1. Fairborne Energy Ltd.
Corporate Presentation
Please refer to Forward‐Looking Statements, Advisory and Resource Disclosure at end of presentation.
2. Fairborne History
2002 2012
• Grew Company from startup to 16,000 BOE/D
• Organic exploration successes
• Wild River – 60 BCF Nisku Pool, 20 mmcf/D
• Vertical multizone wells at Harlech
• Drilled first Hz. Wilrich well in Basin
• Continued to improve with drilling costs down 20-25% and IP’s increasing
from 4 mmcf/D to max 10 mmcf/D
• Early success in Cardium resource at Harlech (2 Hz with
second well at 1,000 boe/D IP)
NEW FAIRBORNE
• Divestiture of dry natural gas assets to close Oct 1, 2012 ($189 MM Proceeds)
• Transformed Fairborne into pure Deep Basin focused company with:
• 75/25 Gas/Oil mix with Netbacks proforma of > $15.00/boe
• Initial production of 4,500 boe/D
• 312 Gross (201 Net) sections in the Harlech area
• Nominal Debt
• Management & technical team remains intact.
3. Post Divestiture Snapshot
• Production (Oct 1, 2012) 4,500 boe/D (25% oil & liquids)
• Harlech Area 13.5 mmcf/D Gas
470 bbls/D Condensate/Light Oil
280 bbls/D NGL’s
3,000 boe/D TOTAL
• Clive 500 bbls/D Light Oil/Liquids
• Wild River/Tower Creek 1,000 boe/D (100% Gas)
• Bank line $ 80 MM
• Shares outstanding (basic/FD) 102.6 MM/110.0 MM
• Management & Insiders (FD) 5% (8%)
4. Proforma Value
Future Development
Reserves Net Asset Value * Capital **
40 $5 100
90
Bank
$4 80
Lines
30
68
$3.21 70
23.1
$3 60
mm boe
$ MM
$/sh
20 $2.35 50 45
15.4
$2 $1.75 40
Current
10.6 Share 30
10 Price
$1 20
10
1
0 $- 0
PDP Proven P+P PDP Proven P+P PDP Proven P+P
Horizontal Horizontal Multizone
Cardium Wilrich/Falher Vertical
Gross Unbooked Locations 330 201/182 55
PV10 - Debt
* Net Asset Value = GLJ Resource Report
Shares OS Cardium 131 MM boe’s
* PV10 YE 2011 Reserves & Pricing Economic Contingent
** FDC on a Discounted Basis Resource
6. Operating Focus – Deep Basin
312 Gross (201 Net) Sections
• FEL operates 100% of production
• High working interest
• Reservoir depth up to 3,800 m Multizone 12
producing horizons
• Rich gas, light oil & NGL’s
8. Regional Cardium Geology
Cardium Ram Barrier Trend
225 Miles long
30 Miles wide
2,562 Vertical production
163 Hz. Production
13,350 Total wells through
cardium sand
10. Harlech Cardium
Cardium Type Log Theoretical Volumetric Calculation
Gamma Depth 15 Porosity 0 Resistivity Mud Gas
Low Med High
AREA (acres): 640 640 640
2850
NET PAY (m): 6 7 8
POROSITY (%): 12 11 10
CARDIUM TOP SW (%): 20 15 10
RESERVOIR TEMPERATURE (deg F) 184 184 184
2860
RESERVOIR PRESSURE (psia): 4,700 4,700 4,700
COMPRESSIBILITY FACTOR: 0.95 0.95 0.95
RECOVERY FACTOR (%): 75% 75% 75%
CARDIUM BASE GIP PER SECTION (BCF) 14.4 16.3 17.9
2870
RGIP PER SECTION (BCF) 10.8 12.2 13.4
LIQUIDS mmbbls 0.54 0.61 0.67
Rock - Porosity Types MM BOE/SECTION 2.34 2.64 2.90
Open
Fracture
Fairborne owns 102 net sections
Porosity
Conglomerate Sandstone
Fracture + Intergranular Porosity Fracture + Intergranular Porosity
11. Cardium Resource
Economic Contingent Resource – GLJ Evaluated
LOW (P90) BEST (P50) HIGH (P10)
TOTAL RECOVERABLE
GAS (BCF) 790 1,056 1,389
CONDENSATE/NGL (MMBBLs) 45 60 79
TOTAL (MMBOE) 176 236 310
WORKING INTEREST
GAS (BCF) 436 588 757
CONDENSATE/NGL (MMBBLs) 25 33 43
TOTAL (MMBOE) 97 131 169
WELLS (GROSS) 298 330 387
TYPE WELL
GAS (BCF) 2.9 3.5 4.0
CONDENSATE/NGL (MBBLs) 150 180 200
1. Based on an independent resource study (the "Resource Study") prepared by GLJ for a portion of Fairborne's
Cardium land holdings in the greater Harlech area effective March 31, 2012.
