Operations

Clive/Clive CBM

Fairborne's interest in the Clive area, located approximately 50 kilometers northeast of Red Deer, Alberta, includes conventional crude oil and natural gas production from Devonian aged reservoirs as well as coal bed methane ("CBM") production. Fairborne has developed an extensive CBM project at Clive, which targets CBM gas from coals within the Horseshoe Canyon formation of the Cretaceous. Fairborne's land position in Clive includes 63,179 gross (47,103 net) acres of land, with approximately 28% of net acres currently undeveloped.

Clive – Units and Non-Unit Wells

Fairborne's position in the conventional oil and natural gas production at Clive includes a working interest in the Clive Leduc (D3) Unit #1 and the Clive Nisku (D2) Unit #1 as well as non-unitized wells. Fairborne operates both units with a 93.9% and 98.9% unit interest respectively. All oil and gas is initially processed at an operated facility in the immediate vicinity, with gas then transported to the Nevis Gas plant (operated by Duke) for further processing and natural gas liquids recovery. In April 2007 Fairborne signed a letter of intent with a third party producer to investigate and potentially develop a CO2 flood in the Clive D2 and D3 units. Fairborne believes that this project could potentially recover an additional 10% to 20% of the original oil in place from these conventional light oil pools.

Clive – Coal Bed Methane

Since its initial drilling program in 2003, Fairborne has developed an extensive CBM project on its Clive property, located approximately 50 kilometers northeast of Red Deer, Alberta, with 38 (28.0 net) wells drilled in 2007 with a100% success rate. Average daily CBM production from this area in the Third Quarter was 8,291 Mcf/d (1,382 Boe/d)
of natural gas produced from the Horseshoe Canyon formation.
In 2008 Fairborne plans to drill approximately 59 (44.7 net) wells. Long term development plans for CBM at Clive involve drilling four wells per square mile for a minimum of 200 wells in the fully developed model. Current CBM wells decline at rates of 8% to 12% and therefore are expected to have the effect of lessening the overall corporate
decline rate for the next two to three years as CBM accounts for a higher and higher percentage of Fairborne's total
production.

Westerose/Pigeon Lake

The Pigeon Lake/Westerose property, located approximately 40 kilometers south and west of the city of Edmonton, Alberta, offers a diverse range of exploration and development opportunities. In 2007 Fairborne drilled one (0.5 net) successful well and recompleted an additional three (2.5 net) wells in either the Wabamun (sour gas) or the Glauconite (sweet gas) formations. Average daily production from this area in the Third Quarter was 487 Boe/d including 2,233 Mcf/d natural gas and 115 Bbls/d in associated NGLs. Fairborne plans to drill between seven and eight wells and recomplete an additional two to three wells during 2008.

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