Fairborne Energy Ltd.

Fairborne Energy Ltd.

May 04, 2011 16:45 ET

Fairborne Energy Ltd.: Marlboro Gas Plant Update and Partial Divestiture

CALGARY, ALBERTA--(Marketwire - May 4, 2011) - Fairborne Energy Ltd. ("Fairborne" or the "Company") (TSX:FEL) is pleased to provide the following update.

Marlboro Gas Plant

Construction of the Marlboro Gas Plant, designed to handle Fairborne's growing Wilrich production volumes, is now complete with commissioning and startup operations currently underway.

The Marlboro Gas Plant is a 40 million cubic feet per day sweet natural gas processing facility that also includes natural gas liquids recovery and a sales line that delivers gas to the TCPL Meter Station at Nose Hill. Fairborne currently has an eighty two percent (82%) working interest in the facility.

Marlboro Gas Plant Partial Divestiture

Fairborne is also pleased to announce that is has entered into an agreement in principle to sell a forty percent (40%) working interest in the Marlboro Gas Plant to a third party midstream company for proceeds of $18 million while retaining priority access to the divested working interest. The transaction is subject to normal conditions precedent including the execution of definitive agreements.

Fairborne incurred $4 million of costs for the Marlboro facility during 2010. The remaining costs incurred in 2011 for Fairborne's share of the facility are approximately $18 million prior to the divestiture. As a result of the sale, Fairborne will retain a forty two percent (42%) working interest in the facility and operatorship for a net cost of approximately $4 million (which was previously accounted for in 2010).

Fairborne is a crude oil and natural gas exploration, development and production company headquartered in Calgary, Alberta, Canada. Fairborne's common shares trade on the Toronto Stock Exchange under the symbol "FEL".

Forward-Looking Statements

Certain information set forth in this press release, contain forward-looking statements including management's assessment of future plans and operations, expected timing of start up of operations at the new Marlboro Gas Plant and whether the conditions precedent to the sale described will be satisfied and whether the sale will be completed. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond Fairborne's control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, delays resulting from or the inability to obtain required regulatory approvals, inability to retain and delays in retaining drilling rigs and other services, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other industry participants, the lack of availability of qualified personnel or management, stock market volatility, incorrect assessment of the value of acquisitions, failure to realize the anticipated benefits of acquisitions and ability to access sufficient capital from internal and external sources. The foregoing list is not exhaustive. Additional information on these and other risks that could affect Fairborne's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com), or at Fairborne's website (www.fairborne-energy.com). Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. The actual results, performance or achievement of Fairborne could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance 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 that Fairborne will derive therefrom. Fairborne disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities laws.

Barrels of Oil Equivalency

Natural gas volumes are converted to barrels of oil equivalent (boe) on the basis of 6,000 cubic feet (mcf) of gas for 1 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 equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

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