HOUSTON, Jan. 26, 2012 /CNW/ - Far East Energy Corporation (OTCBB:FEEC) today announced positive test results from three more appraisal wells located at significant distances from the 1H Pilot Area in the Company's Shouyang Block, continuing a series of successful appraisal wells that have revealed much of the block to be highly prospective.
SYS-05 Appraisal Well
The SYS-05 appraisal well was drilled in the southeast portion of the Company's Shouyang Block and is located approximately 35 kilometers south southeast of the 1H pilot area (the 1H Pilot Area is located near the midpoint of the northern boundary of the block). Final test results reveal the SYS-05 to have higher gas content than any well drilled by the Company to date in the Shouyang Block, testing at a final average of 935 scf per ton (dry ash free), which is extraordinarily high gas content. The well is currently producing 2180m3 (77 Mcf) per day, after peaking at 2915m3 (103 Mcf) per day, with the production rate being held back to ensure a steady rate of production is maintained to satisfy Chinese reserves requirements which require production averaging 2000m3 (70 Mcf) per day for 90 consecutive days. The total vertical depth is 1372 meters (4501 feet), and the #15 coal seam is 6.4 meters (21 feet) thick at this location.
P18 Appraisal Well
The P18 appraisal well, located in the eastern part of the Shouyang Block is approximately 22 kilometers east southeast of the 1H Pilot Area, and recently began producing gas. This well peaked at over 2831m3 (100 Mcf) per day and tested at a rate of over 2265m3 (80 Mcf) per day for a ten day period with a surface flowing pressure of 40 psi. The well is currently producing about 1132m3 (40 Mcf) per day. The top of the #15 coal at this location is at a depth of approximately 3510 feet, or 1070 meters, and the #15 coal seam is 3.85 meters (12.63 feet) thick at this location. Preliminary measured gas content for the P18 is estimated at 660 scf per ton (dry ash free). Permeability calculations have not been completed, but it is believed that this well may demonstrate the presence of good permeability at the eastern boundary of the block.
SYS-02 Appraisal Well
The SYS-02 appraisal well, located nearly 20 kilometers due south of the 1H Pilot Area has been producing since May 2011. Its depth is approximately 1274 meters or 4180 feet. The gas content of the #15 coal at this location was measured at 635 scf per ton (dry ash free), which is very high gas content, and the permeability is estimated to exceed 100 millidarcies. This is unusually high permeability for coal at this depth.
Commenting on the appraisal wells and test results, Michael R. McElwrath, CEO and President of Far East Energy, stated: "This now makes 17 out of 18 appraisal wells, drilled all over the Shouyang Block, that have confirmed very high gas content and strong potential. Of these, 15 wells have tested to have high permeability, with permeability not yet determined for the P18 and SYS-05. The news on the SYS-02 is exceptional, as we have now demonstrated high permeability in the #15 coal seam even at a depth of 1274 meters, or 4180 feet, which is far higher permeability than we expected. This holds open the possibility that the preponderance of the block will demonstrate world class gas content and permeability. The SYS-05 appears to be even more exciting, as its sustained production rate is impressive for a stand-alone appraisal well, and its gas content would be exceptional in virtually any CBM play in the world. We are quite excited with the recent positive results that these far-reach appraisal wells have shown, and we look forward to drilling additional wells that we believe will result in a significant amount of additional contingent resources for our Shouyang Block as we seek to optimize valuation."
Far East Energy Corporation
Based in Houston, Texas, with offices in Beijing, Kunming, and Taiyuan City, China, Far East Energy Corporation is focused on coalbed methane exploration and development in China. For additional information please visit, www.fareastenergy.com.
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 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 ("CUCBM"), 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; the Chinese Ministry of Commerce ("MofCom") may not approve the Modification Agreement to the Shouyang PSC (the "Modification Agreement") on a timely basis or at all, or, if so, on commercially advantageous terms; our Chinese partner companies or MofCom may require certain changes to the terms and conditions of the Modification Agreement or our PSCs in conjunction with their approval, including reductions in acreage or a reduction in the term of the extension for the exploration period; 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 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
For further information:
Investor Relations, Far East Energy Corporation, +1-281-606-1600, [email protected]; or Bruce Huff, +1-832-598-0470, [email protected], or Catherine Gay, +1-832-598-0470, [email protected], both of Far East Energy Corporation