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Far East Energy Announces Second Quarter Results And Increased Revenue for First Half of 2014
|By PR Newswire
|August 7, 2014 08:37 AM EDT
HOUSTON, Aug. 7, 2014 /PRNewswire/ -- Far East Energy Corporation (OTCBB:FEEC), the U.S. listed company that operates the Shouyang Coalbed Methane (CBM) Production Sharing Contract (PSC) in Shanxi Province, People's Republic of China, is pleased to announce the filing of its Form 10-Q, for the period ended June 30, 2014.
For the first six months of 2014, revenues rose 209% compared to the same period in 2013, reaching $2.2 million for the first half of the year. This performance reflects (1) the strong increase in gas production and gas sales resulting from the 2013 drilling and fracing program and (2) the significant increase in gas prices being received in 2014 compared to 2013. Compared to a relatively weak 2nd quarter in 2013, revenues for the three-months ended June 30, 2014 increased 324% to $1.1 million.
Gas sales volumes for the six months ending June 30, 2014 averaged 1.35 MMcf/d, up 126% from the same period in 2013, resulting from the newly drilled and fraced wells. As previously announced, 29 wells in the core Area A production zone were shut-in during the second quarter as being wells located outside the main production area, wells not tied-in to the gas gathering system or wells having ineffective fracs. Production and sales have remained constant since the beginning of May, despite shutting in these 29 wells in Area A. A number of these wells are candidates for future recompletions, and should meaningfully enhance production of water and/or gas upon successful recompletion.
Following the previously announced increase in the sales gas price, the average price received for gas sales, inclusive of subsidies and refunds, was $8.87/Mcf in the first half of 2014, up 37% over the same period in 2013.
The company continued to focus on costs during the first half of 2014, and, although direct operating costs rose with the higher production levels, they were down 23% on a per Mcf sold basis, and general and administrative costs were down in total compared to same period in 2013. The announced well shut-ins will contribute to further cost reductions into the third quarter of 2014, without affecting current production levels.
Commenting, CFO Jennifer Whitley said, "These results show the impact of our 2013 drilling and fracing program, combined with the higher gas price that we are now receiving for our contracted gas sales. As we continue our ongoing strategic discussions, management is also maintaining its focus on cost controls into the second half of the year."
The draft ODP report, which covers Area A, was submitted to the National Energy Administration ("NEA") of the National Development and Reform Commission ("NDRC") on June 16, 2014. The NEA is in the process of reviewing the ODP report, and the Company is now awaiting the award of its "Road Pass". Area A will exit the exploration period and commence the development period when the ODP receives final regulatory approvals. Final regulatory approval is expected during 2015. Receipt of the "Road Pass" will allow the Company to proceed with the development of Area A while awaiting final regulatory approvals; however, continuing further development and exploration activities does require conclusion of the strategic process currently underway, and on which management is diligently working, in order to provide funding for those activities.
Far East Energy Corporation
Based in Houston, Texas, with offices in Beijing, China, Far East Energy Corporation is focused on coalbed methane exploration and development in China.
Statements contained in this press release that state the intentions, hopes, estimates, 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, including that the amendment to the PSC may not be entered into or if entered into may not be on the same terms as originally agreed upon by the parties. 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; there can be no assurance as to the volume of gas that is ultimately produced or sold from our wells; the fracture stimulation and drilling programs may not be successful in increasing gas volumes; due to limitations under Chinese law, we may have only limited rights to enforce the gas sales agreement between Shanxi Province Guoxin Energy Development Group Limited and China United Coalbed Methane Corporation, to which we are an express beneficiary; additional wells may not be drilled, or if drilled may not be timely; additional pipelines and gathering systems needed to transport our gas may not be constructed, or if constructed may not be timely, or their routes may differ from those anticipated; the pipeline and local distribution/compressed natural gas companies may decline to purchase or take our gas, or we may not be able to enforce our rights under definitive agreements with pipelines; conflicts with coal mining operations or coordination of our exploration and production activities with mining activities could adversely impact or add significant costs to our operations; our lack of operating history; limited and potentially inadequate management of our cash resources; risk and uncertainties associated with exploration, development and production of coalbed methane; our inability to extract or sell all or a substantial portion of our reserves and other resources; we may not satisfy requirements for listing our securities on a securities exchange; expropriation and other risks associated with foreign operations; disruptions in capital markets affecting fundraising; matters affecting the energy industry generally; lack of availability of oil and gas field goods and services; environmental risks; drilling and production risks; changes in laws or regulations affecting our operations, as well as other risks described in our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and subsequent filings with the Securities and Exchange Commission.
SOURCE Far East Energy Corporation
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