2. "Total Interest" means a 100% working interest in the lands in which Fairborne has an interest in the area (which
includes Fairborne's interest in the area as well as all other working interests in such lands held by third parties). Liquids 0% C2
3. "Working Interest" means Fairborne's working interest (operated or non‐operated) share before deduction of
royalties and without including any royalty interests of Fairborne. 33% C3 – C4
4. All volumes in the table are sales volumes.
5. The liquid yields are based on average yield over the producing life of the property. 67% C5 +
6. Numbers in the table may not add due to rounding.
7. Reflects contingent resources which have been sub‐classified by GLJ as economic based on GLJ forecast pricing as
at April 1, 2012.
8. See "Information Regarding Disclosure on Contingent Resources and Resource Study"
12. Cardium - Resource
CRDM HZ Estimated Type Well Curve
3.5 BCF GAS 50 bbls/MMscf liquid Yield
Estimated Daily Production Rate (BOE/d)
1,200
Well #2 1,200 m Hz Harlech Total Revenue
1,000 20 Fracs 11-21 Well 5.6 MMscf/D IP
Revenue Stream per MCF (Sales)
02-15 Well 2.4 MMScf/D IP at $2.50/MCFE
800
GLJ TYPE CURVE
$8
600
Well #1 850 m Hz $7
10 Fracs
400 Gas
$6
37%
200 $5 N
$/MCFE
0 $4
1 Year 2 Years
NGLs $3
63%
$2
Liquid Pricing :
C3 = $34.00/bbl
$1
C4 = $66.00/bbl
$0
C5+=$95.00/bbl
Cost Per Well ($000) Capital Efficiency
$3,900 Drill $10.00 F & D (per boe)
$2,800 Complete $8,705 On Stream Cost (per boe/D)
$ 700 Tie-In & Equip
$7,400 TOTAL
13. Cardium Economics
CRDM HZ IRR vs Gas Prices
100%
90%
80%
Cardium Type Well
4.0 MMscfd IP GLJ Type Well
70% Drill & Complete Tie-in 7.4 MM
IP 4.0 mmscf/D
60%
50% Reserves 3.5 Bcf
IRR
Liquids Yield 50 bbls/mmscf
40%
IRR 20% +
30% Locations (Gross/Net) 330/183
20% Resource – Net 131 MMboe
10%
0%
$1.50 $2.50 $3.50 $4.50 $5.50 $6.50
GAS PRICES AECO $/MCF
Liquid Pricing /Breakdown:
C3 = $34.00/bbl ‐ 20.5%
C4 = $66.00/bbl ‐ 14.5%
C5+=$95.00/bbl ‐ 65.0%
14. Harlech Wilrich
Summary
Hz Drilled 0
Land 102.5 Gross
Sections
44 Net Sections
Drilling inventory 354 (152 Net) Hz
Depth 3,400 m
Liquids content in gas 10+ bbls/mmcf
15. Harlech Wilrich
WilrichType Log 7-35-46-15W5
Theoretical Volumetric Calculation
Gamma Depth 20 Porosity 0 Resistivity Mud Gas
Low Med High
Coal AREA (acres): 640 640 640
Wilrich Top
3010 NET PAY (m): 8 9 10
Gas kick
bypassed POROSITY (%): 12 10 8
shaker SW (%): 25 20 15
Conglomerate
3020 RESERVOIR TEMPERATURE (deg F) 203 203 203
Zone
RESERVOIR PRESSURE (psia): 5,200 5,200 5,200
COMPRESSIBILITY FACTOR: 0.99 0.99 0.99
Wilrich Base 3030
RECOVERY FACTOR (%): 70% 70% 70%
GIP PER SECTION (BCF) 12.2 18.8 27.4
RGIP PER SECTION (BCF) 8.5 13.1 19.1
LIQUIDS mmbbls .10 .16 .23
Rock – Porosity Types
MM BOE/SECTION 1.95 3.00 4.39
Porosity Fairborne owns 102.5 gross sections
Conglomerate Sandstone
Intergranular Porosity Intergranular Porosity
16. FEL – The Investment Opportunity
1. Value Trading @ PDP NAV
2. Strong proforma netbacks at bottom of gas cycle $15.00 +
3. Resource play success Hz Cardium tests @ 1,100 boe/D
Best Estimate Ec. Cont. Res. 130 MMBOE
17. Corporate Information
TSX Listings Reserve Auditors
Trading Symbol: FEL GLJ Petroleum Consultants Ltd.
