CALGARY, ALBERTA, Nov. 5, 2010 (Marketwire) -- Fairborne Energy Ltd. (TSX:FEL)

HIGHLIGHTS
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                                     Three months ended   Nine months ended
                                           September 30,       September 30,
                                         2010      2009      2010      2009
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Financial ($thousands, except per
 share amounts)
Petroleum and natural gas revenue      54,718    55,244   177,733   182,219
Funds generated from operations (1)    28,204    37,236    95,207   105,948
 Per share - basic                     $ 0.28    $ 0.43    $ 0.93    $ 1.22
 Per share - diluted                   $ 0.28    $ 0.43    $ 0.93    $ 1.22
Cash flow from operations
 (including changes in working
 capital)                              24,803    40,048    88,017   102,483
 Per share - basic                     $ 0.24    $ 0.46    $ 0.86    $ 1.18
 Per share - diluted                   $ 0.24    $ 0.46    $ 0.86    $ 1.18
Net loss                               (7,600)     (497)  (10,912)  (22,521)
 Per share - basic                     $(0.07)   $(0.01)   $(0.10)   $(0.26)
 Per share - diluted                   $(0.07)   $(0.01)   $(0.10)   $(0.26)
Exploration and development
 expenditures                          40,123    19,232   124,082    87,802
Acquisitions, net of dispositions      74,321    (8,400)   77,254    (9,005)
Working capital deficit (surplus)      22,621    (1,539)   22,621    (1,539)
Bank indebtedness                     194,042   204,046   194,042   204,046
Convertible debentures                 97,959    96,027    97,959    96,027
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Operations (Units as noted)
Average production
 Natural gas (Mcf per day)             68,910    56,797    65,563    63,648
 Crude oil (bbls per day)               2,916     3,292     3,008     3,480
 Natural gas liquids (bbls per day)     1,036       563       958       589
 Sulphur (tonnes per day) (2) (4)          66       100        70        86
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 Total (BOE per day)                   15,503    13,421    14,963    14,763
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Average sales price (3)
 Natural gas ($ per Mcf)                 4.79      5.28      5.12      5.68
 Crude oil ($ per bbl)                  74.09     68.35     76.37     63.21
 Natural gas liquids ($ per bbl)        42.29     32.19     41.39     28.70
 Sulphur ($ per tonne) (4)              48.25         -     35.51     96.07
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Netback per BOE ($ per BOE)
 Petroleum and natural gas sales (3)    38.41     40.53     40.84     41.24
 Sulphur block revenue                      -      7.32      2.58      5.05
 Royalties                              (3.32)    (1.40)    (4.64)    (3.19)
 Operating expenses                     (9.35)    (9.05)    (9.34)   (10.72)
 Transportation                         (1.11)    (1.25)    (1.08)    (1.11)
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 Operating netback                      24.63     36.15     28.36     31.27
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Wells drilled (gross)                      16        24        33        43
Undeveloped land (net acres)          261,945   218,293   261,945   218,293
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1) Funds generated from operations is calculated using cash flow from
   operations as presented in the consolidated statement of cash flows
   before non-cash working capital and asset retirement expenditures. 
2) A BOE conversion ratio has been calculated using a conversion rate of
   one tonne of sulphur to one barrel.
3) Excludes the change in fair value of derivatives.
4) Excludes the sale of inventory at the West Pembina sulphur block. 

FAIRBORNE REPORTS ANOTHER STRONG OPERATIONAL QUARTER AND RECORD CURRENT PRODUCTION

Fairborne's successful drilling program and property acquisition completed during the third quarter have resulted in record current production of 16,500 BOE per day. With two Wilrich wells, one Harlech well and one Westerose well drilled and awaiting completion or tie in, the Company is positioned to record exit production of 17,000 to 17,500 BOE per day in 2010, which represents an increase of more than 30% from 2009 exit production of 13,000 BOE per day. Financial and operating highlights include:

- Current production of approximately 16,500 BOE per day (75% natural gas, 25% light oil and natural gas liquids) with four additional wells drilled and awaiting completion or tie in;

- Average production for the third quarter of 15,503 BOE per day (68.9 MMcf per day of natural gas and 3,952 bbls per day of light oil and NGL's), consistent with the second quarter of 2010 and 16% higher than the same period in 2009;

- Current light oil and natural gas liquids production is approximately 4,100 bbls per day;

- Funds generated from operations of $28.2 million ($0.28 per share) in the third quarter, 3% higher than the preceding second quarter despite lower natural gas prices;

- Third quarter operating netback of $24.63 per BOE continues to benefit from a low cost structure with third quarter operating costs of $9.35 per BOE, 8.7% average royalties and transportation costs of $1.11 per BOE;

- Drilling activities included 16 (12.8 net) wells resulting in 12 (9.3 net) natural gas wells and four (3.5 net) oil wells;

- Property acquisition was completed which significantly expanded Fairborne's land position on the core asset at Marlboro/Pine Creek, including 71.8 net sections of Wilrich rights as well as a new producing property at McLeod River;

- Bank credit facilities were increased to $325 million from $285 million as a result of successful drilling results and the acquisition of the McLeod River property;

- Fairborne's hedging strategy continued to add significant value with third quarter realized natural gas prices 35% above the AECO Daily Index prices;

- 34% of natural gas production is hedged for the balance of 2010 at an average price of $6.63 per Mcf and 17% of natural gas production is hedged for 2011 at an average price of $5.66 per Mcf.