/NOT FOR DISTRIBUTION TO UNITED STATES NEWS WIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED STATES OF AMERICA/
CALGARY, Aug. 27 /CNW/ - Fairmount Energy Inc. ("Fairmount" or the
"Company") (TSX-V - FMT) is pleased to present a summary of its operating and
financial results for the three months ended June 30, 2008. For a complete
copy of Fairmount's quarterly financial statements and management's discussion
and analysis ("MD & A") please visit www.sedar.com. Certain information
contained in this news release, including reserves and present value of future
net revenues, development plans, drilling locations, anticipated production
from Gold Creek, and the sale of the Harmattan property, constitute
forward-looking information which are subject to risks and uncertainties. See
"Forward - Looking Information".
Highlights:
- Cash flow for the quarter increased 76% to $683,357 as compared to
$388,227 in the prior year period.
- Production for the three months ended June 30, 2008 was 404 boe/day
in spite of reduced production due to plant turn-around operations at
both Harmattan and Gold Creek.
- Subsequent to quarter end, Fairmount entered into agreements to sell
approximately 210 boe per day of production at Crossfield and
Harmattan for gross proceeds of $14.25 million.
- Excluding the Harmattan and Crossfield properties, Fairmount's
productive capacity is currently estimated at 625 boe/day before the
impact of our recent drilling program. However, production levels
subsequent to June 30 have been impacted by the extended plant turn
around and gathering and processing issues at Gold Creek. We
anticipate Gold Creek production to be restored during September and
at that time expect total corporate production to reach 675 boe/day
following the tie in of the Thorsby well.
- Fairmount's five well (4.0 net) summer drilling program is underway
with 2 wells (1.0 net) drilled and cased at Gold Creek, 2 wells
(2.0 net) drilled and cased at Chin Coulee, and 1 well (1.0 net) at
Thorsby planned for September. Completion programs are underway and
the outcome of this program will direct the drilling for the balance
of the year.
Operations
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Three Months Ended
June March December September
30, 31, 31, 30,
2008 2008 2007 2007
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Wells drilled - gross 1 2 3 0
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Wells drilled - net 0.5 1.0 1.8 0.0
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Natural gas production
- mcf/day 1,412 1,439 1,307 1,333
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Oil production bbl/day 7 12 13 19
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NGL production bbl/day 162 162 138 116
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Average daily production
- boe/day 404 414 369 357
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Average selling price -
natural gas $/mcf $9.40 $7.94 $6.07 $5.17
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Average selling price -
oil $/bbl $123.35 $97.84 $86.70 $78.61
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Average selling price -
NGL's $/bbl $60.73 $52.91 $48.01 $40.26
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Average selling price -
$/boe $59.34 $51.16 $42.55 $36.51
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Three Months Ended
June March December September
30, 31, 31, 30,
2007 2007 2006 2006
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Wells drilled - gross 1 3 6 5
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Wells drilled - net 0.1 1.6 1.9 0.8
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Natural gas production
- mcf/day 1,402 1,000 865 857
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Oil production bbl/day 17 15 25 23
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NGL production bbl/day 140 107 114 84
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Average daily production
- boe/day 390 289 284 250
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Average selling price -
natural gas $/mcf $7.06 $7.32 $6.85 $5.73
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Average selling price -
oil $/bbl $69.99 $66.68 $67.06 $78.64
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Average selling price -
NGL's $/bbl $41.99 $37.93 $32.86 $36.46
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Average selling price -
$/boe $43.41 $42.89 $40.09 $39.13
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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 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.
Gold Creek contributed an average of 225 boe/day of production for the
three months ended June 30, 2008, up from 107 boe/day during the prior year
period. The BP South Wapiti plant which processes approximately 290 mmcf of
natural gas per day was shut down for a scheduled plant turn-around for what
was anticipated to be a three week period in the first week of June, 2008.
While the main plant came back up following the scheduled shut down, there
were several mechanical problems which delayed production coming on stream
from the portion of the gathering system to which our wells are connected. Due
to the lengthened shut down of the gathering system, some wells which have
priority in the gathering system experienced a large build up in pressure, and
have effectively squeezed us out of the gathering system until such time as
their flush production has blown down. As a result, Fairmount's production at
Gold Creek has been nominal through all of July and is expected to remain that
way until early September. Once this flush production from other wells has
decreased, we expect production from the area will be approximately
600 boe/day. Fairmount and partners own gathering and compression facilities
sufficient to process 12.5 mmcf/day of raw gas allowing capacity for future
wells in the Gold Creek area.
Fairmount participated in the drilling of one well (0.5 net) at Gold
Creek during the quarter and one well (0.5 net) immediately following the
first well during July as part of our summer drilling program. Both wells have
been cased and are awaiting completion operations. The Company plans to drill
up to three more wells (1.3 net) at Gold Creek this year.
Based on the results of the nine wells drilled to date on this property,
geologic mapping, and/or 3D seismic Fairmount has identified an additional 4
to 8 drilling locations on existing Company lands.
Harmattan
In total Fairmount has drilled 47 wells (3.8 net) at Harmattan as at
June 30, 2008 with the Company estimating 12 additional locations (1.5 net)
remain for future development drilling. Harmattan averaged 138 boe/day of
production during the quarter as compared to 208 boe/day during the same
period last year.
