Fairmount announces substantial increase in oil and gas reserves



    /NOT FOR DISTRIBUTION TO UNITED STATES NEWS WIRE SERVICES OR FOR
    DISSEMINATION IN THE UNITED STATES OF AMERICA./

    CALGARY, June 2 /CNW/ - Fairmount Energy Inc. ("Fairmount" or the
"Company") (TSX-V - FMT) is pleased to announce a 43% increase in the before
income tax value of Proved plus Probable oil and natural gas reserves as
determined by GLJ Petroleum Consultants Ltd. ("GLJ") as at March 31, 2008.
Fairmount has received its updated independent reserve evaluation report,
compliant with National Instrument 51-101 ("NI 51-101") and the Canadian Oil
and Gas Evaluation Handbook ("COGEH") from GLJ. Under NI 51-101 and COGEH,
Proved reserve assignments are based on a 90 percent probability that total
quantities recovered will equal or exceed Proved reserve estimates. Proved
plus Probable reserves are the most likely case and are based on a 50 percent
probability that the quantities actually recovered will equal or exceed the
sum of Proved plus Probable estimates. The reserves committee of Fairmount's
board of directors, which is made up of a majority of independent directors,
met with GLJ representatives and has reviewed the independent evaluator's
reserves report. Summary information is presented below. Additional
disclosure, in accordance with NI 51-101, will be provided in the company's NI
51-101 filings at a later date.
    Certain information contained in this press release, including reserve
estimations and related future net revenues, constitute forward looking
information which are subject to risks and uncertainties. See "Forward -
Looking Information".

    Highlights
    
    -   Before tax present value of Gross Proved plus Probable reserves
        discounted at 10% increased 43% from $29,658,000 at March 31, 2007 to
        $42,373,000 at March 31, 2008.
    -   Gross Proved plus Probable reserves increased 25% from 2,052,000 boe
        at March 31, 2007 to 2,562,000 boe at March 31, 2008.
    -   Before tax present value of Gross Proved reserves discounted at 10%
        increased 22% from $21,931,000 at March 31, 2007 to $26,707,000 at
        March 31, 2008.
    -   Gross Proved reserves increased 16% from 1,293,000 boe at March 31,
        2007 to 1,495,000 boe at March 31, 2008.
    

    As at March 31, 2008, Fairmount had 17,243,889 common shares outstanding
and stock options and performance warrants potentially convertible into
2,200,617 common shares.

    Reserves

    The following information is extracted from the reserve report prepared
for the Company by its independent reservoir evaluators, GLJ as at March 31,
2008.

    
    Net Present Value of Reserves (Before Tax) as at March 31, 2008(1)

    -------------------------------------------------------------------------
      ($ thousands)      Undiscounted      PV 5%      PV 10%      PV 12%
    -------------------------------------------------------------------------
    Proved Producing         32,287       27,108      23,719      22,664
    -------------------------------------------------------------------------
    Proved Non Producing      2,184        1,796       1,534       1,451
    -------------------------------------------------------------------------
    Proved Undeveloped        2,036        1,707       1,455       1,370
    -------------------------------------------------------------------------
    Total Proved             36,506       30,612      26,707      25,484
    -------------------------------------------------------------------------
    Total Probable           28,822       20,433      15,666      14,284
    -------------------------------------------------------------------------
    Total Proved & Probable  65,328       51,045      42,373      39,769
    -------------------------------------------------------------------------


    Net Present Value of Reserves After Tax as at March 31, 2008(1)

    -------------------------------------------------------------------------
      ($ thousands)      Undiscounted      PV 5%      PV 10%      PV 12%
    -------------------------------------------------------------------------
    Total Proved             36,506       30,612      26,707      25,484
    -------------------------------------------------------------------------
    Total Probable           22,811       16,065      12,293      11,207
    -------------------------------------------------------------------------
    Total Proved & Probable  59,317       46,677      39,000      36,692
    -------------------------------------------------------------------------


