Far East Energy Corporation, 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 reported Tuesday that the maturity date of the existing bridge facility with Standard Chartered Bank (SCB) has been extended to July 15, from the previous date of April 15.
In connection with the release of its 2013 results, the Company announced the results of its updated SEC reserve report prepared by the independent petroleum engineers, Resource Investment Strategy Consultants (RISC). As of Dec. 31, 2013, the Company had estimated net proved gas reserves of 67.5 billion cubic feet (Bcf), an increase of 32 percent over last year’s net proved gas reserves of 51.3 Bcf. This increase reflects the results of the 2013 drilling program, specifically in the 1H Pilot Area, which is the core gas production zone for the Company and, hence, provides the ability to upgrade reserves to the Proved from the Probable category. 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 percent (NPV10) for the Proved and Probable (2P) reserves is now $1.4 billion (up 73 percent compared to the same period last year).
Commenting, CEO Mike McElwrath said, "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."
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, FEEC produced a total of 175.5 million cubic feet (MMcf) of gas, up 96 percent compared to the same period in 2013.
The 2013 Form 10-K has been filed with the SEC, is available on our web site, and includes the following relating to our reserves:
The Year End 2013 Reserve Report prepared by RISC, evaluates, as of Dec. 31, 2013, the estimated proved, probable and possible coalbed methane gas reserves attributable to the three (3) target coal seams (#3, #9 and #15) in Far East Energy’s Shouyang Block, Shanxi Province, PRC.
The reserve estimates have been prepared in accordance with definitions and regulations of the U.S. Securities and Exchange Commission (SEC) and the FASB Accounting Standards Codification Topic 932, Extractive Industries-Oil and Gas with the exclusion of future income tax and Chinese VAT. RISC’s estimates of Proved, Probable and Possible follow:
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