MEDIA RELEASE PR37863
Far East Energy Announces Robust Winter Drilling Program and Related Funding
HOUSTON, Jan. 13 /PRNewswire-AsiaNet/ --
Far East Energy Corporation (OTC Bulletin Board: FEEC) announced today it has
commenced a robust winter drilling program in response to the rapid increase in gas
production from its Shouyang Block in Shanxi Province, China that occurred in late
November and December of last year.
Far East will finance the drilling program with the net proceeds of the
approximately $4.5 million registered direct offering closed in December 2009. The goal
of the program is to accelerate the dewatering in the 1H Pilot Area to lower the
pressure and increase the amount of gas being produced in the Shouyang Block. As
previously disclosed, Far East is in discussions with three separate third parties
regarding the potential off-take and sale of gas produced from the area. Far East
believes it could initiate gas sales by the third quarter of 2010.
The focus of the winter drilling program is the drilling and fracturing of eight
wells by early March. The five drilling rigs being utilized are now fully operational
with the first of the wells having been spudded in December. Of the eight wells, seven
will expand the 1H Pilot Area to the west and one parameter well will be drilled
approximately four kilometers outside of the 1H Pilot Area to the west in order to
obtain further information regarding the geographic extent of the high permeability/high
gas content area. In addition, the existing P4 parameter well will be fractured and the
production from the #15 seam of the P2 parameter well will be temporarily suspended to
accommodate the fracturing of the #9 seam using the same wellbore.
"Winter is quite harsh in Shanxi Province, so December, January and February are
normally months when companies cease drilling operations and evaluate results," said
Michael McElwrath, CEO of Far East. "Temperatures have been as low as -17C (-5F), but
instead of staying dormant, we have designed a workable drilling program and chosen to
drill through the extreme conditions because we are enthusiastic about the ramp up in
gas production and felt that those results call for us to do everything possible to
maintain such positive momentum."
Garry Ward, Senior Vice President of Engineering, added, "The rapid increase in
production that we experienced at the end of last year has indicated the capability of
the highly permeable #15 coal seam. Although this increase is very positive, we believe
that we have not yet seen the full capacity that is often associated with a coal seam
that has the permeability of the #15 coal seam in the 1H Pilot Area. The winter drilling
program is designed to begin to exploit this rise in gas production by increasing our
water withdrawals and significantly enhancing gas production in 2010 as we seek to move
this project toward gas sales and project financing."
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: the pipelines mentioned
may not be constructed or their routes may differ from those mentioned; the pipeline and
local distribution/CNG companies may decline to purchase or take our gas; the gas
produced at our wells may not increase to commercially viable quantities or may
decrease; we may have insufficient capital to develop the Shouyang field; weather may
significantly delay the planned drilling program; wells may be damaged or adversely
impacted during the production process, resulting in decreases in the amount of gas
produced, or that can be produced; certain proposed transactions with Arrow 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 transactions with Arrow may
not be realized; the final amounts received by us from Arrow may be different than
anticipated; Chinese Ministry of Commerce (MOFCOM) may not approve the extensions of the
Qinnan Production Sharing Contract (Qinnan PSC) on a timely basis or at all; PetroChina
or MOFCOM may require certain changes to the terms and conditions of the Qinnan PSC in
conjunction with their approval of any extension; our lack of operating history; limited
and potentially inadequate management of our cash resources; risk and uncertainties
associated with exploration, development and production of CBM; expropriation and other
risks associated with foreign operations; disruptions in capital markets effecting
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 Annual Report on Form 10-K for 2008 and subsequent filings with the
Securities and Exchange Commission.
SOURCE Far East Energy Corporation
CONTACT: David Nahmias, +1-901-218-7770, dnahmias@fareastenergy.com, or Bruce Huff,
+1-832-598-0470, bhuff@fareastenergy.com, or Catherine Gay, +1-832-598-0470,
cgay@fareastenergy.com, all of Far East Energy Corporation
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