/NOT FOR DISTRIBUTION TO UNITED STATES NEWS WIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED STATES OF AMERICA./
CALGARY, June 2 /CNW/ - Fairmount Energy Inc. ("Fairmount" or the "Company") (TSX-V - FMT) is pleased to announce a 43% increase in the before income tax value of Proved plus Probable oil and natural gas reserves as determined by GLJ Petroleum Consultants Ltd. ("GLJ") as at March 31, 2008. Fairmount has received its updated independent reserve evaluation report, compliant with National Instrument 51-101 ("NI 51-101") and the Canadian Oil and Gas Evaluation Handbook ("COGEH") from GLJ. Under NI 51-101 and COGEH, Proved reserve assignments are based on a 90 percent probability that total quantities recovered will equal or exceed Proved reserve estimates. Proved plus Probable reserves are the most likely case and are based on a 50 percent probability that the quantities actually recovered will equal or exceed the sum of Proved plus Probable estimates. The reserves committee of Fairmount's board of directors, which is made up of a majority of independent directors, met with GLJ representatives and has reviewed the independent evaluator's reserves report. Summary information is presented below. Additional disclosure, in accordance with NI 51-101, will be provided in the company's NI 51-101 filings at a later date.
Certain information contained in this press release, including reserve estimations and related future net revenues, constitute forward looking information which are subject to risks and uncertainties. See "Forward - Looking Information".
Highlights
- Before tax present value of Gross Proved plus Probable reserves
discounted at 10% increased 43% from $29,658,000 at March 31, 2007 to
$42,373,000 at March 31, 2008.
- Gross Proved plus Probable reserves increased 25% from 2,052,000 boe
at March 31, 2007 to 2,562,000 boe at March 31, 2008.
- Before tax present value of Gross Proved reserves discounted at 10%
increased 22% from $21,931,000 at March 31, 2007 to $26,707,000 at
March 31, 2008.
- Gross Proved reserves increased 16% from 1,293,000 boe at March 31,
2007 to 1,495,000 boe at March 31, 2008.
As at March 31, 2008, Fairmount had 17,243,889 common shares outstanding and stock options and performance warrants potentially convertible into 2,200,617 common shares.
Reserves
The following information is extracted from the reserve report prepared for the Company by its independent reservoir evaluators, GLJ as at March 31, 2008.
Net Present Value of Reserves (Before Tax) as at March 31, 2008(1)
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($ thousands) Undiscounted PV 5% PV 10% PV 12%
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Proved Producing 32,287 27,108 23,719 22,664
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Proved Non Producing 2,184 1,796 1,534 1,451
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Proved Undeveloped 2,036 1,707 1,455 1,370
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Total Proved 36,506 30,612 26,707 25,484
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Total Probable 28,822 20,433 15,666 14,284
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Total Proved & Probable 65,328 51,045 42,373 39,769
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Net Present Value of Reserves After Tax as at March 31, 2008(1)
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($ thousands) Undiscounted PV 5% PV 10% PV 12%
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Total Proved 36,506 30,612 26,707 25,484
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Total Probable 22,811 16,065 12,293 11,207
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Total Proved & Probable 59,317 46,677 39,000 36,692
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Reserves Summary as at March 31, 2008
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Light/ Light/
Medium Medium Natural Natural
Oil Oil Gas Gas NGLs NGLs Total Total
Gross Net Gross Net Gross Net Gross Net
(mbbls)(mbbls) (mmcf) (mmcf)(mbbls)(mbbls)(mboe) (mboe)
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Proved Producing 31 29 4,379 3,246 557 384 1,318 954
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Proved Non Producing 0 0 506 323 6 4 91 58
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Proved Undeveloped 0 0 268 200 42 30 86 63
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Total Proved 32 30 5,153 3,769 604 417 1,495 1,075
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Total Probable 23 21 3,528 2,677 456 326 1,067 793
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Total Proved &
Probable 55 50 8,681 6,446 1,060 743 2,562 1,868
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Gross reserves are the total of the Company's working interest (operated or non-operated) share before deduction of royalties and without including any royalty interests of the Company. Net reserves are gross reserves net of royalty interests owned by others, plus the Company's royalty interests in reserves (if any).
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 ratio of 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.
(1) Estimated values disclosed do not represent fair market value. The
reserve values are based on the table of prices below. Prices at each
property were adjusted for quality, heating content and
transportation. Oil prices are the equivalent price of sweet light
crude landed in Edmonton to that of West Texas Intermediate crude
(WTI) in Cushing, Oklahoma after adjustments for transportation and
the prevailing Canadian dollar exchange rate. A Canadian dollar
exchange rate of $1.00 US to $1.00 Canadian was used. Gas prices are
based on the type of contract applicable.
Price Forecast
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Gas
(AECO-C) Ethane Pentanes Propane Butane
Oil ($Cdn/ ($Cdn/ + ($Cdn/ ($Cdn/ ($Cdn/
($Cdn/bbl) mmbtu) bbl) bbl) bbl) bbl)
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2008-9 mo. 96.77 8.42 28.46 98.70 60.96 77.41
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2009 89.10 8.20 27.71 90.88 56.13 71.28
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2010 85.10 8.10 27.37 86.80 53.61 68.08
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2011 84.10 7.95 26.85 85.78 52.98 67.28
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2012 84.10 8.01 27.06 85.78 52.98 67.28
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2013 84.10 8.18 27.65 85.78 52.98 67.28
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2014 84.10 8.36 28.27 85.78 52.98 67.28
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2015 85.25 8.54 28.89 86.96 53.71 68.20
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2016 86.97 8.72 29.51 88.71 54.79 69.58
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2017 88.73 8.91 30.16 90.51 55.90 70.98
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2018+ +2.0%/yr +2.0%/yr +2.0%/yr +2.0%/yr +2.0%/yr +2.0%/yr
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Forward-Looking Information
This news release contains forward-looking information, including but not limited to estimated reserves and future net revenues which have been independently evaluated by GLJ. Information relating to reserves and related future net revenue are forward-looking information as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described can be profitably produced in the future. Additionally, estimates of future net value involve assumptions relating to production rates, production decline rates, ultimate recovery of reserves, commodity prices and exchange rates, operating costs, capital expenditures and well abandonment costs. This information relates to future events or the Company's future performance. All information other than statements of historical fact is 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. Forward looking information relating to reserves and future net revenue are estimates only. Actual reserves and future net revenues will differ from those estimated by GLJ and such differences may be material. 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 information is 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. 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 news 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 news release to conform such information to actual results or to changes in the Company's expectations.
The TSX Venture Exchange does not accept responsibility for the adequacy
or accuracy of this release.