Fairborne Energy Ltd. Corporate Presentation

Fairborne Energy Ltd.Corporate Presentation

Please  refer to Forward‐Looking Statements, Advisory and Resource Disclosure at end of presentation.

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.

Fairborne History2002 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)

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%)

Proforma Value

10.6

15.4

23.1

0

10

20

30

40

PDP Proven P+P

mm

boe

$1.75

$2.35

$3.21

$-

$1

$2

$3

$4

$5

PDP Proven P+P

$/sh

1

45

68

0

10

20

30

40

50

60

70

80

90

100

PDP Proven P+P

$ M

M

HorizontalCardium

Horizontal Wilrich/Falher

MultizoneVertical

Gross Unbooked Locations 330 201/182 55

* Net Asset Value =PV10 - Debt

Shares OS

ReservesFuture Development

Capital **Net Asset Value *

Current Share Price

Bank Lines

GLJ Resource ReportCardium 131 MM boe’sEconomic Contingent

Resource* PV10 YE 2011 Reserves & Pricing** FDC on a Discounted Basis

Fairb

orne

Position for Co’s ‹10,000 boe/dSize (BOE/D) Opex ($/BOE)

Debt to Cash Flow G&A ($/BOE)

010002000300040005000600070008000900010000

$0.00$1.00$2.00$3.00$4.00$5.00$6.00$7.00$8.00$9.00

$10.00

$0$3$6$9$12$15$18$21$24$27$30

‐2.0

‐1.0

0.0

1.0

2.0

3.0

4.0

5.0

FEL ProformaProduction = 4,500 BOE/D

OPEX = $10.50/BOE

Debt to Cash Flow = 0.2 x

G&A = $3.80/BOE

Fairb

orne

Fairb

orneFairb

orne

Operating Focus – Deep Basin312 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

Harlech Area – Infrastructure & Activity

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

Harlech – Cardium Ram Barrier

Harlech Cardium

CARDIUM TOP

CARDIUM BASE

2850

2860

2870

Gamma Depth 15 Porosity 0 Resistivity Mud Gas

Cardium Type Log Theoretical Volumetric Calculation

Rock - Porosity Types

Conglomerate Fracture + Intergranular Porosity

Sandstone Fracture + Intergranular Porosity

Open Fracture

Porosity

Low Med High

AREA (acres): 640 640 640

NET PAY (m): 6 7 8

POROSITY (%): 12 11 10

SW (%): 20 15 10

RESERVOIR TEMPERATURE (deg F) 184 184 184

RESERVOIR PRESSURE (psia): 4,700 4,700 4,700

COMPRESSIBILITY FACTOR: 0.95 0.95 0.95

RECOVERY FACTOR (%): 75% 75% 75%

GIP PER SECTION (BCF) 14.4 16.3 17.9

RGIP PER SECTION (BCF) 10.8 12.2 13.4

LIQUIDS mmbbls 0.54 0.61 0.67

MM BOE/SECTION 2.34 2.64 2.90

Fairborne owns 102 net sections

Cardium ResourceEconomic 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).

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.

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.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"

Liquids 0% C2

33% C3 – C4

67% C5 +

0

200

400

600

800

1,000

1,200

Estim

ated

Dai

ly P

rodu

ctio

n R

ate

(BO

E/d)

CRDM HZ Estimated Type Well Curve 3.5 BCF GAS 50 bbls/MMscf liquid Yield

11-21 Well 5.6 MMscf/D IP

02-15 Well 2.4 MMScf/D IP

GLJ TYPE CURVE

Well #1 850 m Hz10 Fracs

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

Cardium - Resource

1 Year 2 Years

HarlechRevenue Stream

$0

$1

$2

$3

$4

$5

$6

$7

$8

$/M

CFE

Total Revenue per MCF (Sales) at $2.50/MCFE

N

Gas37%

NGLs 63%

Liquid Pricing :C3 = $34.00/bblC4 = $66.00/bblC5+=$95.00/bbl

Well #2 1,200 m Hz20 Fracs

Cardium Economics

Liquid Pricing /Breakdown:

