FairWest Energy Corporation

FairWest Energy Corporation

June 24, 2008 11:59 ET

FairWest Settles Outstanding Indebtedness of Its 100% Subsidiary, Strike Petroleum Ltd.

CALGARY, ALBERTA--(Marketwire - June 24, 2008) - FairWest Energy Corporation (TSX:FEC) ("FairWest") is pleased to announce an update to its April 24, 2008 announcement that Strike Petroleum Ltd. ("Strike"), a 100% subsidiary of FairWest had received a demand to repay its outstanding indebtedness with its secured lender ("Lender"). On June 20, 2008, FairWest entered into a binding agreement ("Settlement Agreement") with the Lender. Under the terms of the Settlement Agreement, FairWest will acquire Strike's secured indebtedness from the Lender for cash, equity, and other consideration. Closing is expected to occur within 60 days and is subject to receiving regulatory approvals within 14 days of the Settlement Agreement.

Subject to regulatory approval, the Lender will receive 5,000,000 FairWest Units (the "Units"), each Unit comprised of 1 FairWest common share and 1 warrant to purchase 1 common share at $0.20 within 24 months.

FairWest had set a goal to have a debt to cash flow ratio of 1.5 to 1 by December 31, 2008. The Settlement Agreement, together with other activities planned are expected to result in FairWest achieving this goal prior to the end of August 2008.

FairWest recognizes that the Strike debt settlement has been a slow and arduous process and wishes to thank all involved parties for their patience in working to complete this milestone on behalf of our shareholders.

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.

Statements in this release which describe FairWest's intentions, expectations or predictions, or which relate to matters that are not historical facts are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties which may cause the actual results, performances or achievements of FairWest to be materially different from any future results, performances or achievements expressed in or implied by such forward-looking statements. FairWest may update or revise any forward-looking statements, whether as a result of new information, future events or changing market and business conditions.

Contact Information

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