Far East Energy Updates on Drilling Activities in China

Far East Energy Corporation, which operates the Shouyang coalbed methane (CBM) Production Sharing Contract (PSC) in Shanxi Province, People’s Republic of China, provided an update on recent drilling and fracing activities.

Far East Energy is progressing though a robust drilling and development program for the 2013 work year and as of July 31, a total of 53 wells have been spudded since Jan. 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. 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.

Commenting, CEO Michael McElwrath said, “We are pleased with the progress of our 2013 drilling program and with the efficiencies we are seeing in field operations managing the program. Our focus is now on adding production wells for dewatering and gas production, and it is gratifying to see a real well pattern filling in so rapidly with 25 rigs masterfully managed. As for results, we are encouraged with the initial rates of water production from our core production area, which is essential to the dewatering process. We also just received positive preliminary gas content results from 18 of our recently drilled appraisal wells.”

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 standard cubic feet per ton.

Continuing, McElwrath said, “We are very encouraged with the initial laboratory reports for gas content and saturation levels, which seem to confirm that virtually the entirety of our block is blessed with very high gas content. This information will be fed into future reserve and resource estimates.”

Additionally, Far East Energy announced that it has filed its Quarterly Report on Form 10-Q for the period ending June 30, 2013, which is available on the SEC’s website at www.sec.gov and on the company’s website at www.fareastenergy.com under the tab “Investor Relations” in the “SEC Filings” section.

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