Message #5 From:
NewsBot Date: April 13, 2008 11:10:54 PM
Far East Releases Independent Engineering Report
Far East Releases Independent Engineering Report
Far East Energy Corporation (OTCBB:FEEC) today released the
results of an independent coalbed methane reservoir simulation study
conducted over the past four months by Advanced Resources International,
Inc. (“ARI”), of
Houston, Texas, for the Shouyang Block, Qinshui Basin, Shanxi Province,
China. The report concludes that “based upon model
predictions of reservoir pressure, dewatering of the #15 coal
seam has been occurring and is approaching the estimated desorption
pressure within the pilot area.”
The desorption pressure is the point at which pressure is lowered
sufficiently for gas to be released from the coal matrix.
The report also indicates the potential for favorable gas recoveries
from either vertical or horizontal wells. Using standardized assumptions
of gas recoveries over 20 years at the median case (50% probability), ARI’s
simulations show recoveries of 3.4 to 5.3 billion cubic feet (Bcf) from
horizontal wells spaced at 250 and 550 acres, respectively. Using the
same assumptions, the report estimates gas recoveries from individual
vertical wells of .5 to 1.2 Bcf per well based on wells spaced at 40 and
160 acres, respectively. These recoveries are for simulated wells and
are not necessarily indicative of actual results to be expected from the
Company’s existing wells, many of which
suffered formation damage during drilling operations.
ARI’s simulations show theoretical peak gas
production rates of between 2.3 and 5 million cubic feet per day (MMcfd)
for a 900-meter long horizontal well drilled on 400-acre spacing. These
rates are also above the projected gas production rates of 1 to 2 MMcfd
projected for future horizontal wells by Netherland Sewell in June 2007.
The ARI data includes information gathered from additional wells drilled
subsequent to the Netherland Sewell report. The ARI simulations show
peak production rates of .3 to .5 MMcfd from vertical wells drilled on
80-acre spacing.
“This is great news,”
said Michael R. McElwrath, CEO and President of Far East. “We
certainly hope we are approaching the estimated desorption pressure, and
the potential values for both peak daily production per well and for
ultimate gas recovery per well indicate significant upside for the
project. We are gratified that this four-month long analysis by ARI,
which is based upon the data from new wells and upon much more
information than was available to Netherland Sewell, has resulted in an
optimistic analysis.”
The ARI simulations also continue to reflect high permeability ranging
from 80 to 120 millidarcies, and very high gas content of approximately
500 standard cubic feet (scf) per ton. As Netherland Sewell previously
noted, “CBM reservoirs with higher
permeability have the ability to outperform CBM reservoirs with lower
permeability if the coal can be adequately dewatered. Higher
permeability allows wells to maintain their production rates for longer
time periods enabling higher gas recoveries from wider spaced wells in
shorter periods of time.”
The full text of the Advanced Resources International, Inc., report,
which contains further information and qualifications, may be found on
the website of Far East Energy at www.fareastenergy.com.
Advanced Resources International, Inc.
Advanced Resources International (ARI) is a leading independent
consulting firm which has been providing technical and strategic
services to the international energy industry for over 30 years. It has
developed special expertise with unconventional gas reservoirs (coalbed
methane, gas shales and tight sands), enhanced oil recovery and CO2
sequestration. ARI has a rich history in the coalbed methane (CBM)
industry. ARI staff were involved with the first U.S. CBM pilots in the
1970’s in the Black Warrior basin of Alabama.
In the 1980’s, ARI was a major contractor to
the Gas Research Institute’s (GRI) CBM
program. As part of that program, they performed most of GRI’s
basin CBM resource assessments, developed the initial version of their
Comet3 reservoir simulator for coalbed methane and gas shale reservoirs,
and were the lead reservoir engineering contractor to GRI’s
major field test sites – the Rock Creek
Multiple Coal Seams Completions project in the Warrior Basin, and the
Deep Coal Seams and COAL projects in the San Juan Basin. Since the
initial GRI program, ARI has worked for commercial ventures in some
capacity in almost every CBM basin around the world. ARI’s
Executive Vice President, Scott
Reeves, was an SPE Distinguished Lecturer during 2003/03 on the
topic of “Enhanced
Coalbed Methane Recovery”. Mr. Reeves has
published over 150 articles, papers and consulting reports and has been
appointed by the United Nations to be a Special Advisor to China on
coalbed methane technology.
Based in Houston, Texas, with offices in Beijing, Kunming, and Taiyuan
City, China, Far East Energy Corporation is focused on CBM exploration
and development in China through its agreements with ConocoPhillips and
China United Coalbed Methane Company, Ltd. (CUCBM).
Statements contained in this press release that state the intentions,
hopes, beliefs, anticipations, expectations or predictions of the future
of Far East Energy Corporation and its management are forward-looking
statements within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended. It is important to note that any such forward-looking
statements are not guarantees of future performance and involve a number
of risks and uncertainties. Actual results could differ materially from
those projected in such forward-looking statements. Factors that could
cause actual results to differ materially from those projected in such
forward-looking statements include: the preliminary nature of well data,
including permeability and gas content, and commercial viability of the
wells; risk and uncertainties associated with exploration, development
and production of oil and gas; drilling and production risks; our lack
of operating history; limited and potentially inadequate cash resources;
expropriation and other risks associated with foreign operations;
anticipated pipeline construction and transportation of gas; matters
affecting the oil and gas industry generally; lack of availability of
oil and gas field goods and services; environmental risks; changes in
laws or regulations affecting our operations, as well as other risks
described in our Annual Report on Form 10-K and subsequent filings with
the Securities and Exchange Commission.
