Far East Energy Notes 66% Increase in Shouyang Block
Far East Energy announced the results of an independent report prepared by Netherland, Sewell & Associates, Inc. ("NSAI") evaluating, as of June 30, 2011, the net contingent gas resources and Net Present Value at 10% Discount ("NPV10") of the net contingent cash flow for the three target coal seams in Far East Energy's 485,000 acre (1960 square kilometers) Shouyang Block, situated in Shanxi Province, China.
The report, which is subject to certain limitations and assumptions described therein, gives a Best Estimate of NPV10 of $1.23 billion, which reflects a 66% increase over the previously prepared NSAI report as of December 2010; a High Estimate of $2.11 billion, which reflects a 44% increase; and a Low Estimate of $319.30 million, which reflects a 143% increase.
"Obviously, this is an exhilarating report. It reflects the great potential of the Shouyang Block project," said Michael R. McElwrath, CEO and President of Far East. "These estimates not only reinforce the belief we have had in this project since the beginning, but it also better defines the economic potential of the Shouyang Block. As you may recall when we released the December 2010 NSAI report we stated that it was our hope and belief that the numbers then reported by NSAI, were just the beginning indicators of the Shouyang Block's vast resource potential. Now, with the receipt of the latest NSAI report, a mere six months later, this is being borne out. As the Company continues its development of the Shouyang Block project, with operations now under the oversight of David Minor, Executive Director of Operations, we believe we are well positioned to enter the next development phase and expect to see increased well-by-well gas rates coupled with sustainability."
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