    Reserves Summary as at March 31, 2008
    -------------------------------------------------------------------------
                      Light/ Light/
                      Medium Medium Natural Natural
                        Oil    Oil    Gas    Gas    NGLs  NGLs  Total   Total
                       Gross   Net   Gross   Net   Gross   Net  Gross    Net
                      (mbbls)(mbbls) (mmcf) (mmcf)(mbbls)(mbbls)(mboe) (mboe)
    -------------------------------------------------------------------------
    Proved Producing      31    29    4,379  3,246    557   384  1,318    954
    -------------------------------------------------------------------------
    Proved Non Producing   0     0      506    323      6     4     91     58
    -------------------------------------------------------------------------
    Proved Undeveloped     0     0      268    200     42    30     86     63
    -------------------------------------------------------------------------
    Total Proved          32    30    5,153  3,769    604   417  1,495  1,075
    -------------------------------------------------------------------------
    Total Probable        23    21    3,528  2,677    456   326  1,067    793
    -------------------------------------------------------------------------
    Total Proved &
     Probable             55    50    8,681  6,446  1,060   743  2,562  1,868
    -------------------------------------------------------------------------
    

    Gross reserves are the total of the Company's working interest (operated
or non-operated) share before deduction of royalties and without including any
royalty interests of the Company. Net reserves are gross reserves net of
royalty interests owned by others, plus the Company's royalty interests in
reserves (if any).
    Per barrel of oil equivalent amounts have been calculated using a
conversion rate of six thousand cubic feet of natural gas to one barrel of oil
(6:1). Barrel of oil equivalents ("boe") may be misleading, particularly if
used in isolation. A boe conversion ratio of 6 mcf: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.

    (1) Estimated values disclosed do not represent fair market value. The
    reserve values are based on the table of prices below. Prices at each
    property were adjusted for quality, heating content and
    transportation. Oil prices are the equivalent price of sweet light
    crude landed in Edmonton to that of West Texas Intermediate crude
    (WTI) in Cushing, Oklahoma after adjustments for transportation and
    the prevailing Canadian dollar exchange rate. A Canadian dollar
    exchange rate of $1.00 US to $1.00 Canadian was used. Gas prices are
    based on the type of contract applicable.

    
    Price Forecast
    -------------------------------------------------------------------------
                           Gas
                         (AECO-C)   Ethane   Pentanes    Propane     Butane
                Oil       ($Cdn/    ($Cdn/   + ($Cdn/     ($Cdn/     ($Cdn/
             ($Cdn/bbl)    mmbtu)     bbl)      bbl)        bbl)       bbl)
    -------------------------------------------------------------------------
    2008-9 mo.  96.77      8.42      28.46      98.70      60.96      77.41
    -------------------------------------------------------------------------
    2009        89.10      8.20      27.71      90.88      56.13      71.28
    -------------------------------------------------------------------------
    2010        85.10      8.10      27.37      86.80      53.61      68.08
    -------------------------------------------------------------------------
    2011        84.10      7.95      26.85      85.78      52.98      67.28
    -------------------------------------------------------------------------
    2012        84.10      8.01      27.06      85.78      52.98      67.28
    -------------------------------------------------------------------------
    2013        84.10      8.18      27.65      85.78      52.98      67.28
    -------------------------------------------------------------------------
    2014        84.10      8.36      28.27      85.78      52.98      67.28
    -------------------------------------------------------------------------
    2015        85.25      8.54      28.89      86.96      53.71      68.20
    -------------------------------------------------------------------------
    2016        86.97      8.72      29.51      88.71      54.79      69.58
    -------------------------------------------------------------------------
    2017        88.73      8.91      30.16      90.51      55.90      70.98
    -------------------------------------------------------------------------
    2018+    +2.0%/yr  +2.0%/yr   +2.0%/yr   +2.0%/yr   +2.0%/yr   +2.0%/yr
    -------------------------------------------------------------------------
    

