SOURCE: Far East Energy

June 07, 2007 06:01 ET

Far East Energy Provides Drilling Update and Schedules Webcast

HOUSTON, TX--(Marketwire - June 7, 2007) - Far East Energy Corporation (OTCBB: FEEC) announced that within the next week it will spud its first horizontal well in its Qinnan Block in Shanxi Province, China. This new well is planned to be drilled to a horizontal length of approximately 3000m in the No. 3 coal seam. The Qinnan Block contains approximately 500,000 acres or 2,000 square kilometers, and is located near the West-East Pipeline to Shanghai. Far East Energy estimates that the total contract cost of the new well will be approximately $1.2 million, continuing a trend of declining well costs as Far East Energy pursues its development efforts.

Earlier this week, Far East released a report from the independent engineering firm of Netherland, Sewell & Associates, Inc. covering the area of Far East's pattern of wells in the Shouyang Block, which is also almost 500,000 acres in size and is located near the Shanjing II Pipeline to Beijing. The Netherland Sewell report stated that in their opinion the No. 15 coal seam contains high permeability on the order of 100 millidarcies, the gas content of the Shouyang Block is on the high end of CBM fields, and that potential gas rates of 1 million to 2 million cubic feet per day are possible in future horizontal wells. The full text of the report, which contains further information and qualifications, may be found on the website of Far East Energy at www.fareastenergy.com.

"Now that the potential uncovered by our first wells in Shouyang has been supported by Netherland Sewell, and as we move forward with the drilling program there, it makes sense to begin to explore the potential of the equally large Qinnan Block," said Michael R. McElwrath, CEO and President of Far East. "It is our hope that our first horizontal well in Qinnan meets with success similar to our efforts in Shouyang. It would be ideal if we could successfully develop production blocks in both Shouyang and Qinnan due to their proximity to the national pipelines to Beijing and Shanghai, respectively," McElwrath continued.

Another Well Commenced in Shouyang Block. Far East Energy also announced that it has spudded a new vertical well, the FCC-HZ06V, in the Shouyang Block. The FCC-HZ06 will be drilled to the top of the coal seam and then the coal seam will be drilled underbalanced to minimize the mechanical damage done to the wellbore. The process of underbalanced drilling will provide a good test of vertical production wells in the Shouyang Block.

"We believe this well will not only speed the dewatering process as we continue to move closer to reaching the critical desorption pressure to achieve commercial gas production, but it will also allow us to begin to assess whether the high permeability of our area makes low-cost vertical wells an economically attractive complement to horizontal wells," said Garry Ward, Senior Vice President for Engineering of Far East Energy Corporation.

Update on Shouyang Block Operations. Far East Energy also indicated that the dewatering process related to the first five horizontal wells is proceeding as anticipated. The previously announced drop in bottom hole pressure in the most recent wells drilled in the Shouyang drilling pattern indicates the substantial progress made toward reaching the desorption pressure at which gas is released.

Operations Update Webcast. Far East Energy plans to host a China operations update webcast with CEO and President Michael R. McElwrath on June 20, 2007 at 11:00 a.m. Eastern time.

What:     China Operations Update Webcast

When:     Wednesday, June 20, 2007 at 11:00 a.m. EDT

Where:    www.fareastenergy.com

How:      Live over the Internet - Via the Far East Energy website
Far East Energy's operations include the Shouyang and Qinnan Blocks, which make up the 1,057,650 acre (4,280 square kilometers) coalbed methane (CBM) project in Shanxi Province that Far East holds under farmouts from ConocoPhillips. Including its 264,863 acre (1,072 square kilometers) project in Yunnan Province, the CBM concessions of Far East Energy contain a land mass slightly larger than the State of Delaware. The Shanxi properties are strategically located next to China's two largest pipelines leading to the industrial centers of Shanghai and Beijing.

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 through its agreements with ConocoPhillips and China United Coalbed Methane Company, Ltd. (CUCBM).

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 preliminary nature of well data, including permeability and gas content, and commercial viability of the wells; risk and uncertainties associated with exploration, development and production of oil and gas; drilling and production risks; our lack of operating history; limited and potentially inadequate cash resources; expropriation and other risks associated with foreign operations; anticipated pipeline construction and transportation of gas; matters affecting the oil and gas industry generally; lack of availability of oil and gas field goods and services; environmental risks; changes in laws or regulations affecting our operations, as well as other risks described in our Annual Report on Form 10-K and subsequent filings with the Securities and Exchange Commission.

Contact Information

  • Contact:
    David Nahmias
    Far East Energy Investor Relations
    901-218-7770
    Email Contact

    Warren Laird
    Vice President
    Email Contact
    CTA Integrated Communications
    303-665-4200