Fortress Energy Inc.
TSX : FEI

Fortress Energy Inc.

March 10, 2010 23:35 ET

Fortress Energy Reports 15% Increase in Reserves for 2009

CALGARY, ALBERTA--(Marketwire - March 10, 2010) - Fortress Energy Inc. (TSX:FEI) ("Fortress" or the "Company") has released the results of its independent reserve evaluation effective December 31, 2009, as evaluated by Sproule Associates Ltd. ("Sproule") in accordance with the disclosure requirements provided by National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities.

Corporate Highlights:

- Proved plus probable reserves increased 15% to 42 Bcf;

- Proved plus probable finding, development and acquisition costs of $1.84/Mcfe ($11.07/Boe) (including changes in estimated future capital);

- Replaced production by a factor of 3.0 times;

- Proved plus probable reserve life index (RLI) of 10.9 years based on the Company's current production rate of 10.5 MMcf/d (1,750 Boe/d);

- Square Creek (70% of Company's production and producing reserves):

-- Acquired 50% partner's interest;

-- Increased gross production from the area by 40%;

-- Increased gross discovered natural gas resource by 38%, and initial gross recoverable reserves by 44%;

Oil and Natural Gas Reserves and Net Present Values

The following table provides summary information presented in the Sproule report effective December 31, 2009. Detailed reserve information will be presented in the Company's year-end financial results press release and in the Statement of Reserves Data and Other Oil and Gas Information sections of the Company's Annual Information Form scheduled to be filed on SEDAR no later than March 31, 2010.



Summary of Oil and Natural Gas Reserves
and Net Present Values of Future Net Revenue as of December 31, 2009
Forecast Prices and Costs


Reserves
------------------------------------------------------------
Light and Medium Oil Natural Gas Natural Gas Liquids
------------------------------------------------------------
Reserves Gross Net Gross Net Gross Net
Category (Mbbls) (Mbbls) (Mmcf) (Mmcf) (Mbbls) (Mbbls)
----------------------------------------------------------------------------
Proved:
Developed
Producing - - 19,718 12,630 28.4 22.6
Developed
Non-Producing - - 1,615 1,433 3.7 2.9
Undeveloped - - 4,273 3,866 5.6 4.4
------------------------------------------------------------
Total Proved - - 25,606 17,929 37.7 29.9
Probable - - 16,210 13,507 20.1 16.0
------------------------------------------------------------
Total Proved
plus Probable - - 41,816 31,436 57.8 46.0


Net Present Values of Future Net Revenue Before
Income Taxes Discounted at (%/Year)
--------------------------------------------------
0% 5% 10% 15% 20%
Reserves Category ($000s) ($000s) ($000s) ($000s) ($000s)
----------------------------------------------------------------------------
Proved:
Developed Producing 47,975 39,767 34,068 29,890 26,699
Developed Non-Producing 3,683 2,882 2,320 1,912 1,605
Undeveloped 11,292 8,271 6,126 4,571 3,422
--------------------------------------------------
Total Proved 62,950 50,920 42,514 36,372 31,725
Probable 39,454 28,109 20,771 15,739 12,146
--------------------------------------------------
Total Proved Plus Probable 102,405 79,029 63,285 52,112 43,871

Notes:
(1) Total values may not add due to rounding.
(2) Net present values are before tax.
(3) It should not be assumed that the undiscounted and discounted future
net revenue estimated by the Sproule report represents the fair market
value of the reserves.
(4) Company Interest consists of working interest and royalty interest
before deduction of royalties payable.


Finding, Development and Acquisition Costs (FD&A)

The Company's FD&A costs for 2009 are presented in the table below. The costs used in the FD&A calculation are the capital costs related to: land acquisition and retention; drilling; completions; tangible well site; tie-ins; facilities, and acquisitions. Due to the timing of capital costs the total of the exploration and development costs incurred in the most recent financial year generally will not reflect total finding and development costs related to reserve additions for that year. The reserves used in this calculation are Company interest reserve additions plus or minus revisions. The 2009 costs are unaudited as the financial results are in the process of being finalized.



Proved plus Probable Finding, Development and
Acquisition Costs Mboe Mmcfe
----------------------------------------------------------------------------
Proved Plus Probable Reserves 7,027 42,163
Production 466 2,799
Change in Reserves 1,371 8,224
Total Net Capital ($000s)(1) $ 15,170 $ 15,170
Finding and Development Costs ($/Boe, $/mcf) $11.07 $ 1.84
----------------------------------------------------------------------------
(1) Includes changes in future development costs.