C3 = $34.00/bbl ‐ 20.5% C4 = $66.00/bbl ‐ 14.5%C5+=$95.00/bbl ‐ 65.0%

Cardium Type Well

Drill & Complete Tie-in 7.4 MM

IP 4.0 mmscf/D

Reserves 3.5 Bcf

Liquids Yield 50 bbls/mmscf

IRR 20% +

Locations (Gross/Net) 330/183

Resource – Net 131 MMboe

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

$1.50 $2.50 $3.50 $4.50 $5.50 $6.50

IRR

GAS PRICES AECO $/MCF

CRDM HZ IRR vs Gas Prices

4.0 MMscfd IP GLJ Type Well

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

Harlech WilrichWilrichType Log 7-35-46-15W5

Theoretical Volumetric CalculationLow Med High

AREA (acres): 640 640 640

NET PAY (m): 8 9 10

POROSITY (%): 12 10 8

SW (%): 25 20 15

RESERVOIR TEMPERATURE (deg F) 203 203 203

RESERVOIR PRESSURE (psia): 5,200 5,200 5,200

COMPRESSIBILITY FACTOR: 0.99 0.99 0.99

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

MM BOE/SECTION 1.95 3.00 4.39

Fairborne owns 102.5 gross sections

3010

3020

3030

Gas kick bypassed shaker

Wilrich Top

Wilrich Base

Porosity

Conglomerate Intergranular Porosity

Sandstone Intergranular Porosity

Rock – Porosity Types

Conglomerate Zone

Gamma Depth 20 Porosity 0 Resistivity Mud Gas

Coal

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

Corporate InformationTSX ListingsTrading Symbol: FEL

Corporate Office3400, 450 1st St. S.W.Calgary, Alberta, T2P 5H1Telephone: 403-290-7750Fax: 403-290-7724Website:www.fairborne-energy.comE-mail: [email protected]

ContactsS. R. VanSickle, President & CEOA. G. Grandberg, CFO

Reserve AuditorsGLJ Petroleum Consultants Ltd.

BankingRoyal Bank of CanadaAlberta Treasury Branch National Bank of CanadaUnion Bank

Legal CounselBurnet, Duckworth & Palmer LLP

AuditorsKPMG LLP

Aug ‘12

Forward-Looking Statements & AdvisoriesCertain information set forth in this document, contains forward‐looking statements including management's assessment of future plans and operations of Fairborne EnergyLtd. ("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 resultingcapital efficiencies. By their nature, forward‐looking statements are subject to numerous risks and uncertainties, some of which are beyond Fairborne's control, including theimpact 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 drillingrigs and other services, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other industry participants, the lack of availability ofqualified personnel or management, stock market volatility, incorrect assessment of the value of acquisitions, failure to realize the anticipated benefits of acquisitions andability to access sufficient capital from internal and external sources. The foregoing list is not exhaustive. The estimates of reserves and future net income for individualproperties 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 informationincluded 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 orproduction results. Test rates and initial production rates disclosed may not necessarily be indicative of long‐term performance or of ultimate recovery. Netbacks are calculatedby subtracting royalties, operating costs and transportation costs from revenues. Additional information on these and other risks that could affect Fairborne's operations andfinancial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com), or atFairborne's website (www.fairborne‐energy.com). Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable atthe 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 orachievement of Fairborne could differ materially from those expressed in, or implied by, these forward‐looking statements and, accordingly, no assurance can be given that anyof 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. Fairbornedisclaims 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 requiredby 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 equivalencyconversion 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 oilequivalent (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. Aboe 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 atthe 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, utilizinga conversion on a 6:1 basis may be misleading as an indication of value.

Information Regarding Disclosure on ContinegentResources 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 Cardiumformation 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.