Attached files
| file | filename |
|---|---|
| EX-10.1 - FAR EAST ENERGY CORP | v188405_ex10-1.htm |
| EX-10.3 - FAR EAST ENERGY CORP | v188405_ex10-3.htm |
| EX-10.2 - FAR EAST ENERGY CORP | v188405_ex10-2.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities and Exchange Act of 1934
Date of
Report (Date of earliest event reported): June 12, 2010
FAR
EAST ENERGY CORPORATION
(Exact
name of registrant as specified in its charter)
|
Nevada
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0-32455
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88-0459590
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||
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(State
or other jurisdiction of incorporation)
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(Commission
File
Number)
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(IRS
Employer
Identification
No.)
|
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363
N. Sam Houston Parkway East, Suite 380, Houston, Texas
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77060
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|
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code: (832) 598-0470
Not
Applicable
(Former
name or former address, if changed since last report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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o
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item
1.01.
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Entry
into a Material Definitive
Agreement.
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On June
12, 2010, China United Coalbed Methane Corporation, Ltd. (“CUCBM”) and Shanxi
Province Guoxin Energy Development Group Limited (“SPG”) executed the Shouyang
Project Coalbed Methane Purchase and Sales Contract (the “Gas Sales Agreement”)
to sell coalbed methane gas (“CBM”) produced pursuant to the Production Sharing
Contract for Exploitation of Coalbed Methane Resources for the Shouyang Area in
Shanxi Province, Qinshui Basin, the People’s Republic of China dated April 16,
2002 (the “Shouyang PSC”) by and between CUCBM and Far East Energy (Bermuda),
Ltd. (“FEEB”), a wholly-owned subsidiary of Far East Energy Corporation, as
successor in interest to ConocoPhillips China Inc.
Under
Chinese law and practice, foreign-owned and controlled entities can only sell
gas through a licensed, local entity, such as CUCBM. Therefore,
concurrently with the execution of the Gas Sales Agreement, FEEB, which is the
operator of the CBM field governed by the Shouyang PSC (the “Shouyang Field”),
and CUCBM entered into a letter agreement (the “Acceptance Letter”) under
which FEEB acknowledged that sales by CUCBM under the Gas Sales
Agreement would constitute the joint marketing and sales of CBM from the
Shouyang Field for purposes of the Shouyang PSC. The Acceptance
Letter further confirmed that FEEB accepted the terms of the Gas Sales
Agreement, which named the parties to the Shouyang PSC as express beneficiaries.
On June 12, 2010, FEEB and CUCBM also entered into a letter agreement (the
"Letter Agreement") in which they agreed that they would share any value added
tax refunds and government subsidies related to gas sales from the Shouyang
Field and that FEEB and its affiliates could disclose the Gas Sales Agreement to
its investors and certain other third parties. In the Letter Agreement, the
parties also acknowledged that the funds received under the Gas Sales Agreement
would be allocated in accordance with the Shouyang PSC, which allocates a 30%
participating interest to CUCBM subject to specified conditions. See “Our Holdings in
the Shanxi Province of the People’s Republic of
China” of
Item 1 - Business in our Annual Report on Form 10-K for the year ended December
31, 2009 for a further description of the Shouyang PSC.
Pursuant
to the Gas Sales Agreement, SPG is initially required to purchase up to 300,000
cubic meters per day of CBM (the “Daily Volume Limit”) produced at the Shouyang
Field on a take-or-pay basis, with the purchase of any quantities above such
amount to be negotiated pursuant to a separate agreement. Beginning
in 2015, SPG may be required to purchase up to 1 million cubic meters per day of
CBM produced at the Shouyang Field. The Gas Sales Agreement has a
term of 20 years.
The price
to be paid by SPG, excluding the effect of any applicable rebates or subsidies,
for CBM under the Gas Sales Agreement will be 1.20 RMB per cubic meter
(including tax) until June 12, 2011. The price to be received by
CUCBM and FEEB, including subsidies for gas sales that will be allocated between
CUCBM and FEEB as agreed under the Letter Agreement, should be approximately
1.55 RMB per cubic meter, which equates to approximately $6.55 per Mcf at
current exchange rates as of the date of this report. The Gas Sales Agreement
also provides for price adjustments in accordance with changes to the published
Chinese national natural gas price and annual price adjustments based on the
parties mutual agreement. If the parties do not agree on a new price, the
then-current price shall continue in effect and either party may seek to resolve
any pricing dispute pursuant to arbitration. SPG is obligated to pay
for all CBM monthly in advance, based on anticipated deliveries for the coming
month.
