Varie
Far East Energy Welcomes Higher Chinese Gas Prices; Provides Updates on Production, Sales & Drilling; And Announces Further Extension to the SCB Loan Facility
Far East Energy Corporation expects to enter into a new round of gas price negotiations before the end of 2014 at which time management would expect to secure another increase in gas prices for future gas sales.
Commenting, CEO Michael McElwrath said, "We welcome this increase because it should translate into significantly higher pricing for our gas. And we believe that gas prices in China will maintain their upward trend, hopefully providing an ongoing opportunity for significant annual enhancement to the price we receive at the wellhead. The Chinese government is committed to improving the environment, and supporting the use of more domestic gas is an integral part of their strategy. Even with this rise in gas pricing, gas prices remain significantly below those of competing fuels, such as fuel oil and diesel – both of which are far more polluting than cleaner burning natural gas, so there is ample room for the government to provide further increases in the coming years."
Gas production from the Shouyang PSC remained consistent during July and August at roughly 1.92 million cubic feet per day, mirroring production rates seen in May and June after wells were shut-in for various reasons including Area B wells shut-in due to distance from the production area and certain Area A gel-frac wells shut-in because they were not tied in to the gathering system. However, partially as a result of production increases from gathered wells in the production area and also improved efficiencies across the summer, sales have increased from an average of 1.4 million cubic feet per day in May to 1.55 million cubic feet per day thus far in September. Drilling has also begun on the P8 replacement well with CUCBM, which committed to fund the drilling of a replacement well in the northeast portion of Area B pursuant to the terms of the April 26, 2012 Modification Agreement of the Shouyang PSC. Management worked with CUCBM on the design and planning of the P8 replacement well (designated FCC-SYE01), and the well has now been spudded with drilling underway.
The maturity date of the bridge facility with SCB has been extended to October 31, 2014 , from the previous maturity date of September 15 , 2014. Commenting, CFO Jennifer Whitley said "This added extension of the facility underlines SCB's ongoing support as we further our discussions with various third parties." The Company will advise shareholders as appropriate, as developments progress.