Far East Energy Reports Rise in Shouyang CBM Block Reserves

Far East Energy, which operates the Shouyang CBM block China’s Shanxi Province has announced its estimated net proved gas reserves stood at 67.5 billion cubic feet (Bcf) as on Dec 31, 2013, up 32% over last year.

As a result of the 2013 drilling and fracing program, gas production from Shouyang has risen significantly in recent months.  During the first quarter of 2014, the company produced a total of 175.5MMcf of gas, up 96% compared to the same period in 2013.

"It is gratifying that the work that went in on the Shouyang Block during 2013 has resulted in a significant increase to SEC Proved reserves.  I think it's also important to remember that these reserves are still based on the evaluation of only a portion of the block, which implies significant upside potential for our reserves," CEO Mike McElwrath said.

According to Far East, the increased reserve figures, together with the higher gas prices now being received (2014 price of approximately $9 per thousand cubic feet) have combined to drive an increase in the value of the block. 

The net present value of future cash flows discounted at 10% for the Proved and Probable (2P) reserves is now $1.4 billion (up 73% compared to the same period last year).

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