Fairquest Energy Limited
TSX : FQE

Fairquest Energy Limited

January 10, 2006 19:05 ET

Fairquest Updates Activity

CALGARY, ALBERTA--(CCNMatthews - Jan. 10, 2006) - Fairquest Energy Limited (TSX:FQE) ("Fairquest" or the "Company") is pleased to provide an update on its activities during the fourth quarter of 2005, the Company's present operations and remaining drilling plans for the first quarter of 2006.

Over the last 60 days the Company has brought on new production from five gas wells and one oil well. Current production is approximately 1500 barrels of oil equivalent per day (BOE/d) comprised of 7.2 mmcf/d of natural gas and 300 bbls/d of oil and natural gas liquids. During the past three months the Company spudded and/or drilled a total of 22 gross wells (9.0 net working interest) ranging in depth from 1800 meters to 4100 meters. All but five of these wells were operated by the Company. To date, 18 wells are logged and cased while four wells are still drilling. Completion and testing operations currently are being conducted on eight wells with a further seven wells awaiting completion, and five wells are awaiting tie-in to production facilities. The Company's estimate of net production behind pipe is approximately 450 BOE/d.

West Pembina/Harlech Area

This is the most active drilling area for the Company and accounts for 58 percent (870 BOE/d) of current production. Since early October 2005, the Company has drilled 11 gross wells (4.6 net working interest) in this area in partnership with Fairborne Energy Trust under a regional farm-in agreement. The main drilling targets include multiple Belly River gas and oil reservoirs at depths of between 1600 and 2100 meters, as well as deeper gas reservoirs in the Cardium, Dunvegan, Viking and Mannville formations. Since November 2005 two Viking gas wells and two Belly River wells (one oil, one gas) have been tied into production facilities. At present, six wells are being completed or tested while three wells have been cased and are scheduled to be completed over the next 30 to 60 days. In addition to the 11 wells drilled, the Company currently is drilling a Viking test (non-operated) and two Belly River tests.

Over the next three months and prior to spring break-up in the West Pembina/ Harlech area, the Company plans to drill an additional 11 Belly River tests, three deeper (3100 meters) Mannville tests and one Nisku test (3600 meters).

Deep Basin/Wild River Area

The Company commenced operations in the Deep Basin and Wild River operating areas in August of 2005 and since then has participated in the drilling of seven wells (2.5 net working interest) of which four were operated and three non-operated. Current production from the Wild River and Marlboro pools represents 19 percent (280 BOE/d) of the Company's production.

In the Marsh, Hinton and Marlboro areas, the Company has drilled five gross wells (2.0 net working interest) targeting multiple Cretaceous tight sandstone gas reservoirs ranging from 2500 meters to 4000 meters that are part of a large gas resource fairway. Currently, one well has been tied into production facilities at Marlboro, one well has been completed and is undergoing production testing operations and three wells are scheduled to be completed over the next 30 to 45 days.

At Wild River the Company is pursuing Nisku sour gas reef reservoirs at a depth of 3800 meters. In early January one well reached total depth and has been cased over the Nisku. A second well is drilling and should reach total depth in the next 30 days.

The Company has extensive land holdings in the Deep Basin and at Wild River with varying interests in 150 sections (96000 acres) of oil and gas rights (43000 net acres). In addition to exploration for tight sandstone gas reservoirs in the Deep Basin, the Company plans to spud two deep (5000 meter) Devonian tests over the next 90 days and currently is shooting two 3-D seismic programs.

Westerose/Pigeon Lake Area

In the past 60 days, the Company drilled two wells (1.0 net working interest) in this area with one well tied into production facilities while completion operations are being conducted on the other. In addition, two sweet gas wells (1.2 net working interest) are awaiting pipeline construction and one sour gas well (0.2 net working interest) is awaiting approval of a re-licensing application to convert an existing pipeline over to sour gas service. Current production in this area represents 11 percent of the Company's production which should increase over the next several months as the Company continues to drill and evaluate wells pursuant to its area farm-in arrangement with Fairborne Energy Trust.

In summary, Fairquest is currently producing 1500 BOE/d with approximately 450 BOE/d behind pipe. Completion operations are underway on eight wells with seven wells awaiting completion. The Company has four drilling rigs under contract and five completion rigs working in West Pembina/Harlech, Deep Basin, and Westerose/ Pigeon Lake operating areas. The Company plans to drill 22 wells (9.0 net working interest) over the next three months with 16 (6.4 net working interest) of these wells in the West Pembina/Harlech Area.

Forward Looking Statements: Certain information regarding Fairquest in this news release including management's assessment of future plans and operations, production estimates, drilling inventory and wells to be drilled, timing of drilling and tie-in of wells, productive capacity of new wells, capital expenditures and the timing thereof, may constitute forward-looking statements under applicable securities laws and necessarily involve risks including, 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, the timing and length of plant turnarounds and the impact of such turnarounds and the timing thereof, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources. As a consequence, Fairquest's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly no assurance can be given that any events anticipated by the forward-looking statements will transpire or occur, or, if any of them do so, what benefits Fairquest will derive therefrom. Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could effect Fairquest 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), at Fairquest's website (www.fairquestenergy.com). Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and Fairquest 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.

BOE Disclosure: Disclosure provided herein in respect of barrels of oil equivalent (boe) may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf: 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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