Far East Energy Corporation (OTCBB:FEEC), the U.S. listed company that operates the Shouyang Block Coalbed Methane (CBM) Production Sharing Contract (PSC) in Shanxi Province, People's Republic of China, today announced that as a result of negotiations concluded December 6, 2013 with its Chinese partner, China United Coalbed Methane Corp. (CUCBM), the parties have extended the exploration period of the portion of the Shouyang Block identified as "Area B" until June 30, 2016, and have agreed that Far East will drill at least 39 additional wells in Area B by June 30, 2016. The Company also announced that there has been a large increase in gas production, with gas production now exceeding 1 million cubic feet per day.
The parties have agreed to revise certain related terms of the PSC to reflect this agreement and intend to do so within 90 days. Area B is significantly larger, at 1103.1 square kilometre (272,581.95 acres), than the Company's 1H core production area which contains 64.7 square kilometre (15,987 acres).
Commenting, CEO Mike McElwrath said, "CUCBM has exceptionally capable new senior leadership, and, building upon our historically good relations, Far East and CUCBM were able to quickly reach this accord. We could not be more pleased with our partnership with CUCBM, and look forward to the continued exploration and analysis of Area B through June 30, 2016.
The primary impact of this extension is to allow additional time to establish Chinese resources, thereby providing further assurances of our ability to retain the acreage to the PSC's expiration in 2032."
The Company also announced that there has been a significant increase in gas production in recent weeks. As of December 12, 2013, gas production has risen to over 1 million cubic feet per day, and now stands at 1,034,038 cubic feet per day (1,034Mcf/pd). Average production for the 7 days ending December 12, 2013 was 957.65 Mcf per day, representing a 30% increase over production for the week ended November 12, 2013, during which production averaged 738 Mcf/pd.
