DGAP-News: Far East Energy Welcomes China's Gas Pricing Reform
(firmenpresse) - Far East Energy Corporation
11.07.2013 15:00
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HOUSTON, 2013-07-11 15:00 CEST (GLOBE NEWSWIRE) --
Far East Energy Corporation (OTCBB:FEEC), the U.S. listed coalbed methane
company operating the Shouyang PSC in Shanxi Province, People's Republic of
China, welcomes the long-awaited reforms to China's gas pricing structure.
The National Development and Reform Commission ('NDRC'), China's top
policy-making body, has announced that, effective July 10, 2013, city gate gas
prices will increase by an average of 15% across the country. These increases
will be borne by the industrial and other sectors and will flow to upstream
producers such as Far East, with analysts projecting that this will translate
into an increase of approximately 25% at the wellhead.
Importantly, the NDRC is introducing a two-tier pricing structure that will
base new, incremental, gas supply on the pricing formula that has already been
tested in provinces such as Guangdong. The formula links domestic China gas
prices to LPG and fuel oil prices, which has resulted in gas prices of
approximately $14/Mscf in the provinces where the formula is in operation.
Commenting, CEO Mike McElwrath said, 'Far East is currently receiving
$6.50/Mscf for gas sales, from our Shouyang Block for the first 10.6 MMscf
produced (inclusive of subsidies). We expect volumes going forward to be sold
at increasingly higher prices as the new pricing formula takes effect.'
These reforms apply to city gate pricing, but analysis in the market indicate
that the 15% increase in city gate prices should equate to a near 25% increase
in well-head prices. This should provide a clear incentive for increased
exploration and production of China's domestic gas resources, as opposed to the
more expensive options of importing LNG and/or piping gas into China.
McElwrath continued, 'The changes to China's gas price policy underline the
determination by the country's leadership that gas play a major role in the
country's energy mix moving forward. Higher gas prices are needed to stimulate
more domestic production and compensate for high LNG import prices and the move
to link gas prices to oil based fuels recognizes that gas is a clean
alternative to LPG and fuel oil.'
Note that CBM prices are not regulated by the NDRC and are subject to
independent negotiation between producers and buyers. However, recent history
has shown that CBM price levels reflect national trends and management expects
that future gas sales contracts would be made at prices above current
realizations.
Far East Energy Corporation
Based in Houston, Texas, with offices in Beijing, and Taiyuan City, 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. 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.
CONTACT: Investor Relations - 281-606-1600
Far East Energy Corporation
Investorrelations(at)fareastenergy.com
Jennifer Whitley - 832-598-0470
Far East Energy Corporation
jwhitley(at)fareastenergy.com
Catherine Gay - 832-598-0470
Far East Energy Corporation
cgay(at)fareastenergy.com
News Source: NASDAQ OMX
11.07.2013 Dissemination of a Corporate News, transmitted by DGAP -
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Language: English
Company: Far East Energy Corporation
United States
Phone:
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ISIN: US3073251007
WKN:
End of Announcement DGAP News-Service
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Datum: 11.07.2013 - 15:00 Uhr
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