Net Asset Value

Based on the Sproule report and the independent land evaluation, the
Company's Net Asset Value is determined as follows:

($000s except
per share data)
----------------------------------------------------------------------------
Net Present Value of Proved Plus Probable Reserves 63,285
Estimated Value of Undeveloped Land 12,616
Other Asset 3,400
Estimate of 2009 Working Capital Deficiency 23,600
Net Asset Value 55,701
Shares Outstanding (Basic) 55,294
Net Asset Value Per Share $1.01
----------------------------------------------------------------------------


Material Development - Boyer Acquisition

On March 4, 2010, the Company announced that it had entered into a Letter of Intent to acquire a 100% working interest in a significant producing natural gas property located in the Boyer area of Alberta.

Acquisition Highlights

(i) 27 Mmcf per day of natural gas production

(ii) Reserve Life Index of 13.8 years (Total Proved + Probable)

(iii) 8% forecasted annual decline rate (Proved + Probable Producing)

(iv) Only 37% of approximately 1.0 Tcf resource produced to date

(v) A total of 786,444 (755,569 net) acres of contiguous land

(vi) 239,995 (227,195 net) acres of undeveloped land

(vii) 100% working interest, including the gathering and processing facilities

(viii) Proven Plus Probable Reserves of 136 Bcf

The Company considers the Boyer assets to be low decline, high quality, long-life natural gas focussed assets with significant identified optimization opportunities and future upside of low risk development potential within a discovered natural gas resource of approximately 1.0 Tcf in size.

The Boyer area is characterized by a regionally extensive Cretaceous Bluesky development. Secondary horizons are the Gething, Banff, Wabamun, and Keg River formations. With only 37% recovery of the resource to date, the Company believes there is significant opportunity to both optimize production and grow reserves from the area.

The Company has identified over 200 drilling locations on the Boyer assets. While there is extensive exploration and development potential in many zones within the area, the primary development program is expected to consist of infill drilling within the Bluesky in order to maximize ultimate recovery.

In addition, the Boyer assets feature high working interests and operatorship with extensive gathering and processing infrastructure which management expects to efficiently accommodate production additions. The Company expects the acquisition to provide the following benefits to Shareholders:

- Provides a stable stream of free cash flow. The Company intends to distribute up to 50% of the net cash flow as quarterly dividends;

- Increases the Company's current production by 257% to approximately 37.5 Mmcf/d (6,250 Boe/d) (100% natural gas weighting);

- Increases the Company's proved plus probable reserves by 323% to 178 Bcf (29.7 MMBoe);

- Improves the Company's proved plus probable reserve life index to 13.0 years (from 10.9 years) using a production rate of 37.5 Mmcf/d;

- Increases the Company's total prospect inventory to 250 locations;

- Increases the Company's undeveloped land position by 245% to approximately 319,835 net acres;

- 100% of the production from the Boyer assets will be operated by the Company with favourable operating costs;

- Provides the Company with control of strategic processing infrastructure currently operating at 50% of capacity;

- The significant development opportunities on the Boyer assets are expected to provide the Company with the ability to execute on its acquire and exploit strategy of adding low cost production and reserves and related cash flow; and

- Additional critical mass that the Company expects will provide increased long-term stability, additional efficiencies in the Company's operations and greater access to capital markets.

All reserves associated with the Boyer assets are located in Alberta, Canada.

GLJ Petroleum Consultants Ltd. has provided Fortress with a reserve valuation effective December 31, 2009 evaluating the reserves attributable to the Boyer assets.



Summary of Oil and Natural Gas Reserves
and Net Present Values of Future Net Revenue as of December 31, 2009
Forecast Prices and Costs(1)

Reserves
---------------------------------------------------------
Light and Medium
Oil Natural Gas Natural Gas Liquids
---------------------------------------------------------
Gross Net Gross Net Gross Net
Reserves Category (Mbbls) (Mbbls) (Mmcf) (Mmcf) (Mbbls) (Mbbls)
----------------------------------------------------------------------------
Proved:
Developed
Producing - - 87,686 82,447 - -
Developed
Non-Producing - - 14,903 14,121 - -
Undeveloped - - 7,661 7,246 - -
---------------------------------------------------------
Total Proved - - 110,251 103,815 - -
Probable - - 25,823 24,263 - -
---------------------------------------------------------
Total Proved plus
Probable - - 136,074 128,078 -


