Far East Energy Announces Second Quarter Results And Increased Revenue for First Half of 2014
HOUSTON, Aug. 7, 2014 /CNW/ -- 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."
ODP
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.
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