Far East Energy Corporation Announces Financing For Development Of Coalbed Methane Projects In China
Houston, TX - Far East Energy Corporation announced recently that it entered into a subscription agreement on August 24, 2007 with International Finance Corporation (IFC), a member of the World Bank Group, to help fund Far East Energy's coalbed methane exploration and development program in China. Far East Energy, one of the largest holders of coalbed methane deposits in China, will use the proceeds to finance a portion of its operations in China, including planned drilling and development of coalbed methane production, and for working capital purposes.
Far East Energy sold, at a price of $1.306 per share, a total of 11,485,452 shares of its common stock to IFC for total gross proceeds of $15 million. Far East Energy also issued warrants to IFC to purchase 4,019,908 shares of common stock with an exercise price of $2.61 per share. Far East Energy may redeem the warrants if the shares of the company's common stock trade at a price equal to or in excess of $3.92 per share for fifteen or more consecutive trading days. Far East Energy will pay no commissions or finder fees in connection with the offering.
"We certainly are proud that IFC's first investment in coalbed methane in China is with Far East Energy. We consider this to be a strong vote of confidence in our projects," said Michael R. McElwrath, Chairman and CEO of Far East Energy. "This financing supports the acceleration of our drilling program, making us better positioned to act on the findings of the Netherland, Sewell & Associates report issued earlier this summer. Its findings were that Far East Energy's #15 coal seam has high permeability on the order of 100 millidarcies, gas content on the high end of CBM fields, and indications of a potential gas production profile of 1 million to 2 million cubic feet per day from horizontal wells. The NSA report and the recently announced gas production in our Shouyang Block, now coupled with the IFC financing, support Far East Energy's plan to step up the pace of our exploration and development program."
"Given China's significant coalbed methane resources, this investment has great potential to help China meet its growing energy needs by using domestic resources in an environmentally conscious manner," said Somit Varma, IFC's director for oil, gas mining and chemicals. "IFC is excited to partner with Far East Energy, a company that brings excellent management and technical expertise needed to develop this unconventional energy source."
IFC is a highly respected global development institution and is well positioned to provide advisory capabilities to Far East Energy. IFC has also indicated that it is interested in considering future long-term project financing. In addition to this potential project financing, IFC, as a member of the World Bank Group, can potentially render political risk mitigation, guidance on developing a long term strategy to leverage potential carbon finance opportunities under the Kyoto Protocol, and assistance on other aspects of Far East Energy's activities in China.
SOURCE: IFC