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Far East Energy Provides Update on Drilling Operations
HOUSTON-(Business Wire)-January 30, 2008 - Far East Energy Corporation (OTCBB:FEEC) today reported progress on the recently announced vertical well drilling program on its Shouyang Block in Shanxi Province, China. Including the HZ08V well, which was spudded in late October 2007, a total of four vertical wells have been drilled to date and a fifth well has been spudded. As previously reported, Far East has contracted for a second drilling rig from Beijing China Coal Dadi Technology Development Company which is now drilling in the field. Far East has been able to drill these wells without significant difficulties and is evaluating the preliminary results from the wells.
The Company continues to dewater the field and has initiated workover operations on the initial HZ01H horizontal well to increase water production from this well.
The cost of drilling these vertical wells has been significantly lower than the earlier horizontal wells, which allows the Company to better utilize its capital resources. Total cash spending during the fourth quarter of 2007 totaled approximately $3.6 million and Far East ended the year with a cash balance of approximately $17.0 million. While the Company will require additional capital in the future, it has sufficient funds to continue its operating activities in the short-run and does not presently have plans to raise additional equity capital in this challenging market environment.
"We have gained new information from this drilling program, which adds to our understanding of the field," said Garry Ward, Senior Vice President of Engineering for Far East. "Our goals with this vertical well program are to learn as much as possible about the Number 15 coal seam in this area and to accelerate the dewatering process to try to achieve commercial gas production rates as soon as possible. We remain optimistic that we are making good progress toward the critical desorption pressure in this area of the reservoir."
Separately, responding to a recent media report that China United Coalbed Methane Company, Ltd. (CUCBM) is seeking more aggressive means to accelerate the pace of CBM development on the vast acreage positions under its control, Michael R. McElwrath, President and CEO of Far East Energy, commented, "We share the strong commitment of CUCBM to accelerate the development of CBM resources in China. The country urgently needs this new source of clean energy to sustain its economic growth and reduce the adverse environmental impacts of its primary dependence on coal. We believe that our excellent relationship with CUCBM will allow us to work in cooperation toward that goal."
Far East Energy's website has been updated with recent media interviews where management discusses the Company's current operations and long-term coal-bed methane opportunities in China.
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.