Net Present Values of Future Net Revenue Before
Income Taxes Discounted at (%/Year)
--------------------------------------------------
0% 5% 10% 15% 20%
Reserves Category ($000s) ($000s) ($000s) ($000s) ($000s)
----------------------------------------------------------------------------
Proved:
Developed Producing 310,940 233,149 185,353 153,747 131,586
Developed Non-Producing 71,476 38,656 21,472 11,880 6,214
Undeveloped 22,999 13,817 8,289 4,808 2,533
--------------------------------------------------
Total Proved 405,415 285,622 215,115 170,435 140,332
Probable 157,947 78,000 44,644 28,743 20,245
--------------------------------------------------
Total Proved Plus Probable 563,363 363,622 259,759 199,178 160,577

Note:

(1) Based on the GLJ Petroleum Consultants Ltd. forecast prices effective
January 1, 2010.


Pro-Forma Oil and Natural Gas Reserves and Net Present Values

The following tables are presented on a pro-forma basis which combines the reserves information above for the Company and the Boyer assets.



Pro-Forma Summary of Oil and Natural Gas Reserves
and Net Present Values of Future Net Revenue as of December 31, 2009
Forecast Prices and Costs

Reserves
-------------------------------------------------------------
Light and Medium Oil Natural Gas Natural Gas Liquids
-------------------------------------------------------------
Reserves Gross Net Gross Net Gross Net
Category (Mbbls) (Mbbls) (Mmcf) (Mmcf) (Mbbls) (Mbbls)
----------------------------------------------------------------------------
Proved:
Developed
Producing - - 107,404 95,077 28.4 22.6
Developed
Non-Producing - - 16,518 15,554 3.7 2.9
Undeveloped - - 11,934 11,112 5.6 4.4
-------------------------------------------------------------
Total Proved - - 135,857 121,744 37.7 29.9
Probable - - 42,033 37,770 20.1 16.0
-------------------------------------------------------------
Total Proved
Plus Probable - - 177,890 159,514 57.8 46.0



Pro-Forma Net Present Values of Future Net Revenue
Before Income Taxes Discounted at (%/Year)
----------------------------------------------------
0% 5% 10% 15% 20%
Reserves Category ($000s) ($000s) ($000s) ($000s) ($000s)
----------------------------------------------------------------------------
Proved:
Developed Producing 358,915 272,916 219,421 183,637 158,285
Developed Non-Producing 75,159 41,538 23,792 13,792 7,819
Undeveloped 34,291 22,088 14,415 9,379 5,955
----------------------------------------------------
Total Proved 468,365 336,542 257,629 206,807 172,057
Probable 197,401 106,109 65,415 44,482 32,391
----------------------------------------------------
Total Proved Plus Probable 665,768 442,651 323,044 251,290 204,448


BOE Presentation

Natural gas reserves and volumes recorded in thousand cubic feet are converted to barrels of oil equivalent ("boe") on the basis of six thousand cubic feet ("mcf") of gas to one barrel ("bbl") of oil. The term "barrels of oil equivalent"may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf to 1 bbl is based on an energy equivalent conversion method primarily applicable at the burner tip and does not represent a value equivalent at the wellhead.

Caution to Reader

This news release contains forward-looking information, including without limitation statements concerning the completion of the asset acquisition, the completion of the financing, the plan to pay dividends the benefits of the acquisition, increase of production and reserves of the Boyer assets, anticipated finding and development costs and on stream costs and future development program. The reader is cautioned that assumptions used in the preparation of such information, although considered reasonable by Fortress at the time of preparation, may prove to be incorrect. The actual results achieved in future periods will vary from the information provided herein and the variations may be material. In respect of the forward looking information provided herein, the Company has assumed that the acquisition will close, it will be able to finance the acquisition, it will be able to sell forward sufficient production at an acceptable price, it will be able to institute operational improvements to increase production and reduce costs and that it will be able to carry out the proposed development drilling. There are risks associated with the forward looking statements including completion of the acquisition, the ability to obtain financing on acceptable terms, the continued performance characteristics of the oil and gas properties including production levels and the associated cash flow there from, the ability to hedge its production in sufficient volumes and at acceptable prices and the ability to improve operations and continued drilling success. Consequently there is no representation by Fortress that it will close the proposed acquisition, complete the financing, maintain current production levels, hedge its future production or pay dividends.

In addition there is no representation by Fortress that the actual results achieved during future periods will be the same in whole or in part as the information contained herein.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. The common shares of Fortress have not and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold in the United States or to any U.S. person except in certain transactions exempt from the registration requirements of the U.S. Securities Act and applicable state securities laws.

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