Far East Energy Announces Completion of Gathering System, Nomination of First Gas Sales, and Anticipated Payment Before December 31

Far East Energy Corporation today announced that the Company and its Chinese partner, CUCBM, have initiated the process for nomination of initial gas for sales, with delivery to occur between late December and January 20, 2011.  In accordance with the Gas Sales Agreement, Shanxi Guoxin Energy Development Group, the Purchaser, will prepay for gas volumes each month when volumes are nominated.  Thus, it is anticipated that first payment will occur before December 31, as previously projected by Far East.   The initial nomination of gas covers gas produced from wells that will be connected to the gathering system before year-end.
FEEC also stated that the second-stage compressor has arrived on site for immediate installation.  Delivery of the first-stage compressors will be accepted before year-end.  Final commissioning and initial delivery of gas is scheduled to occur between January 15 and January 20, although some gas may be delivered directly to second stage compression before December 31.
FEEC also reported that it has drilled 9 additional wells since August 31, 2010; is currently drilling seven more wells, one of which is a parameter well approximately 20 kilometers to the south of the 1H Pilot Area; and is in the process of completing fracture stimulation operations on a total of 11 wells.  
In addition to the Pilot Area extension wells, the SYS-02 parameter well, being drilled 20 kilometers south of the 1H Pilot Area will test the southward extension of the high permeability the company has discovered in the northern part of the Shouyang Block.  This well has just spudded and should be testing the #15 coal seam in early January 2011.  Far East has previously drilled a series of parameter wells to the west and southwest of its Pilot Area with permeability in the P7 parameter well, some 22 kilometers to the west, testing at approximately 100 millidarcies.
Michael R. McElwrath, Far East CEO and President said, "Clearly the Company is pleased to report that in the 3.5 months since its 2010/2011 drilling program raise, 16 of the 60 wells planned at that time have either been drilled and are being fraced, or are currently underway, keeping us precisely on schedule.  However, the biggest news of all is that the gas nomination process has commenced, and first payment for gas should be forthcoming before year-end."  McElwrath added, "FEEC continues to check off major milestones according to projections, and we wish to thank all of our investors for their support."
Source: Press release