SOURCE: Far East Energy

November 01, 2005 14:24 ET

Far East Energy Starts Completion Operations on First Horizontal Well; Prepares to Drill Second

HOUSTON, TX -- (MARKET WIRE) -- November 1, 2005 -- Far East Energy Corporation (OTC BB: FEEC) announced that it has completed drilling a total of approximately 2,500 meters (8,200 feet) of horizontal distance in the coal seam for the first of its two-well, multilateral horizontal coalbed methane well program in the Shouyang Block of Shanxi Province, China. This first horizontal well (FCC HZ01) will now be completed for a production test which will begin as soon as the equipment has been installed to proceed. The results of the next step to dewater and test the well for production should be available after the next 30 to 60 days.

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. The first horizontal well in the Shouyang Block (FCC HZ01) contains a total of six radials from the main horizontal well bore at a vertical depth of approximately 563 meters (1,847 feet).

"We are very pleased that we have finished drilling operations for our first horizontal well in Shanxi Province," said Michael R. McElwrath, CEO and President of Far East Energy. "We are eagerly awaiting the results of our testing program. However, the most important news may be that we clearly demonstrated that extended horizontal well bores can be successfully drilled in the coal seam. This was a critical accomplishment for our company. We believe that future well costs will steadily decline as data is accumulated and drilling operations become repetitive. In the next month or two, we should have production test results that will begin to reveal the nature of our resources in the Shouyang Block."

Far East is now preparing to drill in the second horizontal well, the FCC HZ02, with a goal of completing over 4,000 meters (13,120 feet) of horizontal drilling in the #15 coal seam. This second well, which the Company plans to commence drilling within the next 30 days, is expected to take 30 to 45 days to drill.

Drilling time on the first well exceeded the Company's original estimates due to various mechanical difficulties and local logistics problems. The mechanical problems were identified and the Company anticipates they can be efficiently resolved.

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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    Release No. 05-13