HOUSTON, November 18, 2010 /PRNewswire/ -- Far East Energy Corporation announced today the results of an independent engineering report prepared by Netherland, Sewell & Associates, Inc. (NSAI) estimating the total coalbed methane Original Gas-in-Place (OGIP) in Far East Energy's Shouyang Block situated in Shanxi Province, China.
The report covers three target coal seams (the Nos. 3, 9 and 15) and concludes with a best estimate of Original Gas-in-Place of 7.0 trillion cubic feet (Tcf) of coalbed methane (CBM) gas and a high estimate of 8.5 Tcf covering the 487,000 acres under the company's Shouyang Production Sharing Contract (PSC). This is the first time the entire Shouyang Block has been assessed by a third-party engineering firm.
"We are pleased to receive this report on Original Gas-in-Place for the Shouyang PSC," said Michael R. McElwrath, CEO and President of Far East Energy. "This report is a clear indicator of increased potential of the Shouyang Block, and we are excited about the results. As previously announced, this NSAI Original Gas-in-Place report will be followed, subsequent to year-end, by a report covering SEC reserves in the Shouyang Block calculated as of December 31, 2010, and gas sales are expected to begin at that time, as we continue to tick off milestones. All of this comes at a time when, based on current exchange rates, the pricing of our natural gas in China is approximately $6.00 to $6.45 per Mcf, which includes enacted and announced government subsidies and compares quite favorably to the November 3 Henry Hub US natural gas price of $3.35 per Mcf."
Far East Energy previously received data in 2003 from ConocoPhillips for the northern 204,000 acres of the Shouyang Block estimating Original Gas-in-Place at a low of 3.9 Tcf, a median of 4.8 Tcf, and a high of 6.1 Tcf. The current NSAI report estimates OGIP at a low of 5.4 Tcf, a best estimate of 7.0 Tcf and a high of 8.5 Tcf.
The NSAI report on OGIP estimates, which contains further information and qualifications, can be found on Far East Energy's website at: http://www.fareastenergy.com, in the left hand column of the home page.
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.
About Netherland, Sewell & Associates
Netherland, Sewell & Associates, Inc. provides integrated consulting services encompassing geophysics, geology, petro physics, engineering, reservoir modeling and economics. NSAI has performed geophysical, geologic and engineering studies of reservoirs around the globe -- from the North Sea to South America, from the North Slope to South Florida, and from West Africa to the Middle East and Indonesia -- for leading major integrated petroleum companies, both small and large independent oil and gas companies, and various financial institutions and government agencies. For more information about NSAI, please visit their website at http://www.netherlandsewell.com.
The United States Securities and Exchange Commission ("SEC") permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to be economically and legally producible under existing economic and operating conditions. We use certain terms in this press release, such as "original gas-in-place," that are not consistent with "proved reserves" and are not permitted to be included in filings with the SEC. This term "original gas-in-place" refers to discovered and undiscovered gas-in-place, which is the quantity of hydrocarbons which is estimated, on a given date, to be contained in known accumulations, plus those quantities already produced there from, plus those estimated quantities in accumulations yet to be discovered. Investors are urged to consider closely the disclosure in our Form 10-K, File No. 0-32455, available from us on this website under the heading, "SEC Filings." You can also obtain our Form 10-K and our other SEC filings over the Internet at the SEC's website at http://www.sec.gov. Additionally, you can obtain any document we file with the SEC at its public reference facility. Please call the SEC at 1-800-SEC-0300 for further information on the operation of the public reference facility.
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; 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; 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 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; 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 Securities and Exchange Commission.
SOURCE: Far East Energy Corporation