Far East Energy Announces Commencement Of 60 Well Drilling Program And Groundbreaking On Gathering S

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5th October 2010, 10:30am - Views: 743






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MEDIA RELEASE PR41568


Far East Energy Announces Commencement of 60 Well Drilling Program and Groundbreaking on

Gathering System


HOUSTON, Oct. 5 /PRNewswire-AsiaNet/ --


     Far East Energy Corporation (OTC Bulletin Board: FEEC) announced today

that its second-half 2010 drilling program for the Shouyang Block commenced

recently with three wells, the 34D, 40V, and the 11D having been spudded in

the past week. The drilling program is planned to consist of approximately 60

wells drilled during the remainder of 2010 through the summer of 2011.

Currently, 51 of these wells are planned to be drilled in the 1H Pilot Area

to accelerate gas production and maximize gas sales, projected to begin by

year-end 2010. In addition to these pilot area wells, 9 parameter wells will

be drilled to continue to extend the testing of the #3, #9 and #15 coal seams

across a broad area of the northern half (approximately 242,000 acres or 980

square kilometers) of the Shouyang Block with primary exploration in the #15

coal seam.


    Far East also announced that it is presently finishing a 10 well fracture

stimulation program comprised of fracing 6 already-drilled wells in the 1H

Pilot Area and 4 parameter wells located as much as 16km west of the 1H Pilot

Area. Fracing the 6 pilot wells should further increase production in the 1H

Pilot Area, and Far East continues to target gas volumes of 2 million cubic

feet per day by year-end, which would double the production announced in late

August.


    In order to execute the planned drilling program, Far East will utilize

as many as eight drilling rigs simultaneously which should allow completion

of the drilling program in the summer of 2011. "Based upon the response to

our last drilling program and the rapid ramp-up in production that we

announced in August, we have designed an aggressive drilling program with the

target of doubling production by year-end," said Michael R. McElwrath, CEO

and President. "We will focus first and foremost upon rapidly increasing

production, with roughly eighty-five percent of the new wells drilled in the

1H Pilot Area. But we will continue drilling parameter wells that will

hopefully continue to expand the size of the area determined to contain high

gas content and high permeability across the northern portion of our Block

because we want the potential to be clear."


    Far East also confirmed that the construction of the Shouyang gas gathering

system is underway and is currently on schedule to be completed and

commissioned by year-end. At that time flaring will cease, and gas can be delivered for sale. Shanxi Gas

Gathering, a subsidiary of Shanxi

Provincial Guoxin Energy Development Group Co., Ltd., is managing the

gathering system's completion.


    "We were proud to be the first western company to obtain a CBM gas sales

agreement with a pipeline," said McElwrath, "and we will be even more proud

to be the first to sell gas into a pipeline as China begins to transition

from a CBM transportation system comprised mainly of compressed natural gas

(CNG) - which distinctly limits the volumes of gas which can be transported

to market - to a rapidly developing pipeline infrastructure. This gives us a

distinct market advantage in the sense of being able to potentially market

very large volumes of gas."


    Far East Energy will soon commence the process of obtaining Chinese

reserve certification with the objective of completing this process in the

second quarter of 2011. Far East Energy has already started the process of

evaluating resources and SEC reserves. The engineering firm of Netherland

Sewell and Associates, Inc. (NSAI) has been engaged to complete a report on

the overall resource base in the Shouyang Block in the coming weeks (two

categories of resources, Contingent and Prospective), to be determined under

the guidelines of the Society of Petroleum Engineers), and to complete a

report on SEC reserves in the Shouyang Block as of December 31, 2010.


    Mr. McElwrath commented, "We have been very busy in the second and third

quarters of 2010 moving this project toward commercial production and

development. The recent capital raise of US$32.5 million of net proceeds has

been instrumental in accelerating our plans for gas sales and our potential

for gas reserves by year end. Our relationship with Shanxi Gas Gathering has

proven to be a great benefit in accelerating our progress toward gas sales

and we are very excited at the prospect of beginning to generate revenue from

our Shouyang Block in December 2010."


    Garry R. Ward, Senior Vice President - Engineering, commented, "Our

program of parameter wells has been generating very good information

regarding the recurring high permeability and high gas content of the #15

coal seam all the way out to the western edge of the Shouyang Block. Our

recent drilling of new parameter wells is designed to expand our knowledge of

reservoir quality in the northern 240,000 acres of the Shouyang Block. In

addition to the parameter wells, our pilot wells have been showing good gas

production and we are excited at the prospect of accelerating our immediate

gas production through the addition of the most recent fracture stimulated

wells. We are continuing to refine our completion procedures to lower our

drilling costs and improve our gas production."


    Additionally, Far East commented that it will fracture stimulate 5 wells

in the Laochang Block in Yunnan to test two coal seams for production. This

fracture stimulation and production testing work will commence in October.


    Far East Energy Corporation

    Based in Houston, Texas, with offices in Beijing, Kunming, and Taiyuan

City, China, Far East Energy Corporation is focused on CBM exploration and

development in China.


    Statements contained in this press release that state the intentions,

hopes, beliefs, anticipations, expectations or predictions of the future of

Far East Energy Corporation and its management are forward-looking statements

within the meaning of Section 27A of the Securities Act of 1933, as amended,

and Section 21E of the Securities Exchange Act of 1934, as amended. It is

important to note that any such forward-looking statements are not guarantees

of future performance and involve a number of risks and uncertainties. Actual

results could differ materially from those projected in such forward-looking

statements. Factors that could cause actual results to differ materially from

those projected in such forward-looking statements include: there can be no

assurance as to the volume of gas that is ultimately produced or sold from

our wells; due to limitations under Chinese law, we may have only limited

rights to enforce the gas sales agreement between Shanxi Province Guoxin

Energy Development Group Limited and China United Coalbed Methane

Corporation, Ltd., to which we are an express beneficiary; pipelines and

gathering systems needed to transport our gas may not be constructed, or if

constructed may not be timely, or their routes may differ from those

anticipated; certain of the proposed transactions with Dart Energy(formerly

Arrow Energy) may not close on a timely basis or at all, including due to a

failure to satisfy closing conditions or otherwise; the anticipated benefits

to us of the transactions with Dart may not be realized; the final amounts

received by us from Dart may be different than anticipated; Dart may exercise

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its right to terminate the Farmout Agreement at any time; the Chinese

Ministry of Commerce ("MOC") may not approve the extension of the Qinnan PSC

on a timely basis or at all; our Chinese partner companies or the MOC may

require certain changes to the terms and conditions of our PSC in conjunction

with their approval of any extension of the Qinnan PSC; our lack of operating

history; limited and potentially inadequate management of our cash resources;

the pipelines currently under consideration may not be constructed, or if

constructed may not be timely, or their routes may differ from those

currently anticipated; risk and uncertainties associated with exploration,

development and production of coalbed methane; expropriation and other risks

associated with foreign operations; disruptions in capital markets affecting

fundraising; matters affecting the energy industry generally; lack of

availability of oil and gas field goods and services; environmental risks;

drilling and production risks; changes in laws or regulations affecting our

operations, as well as other risks described in our 2009 Annual Report and

subsequent filings with the SEC.



    SOURCE:  Far East Energy Corporation


    CONTACT: Bruce Huff, 

             +1-832-598-0470, 

             bhuff@fareastenergy.com, 


          or David Nahmias,

             +1-901-218-7770, 

             dnahmias@fareastenergy.com, 


          or Catherine Gay,

             +1-832-598-0470, 

             cgay@fareastenergy.com, 


             all of Far East Energy Corporation








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