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Far East Energy Corporation Announces Completion of Recent Financing Transactions Thursday October 13, 6:00 am ET
HOUSTON, TX--(MARKET WIRE)--Oct 13, 2005 -- As Far East Energy Corporation (OTC BB:FEEC.OB - News) announced earlier, it has completed a private placement of shares of its common stock for total gross proceeds of $10.9 million to be used to finance a portion of its operations in China, including planned horizontal drilling for coalbed methane, and for working capital purposes. The private placement was led by Morgan Keegan & Company, Inc., which acted as placement agent.
ADVERTISEMENT [0] "It was a pleasure to work with Morgan Keegan in securing this private placement," said Michael R. McElwrath, President and CEO of Far East. He added, "We believe this financing provides capital to drill and test several initial multi-lateral horizontal wells, as well as conducting additional activities related to the marketing and potential production of gas."
The Company priced the sale of the common stock on September 19, 2005 at $0.90 per share, and issued a total of 12,111,111 shares in the offering. The Company paid commissions of $763,000 and will grant the placement agent warrants to purchase 150,000 shares of common stock in connection with this transaction.
Additionally, on October 6, 2005, the Company accepted subscription agreements from certain investors for the purchase of 2,782,181 shares of common stock offered in a private placement for total gross proceeds of $2,503,963. The shares were offered pursuant to the terms of the Stock Subscription Agreement dated December 21, 2004 between the Company and certain investors. In connection with this private placement, the Company may, as a fee, pay up to 8% of the gross proceeds from the sale of the common stock, and issue a warrant to purchase up to 8% of the shares sold in the private placement at an exercise price of $0.90 per share with a term of two years.
Total gross proceeds from the private placement led by Morgan Keegan and the separate placement from certain investors described above generated total gross proceeds of $13,403,963. The net proceeds from these two transactions will be approximately $12,300,000 after related commissions and costs.
Based in Houston, Texas, with offices in Beijing, Kunming and Taiyuan City, China, Far East Energy is focused on the acquisition of, and exploration for, coalbed methane through its agreements with ConocoPhillips and China United Coalbed Methane Company (CUCBM).
Statements contained in this press release that state the intentions, hopes, 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 1993, 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: our lack of operating history; limited and potentially inadequate cash resources; risk and uncertainties associated with exploration, development and production of oil and gas; expropriation and other risks associated with foreign operations; matters affecting the oil and gas 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 and subsequent filings with the Securities and Exchange Commission.
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