Canadian Oil

[kraftdinner]

Fairborne completes acquisition of Fairquest shares


2007-06-04 11:10 MT - News Release

Also News Release (C-FQE) Fairquest Energy Ltd


Mr. Steven VanSickle of Fairborne Energy reports

FAIRBORNE ENERGY TRUST AND FAIRQUEST ENERGY LIMITED JOINTLY ANNOUNCE COMPLETION OF PLAN OF ARRANGEMENT

Fairborne Energy Trust has completed acquisition of all the outstanding common shares of Fairquest Energy Ltd., pursuant to a plan of arrangement.

Pursuant to the arrangement, the previous shareholders of Fairquest are entitled to receive, for each outstanding common share of Fairquest held by them, 0.39 of a trust unit of Fairborne. After giving effect to the arrangement, Fairborne has approximately 65.3 million trust units outstanding and approximately 3.2 million exchangeable shares outstanding (which are currently convertible into a total of approximately 4.0 million trust units, subject to further adjustment for subsequent distributions by Fairborne).

Letters of transmittal have been forwarded to shareholders of Fairquest to be used in order to exchange their common shares of Fairquest for trust units of Fairborne and to receive future distributions on such trust units.

Upon issuance of a bulletin of the Toronto Stock Exchange confirming receipt by the TSX of all necessary documents in connection with the closing of the arrangement and related matters, the common shares of Fairquest will be delisted from the TSX.

Current production from the combined entity is in line with previously reported levels of 13,000 to 13,500 barrels-of-oil-equivalent per day. Fairborne expects its second-half 2007 capital program to be in the $50-million to $55-million range resulting in the drilling of 43 gross wells (29 net). Following the acquisition, Fairborne Energy Trust is approaching $1-billion in enterprise value.

Fairborne plans to continue to manage its business so that its combined distributions and capital expenditures are approximately equal to its cash flow. Fairborne's net debt upon completion of the transaction is approximately $165-million, before convertible debentures, on a new borrowing base of $220-million.

Strategically, the combination further strengthens Fairborne's position as a leading, sustainable natural-gas-focused trust. The transaction maintains Fairborne's focused production base, simplifies its operating structure and consolidates its working interest in its major growth properties.

Note -- Barrels of oil equivalent (BOE) may be misleading, particularly if used in isolation. A BOE conversion ratio has been calculated using a conversion rate of 6,000 cubic feet of natural gas to one barrel, and is based on an energy equivalent conversion method application at the burner tip and does not represent an economic value equivalency at the wellhead.

We seek Safe Harbor.