SOURCE: Fellows Energy Ltd.

March 05, 2007 10:21 ET

Fellows Restructures Convertible Debt Securities

BROOMFIELD, CO -- (MARKET WIRE) -- March 5, 2007 -- Fellows Energy Ltd. (OTCBB: FLWE) ("Fellows"), an oil and gas company focused on exploration and production of natural gas and oil in the Rocky Mountain Region, announced today that the Company entered into a series of transactions to restructure securities issued pursuant to securities purchase agreements dated June 17, 2005 and September 21, 2005. Complete details were filed with the SEC FORM 8-K on February 15, 2007.

In the restructuring transactions, Fellows also closed a financing pursuant to a securities purchase agreement with Palisades Master Fund, L.P. ("Palisades") for the issuance of a $714,500 face amount debenture maturing September 15, 2007 (the "New Debenture"). The New Debenture does not accrue interest. Investors paid $500,000 for the New Debenture, resulting in net proceeds of $400,000 before legal fees.

The changes highlighted in the June and September, 2005 agreements include the removal of the ratchet and call provisions; removal of the mandatory monthly liquidation and amortization provisions, and amending the fixed conversion price to $0.1375. A full description of these transactions is included in the Company's Form 8-K.

"We are very pleased to have completed this restructuring," said George Young, President of Fellows Energy. "This restructuring will be very beneficial to Fellows and our shareholders by eliminating the monthly amortization payments, which we believe will result in a more orderly trading market for our stock, and by fixing the conversion price at a level 40% above the current market price. We believe that this transaction, combined with the recent reserve report showing in excess of 10.5 BCF of gas in the proven reserve category and net income potential of over $17 million from the Carbon County project, will allow us to move forward in developing this acreage. We also expect that this new structure will enable us to acquire additional producing properties and raise additional capital for our increasing development activities on our other projects."

About Fellows Energy Ltd.

Fellows is an early stage oil and gas company led by an experienced management team which is focused on exploration and production of natural gas and oil in the Rocky Mountain Region using both traditional and new technologies. The current strategy is to pursue both short- and long-term opportunities to leverage its large acreage position in the Rockies, which management believes are characterized by reasonable entry costs, favorable economic terms, high reserve potential relative to capital expenditures and the availability of existing technical data. For additional information please go to www.fellowsenergy.com.

Safe Harbor Statement

This press release may contain forward-looking information within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and is subject to the safe harbor created by those sections. Examples of such forward-looking information would be statements regarding financing, acquisition of properties, and terms including "probable," "possible," or "recoverable" reserves among others. There are many risk factors that could cause our expectations and beliefs to fail to materialize: competition for new acquisitions; availability of capital; unfavorable geologic conditions; the complexity of coal bed methane exploration and production; and prevailing prices for natural gas and general regional economic conditions. Management hopes these transactions will bring additional value to the shareholders of Fellows Energy. There is no guarantee that the projects that Fellows has recently acquired will increase the value of its shares of common stock, or that Fellows will acquire rights to explore and operate any other such projects, or that in the event that it acquires rights to explore and operate other such projects, that these actions will be successful or increase the value of Fellows' common stock.

Cautionary Note to U.S. Investors -- The United States Securities and Exchange Commission ("SEC") permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this press release, such as probable, possible and potential, that the SEC's guidelines strictly prohibit us from including in filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our Form 10-KSB, File No. 0-33321, available from us at 370 Interlocken Boulevard, Suite 400 Broomfield, Colorado 80021. You can also obtain this form from the SEC by calling 1-800-SEC-0330. Fellows assumes no obligation to update the information contained in this press release.

Contact Information

  • Contacts:

    Fellows Energy Ltd.
    George S. Young / Shane Reeves
    303-926-4415

    Investor & Public Relations
    Harvey Goralnick / Alison Hart
    212-752-9445
    Email Contact