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Far East Energy Corp. reported an agreement that extends the exploration period of its production-sharing contract for coalbed methane (CBM) in the Shouyang block in Shanxi Province received formal approval from the Ministry of Commerce of the People's Republic of China.
Among other provisions, the agreement with China United Coalbed Methane Corp. provides a four-year extension of the exploration period for approximately 1,204 sq km (464 sq miles) until June 30, 2015, and a two-year extension for approximately 490 sq km (189 sq miles) until June 30, 2013.
Michael R. McElwrath, CEO and president, said, “We have drilled 20 appraisal wells covering every area of the block except the southwestern quadrant, which is very deep and for which we accepted a two-year extension. The results from our appraisal wells indicate that the Shouyang block contains an extensive area of coal seams that are both extremely high in gas content and high in permeability.
“With additional drilling of exploratory and appraisal wells during the four-year extension period, we believe we will have sufficient wells to retain all or most of what may be the most highly prospective CBM acreage in China.”
The company also announced that the Chinese Ministry of Land Resources recently certified Chinese proved reserves for an approximate area of 100 sq km (38 sq miles) in the Shouyang block.