Corporate Office Banking
3400, 450 1st St. S.W. Royal Bank of Canada
Calgary, Alberta, T2P 5H1 Alberta Treasury Branch
Telephone: 403-290-7750 National Bank of Canada
Fax: 403-290-7724 Union Bank
Website: www.fairborne-energy.com
E-mail: info@fairborne-energy.com Legal Counsel
Burnet, Duckworth & Palmer LLP
Contacts
S. R. VanSickle, President & CEO Auditors
A. G. Grandberg, CFO KPMG LLP
Aug ‘12
18. Forward-Looking Statements & Advisories
Certain information set forth in this document, contains forward‐looking statements including management's assessment of future plans and operations of Fairborne Energy
Ltd. ("Fairborne"), the inventory of drilling prospects and potential drilling locations, future or anticipated production levels, the risk/reward potential of the portfolio of plays,
drilling plans, debt levels, capital expenditures and the nature of the expenditures, commodity and revenue mix, estimated netbacks, and estimated well costs and the resulting
capital efficiencies. By their nature, forward‐looking statements are subject to numerous risks and uncertainties, some of which are beyond Fairborne's control, including the
impact of general economic conditions, industry conditions, volatility of commodity prices, risks associated with oil and gas exploration, development, exploitation, production,
marketing and transportation, loss of markets, delays resulting from or the inability to obtain required regulatory approvals, inability to retain and delays in retaining drilling
rigs and other services, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other industry participants, the lack of availability of
qualified personnel or management, stock market volatility, incorrect assessment of the value of acquisitions, failure to realize the anticipated benefits of acquisitions and
ability to access sufficient capital from internal and external sources. The foregoing list is not exhaustive. The estimates of reserves and future net income for individual
properties may not reflect the same confidence level as estimates of reserves and future net income for all properties, due to the effects of aggregation. Reserve information
included herein is as at December 31, 2011 unless otherwise stated. Type curves are provided for illustration purposes and may not necessarily be indicative of future well or
production results. Test rates and initial production rates disclosed may not necessarily be indicative of long‐term performance or of ultimate recovery. Netbacks are calculated
by subtracting royalties, operating costs and transportation costs from revenues. Additional information on these and other risks that could affect Fairborne's operations and
financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com), or at
Fairborne's website (www.fairborne‐energy.com). Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at
the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward‐looking statements. The actual results, performance or
achievement of Fairborne could differ materially from those expressed in, or implied by, these forward‐looking statements and, accordingly, no assurance 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 that Fairborne will derive therefrom. Fairborne
disclaims any intention or obligation to update or revise any forward‐looking statements, whether as a result of new information, future events or otherwise, except as required
by applicable securities laws. BOE disclosure may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf to 1 Bbl is based on an energy equivalency
conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Natural gas volumes are converted to barrels of oil
equivalent (boe) on the basis of 6,000 cubic feet (mcf) of gas for 1 barrel (bbl) of oil. The terms "barrels of oil equivalent" may be misleading, particularly if used in isolation. A
boe conversion ratio of 6 mcf to 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at
the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6:1, utilizing
a conversion on a 6:1 basis may be misleading as an indication of value.
19. Information Regarding Disclosure on Continegent
Resources and Resource Study
The Resource Study is effective March 31, 2012 and was prepared in accordance with National Instrument 51‐101 – Standards of Disclosure for Oil and Gas Activities ("NI 51‐
101") of the Canadian Securities Administrators based on the definitions and guidelines contained in the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook").
Contingent resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or
technology under development, but may not currently be considered commercially recoverable due to one or more contingencies. Contingent resources are in additions to
reserves booked as proved, probable and possible.
Uncertainty ranges are described by the COGE Handbook as low, best and high estimates for resources as follows:
Low Estimate: This is considered to be a conservative estimate of the quantity that will actually be recovered. It is likely that the actual remaining quantities recovered will
exceed the low estimate. If probabilistic methods are used, there should be at least a 90 percent probability (P90) that the quantities actually recovered will equal or exceed the
low estimate.
Best Estimate: This is considered to be the best estimate of the quantity that will actually be recovered. It is equally likely that the actual remaining quantities recovered will
be greater or less than the best estimate. If probabilistic methods are used, there should be at least a 50 percent probability (P50) that the quantities actually recovered will
equal or exceed the best estimate.
High Estimate: This is considered to be an optimistic estimate of the quantity that will actually be recovered. It is unlikely that the actual remaining quantities recovered will
exceed the high estimate. If probabilistic methods are used, there should be at least a 10 percent probability (P10) that the quantities actually recovered will equal or exceed
the high estimate.
The most significant positive factors with respect to estimates of contingent resources are that Cardium formation is extensive in the Harlech region and there is extensive
vertical well data. Negative factors include that there is limited horizontal well tests and history in the immediate area. Both resource‐in‐place and productivity may be higher
or lower than current estimates. The principal risk that will influence the recovery of the contingent resources relate to the potential for variations in the quality of the Cardium
formation where minimal well data currently exists. There is no certainty that it will be commercially viable to produce any portion of the resources.
In the Company's year‐end independent reserves evaluation, effective as at December 31, 2011, prepared by GLJ, gross proved plus probable reserves of 2.2 MMboe were
assigned to seven gross (4.9 net) horizontal Cardium well locations attributable to the Fairborne's interest evaluated in the Resource Study, which resources are incremented to
economic contingent resource identified in the Resource Study. The year‐end independent reserve evaluation did not incorporate Fairborne's most recent Cardium well (75%
WI) that, as previously announced, had an initial 30 day gross production rate of 1,000 boe per day.
