Fairborne Energy Ltd : Fairborne Announces Closing of Strategic Asset Dispositions

PRESS RELEASE FAIRBORNE ANNOUNCES CLOSING OF STRATEGIC ASSET DISPOSITIONS

October 1, 2012

CALGARY, ALBERTA

Fairborne Energy Ltd. ("Fairborne" or the "Company") (TSX:FEL) is pleased to announce that it has closed its previously announced sale of properties in the Company's greater Marlboro area (Marlboro, McLeod and Westerose) and the Company's shallow gas/coal bed methane assets in the Clive area for net proceeds, before transaction costs, of $188 million. Proceeds from the divestiture were used to reduce bank indebtedness.

The Company's post-closing bank facility will be $80 million. At the time of closing there are no funds drawn on the facility with only a nominal working capital deficit related to transaction costs.

Going forward Fairborne will focus on the delineation and exploitation of its large land base in the greater Harlech area where the Company has 312 gross (201 net) sections of land in the heart of the liquids rich deep basin fairway. With post-closing current production of approximately 4,500 boe/d, proved reserves of 15.3 mmboe, proved plus probable reserves of 23.0 mmboe combined with a recently announced resource study of 131 mmboe of Economic Contingent Resource (best estimate) attributable to the Company's working interest share in the Cardium and no drawings on its bank facility, the Company will have the cash flow, balance sheet flexibility and inventory of opportunities to deliver significant economic growth for the future.

The closing of these two asset sales marks the formal culmination of Fairborne's previously announced strategic review process.

Fairborne is a crude oil and natural gas exploration, development and production company headquartered in Calgary, Alberta, Canada. Fairborne's common shares trade on the Toronto Stock Exchange under the symbol "FEL".

For further information contact:

Fairborne Energy Ltd.

Steven R. VanSickle Aaron G. Grandberg

President and Chief Executive Officer Chief Financial Officer

Tel: [phone] Fax: [phone] Tel: [phone] Fax: [phone] [e-mail] [e-mail] www.fairborne-energy.com www.fairborne-energy.com

Forward-Looking Statements:

Certain information set forth in this press release, contain forward-looking statements including management's assessment of future operations, various matters relating to the asset sales, use of proceeds from the asset sales, the effect of the asset sales on continuing operations, future anticipated available credit facilities, future strategy and plans including drilling plans of the Company. 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 the asset sales and the effects thereof. The foregoing list is not exhaustive. 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.

Contingent Resources:

Contingent resources referred to herein are based on the Resource Study effective March 31, 2012 prepared by GLJ Petroleum Consultants Ltd. ("GLJ). 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 addition to reserves booked as proved, probable and possible. For low, best and high estimates of the contingent resources, further definitions related thereto, positive and negative factors related to the contingent resources and contingencies and risk factors related thereto, please refer to the press release of the Corporation dated May 2, 2012. There is no certainty that it will be commercially viable to produce any portion of the resources.

Reserves:

Reserves herein are evaluated by GLJ effective December 31, 2011. The estimates of reserves and future net revenue for individual properties may not reflect the same confidence level as estimates of reserves and future net revenue for all properties, due to the effects of aggregation. The net present value of future net revenue of reserves does not represent the fair market value thereof.

Barrels of Oil Equivalency:

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 term "barrels of oil equivalent" may be misleading, particularly if used in isolation. A boe conversation 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.