Far East Energy announced that gas production from the Shouyang Block in Shanxi Province, China, has surpassed one million cubic feet per day.
"We are very pleased to have reached this significant production milestone," said Michael R. McElwrath, President and CEO of Far East. "In the past eight months, production has doubled, and more importantly, based on historical production data of other properties with similar characteristics, we would expect it to double again – and to perhaps triple – in the next four months. Our pilot area has reached the stage at which high permeability coal seams often begin to exhibit geometric production increases, and we are hopeful that we will see that kind of growth in production by year-end."
The Company also announced that, on August 25, 2010, it completed the sale of approximately 105.5 million shares of common stock at a price of $0.33 per share for aggregate gross proceeds of over $34 million in a registered direct offering.
"Not only are we pleased with the quality of the investor group, which consists primarily of several large, long-only mutual funds, but we are also pleased that the funds were raised at a minimal discount to market and with no warrants," said McElwrath.
"We are receiving these funds at an inflection point in the Company's history with the rising gas production and the recent completion of the Shanxi Province Guoxin Energy Development Group Limited (SPG) pipeline through the Shouyang Block. We intend to use the proceeds to complete our in-field gathering system and drill, complete and test new wells as we seek to rapidly increase gas production in the Shouyang Block and prepare to deliver gas under the SPG gas sales agreement," said Michael R. McElwrath. "Our current development plans consist of drilling and completion of approximately sixty (60) new wells in the Shouyang Block."
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