FairWest Energy Corporation is pleased to announce, FairWest and its 100% subsidiary Strike Petroleum Ltd. have closed a settlement agreement with Strike's secured lender.
FairWest has acquired Strike's secured indebtedness from the Lender for cash of $4.25 million, equity and other consideration. The equity portion included 5.0 million FairWest common shares issued at $0.15 per share and 5.0 million warrants exercisable at $0.20 for 24 months following closing.
FairWest set a goal to have a debt to projected cash flow ratio of 1.5 to 1 by December 31, 2008. Net debt at June 30, 2008 was $19 million. The Settlement Agreement closed on August 19, 2008 reduces FairWest's net debt to $14.4 million. Sales of non producing assets in progress are expected to result in FairWest achieving this debt to projected cash flow goal by September 30, 2008.
FairWest has sufficient cash flow and bank lines to focus on production growth for the balance of 2008. Our goal is to exit December 31, 2008 at 1,100 barrels of oil equivalent per day. Cash flow from the Strike properties in core areas of Kirkpatrick Lake and Youngstown is now available to implement optimization strategies on the lands instead of being directed to service Lender debt.
The Settlement Agreement will significantly reduce FairWest's interest payments on a consolidated basis. Management is now free to focus on production growth and informing the investment community that FairWest is a well financed value player in East Central, Alberta -- www.cnxmarketlink.com
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