FairWest Energy Corporation

FairWest Energy Corporation

April 23, 2007 19:22 ET

FairWest Energy Corporation Announces Proposed Property Disposition at Garrington, Alberta

CALGARY, ALBERTA--(CCNMatthews - April 23, 2007) - FairWest Energy Corporation ("FairWest")(TSX:FEC) is pleased to announce that it has entered into a letter of intent dated April 20, 2007 for the planned disposition of a 37.66% working interest in a producing gas well and a 28.12% working interest in a shutin well located at Garrington, Alberta for consideration of $1,909,821 ("Garrington Properties"). A total of $1,602,023 will be paid at closing and the purchaser will issue FairWest an interest bearing promissory note for $307,798 (the "Promissory Note"). The Promissory Note will bear interest at a rate of eight percent per annum (8%) and will be due on May 1, 2010.

On May 1, 2010, at the sole election of the purchaser, FairWest shall have the obligation to purchase the Garrington Properties from the purchaser for $1,909,821 ("Sales Price"). Any amount outstanding by the purchaser in respect of the Promissory Note shall be applied against the Sales Price.

The producing well is expected to produce 21 barrels of oil equivalent ("BOE") per day in 2007, and, together with the shutin well, is expected to produce 36 BOE/day in 2007. FairWest's 2007 production, after the sale, is expected to be approximately 623 BOE/d. The sale price was negotiated by the parties and was based on an independent engineering evaluation prepared by Chapman Petroleum Engineering Ltd. with reference to the net present value, using escalated pricing and discounted at 10%.

The purchaser is a limited partnership of which the general partner is a company controlled by a director of FairWest and in which the director, directly or indirectly, may make an investment.

The sale of the Garrington interest is expected to close on April 30, 2007. The closing of this transaction is subject to a number of conditions that the parties expect to resolve prior to closing. The proceeds from the sale will be used to finance the proposed acquisition and settlement of the secured and unsecured debts of Strike Petroleum Ltd. which is scheduled to close on May 1, 2007.

FairWest (TSX: FEC) is a Calgary, Alberta based junior oil and gas company engaged in the acquisition, exploration, development and production of crude oil and natural gas in the provinces of Alberta and Saskatchewan. Further information concerning FairWest is available at www.fairwestenergy.com.

Contact Information

  • FairWest Energy Corporation
    James G. Gettis
    President and Chief Executive Officer
    (403) 264-4949
    (403) 269-1761 (FAX)
    FairWest Energy Corporation
    Marion D. Mackie
    Chief Financial Officer
    (403) 264-4949
    (403) 269-1761 (FAX)
    Website: www.fairwestenergy.com