FairWest Energy Corporation
TSX VENTURE : FEC

FairWest Energy Corporation

July 13, 2010 14:17 ET

FairWest Energy Announces Banking and Corporate Update

CALGARY, ALBERTA--(Marketwire - July 13, 2010) - FairWest Energy Corporation ("FairWest" or the "Company") (TSX VENTURE:FEC) announces that it intends to repay the amount due to its principal lender (the "Bank") on or before July 30, 2010. In order to repay the Bank, the Company has accepted a loan commitment from Canadian Western Bank for $3.75 million and has received a loan commitment from a related party for $1.65 million. Since May 27, 2009, the Company has been operating under the terms of a Forbearance Agreement (the "Agreement") with its Bank which allowed the Company a period of time to comply with the terms of its credit facility (the "Credit Facility") with the Bank. The amended Agreement extends the Credit Facility to July 30, 2010 and requires a stated reduction in the Credit Facility from $5.0 million to $3.75 million as of July 15, 2010 and a nil balance as of July 30, 2010. The repayment of the amount due to the Bank will end the forbearance period and return the Company to a normalized banking relationship with its new bank.

The Company advises that, subject to regulatory and TSX Venture Exchange approval, it intends to issue by way of a private placement $2.97 million of additional equity (the "Unit Offering"). Under the terms of the Unit Offering, the Company plans to issue up to 11,000,000 Units at a price of $0.27 per Unit ("Units"). Each Unit is comprised of two (2) Flow-Through Common Shares at a price of $0.10 per share, one (1) Common Share at a price of $0.07 per share and one (1) Flow-Through Common Share Purchase Warrant (the "Flow-Through Warrant"). Each Flow-Through Warrant is exercisable into one Common Share at a price of $0.12 until December 31, 2011. Proceeds from this Unit Offering will be added to working capital and used to fund a portion of the Company's 2010 capital budget. The capital budget includes optimization and workover activities on existing wells and participation in a drilling program that includes 12 drilling locations (9 oil and 3 natural gas wells). The balance of the Company's 2010 capital budget will be funded from the sale of non core assets and working capital.

On June 23, 2010, the Company held its Annual and Special Meeting of Shareholders (the "Meeting"). At the Meeting, the shareholders reappointed the firm of Kenway Mack Slusarchuk LLP as the Company's auditors, elected the directors of the Company and approved amendments to the Company's stock option plan and Series 1 Debentures. The current directors of the Company are Vern R. Fauth, Carl M. Ravinsky, Ross O. Drysdale, David S. Kelcher, Sean C. Fauth, Angelo W.S. Zia and H. Allen Cameron.

About FairWest Energy
FairWest (TSX VENTURE:FEC) is a Calgary, Alberta based junior oil and gas company engaged in the acquisition, exploration, development and production of crude oil, natural gas and natural gas liquids in the provinces of Alberta and Saskatchewan.

READER ADVISORY

This news release may contain certain forward-looking statements, including management's assessment of future plans and operations, and capital expenditures and the timing thereof, that involve substantial known and unknown risks and uncertainties, certain of which are beyond the Company's control. Such risks and uncertainties include, 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, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources, the impact of general economic conditions in Canada, the United States and overseas, industry conditions, changes in laws and regulations (including the adoption of new environmental laws and regulations) and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in foreign exchange or interest rates, stock market volatility and market valuations of companies with respect to announced transactions and the final valuations thereof and obtaining required approvals of regulatory authorities. The Company's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances 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, including the amount of proceeds, that the Company will derive therefrom. Readers are cautioned that the foregoing list of factors is not exhaustive. All subsequent forward-looking statements, whether written or oral, attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and the Company 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.

The terms bbls, bbls/d, boe, boes or boes/d may be misleading, particularly if used in isolation. A barrel of oil equivalent conversion ratio of 6 mcf per one (1) boe is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

149,279,936 Common Shares Issued

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • FairWest Energy Corporation
    Vern Fauth
    Chairman and Chief Executive Officer
    (403) 264-4949
    (403) 269-1761 (FAX)
    vfauth@fairwestenergy.com
    or
    FairWest Energy Corporation
    Marion D. Mackie
    Chief Financial Officer
    (403) 264-4949
    (403) 269-1761 (FAX)
    mmackie@fairwestenergy.com