Far East Energy Update on China Operations

Far East Energy Corporation, operator of the Shouyang CBM Production Sharing Contract (PSC) in Shanxi Province of China, in an update said that the company has drilled a total of 53 wells have been spudded since January 1.

As of July 31, 26 wells have been fraced (23 wells in the 1H Pilot Area and 3 appraisal wells) and 7 wells are waiting to be fraced.

In addition, 4 wells are in the early stages of the dewatering process, are pumping and producing water from the #15 coal seam, the company said.

Additional groups of wells are in the process of having surface facilities installed to commence pumping operations. After reaching a peak of 31 drilling rigs in late June, 25 rigs remain in the field focused on the drilling of additional production wells.

The company is now focussing on on adding production wells for dewatering and gas production.

Of the 53 wells spudded in 2013, 27 are appraisal wells that continue to confirm the lateral extension of the #15 seam throughout the company’s block and defining the real extent of the #9 and #3 coal seams. The appraisal program includes core retrieval and evaluation, pressure testing, mud logging and sample collection. The 18 appraisal wells undergoing testing reveal excellent preliminary gas content averaging 500 scf/ton.