FairWest Energy Corporation
TSX : FEC

FairWest Energy Corporation

March 28, 2006 17:33 ET

FairWest Energy Corporation Announces Financial and Operational Results for 2005, Odd-Lot Selling Program, Private Placement, and Release From Escrow

CALGARY, ALBERTA--(CCNMatthews - March 28, 2006) - FairWest Energy Corporation (TSX:FEC) ("FairWest") is pleased to announce its financial and operational results for the thirteen months ended December 31, 2005 and the eleven months ended November 30, 2004. In addition, FairWest is pleased to announce the commencement of an odd-lot selling program to shareholders holding less than 500 common shares of FairWest, a private placement of 1,666,667 flow through common shares at a price of $0.60, and the release of escrowed funds and securities held pursuant to the acquisition of a private oil and gas company in July 2005.

Financial and Operational Results

The highlights of financial and operational results during the periods are summarized below. This message should be read in conjunction with the Management's Discussion and Analysis and the associated Financial Statements for the periods, available at www.sedar.com or by request at the offices of FairWest.



Financial Highlights

Periods Ended
-----------------------------------------
December 31, December 31, November 30,
2005 2005 2004
(3 Months) (13 Months) (2 Months)
------------------------------------------------------------------------
$ $ $
Revenue
Petroleum and natural gas
sales, net of royalties 1,271,104 3,788,321 85,711
Other income 90,670 416,729 98,176
-----------------------------------------
Total Revenue 1,361,774 4,205,050 183,887
-----------------------------------------
Expenses
Depletion, depreciation and
amortization 1,990,905 3,525,848 56,653
Operating costs 297,130 905,635 30,624
Interest and bank charges 87,113 179,235 16,076
General and administrative
expense 316,925 877,517 134,764
Management fees - 10,479 -
Part XII.6 tax 62,574 62,574 -
Future income tax (recovery) 1,762,799 (660,400) 0
-----------------------------------------
Total expenses 4,517,446 4,900,888 238,117
-----------------------------------------
Net loss (3,155,672) (695,838) (54,230)
-----------------------------------------
-----------------------------------------

Funds flow from operations 577,257 1,946,145 (43,166)
Capital expenditures 3,350,772 31,704,840 5,749,333


Periods Ended
-----------------------------------------
December 31, December 31, November 30,
2005 2005 2004
(3 Months) (13 Months) (2 Months)
------------------------------------------------------------------------
Share Data
# # #
Common shares outstanding 53,088,228 53,088,228 15,664,601
Warrants 2,420,000 2,420,000 -
Options 378,579 378,579 -
Weighted common shares -
basic and diluted 48,182,141 31,157,750 3,004,645

Highlights of Operations
------------------------------------------------------------------------
Natural gas
Natural gas sales ($) 1,419,243 3,776,102 58,981
Volume - mcf 119,421 408,829 7,504
Volume - mmcf/day 1,298 1,120 123
$/mcf 11.88 9.24 7.86
------------------------------------------------------------------------
Oil and NGLs
Oil and NGL sales ($) 351,229 1,230,855 51,479
Volume - bbl 5,260 20,764 1,038
Volume - bbl/day 57 57 17
$/bbl 66.77 59.28 49.64
------------------------------------------------------------------------
Barrel of oil equivalent
Total sales ($) 1,770,472 5,006,957 110,460
Volume - boe 25,164 88,902 2,289
Volume - boe/day 273 244 38
$/boe 70.36 56.32 47.65
------------------------------------------------------------------------


Reserves

A reserve and economic evaluation of the oil and gas properties owned by FairWest was prepared for an effective date of January 1, 2006 (as of December 31, 2005) by Chapman Petroleum Engineering Ltd., an independent evaluator. The following table summarizes FairWest's gross proved plus probable reserves, based on forecast prices and costs, before income taxes by area as of January 1, 2006:



Cumulative Cash Flow
Light and (BIT), discounted at
Medium Oil Sales Gas NGL 10%/year
Property MSTB MMscf Mbbls M$
------------------------------------------------------------------------

ALBERTA
Antelope 0 2,709 0 7,178
Berry Creek 43 3,304 1 9,593
Bowview/Richdale 0 4,476 0 11,801
Provost 128 947 19 5,937
Other 0 1,313 60 4,544
------------------------------------------------------------------------
Sub-total - Alberta 171 12,749 80 39,053
------------------------------------------------------------------------

SASKATCHEWAN
Burstall 0 742 0 1,886
Other 37 0 0 792
------------------------------------------------------------------------
Sub-total - Saskatchewan 37 742 0 2,678
------------------------------------------------------------------------

