Far East Energy Gets Approval for Yunnan CBM Exploration

Far East Energy Corporation has received approval from Chinese authorities for extension of the exploration period of its coal bed methane Production Sharing Contract (PSC) for Enhong and Laochang area in Yunnan province.

The company is now hopeful of approval of Shouyang PSC, in Shanxi Province, which was also previously agreed to with China United Coalbed Methane Corporation (CUCBM) late last year.   

Under the terms of agreement between Far East Energy and China United Coalbed Methane Corporation (CUCBM), Far East will relinquish the Enhong Block while retaining the right to continue to explore approximately 483 square kilometre Laochang Block, which it considers to hold much greater potential.

 Far East has drilled eleven wells in the Laochang Block, compared to only three in the Enhong Block, and large portions of Enhong were considered to be marginal or non-prospective. The extension moves the end of the exploration period to December 31, 2013.

"For the past several years, as we focused our attention on validating Shouyang as the premier, or one of the premier CBM Blocks in China, due to its uniquely high permeability and pipeline access, we have endeavoured to determine the value potential of our Yunnan blocks.  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 R. McElwrath, CEO and President of Far East Energy Corporation had earlier said.