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Message: NR 3rd quar results....record 16500 boe/d
Fairborne Energy Ltd.: Third Quarter Interim Report and News Release
Fairborne Energy Ltd.: Third Quarter Interim Report and News Release

CALGARY, ALBERTA, Nov. 5, 2010 (Marketwire) -- Fairborne Energy Ltd. (TSX:FEL)



HIGHLIGHTS
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Three months ended Nine months ended
September 30, September 30,
2010 2009 2010 2009
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Financial ($thousands, except per
share amounts)
Petroleum and natural gas revenue 54,718 55,244 177,733 182,219
Funds generated from operations (1) 28,204 37,236 95,207 105,948
Per share - basic $ 0.28 $ 0.43 $ 0.93 $ 1.22
Per share - diluted $ 0.28 $ 0.43 $ 0.93 $ 1.22
Cash flow from operations
(including changes in working
capital) 24,803 40,048 88,017 102,483
Per share - basic $ 0.24 $ 0.46 $ 0.86 $ 1.18
Per share - diluted $ 0.24 $ 0.46 $ 0.86 $ 1.18
Net loss (7,600) (497) (10,912) (22,521)
Per share - basic $(0.07) $(0.01) $(0.10) $(0.26)
Per share - diluted $(0.07) $(0.01) $(0.10) $(0.26)
Exploration and development
expenditures 40,123 19,232 124,082 87,802
Acquisitions, net of dispositions 74,321 (8,400) 77,254 (9,005)
Working capital deficit (surplus) 22,621 (1,539) 22,621 (1,539)
Bank indebtedness 194,042 204,046 194,042 204,046
Convertible debentures 97,959 96,027 97,959 96,027
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Operations (Units as noted)
Average production
Natural gas (Mcf per day) 68,910 56,797 65,563 63,648
Crude oil (bbls per day) 2,916 3,292 3,008 3,480
Natural gas liquids (bbls per day) 1,036 563 958 589
Sulphur (tonnes per day) (2) (4) 66 100 70 86
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Total (BOE per day) 15,503 13,421 14,963 14,763
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Average sales price (3)
Natural gas ($ per Mcf) 4.79 5.28 5.12 5.68
Crude oil ($ per bbl) 74.09 68.35 76.37 63.21
Natural gas liquids ($ per bbl) 42.29 32.19 41.39 28.70
Sulphur ($ per tonne) (4) 48.25 - 35.51 96.07
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Netback per BOE ($ per BOE)
Petroleum and natural gas sales (3) 38.41 40.53 40.84 41.24
Sulphur block revenue - 7.32 2.58 5.05
Royalties (3.32) (1.40) (4.64) (3.19)
Operating expenses (9.35) (9.05) (9.34) (10.72)
Transportation (1.11) (1.25) (1.08) (1.11)
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Operating netback 24.63 36.15 28.36 31.27
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Wells drilled (gross) 16 24 33 43
Undeveloped land (net acres) 261,945 218,293 261,945 218,293
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1) Funds generated from operations is calculated using cash flow from
operations as presented in the consolidated statement of cash flows
before non-cash working capital and asset retirement expenditures.
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.



FAIRBORNE REPORTS ANOTHER STRONG OPERATIONAL QUARTER AND RECORD CURRENT PRODUCTION

Fairborne's successful drilling program and property acquisition completed during the third quarter have resulted in record current production of 16,500 BOE per day. With two Wilrich wells, one Harlech well and one Westerose well drilled and awaiting completion or tie in, the Company is positioned to record exit production of 17,000 to 17,500 BOE per day in 2010, which represents an increase of more than 30% from 2009 exit production of 13,000 BOE per day. Financial and operating highlights include:

- Current production of approximately 16,500 BOE per day (75% natural gas, 25% light oil and natural gas liquids) with four additional wells drilled and awaiting completion or tie in;

- Average production for the third quarter of 15,503 BOE per day (68.9 MMcf per day of natural gas and 3,952 bbls per day of light oil and NGL's), consistent with the second quarter of 2010 and 16% higher than the same period in 2009;

- Current light oil and natural gas liquids production is approximately 4,100 bbls per day;

- Funds generated from operations of $28.2 million ($0.28 per share) in the third quarter, 3% higher than the preceding second quarter despite lower natural gas prices;

- Third quarter operating netback of $24.63 per BOE continues to benefit from a low cost structure with third quarter operating costs of $9.35 per BOE, 8.7% average royalties and transportation costs of $1.11 per BOE;

- Drilling activities included 16 (12.8 net) wells resulting in 12 (9.3 net) natural gas wells and four (3.5 net) oil wells;

- Property acquisition was completed which significantly expanded Fairborne's land position on the core asset at Marlboro/Pine Creek, including 71.8 net sections of Wilrich rights as well as a new producing property at McLeod River;

- Bank credit facilities were increased to $325 million from $285 million as a result of successful drilling results and the acquisition of the McLeod River property;

- Fairborne's hedging strategy continued to add significant value with third quarter realized natural gas prices 35% above the AECO Daily Index prices;

- 34% of natural gas production is hedged for the balance of 2010 at an average price of $6.63 per Mcf and 17% of natural gas production is hedged for 2011 at an average price of $5.66 per Mcf.

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