SOURCE: Far East Energy

March 07, 2006 13:51 ET

Far East Energy Announces China Drilling Update

HOUSTON, TX -- (MARKET WIRE) -- March 7, 2006 -- Far East Energy Corporation (OTC BB: FEEC) issued an update on its China operations indicating that it has finished drilling and has begun to dewater its second horizontal well (FCC HZ02) in the Shouyang Block of its Shanxi Project. Drilling operations on the second well were completed with a total horizontal distance drilled in the coal seam of 2,739 meters (8,986 feet). The #15 coal seam in the FCC HZ02 well is at a depth of approximately 640 meters (2,100 feet). Equipment has been installed to dewater and perform a production test, both of which are in the initial stages.

Far East Energy also explained that it continues to dewater and test its first horizontal well in the Shouyang Block (FCC HZ01) which is producing water at over 700 barrels per day. The #15 coal seam in the FCC HZ01 well is at a depth of approximately 540 meters (1,770 feet) while the current water level is at 378 meters (1,239 feet). The data obtained is not yet sufficient to be able to project the gas production volume of the FCC HZ01 well.

Each of the two horizontal wells was completed with less distance drilled in the coal seam than the target of 4,000 meters due to the difficulties encountered in the drilling process. The Shouyang Block is part of the 4,280 square kilometer (1,057,650 acres) coalbed methane (CBM) project in Shanxi Province that Far East holds under farmouts from ConocoPhillips.

"Although the horizontal distance of the two wells fell short of our original target, we are pleased with the substantial distance that has been completed and we believe this clearly indicates that the coal in this area of our concessions can be successfully drilled to long horizontal reaches in the seam," said Far East Energy President and CEO Michael R. McElwrath. "We look forward to the results of the production tests on our first two horizontal wells in the Shouyang Block."

Based in Houston, Texas, with offices in Beijing, Kunming, and Taiyuan City, China, Far East Energy Corporation is focused on the acquisition of, and exploration for, coalbed methane through its agreements with ConocoPhillips and China United Coalbed Methane Company, Ltd. (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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