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CALGARY, Oct. 18 /CNW/ - Fairmount Energy Inc. ("Fairmount" or the "Company") (TSX-V - FMT) is pleased to announce the tie in of the previously announced (January 2007) well in the Gold Creek area of Alberta and provide an update on current production and the status of activities in the Gold Creek area.
Fairmount interest at 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 66% in 17 contiguous sections of land in the Gold Creek area. Fairmount is the operator of all of its Gold Creek wells. Based on the results of the five wells drilled to date on this property, geologic mapping, and/or 3D seismic, Fairmount has identified an additional 8 drilling locations on existing Company lands.
Tie in of existing well and increase in production
In January, 2007, as part of a four well drilling program, Fairmount successfully completed a multi zone natural gas well in the Gold Creek area. The well (0.30 net) was completed and tested in two prospective zones. Based on preliminary testing results, the first zone flowed at a final gas rate of 3.5 mmcf/day and 155 bbls/day condensate for a total of 738 boe/day (gross) after a 3 day period. The second zone flowed at a final gas rate of 3.0 mmcf/day and 180 bbls/day condensate for a total of 680 boe/day after a 4 day period. The combined total flow rates during the respective test periods was 6.5 mmcf/day of natural gas and 335 bbls/day of condensate for a total of approximately 1,400 boe/day (gross).
Tie in of this well had been delayed pending the acquisition of sufficient processing capacity. During the summer, Fairmount, along with partners, entered into an agreement with the current operator of the gathering and compression facilities to acquire a working interest in the compression facilities by paying to increase the compression and throughput capability of the facilities. Fairmount is pleased to announce the completion of the tie in operations. One of the zones from this well is now on production at a gross rate of 500 mcf/day and 45 bbls/day of associated liquids. The well is choked back significantly due to limited capacity available pending completion of the compression facilities expansion as discussed further below.
Gold Creek facilities expansion update
Fairmount is pleased to report the expansion of the compression facilities at Gold Creek is progressing smoothly and is on schedule for completion during November. Upon completion of the expansion, Fairmount and partners will own 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. Fairmount anticipates bringing onto production an incremental net 300 boe/day once the expansion is complete with approximately 6 mmcf/day (net 2.3 mmcf/day) of additional capacity remaining available for production from new wells planned in the area.
Commencement of 3 well fall drilling program at Gold Creek
Fairmount is pleased to announce commencement of a 3 well (1.0 net) drilling program at Gold Creek. Leases for two wells (0.70 net) are under construction and a drilling rig has been contracted with the first well expected to spud by the end of October. With success, tie in of these wells into the newly expanded gathering and processing system is anticipated to require approximately 2 months following completion with production on stream before spring break up.
Current production update
The Company estimates total current production from all areas at 375 boe/day with a further 300 boe/day behind pipe awaiting completion of the facilities expansion at Gold Creek.
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.
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