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CALGARY, Aug. 22 /CNW/ - Fairmount Energy Inc. ("Fairmount" or the "Company") (TSX-V - FMT) is pleased to announce the sale of its working interests in the Harmattan and Crossfield areas of Alberta for aggregate gross proceeds of $14,250,000. The Company's share of production from these properties was approximately 210 barrels of oil equivalent per day.
Harmattan Property Sale
Fairmount has entered into a letter agreement with a major Canadian energy trust to sell its non-operated working interest of approximately 8% in 47 wells in the Harmattan area for cash proceeds of $12,000,000 before closing adjustments. The sale has an effective date of August 1, 2008, is subject to the execution of a definitive agreement and customary due diligence procedures, and is anticipated to close in mid-September.
Crossfield Property Sale
In a separate transaction, on August 14, 2008 the Company completed the sale of its interests in the Crossfield area effective June 1, 2008 to a major Canadian energy trust for $2,250,000 before closing adjustments.
About Fairmount
The sale of the Harmattan and Crossfield properties represents completion of Fairmount's full cycle business model with respect to these two properties. Over the past four years, Fairmount participated in the drilling and the construction of infrastructure to bring these properties onto production and create reserve value. The exploration and development opportunity for these properties was fulfilled and their reserve value confirmed through production history. As mature long life producing assets, these assets no longer fit with the Company's high growth business model. The sale of these properties allows Fairmount to extinguish current borrowings under its operating line of credit in the short term and redeploy this capital for exploration and development opportunities in the Company's higher growth focus areas.
Fairmount is an emerging junior oil and gas exploration, development and production company with oil and gas properties located in Alberta, Canada. Fairmount trades on the TSX Venture Exchange as FMT and currently has 17,184,389 common shares outstanding.
Additional information regarding Fairmount can be found at their website www.fairmountenergy.com and on Sedar at www.sedar.com.
Disclosure provided herein in respect of production reported in barrels of oil equivalent (boe) may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of natural gas to one barrel of crude oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
Forward - Looking Information
This news release contains forward-looking information, including but not limited to the anticipated sale of the Harmattan Property and future exploration and development plans. This information relates to future events or the Company's future performance. All statements other than statements of historical fact are forward-looking information. 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.
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 news release include, but are not limited to failure to negotiate a mutually acceptable definitive agreement for the Harmattan property sale; 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.