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CALGARY, Jan. 21 /CNW/ - Fairmount Energy Inc. ("Fairmount" or the "Company") (TSX-V - FMT) announced today that the Board of Directors has initiated a process to review the Company's business plan and to identify, examine and consider a range of strategic alternatives available to Fairmount for enhancing shareholder value. This may include, among other things, exploring a corporate sale or business combination, potential asset divestments, adoption of a dividend policy, making a substantial issuer bid or other alternatives to increase shareholder value.
In light of the planned evaluation of strategic alternatives for maximizing shareholder value, the Company wishes to provide the following operational and financial update:
- The Company continues to have a strong balance sheet, with $6,500,000 of un-drawn capacity available under the Company's operating demand loan facility. - Current production has increased to approximately 600 boe/day, with an additional 300 boe/day of estimated productive capacity currently constrained by facility limitations. - The Company has recently drilled and cased 2 (0.8 net) wells with 1 well (0.3 net) in the Gold Creek Area and 1 well (0.5 net) in the Thorsby area. Completion operations on both wells are in progress. - The Company does not feel the current market price of its shares adequately reflects its net asset value and has been actively purchasing and cancelling shares under its normal course issuer bid with 633,500 shares purchased since September 30, 2008. - Fairmount currently has 16,339,889 shares issued and outstanding.
The Board of Directors has engaged Rundle Energy Partners to act as its independent financial adviser to assist in the conduct of this review.
No decision on any particular alternative has been reached at this time and there can be no assurance that the process will result in any change in the Company's current plan to explore and develop its current oil and gas properties or that the Company will pursue any particular transaction or course of action. Fairmount does not intend to make any further announcements regarding the process unless and until its Board of Directors has approved a specific transaction or other course of action or otherwise deems disclosure of developments is appropriate.
Forward Looking Information
This press release contains forward looking information relating to the Company's plans to review strategic alternatives for maximizing shareholder value and estimated productive capacity currently constrained by facility limitation. Forward looking information is based on management's expectations regarding future economic conditions, commodity prices, results of operation, production, future capital and other expenditures (including the amount, nature and sources of funding thereof), plans for and results of drilling activity, environmental matters, business prospects and opportunities. Forward-looking information involves significant known and unknown risks and uncertainties, which could cause actual results to differ materially from those anticipated. These risks include, but are not limited to: the risks associated with the oil and gas industry (e.g., operational risks in development, exploration and production; delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve and resource estimates; the uncertainty of estimates and projections relating to production, costs and expenses, and health, safety and environmental risks), the risk of commodity price and foreign exchange rate fluctuations and risks and uncertainties associated with securing financing to proceed with planned capital programs. In addition, the current financial crisis has resulted in severe economic uncertainty and resulting illiquidity in capital markets which increases the risk that actual results will vary from forward looking expectations in this press release and these variations may be material. Readers are cautioned that there can be no assurance that the review of strategic alternatives will result in the announcement or completion of any specific transaction or the adoption of any new policy. Although Fairmount believes that the expectations in such forward-looking information are reasonable, there can be no assurance that such expectations shall prove to be correct. The forward-looking information included in this press release is expressly qualified in their entirety by this cautionary statement. The forward-looking information included in this press release is made as of the date hereof and Fairmount assumes no obligation to update or revise any forward-looking information to reflect new events or circumstances, except as required by law.
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 (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.