Far East Energy to Extend Yunnan CBM PSC

Far East Energy Corporation has extended the exploration period of its Production Sharing Contract in Yunnan Province. 

However, the modification agreement signed by the company and China United Coal Bed Methane Corporation will need the approval on the government.

Under the terms of the agreement, Far East will relinquish the Enhong Block while retaining the 483 square kilometer (119,340 acres) Laochang Block, which it considers to hold much greater potential. 

Far East has drilled eleven wells in the Laochang Block, compared to three in the Enhong Block, and large portions of Enhong were considered to be marginal or non-prospective.

“After reviewing the results of the three exploration wells in the Enhong Block and eleven in the Laochang Block, as well as considering the very difficult topography in Enhong, we have concluded that the Laochang Block has superior potential, and have elected to focus all Yunnan activities there," Michael McElwrath, CEO and President of Far East Energy Corporation, stated.

Recently, China unveiled a goal to triple CBM production by 2015 and has declared that it will further liberalize well-head prices for CBM.

“Just at this point in time, Far East has signed these extensions for Shouyang and Yunnan and is ideally positioned to capitalize on the increasing emphasis upon unconventional gas in China," McElwrath said.