The Gas
Sales Agreement does not have any minimum delivery obligations, but it does
require that all CBM produced at the Shouyang Field up to 300,000 cubic meters
per day be sold to SPG and production in excess of such shall be subject to
further agreement. The parties agreed to use reasonable efforts to
provide a steady, stable supply of gas and to provide the same amount of CBM
during the summer and the winter. While initial deliveries are planned for
late fall 2010, the Gas Sales Agreement does not have a firm initial delivery
date. Rather, each party is to notify the other at least 30 days before it is
able to deliver or receive gas. Once the initial gas delivery and
acceptance date is set, if one party fails to deliver or receive gas on such
date, then it shall pay the other party 5% of the value of CBM comprising such
shortfall. After initial CBM deliveries commence, if either party
fails to deliver gas or receive gas as nominated for the month, and it fails to
notify the other party that it will not deliver or receive such quantity of gas,
then the non-performing party will pay the other party a penalty based upon 10%
of the value of 80% of the portion of gas not delivered or received, as
applicable.
2
The Gas
Sales Agreement contemplates that CBM sales will commence following completion
of an in-field gathering system that will interconnect with SPG’s gas pipeline
in Shanxi Province, which is currently under construction and is anticipated to
be completed by October 2010. During the initial 180 days following
the first delivery of CBM under the Gas Sales Agreement (the “Commissioning
Period”), the parties are required to make reasonable efforts to deliver and
accept CBM in an amount not to exceed the Daily Volume
Limit. Thereafter, SPG will be required to accept and pay for all
deliveries of CBM produced under the Shouyang PSC up to the Daily Volume
Limit. If at any time after the Commissioning Period SPG fails to
accept any CBM delivered to the delivery point up to the Daily Volume Limit,
other than due to force majeure, maintenance or breakdowns, SPG will pay an
amount equal to the sales price of 80% of the unaccepted amount.
The
descriptions of the Agreement, the Acceptance Letter and the Letter Agreement
set forth herein do not purport to be complete and are qualified in their
entirety by the full text of the English translation of the Agreement, the
Acceptance Letter and the Letter Agreement, which are attached as Exhibits 10.1,
10.2 and 10.3 hereto, respectively, and incorporated herein by
reference.
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Item
9.01.
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Financial
Statements and Exhibits.
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(d)
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Exhibits
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| Exhibit Number |
Description | |
|
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10.1
|
English
translation of the Shouyang Project Coalbed Methane Purchase and Sales
Contract dated June 12, 2010 between China United Coalbed Methane
Corporation, Ltd. and Shanxi Province Guoxin Energy Development Group
Limited.
|
|
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10.2
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English
translation of Letter Agreement dated June 12, 2010 between Far East
Energy (Bermuda), Ltd. and China United Coalbed Methane Corporation,
Ltd.
|
|
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10.3
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Letter
Agreement dated June 11, 2010 between Far East Energy (Bermuda), Ltd. and
China United Coalbed Methane Corporation,
Ltd.
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3
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
| Dated: June 16, 2010 | |||
| Far East Energy Corporation | |||
|
|
By:
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/s/ Michael R. McElwrath | |
| Michael R. McElwrath | |||
| Chief Executive Officer | |||
4
Index to
Exhibits
| Exhibit Number |
Description |
|
10.1
|
English
translation of the Shouyang Project Coalbed Methane Purchase and Sales
Contract dated June 12, 2010 between China United Coalbed Methane
Corporation, Ltd. and Shanxi Province Guoxin Energy Development Group
Limited.
|
|
10.2
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English
translation of Letter Agreement dated June 12, 2010 between Far East
Energy (Bermuda), Ltd. and China United Coalbed Methane Corporation,
Ltd.
|
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10.3
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Letter
Agreement dated June 11, 2010 between Far East Energy (Bermuda), Ltd. and
China United Coalbed Methane Corporation,
Ltd.
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5