Fairborne Energy Ltd T.FEL

Fairborne Announces Year End Results, Operational

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Fairborne Energy Ltd.

TSX : FEL

March 15, 2012 00:05 ET

Fairborne Announces Year End Results, Operational Update and Summary of 2011 Reserves

CALGARY, ALBERTA--(Marketwire - March 15, 2012) - Fairborne Energy Ltd. ("Fairborne" or the "Company") (TSX:FEL) is pleased to provide this summary of its financial and operating results for the 2011 year. A complete copy of the Company's consolidated financial statements for the years ended December 31, 2011 and 2010, along with management's discussion and analysis in respect thereof will be filed on SEDAR and is available on the Company's website at www.fairborne-energy.com.

2011 HIGHLIGHTS
	2011		2010		change
Financial ($thousands, except per share amounts)
Petroleum and natural gas revenue	205,766		234,637		(12	%)
Funds generated from operations(1)	115,628		141,921		(19	%)
Per share - basic	$1.13		$1.38		(18	%)
Per share - diluted	$1.13		$1.37		(18	%)
Net profit (loss) (5)	(74,264	)	8,400		-
Per share - basic	( .72	)	.08		-
Per share - diluted	( .72	)	.08		-
Exploration and development expenditures	168,104		163,354		3	%
Marlboro Gas Plant capital expenditures	21,246		3,610		-
Total capital expenditures	189,350		166,964		13	%
Property acquisitions	-		71,415		-
Proceeds from the sale of petroleum and natural gas properties and partial interest in Marlboro Gas Plant	(150,772	)	-		-
Working capital deficit (excluding convertible debentures)	32,767		17,743		85	%
Convertible debentures	-		97,564		-
Bank indebtedness	228,341		206,331		11	%
Operations
Average production
Natural gas (Mcf per day)	69,249		67,146		3	%
Crude oil (bbls per day)	2,322		2,993		(22	%)
Natural gas liquids (bbls per day)	860		976		(12	%)
Sulphur (tonnes per day) (2), (4)	57		68		(16	%)
Total (BOE per day)	14,781		15,228		(3	%)
Proved and probable reserves
Natural gas (Bcf)	303.9		317.3		(4	%)
Crude oil (Mbbl)	6,457		9,754		(34	%)
Natural gas liquids (Mbbl)	6,959		10,331		(33	%)
BOE (MBOE)	64,065		72,969		(12	%)
Netback per BOE ($ per BOE)
Petroleum and natural gas sales(3)	37.88		40.50		(6	%)
Sulphur block revenue	-		1.89		-
Royalties	(3.83	)	(4.46	)	(14	%)
Operating expenses	(8.77	)	(9.11	)	(4	%)
Transportation	(1.09	)	(1.08	)	1	%
Operating netback	24.19		27.74		(13	%)
Wells drilled (gross)	54		40		35	%
Undeveloped land (net acres)	219,032		264,524		(17	%)

(1)	The calculation of funds generated from operations for the year ended December 31, 2011 excludes $14.2 million (2010 - $13.8 million) of interest expense which is classified as finance expense.
(2)	A BOE conversion ratio has been calculated using a conversion rate of one tonne of sulphur to one barrel.
(3)	Excludes the change in fair value of derivatives.
(4)	Excludes the sale of inventory at the West Pembina sulphur block.
(5)	Included in the 2011 net loss is an after-tax impairment of $110.0 million.

2011 FINANCIAL AND OPERATING RESULTS

• Average annual production increased 7% from the prior year, net of property dispositions;
• Total debt of $261.1 million was down 19% from the end of 2010 ($321.6 million);
• Exit production of 16,700 BOE per day represents 9% growth over the average for the second half of 2011 and an increase of 13% over 2011 average annual production;
• Average 2011 production of 14,781 BOE per day reflected a reduction of approximately 1,430 BOE per day for property dispositions completed in the year;
• Operating costs of $8.77 per BOE were 4% lower than the prior year resulting in an operating netback of $24.19 per BOE;
• Funds generated from operations of $115.6 million ($1.13 per share) before interest expense ($101.4 million after interest expense);
• The Company grew production on its Marlboro property 50% during 2011 from 4,850 BOE per day to an exit of 7,300 BOE per day, representing approximately 40% of total corporate production;
• Dispositions of non-core properties as well as a portion of the Company's interest in the Marlboro gas plant generated $150.8 million of proceeds, improving the Company's focus on core properties and reducing outstanding debt;
• Convertible debentures of $100 million were repaid utilizing existing credit facilities;
• Subsequent to year end, the Company announced the agreement to dispose of its interest in the Clive units and the Clive CO2 project, for estimated proceeds of $47.5 million, scheduled to close in the second quarter of 2012, with proceeds used to further reduce outstanding indebtedness;
• Completed construction of the Company operated Marlboro Gas Plant with an initial operating capacity of 40 MMcf per day;
• The Marlboro Gas Plant had a 2011 capital cost of $21.2 million (net to Fairborne's 82% working interest) and subsequent to plant startup the Company sold a 40% working interest in the plant for proceeds of $18 million (resulting in Fairborne retaining a 42% working interest and operatorship);
• Drilling activities included 54 (38.2 net) wells resulting in 28 (20.9 net) natural gas wells and 25 (16.3 net) oil wells and one (1.0 net) dry and abandoned well. Activity was focused on the Company's Marlboro, Harlech and Sinclair properties.

FOURTH QUARTER 2011 HIGHLIGHTS

• Fourth quarter production of 15,539 BOE per day was impacted by production outages at the Company's Wild River and Marlboro facilities, reducing average production by approximately 400 BOE per day;
• Revenues of $49.4 million in the fourth quarter resulted in funds generated from operations of $27.1 million (
  .26 per share);
• Capital expenditures totaled $46.5 million, including $32.8 million for drilling and completions and $7.2 million for well equipment and facilities;

[TimeBuilder]

BIG trouble and problems with these numbers......and we need only 4.84 to get out....can not see anything positive with the results...all comments and thoughts welcome. Regards and GOOD LUCK to ALL holders, TB

[raziel]

"and we need only 4.84 to get out" -- what do you mean?

[RottenEggS]

your being very vague, try being more specific And the 4.84 you mentioned is your problem. Thx in advance RES  

[TimeBuilder]

At this SP level we would be gone and very happy to get out. It's been a long and tough road for us and our FEL shares. We may just turn blue and a little grayer while we wait for our price. BUT we have NO choice at this point in TIME.  Regards, Builder

[TimeBuilder]

AKA ..sulfur dioxide  Does anyone on this BB remember...CAZ.T  Case Resources from Sept 2003 and/or  FQE.T  Fairquest Energy from March 2006 both taken out by FEL.UN .T which became FEL.T  in Dec 2007 ??? Sorry to say we do. Regards, TimeBuilder