CALGARY, ALBERTA, Sep. 16, 2009 (Marketwire) -- FairWest Energy Corporation ("FairWest or the "Company") (TSX:FEC) announces that the Company closed a non-brokered private placement of $1,250,000 of Units. Each Unit is priced at $0.20 and is comprised of two Flow-Through Common Shares (the "Flow-Through Shares") priced at $0.10 per share and one purchase warrant to acquire one Flow-Through Share of the Company (the "Warrants"). Each full Warrant is exercisable for one Flow-Through Share of the Company at a price of $0.10 per share until December 18, 2010. The Units were sold to enable the Company to initially reduce its working capital deficiency and within the next 12 months the funds will be utilized to drill and test the Company's liquid rich natural gas properties in Provost, Alberta. The project will involve the drilling of a horizontal well with multi-stage fracs and the drilling of a number of conventional wells on the Provost properties. The shares issued in the private placement are subject to a four month hold and subject to final TSX approval.
The Company also announces that the Company terminated its previously announced offering of up to $2,000,000 of Flow-Through Common Shares. Pursuant to the offering, FairWest accepted subscriptions for 7,947,500 Flow-Through Common Shares at $0.10 per share for gross proceeds of $794,750. The funds will be expended during 2009 and 2010 on exploration projects that are designed to increase production from the Company's lands.
The Company also advises that it has entered into an amended Forbearance Agreement (the "Forbearance Agreement") with its principal lender (the "Bank"). Under the terms of the Forbearance Agreement, the existing credit facility shall be reduced from $7.9 million to $6.9 million by October 31, 2009 (the "Forbearance Date"). The Company also agreed to either repay the Bank in full or have qualified for continuing financing from the Bank by the Forbearance Date with the intention that all long-term loan defaults will be eliminated by this date. Provided that the Company is not in default of the terms of the Forbearance Agreement on October 31, 2009, the Bank will give consideration to transferring the Company's account to the Calgary Energy Group, the cancellation of the Forbearance Agreement, the normalization of credit terms under an Offering Letter from the Bank and the renewal of credit terms to the Company to at least January 31, 2010. The Company also agreed to pay a forbearance fee of $50,000 to the Bank by the Forbearance Date.
About FairWest Energy Corporation
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.
This news release may contain certain forward-looking statements, including management's assessment of future plans and operations, and capital expenditures and the timing thereof, that involve substantial known and unknown risks and uncertainties, certain of which are beyond the Company's control. Such risks and uncertainties include, without limitation, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources, the impact of general economic conditions in Canada, the United States and overseas, industry conditions, changes in laws and regulations (including the adoption of new environmental laws and regulations) and changes in how they are interpreted and enforced, increased competition, the lack of availability of qualified personnel or management, fluctuations in foreign exchange or interest rates, stock market volatility and market valuations of companies with respect to announced transactions and the final valuations thereof, and obtaining required approvals of regulatory authorities. The Company's actual results, performance or achievements could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits, including the amount of proceeds, that the Company will derive there from. Readers are cautioned that the foregoing list of factors is not exhaustive. All subsequent forward-looking statements, whether written or oral, attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Furthermore, the forward-looking statements contained in this news release are made as at the date of this news release and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.
129,839,879 Common Shares Issued