SOURCE: Far East Energy

December 06, 2005 06:00 ET

Far East Energy Provides China Operations Update

HOUSTON, TX -- (MARKET WIRE) -- December 6, 2005 -- Far East Energy Corporation (OTC BB: FEEC) announced that China United Coalbed Methane Corporation, Ltd (CUCBM), its partner in China, has agreed to extend the expiration date of Phase II of the exploration period for the Shouyang and Qinnan Production Sharing Contracts from December 31, 2005 to March 31, 2006. These two contracts govern the operations of Far East Energy's Shanxi Project where it has recently completed the drilling phase of its first horizontal well (FCC HZ01) with approximately 2,500 meters (8,200 feet) of horizontal distance in the coal seam. This extension provides additional time for Far East to complete the drilling of its second well (FCC HZ02) in the Shouyang Block, which will be spudded in December 2005.

Far East Energy is now preparing to drill the FCC HZ02 well with a goal of completing over 4,000 meters (13,120 feet) of horizontal drilling in the #15 coal seam. The FCC HZ02 well will require 30 to 45 days to drill. The spudding of the second horizontal well is scheduled in December 2005 to permit winterizing the rig and obtaining certain equipment required for winter operations in the Shanxi Province of China.

Far East began a production test on its first horizontal well (FCC HZ01) on November 29, 2005 following a delay due to equipment logistics issues. 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.

"We are eagerly awaiting the results of the production test of our first horizontal well in Shanxi Province," said Michael R. McElwrath, CEO and President of Far East Energy. "After the end of the year, we should have production test results that will be our first indication of the potential in the area we have drilled. We are also looking forward to commencing drilling on our second horizontal well in the Shouyang Block during December, which targets a greater horizontal distance than the first well."

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 (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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