/NOT FOR DISTRIBUTION TO UNITED STATES NEWS WIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED STATES OF AMERICA./
CALGARY, Nov. 26 /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 and six months ended September 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, and
anticipated production from Gold Creek and Thorsby constitute forward-looking
information which are subject to risks and uncertainties. See "Forward -
Looking Information".
Highlights:
- Net income of $42,713 for the three months ended September 30, 2008.
- Cash flow of $342,013 for the three months ended September 30, 2008.
- One well drilled (0.5 net) and two wells (1.0 net) completed in
multiple zones at Gold Creek during the quarter with tie in
operations nearing completion.
- Completed the sale of approximately 165 boe per day of production at
Harmattan for gross proceeds of $12,000,000 in cash.
- Completed the sale of approximately 45 boe per day of production at
Crossfield for gross proceeds of $2,250,000 in cash.
- Bank lines renewed at $7,000,000 for the operating revolving facility
and $4,000,000 for the acquisition and development facility with
drawings of $900,000 at September 30, 2008.
Operations
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Three Months Ended
September June March December
30, 30, 31, 31,
2008 2008 2008 2007
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Wells drilled - gross 3 1 2 3
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Wells drilled - net 2.5 0.5 1.0 1.8
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Natural gas production
- mcf/day 914 1,412 1,439 1,307
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Oil production bbl/day 8 7 12 13
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NGL production bbl/day 84 162 162 138
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Average daily production
- boe/day 245 404 414 369
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Average selling price -
natural gas $/mcf $8.73 $9.40 $7.94 $6.07
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Average selling price -
oil $/bbl $111.12 $123.35 $97.84 $86.70
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Average selling price -
NGL's $/bbl $62.73 $60.73 $52.91 $48.01
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Average selling price -
$/boe $57.82 $59.34 $51.16 $42.55
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Three Months Ended
September June March December
30, 30, 31, 31,
2007 2007 2007 2006
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Wells drilled - gross 0 1 3 6
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Wells drilled - net 0.0 0.1 1.6 1.9
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Natural gas production
- mcf/day 1,333 1,402 1,000 865
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Oil production bbl/day 19 17 15 25
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NGL production bbl/day 116 140 107 114
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Average daily production
- boe/day 357 390 289 284
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Average selling price -
natural gas $/mcf $5.17 $7.06 $7.32 $6.85
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Average selling price -
oil $/bbl $78.61 $69.99 $66.68 $67.06
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Average selling price -
NGL's $/bbl $40.26 $41.99 $37.93 $32.86
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Average selling price -
$/boe $36.51 $43.41 $42.89 $40.09
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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.
Production at Gold Creek was shut in for all of July and August with some
production coming back on stream during September. As a result, Gold Creek
contributed an average of only 63 boe/day of production for the three months
ended September 30, 2008 as compared to the estimated productive capacity of
over 600 boe/day and production in the first quarter of 225 boe/day.
In June, the BP Canada South Wapiti plant was shut down for a scheduled
plant turn-around for what was anticipated to be a three week period. However
due to a lengthened shut down of the system related to several issues,
Fairmount's production was backed out of the gathering system until such time
as flush production from wells which had priority over our wells came off. As
a result, Fairmount's production at Gold Creek was nominal through all of July
and August and into early September. Once the flush production from other
wells decreased, we expected our production to increase to approximately 600
boe/day as our wells were brought onto production. However, we continue to
have our two greatest productive capability wells shut in or severely
restricted due to natural gas liquids handling constraints in the BP gathering
system. Fairmount is currently working on solutions to resolve these
previously unforeseen bottlenecks to allow us to utilize our full capacity in
the gathering system.
During the quarter, Fairmount participated in the drilling of one new
well (0.5 net) at Gold Creek and the completion of two wells (1.0 net),
including one which was drilled in the first quarter. Both wells were
completed in multiple formations and will be tied into our existing gathering
system by the end of November, 2008. Since these wells tested significantly
lower natural gas liquid rates than Fairmount's other wells in the area, we
anticipate that there will be capacity available in the BP gathering system
for the production from these wells. Initial production capability from the
two wells is anticipated to be 800 boe/day (400 boe/day net).
Fairmount and partners own gathering and compression facilities
sufficient to process 11.5 mmcf/day of raw gas from the Gold Creek area. After
the two new wells are brought onto production and the liquid handling issues
are resolved, we anticipate that there will be more productive capability from
the area than current infrastructure capacity. This means we may need to wait
for production declines from some wells before we can bring all the wells onto
production or, depending upon stabilized production from existing wells and
success with future drilling, create new or expand existing infrastructure to
handle the total productive capability of our Gold Creek wells.
We expect average production from Gold Creek of 240 boe/day during
October and November, increasing to 700 boe/day during December as production
from existing wells is ramped up and the two new wells are placed on
production, and increasing further to 900 boe/day after the natural gas
liquids bottlenecks are resolved.
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 6
drilling locations on existing Company lands.
Thorsby
The Thorsby property is located in west central Alberta, approximately 32
kilometres southwest of Edmonton. Fairmount entered into a farm-in agreement
with a major Canadian independent oil and gas company and drilled a successful
exploratory well in January 2008, and as a result earned a 100% working
interest in 2 sections of land, with drilling options on additional lands. The
well was completed in 3 zones and was placed on production during September
2008.
