FairWest Energy Corporation
TSX VENTURE : FEC

FairWest Energy Corporation

February 17, 2010 09:41 ET

FairWest Energy Provides Corporate Update

CALGARY, ALBERTA--(Marketwire - Feb. 17, 2010) - FairWest Energy Corporation (TSX VENTURE:FEC) ("FairWest" or the "Company") advises that it is continuing to operate under the terms of a Forbearance Agreement (the "Agreement") with its principal lender (the "Bank") which was designed to allow the Company to comply with the terms of its credit facility (the "Credit Facility") with the Bank. Pursuant to the Agreement and subsequent amendments, the Company laid out a comprehensive plan of action that resulted in the sale of oil and gas assets, the monetization of a natural gas hedge contract, the issuance of common shares, the extension of existing debentures and the sale of new debentures. As a result of these activities, the Company expects to comply with the minimum working capital ratio and the removal of liens as required under the terms of the Credit Facility by March 31, 2010. The amended Agreement extends the Credit Facility to May 31, 2010 and requires a stated monthly reduction in the Credit Facility. Currently, the Company has reduced the Credit Facility to $6,700,000 and has agreed to reduce the facility to $5,650,000 by May 31, 2010, subject to adjustments based on a revised borrowing base calculation that the Bank may undertake to obtain prior to that date. 

The Company also announces that it has extended its previously announced private placement (the "Private Placement") of up to $4,000,000 of Series 2, 14% Secured, Subordinated, Convertible Debentures (the "Debentures") to March 31, 2010. To date, the Company has raised in excess of $3,000,000 in the Private Placement and has scheduled subsequent closings in February and March, 2010 in order to raise the maximum amount of the Private Placement. Each Debenture is priced at $1,000 and is convertible into Common Shares at a price of $0.15 per share until December 31, 2011. The proceeds from the sale of Debentures are being used for oil and gas well optimization, payment of unsecured debt and other general corporate purposes.

The Company advises that it has completed and tied in its previously announced gas well at Kirkpatrick Lake adding approximately 50 barrels of oil equivalent per day ("boe/d") of net production. With the onset of warmer weather and the addition of production volumes from planned optimization work, the Company expects to average approximately 550 boe/d during the first quarter of 2010. The Company has a significant inventory of optimization projects and drillable oil and gas prospects to pursue during the balance of 2010.

The Company also announces that it mailed a proposal to certain unsecured creditors of the Company to satisfy outstanding amounts owing to these creditors. In the proposal, the Company plans to issue either a combination of cash and shares or shares and share purchase warrants to the creditors in exchange for the elimination of the debt. If all the creditors agree to participate in the proposal, the Company may issue up to 20 million common shares and 10 million common share purchase warrants. The deemed price of the shares to be issued will be $0.10 per share and the share purchase warrants will allow the holder to acquire shares of the Company at a price of $0.15 per share until September 30, 2012. The proposal is subject to approval of the TSX Venture Exchange.

The Company is also pleased to announce the appointment of two independent directors to its Board of Directors. H. Allen Cameron and Angelo W.S. Zia were appointed to the board on February 8, 2010. Mr. Cameron will be the Chairman of the Company's Audit and Reserves Committee. Mr. Cameron is presently serving as the President of Cordy Oilfield Services Inc. and has over 30 years of experience in leadership roles in business, accounting and management consulting. He is presently serving as the chairman of the Audit Committee of two private companies operating in Calgary, Alberta. Mr. Cameron is a Fellow of the Society of Management Accountants of Canada, Certified Management Accountant of Alberta, Certified Management Consultant, and Professional Administrator. Mr. Zia will join the Audit and Reserves Committee with responsibility for the Company's reserves. Mr. Zia is presently Managing Director of Canada Link Resources Development Co. Ltd. He has over 30 years of experience in engineering, operations, international and intergovernmental relations. From 2000-2009 he served as Alberta Managing Director for the China National Petroleum Corporation located at the Alberta Petroleum Centre (CAPC) in Beijing, China. Mr. Zia holds a B.Sc. in Electrical Engineering, a MBA from the University of Alberta and is a registered Professional Engineer in Alberta.

About FairWest Energy

FairWest (TSX VENTURE: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.

The terms bbls, bbls/d, boe, boes or boes/d may be misleading, particularly if used in isolation. A boe (barrel of oil equivalent) conversion ratio of 6 mcf per one (1) boe is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

129,839,879 Common Shares Issued

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • FairWest Energy Corporation
    Vern Fauth
    Chief Executive Officer
    (403) 264-4949
    (403) 269-1761 (FAX)
    vfauth@fairwestenergy.com
    or
    FairWest Energy Corporation
    Marion D. Mackie
    Chief Financial Officer
    (403) 264-4949
    (403) 269-1761 (FAX)
    mmackie@fairwestenergy.com