    Forward-Looking Information

    This news release contains forward-looking information, including but not
limited to estimated reserves and future net revenues which have been
independently evaluated by GLJ. Information relating to reserves and related
future net revenue are forward-looking information as they involve the implied
assessment, based on certain estimates and assumptions, that the reserves
described can be profitably produced in the future. Additionally, estimates of
future net value involve assumptions relating to production rates, production
decline rates, ultimate recovery of reserves, commodity prices and exchange
rates, operating costs, capital expenditures and well abandonment costs. This
information relates to future events or the Company's future performance. All
information other than statements of historical fact is forward-looking
information. In some cases, forward-looking information can be identified by
terminology such as "may", "will", "should", "expect", "plan", "anticipate",
"believe", "estimate", "predict", "potential", "continue", or the negative of
these terms or other comparable terminology. Forward looking information
relating to reserves and future net revenue are estimates only. Actual
reserves and future net revenues will differ from those estimated by GLJ and
such differences may be material. By its nature, forward-looking information
involves numerous assumptions, known and unknown risks and uncertainties, both
general and specific, that contribute to the possibility that the predictions,
forecasts, projections and other forward-looking statements will not occur.
Forward-looking information is based on assumptions, including, among other
things, the Company's ability to benefit from the combination of growth
opportunities and the ability to grow through the capital markets; the
Company's acquisition strategy, the criteria to be considered in connection
therewith and the benefits to be derived therefrom; sustainability and growth
of production and reserves through prudent management and acquisitions; the
emergence of accretive growth opportunities; the impact of Canadian
governmental regulation on the Company; the strategy of the Company regarding
commodity price risk management, changes in oil and natural gas prices and the
impact of such changes on financial performance; the level of capital
expenditures devoted to development activity rather than exploration; the use
of development activity and/or acquisitions to replace and add to reserves;
the quantity of oil and natural gas reserves and oil and natural gas
production levels; and currency, exchange and interest rates.
    Although the Company believes that the expectations reflected in the
forward-looking information are reasonable, there can be no assurance that
such expectations will prove to be correct. The Company can not guarantee
future results, levels of activity, performance, or achievements. Some of the
risks and other factors, some of which are beyond the Company's control, which
could cause results to differ materially from those expressed in the
forward-looking information contained in this news release include, but are
not limited to, general economic conditions in Canada, the United States and
globally; industry conditions, including fluctuations in the price of crude
oil, natural gas and natural gas liquids and services used by the Company;
uncertainties associated with estimating reserves; royalties payable in
respect of oil and gas production; governmental regulation of the oil and gas
industry, including income tax and environmental regulation; fluctuation in
foreign exchange or interest rates; stock market volatility and market
valuations; the impact of environmental events; the need to obtain required
approvals from regulatory authorities; unanticipated operating events which
can reduce production or cause production to be shut-in or delayed; failure to
obtain industry partner and other third party consents and approvals, when
required; and third party performance of obligations under contractual
arrangements. Subject to the company's obligations under applicable securities
laws, the Company is not under any duty to update any of the forward-looking
information after the date of this news release to conform such information to
actual results or to changes in the Company's expectations.

    The TSX Venture Exchange does not accept responsibility for the adequacy
    or accuracy of this release.





For further information:

For further information: Joseph S. Durante, President and CEO,
JDurante@Fairmountenergy.com, Phone: (403) 355-0440 or Ryan A. Michaluk, VP
Finance and CFO, RMichaluk@Fairmountenergy.com, Phone: (403) 355-0440;
Fairmount Energy Inc. 2200, 520-5th Avenue SW, Calgary, Alberta, T2P 3R7, Fax:
(403) 355-0465; Visit us at our website www.fairmountenergy.com

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FAIRMOUNT ENERGY INC.

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