Far East Energy Announces Spudding of 14th Well of 2013, Preliminary Drilling Results and Release of Q1 2013 Results
HOUSTON, May 10, 2013 /PRNewswire/ -- Far East Energy Corporation (OTCBB:FEEC) today announced that appraisal well SYS03 has reached total depth; preliminary gas content has been determined for the SYE06 appraisal well; and, the 108D, an additional production well has spudded, bringing to 14 the number of wells spudded thus far in 2013.
The focus for the company remains the drilling and well-fracing program that management detailed in its conference call held April 18, 2013, and which was discussed further in its operations update press release of May 6, 2013.
As part of the company's continuing appraisal well program, the SYS03, which is located in the east to southeast portion of the Shouyang Block, completed drilling to a total depth of 1,471 meters (or 4,826 feet) and penetrated the #15 coal seam revealing a total coal seam thickness of 3.77 meters (or approximately 12.4 feet). The coal was cored in its entirety and seven samples have been collected for desorption testing, which will allow for an assessment of gas content. Wire-line logging and open-hole testing will shortly be completed with estimates of permeability to follow.
The SYS03 well is a good control point between the P18 and SYS05 wells, verifying good continuity and stability of the targeted #15 coal seam. This encouraging result from the SYS03 greatly enhances confidence in the potential of the east and southeast portions of the Shouyang Block.
Meanwhile, results from the testing of core samples from the SYE06 appraisal well indicate an initial gas content of 592 standard cubic feet per ton (scf/t) or 16.76 cubic meters per ton (m3/t) in the #15 coal seam and 383 scf/t or 10.84 m3/t in the #9 coal seam. This well is approximately 5 kilometers due east of the P18 appraisal well, and continues to confirm high gas content across virtually all of the Shouyang Block.
CEO Michael McElwrath said, "I am very pleased with the progress we have made this year on the Shouyang Block. As previously announced, our drilling contractors are in the process of mobilizing up to twenty-five rigs dedicated to the Shouyang Block and we are in final preparations for the kickoff of the frac program, with 10 wells now awaiting fracing. The operations team in China is wholly focused on delivery of the Company's 2013 drilling program, and we are encouraged by the results of yet another appraisal well, the SYE06, that affirms high gas content in our targeted coal seams across an ever-expanding area."
Gas sales for Q1 2013 were 66.9 MMcf, an increase of 40% over the same period in 2012. Average gas price for Q1 2013 was $6.47/Mcf, inclusive of the various state and provincial subsidies and VAT refunds. This compares to an average of $6.45/Mcf in Q1 2012.
Due to increased demand for power in the vicinity of our 1H Pilot Area, the electric grid in that area is being upgraded. This increased demand for electricity is indicative of the rapid growth of energy demand in the region, for manufacturing facilities, chemical plants, and for the gas-fired power generation facility and LNG facilities being built adjacent to our 1H Pilot Area. As a result of this ongoing upgrade, since March 2013, the company has been experiencing intermittent power supply interruptions to its compressors in the Shouyang Block, as the power grid is being upgraded. In order to lessen the impact of these interruptions, the company's field personnel are in the process of procuring and installing company-owned gas-fired generators to ensure power continuity at its sales point.
As announced on January 16, 2013, the company completed a $60 million private debt placement during the first quarter, which funds a full production and appraisal well program through 2013.
Far East Energy Corporation
Based in Houston, Texas, with offices in Beijing, and Taiyuan City, China, Far East Energy Corporation is focused on coalbed methane exploration and development in China.
Statements contained in this press release that state the intentions, hopes, estimates, 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 preliminary nature of well data, including permeability and gas content; there can be no assurance as to the volume of gas that is ultimately produced or sold from our wells; the fracture stimulation and drilling programs may not be successful in increasing gas volumes; 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, to which we are an express beneficiary; additional wells may not be drilled, or if drilled may not be timely; additional 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; the pipeline and local distribution/compressed natural gas companies may decline to purchase or take our gas, or we may not be able to enforce our rights under definitive agreements with pipelines; conflicts with coal mining operations or coordination of our exploration and production activities with mining activities could adversely impact or add significant costs to our operations; our lack of operating history; limited and potentially inadequate management of our cash resources; risk and uncertainties associated with exploration, development and production of coalbed methane; our inability to extract or sell all or a substantial portion of our reserves and other resources; we may not satisfy requirements for listing our securities on a securities exchange; 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 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and subsequent filings with the Securities and Exchange Commission.
SOURCE Far East Energy Corporation