------------------------------------------------------------------------
ARTC - - - 2,670
------------------------------------------------------------------------

Total 208 13,491 80 44,401
------------------------------------------------------------------------


Odd-Lot Selling Program

Approximately 1,385 shareholders own less than 500 common shares, representing approximately 282,200 shares, or 0.5% of the 54,248,228 shares issued and outstanding as of today's date. FairWest has commenced an Odd-Lot Selling Program to allow small shareholders to sell their shares without incurring brokerage commission fees. Information on this undertaking will be mailed to all shareholders who are eligible to participate. Further information is available at our website at www.fairwestenergy.com or by contacting Olympia Trust Company, our registrar and transfer agent.

Release of Escrowed Funds and Securities

FairWest is pleased to announce that the conditions of an escrow agreement dated July 11, 2005 ("the "Escrow Agreement") have been resolved to the satisfaction of all parties. The Escrow Agreement arose as a result of FairWest's acquisition of Supreme Energy Inc. ("Supreme"). The Escrow Agreement consideration consisted of an interest bearing promissory note of $947,438 and 2,027,639 shares. The promissory note and shares were held in escrow pending resolution of a number of title deficiencies associated with the oil and gas assets of Supreme.

On March 24, 2006, FairWest and the former Supreme shareholders agreed to cancel $507,345 of the outstanding escrow promissory note and the remaining portion of the $440,093 plus accrued interest be released from escrow and be paid on or before March 31, 2006. Subject to regulatory approval, the Supreme shareholders will use the amount received in respect of the escrow promissory note to acquire flow-through shares in the Company. A total of 1,158,751 of escrow common shares will be cancelled and the remaining 868,888 common shares will be released from escrow.

Private Placement

Subject to Toronto Stock Exchange and regulatory approval, FairWest intends to issue 1,666,667 flow-through common shares ("FT Share") at $0.60 per FT Share, raising $1,000,000 to be expended on FairWest's exploration and drilling program during 2006. The Supreme shareholders have agreed to subscribe for $455,526.40 of the FT Shares. A director of FairWest is subscribing for 11% of the FT Shares. Subject to regulatory approvals, it is anticipated that the private placements will close on or prior to April 30, 2006.

Outlook

Larry Nachshen, Chairman of the Board has not stood for re-election during 2006 on the FairWest Board. Larry was the Chairman of the Fairstar Explorations Inc. board of directors and was a strong supporter of the amalgamation of Fairstar and Western Energy, which occurred in August 2005. Larry intends to continue offering his support to the Board in the upcoming year. We wish Larry success with his future endeavors. On behalf of management, James G. Gettis, President & CEO wishes to thank all directors for their ongoing support and assistance during the start up of FairWest.

Mr. Keith Farries is being recommended for nomination to the FairWest Board during 2006. Mr.Farries has over 50 years experience in the oil and gas industry as a consultant and in management positions. Mr. Farries is a Life Member of the Association of Professional Engineers, Geologist and Geophysists of Alberta ("APEGGA") and the Petroleum Society of AIME and CIM. Mr. Farries has served as a director of several public oil and gas companies, most recently as Chairman of Storm Energy Ltd. until its reorganization into Storm Exploration Inc. in June 2004.

The Annual and Special Meeting of FairWest shareholders will be held at the Calgary Chamber of Commerce, Robert Brown Jr. Room, 2nd Floor, at 100 - 6th Avenue S.W., Calgary, Alberta, T2P 0P5 on April 26, 2006 at 3:00 p.m. (Calgary time).

FairWest has secured a drilling rig for its work during 2006. FairWest plans to drill up to 30 wells in 2006 with working interests averaging 40%. In January 2006 FairWest hired a Production Superintendent to supervise the Company's interests in its drilling and optimization program.

FairWest Energy Corporation is a Calgary, Alberta based company engaged in the acquisition, development and production of oil and natural gas reserves in the provinces of Alberta and Saskatchewan.

Contact Information

  • FairWest Energy Corporation
    James G. Gettis
    President and Chief Executive Officer
    (403) 264-4949 or (514) 695-8080
    (403) 269-1761 or (514) 695-8011 (FAX)
    or
    FairWest Energy Corporation
    Marion D. Mackie
    Chief Financial Officer
    (403) 264-4949 or (514) 695-8080
    (403) 269-1761 or (514) 695-8011 (FAX)
    or
    FairWest Energy Corporation
    Larry Nachshen
    Chairman of the Board
    (403) 264-4949 or (514) 695-8080
    (403) 269-1761 or (514) 695-8011 (FAX)