Fairquest Energy Limited

Fairquest Energy Limited

October 17, 2006 08:41 ET

Fairquest Energy Limited Announces $35.6 Million Bought Deal Equity Financing

CALGARY, ALBERTA--(CCNMatthews - Oct. 17, 2006) -


Fairquest Energy Limited (TSX:FQE) ("Fairquest") is pleased to announce that it has entered into an agreement with a syndicate of underwriters co-led by FirstEnergy Capital Corp. and Sprott Securities Inc., and including Canaccord Capital Corporation, GMP Securities L.P., Raymond James Ltd., BMO Nesbitt Burns Inc, and Scotia Capital Inc., under which they have agreed to purchase for resale to the public, on a bought deal basis, 6,500,000 Common Shares ("Common Shares") at $3.80 each and 2,200,000 Common Shares on a Flow-Through basis ("Flow-Through Shares) at $4.95 each for aggregate gross proceeds of $35,590,000. The Common Shares and Flow-Though Shares will be offered in certain provinces of Canada pursuant to a short form prospectus.

Closing is anticipated to occur on or about November 14, 2006 and is subject to certain conditions including, but not limited to, the receipt of all necessary approvals including the approval of the Toronto Stock Exchange.

Proceeds of the offering will be used to fund a portion of Fairquest's ongoing development and exploration programs and for general corporate purposes. Gross proceeds from the sale of the Flow-Through Shares will be used to fund ongoing exploration activities eligible for Canadian exploration expenses which will be renounced in favour of the subscribers of the Flow-Through Shares effective on or before December 31, 2006.

Fairquest is a Calgary based, junior oil and natural gas exploration and development company that was created on the reorganization of Fairborne Energy Ltd. completed on June 1, 2005. Its common shares trade on the Toronto Stock Exchange under the symbol "FQE".

This news release shall not constitute an offer to sell or the solicitation of an offer to buy the securities in any jurisdiction. The Common Shares will not be and have not been registered under the United States Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.

ADVISORY: This document contains forward-looking statements. More particularly, this document contains statements concerning the anticipated closing date of the offering and the anticipated use of the net proceeds of the offering. Although Fairquest believes that the expectations reflected in these forward-looking statements are reasonable, undue reliance should not be placed on them because Fairquest can give no assurance that they will prove to be correct. Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties.

The closing of the offering could be delayed if Fairquest is not able to obtain the necessary regulatory and stock exchange approvals on the timelines it has planned. The offering will not be completed at all if these approvals are not obtained or some other condition to the closing is not satisfied. Accordingly, there is a risk that the offering will not be completed within the anticipated time or at all.

The intended use of the net proceeds of the offering by Fairquest might change if the board of directors of Fairquest determines that it would be in the best interests of Fairquest to deploy the proceeds for some other purpose, such as an acquisition.

The forward-looking statements contained in this press release are made as of the date hereof and Fairquest undertakes no obligations to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

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