Fairborne Energy Ltd.
TSX : FEL

Fairborne Energy Ltd.

May 12, 2011 16:48 ET

Fairborne Energy Ltd.: Start Up of Marlboro Gas Plant Accompanies Continued Wilrich Success

CALGARY, ALBERTA--(Marketwire - May 12, 2011) - Fairborne Energy Ltd. ("Fairborne" or the "Company") (TSX:FEL) is pleased to provide the following update.

Marlboro Gas Plant

The successful commissioning and startup up of the Fairborne operated Marlboro Gas Plant (82% working interest) was completed on May 11, 2011. As previously announced (May 4, 2011 press release), Fairborne has entered into an agreement in principle to divest of 40% working interest in the gas plant for proceeds of $18 million and will retain a 42% working interest, priority access to the divested capacity and operatorship of the facility.

With the startup of the facility, Fairborne's volume restrictions associated with third party facilities which began in December of 2010 have been removed and the Company is currently producing in excess of 30 million cubic feet per day of natural gas net through the facility. The plant is designed to recover natural gas liquids with a Wilirch well typically yielding 12 to 15 barrels of natural gas liquids per million cubic feet.

The continued success of the Wilrich program has further emphasized to the Company the economic benefits of constructing the Marlboro Gas Plant. Fairborne will see the dual benefit of significantly reduced operating costs on its Wilrich production as well as increased run time and reliability.

Fairborne's Wilrich volumes have grown from approximately 10 million cubic feet per day in January of 2010 to current production in excess of 30 million cubic feet per day, an increase of 200 percent net of declines. Fairborne's original Wilrich well has been on production for approximately two years and has cumulative production of 1.4 bcf sales gas plus natural gas liquids of approximately 20,000 barrels.

Based on the second half program as outlined below and operational results consistent with the success achieved to date, Fairborne anticipates net Wilrich production volumes in excess of 40 million cubic feet per day by the end of 2011.

Operations at Marlboro/Pine Creek Wilrich

Fairborne's winter program included the drilling of four (2.8 net) Wilrich wells with three of these wells being completed and tied in. With the start up of the plant all three are now on production. The fourth well is awaiting completion after break up. This brings the total Wilrich horizontal producing wells at Marlboro to 13 wells (9.6 net).

Fairborne's most recent well (100% WI) has had a 30 day initial average production rate in excess of six million cubic feet per day plus 90 barrels per day of natural gas liquids.

Fairborne has continued to expand its land position on this prolific play, and the core Marlboro area now contains an estimated undrilled inventory of 70 locations.

Oil and NGL Focus

Fairborne's drilling program continues to focus on light oil and liquids rich natural gas.

At Sinclair, Manitoba Fairborne drilled eight (6.7 net wells) in its winter program. Of the eight wells drilled, five were completed and brought on production. Due to extremely wet and early spring breakup conditions three wells remain to be completed. Two of these remaining wells are direct offsets to the recently announced high rate oil well that had an initial production rate of 200 barrels per day. Current operating costs at Sinclair are approximately $7.00 per barrel and with the crown royalty incentives currently in place first quarter netbacks were in excess of $90 per barrel.

At Harlech, Fairborne drilled two (1.7 net) vertical wells targeting multizone Cretaceous aged reservoirs during the first quarter. The Company's type curve for a Harlech multi zone vertical well includes an initial production rate of 300 boe per day which includes a liquids yield of 50 to 60 barrels per mmcf. The first well of the program achieved results slightly below the type curve. Fairborne's most recent well at Harlech exceeded the type curve profile. This well, completed in the Viking, Mannville and Gething sands has been on production for 1.5 months, had an initial production rate of 790 boe per day (2.1 mmcf/d gas and 471 bbls per day of free condensate at the wellhead) and is currently producing 557 boe per day (1.45 mmcf per day gas and 340 bbls per day of free condensate).

Other wells programmed in the second half targeting new liquids rich plays include a Cadomin test at Brown Creek that is on trend with an industry well that tested at 17 million cubic feet per day with 500 barrels of condensate per day. Fairborne will also drill the first Cardium horizontal well in the Harlech area following up on the successful vertical recompletion program that yielded encouraging liquids results of 50 to 60 barrels per million cubic feet (including 30 barrels of free condensate per mmcf).

Second Half Drilling Program

Fairborne's second half capital program will be approximately $80 million and with current plans to drill the following wells:


                                                   Gross            Net
                                    -----------------------------------
Marlboro Wilrich HZ Gas                                7            4.3
Sinclair Torquay Oil                                  18           14.5
Pine Creek Bluesky HZ Gas                              2            1.3
Harlech Cardium HZ Condensate/Gas                      2            1.5
Brown Creek Cadomin Condensate/Gas                     1            0.5
Clive/Haynes Oil                                       1            1.0

Fairborne plans to release its first quarter results on May 25, 2011.

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, drilling plans, the anticipated effect of construction of the Marlboro Gas Plant, timing of completion of repairs to the K3 Plant, estimated production from the Wilrich area by the end of 2011, timing of completion of wells, expected initial production rates of new wells, the capital expenditure budget for the balance of 2011 and the nature of the expenditures and the timing of release of first quarter financial results. 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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