the well will be drilled during March 2008.
New area exploration success
Fairmount is pleased to report it has successfully drilled and completed a prospective natural gas well in a new area in central Alberta. Additional drilling is planned after spring break up to delineate this discovery.
Increase in bank lines
Fairmount is pleased to announce it has amended its revolving operating demand loan with a Canadian chartered bank providing an increase in the line to $14,000,000 (previously $10,000,000) in funds for general corporate purposes, including capital expenditures.
In addition to the operating demand loan, Fairmount also has a non-revolving acquisition and development demand loan for up to $4,000,000 with the same Canadian chartered bank. This facility is available to Fairmount for the acquisition of producing petroleum and natural gas reserves and/or the development of proved non-producing or undeveloped petroleum and natural gas reserves.
Security for the loans includes a General Assignment of Book Debts and floating charge over all of the assets of the Company with the bank having the option to receive fixed charges on producing properties upon request. Both loans are subject to an annual review by August 1, 2008.
About Fairmount
Fairmount is an emerging junior oil and gas exploration, development and production company with oil and gas properties located in Alberta, Canada. Additional information regarding Fairmount can be found at their website www.fairmountenergy.com and on sedar at www.sedar.com.
Forward-Looking Statements
This press release contains forward-looking statements, including but not limited to future exploration and development plans and anticipated production levels. These statements relate to future events or the Company's future performance. All statements other than statements of historical fact are forward-looking statements. In some cases, forward-looking statements 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 statements will not occur. Forward-looking statements 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 statements 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 statements. 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 statements 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 statements after the date of this press release to conform such statements 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.