FairWest Energy Corporation
TSX : FEC

FairWest Energy Corporation

November 19, 2009 15:47 ET

FairWest Energy Announces Third Quarter Results and Other Corporate Matters

CALGARY, ALBERTA--(Marketwire - Nov. 19, 2009) - FairWest Energy Corporation (TSX:FEC) ("FairWest" or the "Company") announces its third quarter results for the three and nine months ended September 30, 2009. The Unaudited Financial Statements and Management's Discussion and Analysis ("MD&A") for the period should be read in conjunction with the Audited Financial Statements and the MD&A for the year ended December 31, 2008, all of which are filed and now available for viewing on SEDAR at www.sedar.com.

The Company also advises that, as previously announced, the Company was in default under the terms of its credit facility with its principal lender (the "Bank"). These defaults are a breach of the Company's working capital ratio covenant and the registration of liens against certain assets of the Company. On May 27, 2009, the Company and the Bank entered into a Forbearance Agreement (the "Agreement") designed to allow the Company to comply with the terms of its credit facility. Pursuant to the Agreement and subsequent amendments, the Company laid out a comprehensive plan of action that was expected to result in the Company's compliance with the working capital covenant and result in all liens being removed by the end of the third quarter. The Agreement also provided for a reduction of the credit facility from $12,500,000 to $6,900,000 and currently, the Company has reduced the credit facility amount to $7,400,000. As of September 30, 2009, the Company was not in compliance with the working capital ratio covenant and two liens are registered against the Company's assets. On November 13, 2009, the Bank forwarded a proposal to extend and amend the Agreement to January 15, 2010 in order to allow the Company more time to comply with the terms of the Agreement, which includes a reduction of the credit facility to $6,900,000 by December 15, 2009 and a potential further reduction of the credit facility to $6,000,000 by January 15, 2010. The Company is currently planning to raise up to $4,000,000 of financing of which $500,000 will be used to reduce the credit facility to $6,900,000, approximately $700,000 will be used to conduct a production optimization program on the Company's producing properties and the balance of the funds will be used for exploration activities and for general corporate purposes. Also, pursuant to the Agreement, the Company agreed to make forbearance payments to the Bank aggregating $100,000.

At the Annual Meeting held in May, 2009, the shareholders approved the repricing of all options previously granted to directors, officers, employees and consultants of the Company. Pursuant to the shareholder approval, the Board of Directors of the Company amended the exercise price of 6,725,000 options previously issued at exercise prices ranging from $0.22 to $0.59 to a new exercise price of $0.15 per share. The options have standard vesting provisions and will expire in accordance with the original expiry dates.

The Company also announces that Colin McPhee has resigned from the Board of Directors.

About FairWest Energy

FairWest (TSX:FEC) is a Calgary, Alberta based junior oil and gas company engaged in the acquisition, exploration, development and production of crude oil and natural gas in the provinces of Alberta and Saskatchewan.

READER ADVISORY

This news release may contain certain forward-looking statements, including management's assessment of future plans and operations, and capital expenditures and the timing thereof, that involve substantial known and unknown risks and uncertainties, certain of which are beyond the Company's control. Such risks and uncertainties include, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources, the impact of general economic conditions in Canada, the United States and overseas, industry conditions, changes in laws and regulations (including the adoption of new environmental laws and regulations) and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in foreign exchange or interest rates, stock market volatility and market valuations of companies with respect to announced transactions and the final valuations thereof, and obtaining required approvals of regulatory authorities. The Company's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits, including the amount of proceeds, that the Company will derive there from. Readers are cautioned that the foregoing list of factors is not exhaustive. All subsequent forward-looking statements, whether written or oral, attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

129,839,879 Common Shares Issued

Contact Information

  • FairWest Energy Corporation
    James G. Gettis
    President and Chief Executive Officer
    (403) 264-4949
    (403) 269-1761 (FAX)
    or
    FairWest Energy Corporation
    Marion D. Mackie
    Chief Financial Officer
    (403) 264-4949
    (403) 269-1761 (FAX)
    jgettis@fairwestenergy.com