HOUSTON, May 16, 2011 /PRNewswire/ -- Far East Energy Corporation (OTCBB: FEEC) today announced that it has filed its Quarterly Report on Form 10-Q for the period ending March 31, 2011, which is available on the SEC's website at http://www.sec.gov and on the Company's website, at http://www.fareastenergy.com, under the tab "Investor Relations" in the "SEC Filings" section.
SALES AND PRODUCTION UPDATE
The Company also announced today that current gas sales are ranging from approximately 400-685 Mcfpd, and gross production generally increased during the first quarter of this year and into the second quarter reaching a high of 890 Mcfpd on May 12, 2011. On May 15, 2011 gross production was 877 Mcfpd and gross sales were 685 Mcfpd. The Company believes that sales will increase as gas from soon-to-be connected wells is sold through the gathering system, and gross production will increase as recently fraced wells ramp up.
Michael R. McElwrath, CEO and President said, "We are pleased that gas sales have increased across the first quarter and look forward to increased sales as additional wells are connected to the gathering system."
McElwrath added, "Drilling activity in Shouyang has increased from an average of 7 wells per year from mid-2005 to mid-2009, to approximately a 30 well-per-year clip in 2010. By the end of 2011 or early 2012 we hope to achieve a drilling rate that will allow Far East to drill in excess of 200 wells per year subject, of course, to adequate funding and requisite Chinese approvals. The profile of Far East is shifting as we move from close-in exploration and incremental development to far-flung exploration and rapid development at significant multiples of previous activity levels. Last week, we announced the addition of David Minor as Executive Director of Operations with a particular focus on optimizing current and future production. We anticipate continuing to add additional top-caliber technical management and field personnel as activity ramps up."
The Company also announced the preliminary results of production testing on the SYS02, P8 and P12 pilot development test wells in the Shouyang Block. The SYS02 well is located midway between the northern and southern boundaries of the block and is approximately 20 kilometers south of the 1H production area. It is producing from a depth of 1274 meters which is several hundred meters deeper than the Company's wells in the northern portion of the block. Initial calculations indicate the Company has again found high permeability in the #15 coal seam, and that the high permeability observed at shallower depths also exists well down-structure at much greater depths.
The P8 is 12 kilometers due east of the 1H area. Preliminary production tests at the P8 also indicate high permeability. The P12 pilot development test well is located approximately 22 kilometers southeast of the 1H area and is producing between 35 and 60 Mcfpd, with indications of high permeability. If these preliminary high permeability results are maintained in the SYS02, P8, and P12, then this will indicate that the entire upper half of the block (approximately 980 square kilometers or 242,500 acres) may have high permeability and be potentially commercial.
In addition, drilling activities of pilot development test wells P18, and SYS05 are proceeding. These wells represent test wells reaching out as far to the east and south as the Company has drilled to date. The SYS05 well is located well into in the lower half of the block, approximately 14 kilometers south and 22 kilometers east of the SYS02 and 35 kilometers south of the producing 1H area. Pilot development test well P18 well is located 26 kilometers southeast of the 1H area, in the far eastern area of the block. These wells will give the Company an expanded look at the permeability of the #15 coal seam at a significant distance from the present producing area and well beyond the recently drilled SYS02 and P12 wells. These test wells will provide valuable information regarding the prevailing permeability in a previously-untested significant portion of the Shouyang Block.
As announced on May 4th, the Company is connecting 14 previously drilled wells to its gathering system. In addition, 3 wells currently being drilled, and 9 wells with locations prepared for drilling, will be connected. This will add a total of 26 additional wells to our original gathering system, bringing the total number of wells tied to the gathering system to 56.
OPERATIONS UPDATE CONFERENCE CALL
The Company will hold an operations update conference call in June. Call hosts will include CEO, Mike McElwrath, and Executive Director of Operations, David Minor.
About 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; the fracture stimulation program 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, Ltd., to which we are an express beneficiary; 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; 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 Energy may not be realized; the final amounts received by us from Dart Energy may be different than anticipated; Dart Energy may exercise its right to terminate the Farmout Agreement at any time; the Chinese Ministry of Commerce ("MOC") may not approve the extension of our PSCs 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 PSCs in conjunction with their approval of any extension of our PSCs, including a reduction in acreage; 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; proved reserves may not be reported in a timely manner or at all and, if reported, may be smaller than anticipated; our inability to extract or sell all or a substantial portion of our estimated Contingent 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 2010 Annual Report and subsequent filings with the Securities and Exchange Commission.
SOURCE Far East Energy Corporation