Pacific Asia China Energy Inc.

Pacific Asia China Energy Inc.

February 06, 2006 13:49 ET

Pacific Asia China Energy Inc. Enters into MOU with Mitchell Drilling

KELOWNA, BRITISH COLUMBIA--(CCNMatthews - Feb. 6, 2006) - PACIFIC ASIA CHINA ENERGY INC. ("PACE") (TSX VENTURE:PCE) is pleased to announce that the Company has entered into a Memorandum of Understanding with Mitchell Drilling Contractors Pty Ltd of Brisbane, Australia ("Mitchell Drilling") for the formation of a Joint Venture Drilling Contractor to provide drilling services in China for coalbed methane gas ("CBM").

The Joint Venture company will have the exclusive license to use Mitchell's proprietary drilling Dymaxion System in China. Dymaxion is a unique and highly effective surface to in-seam drilling technique which the company has deployed since early 2000. To date, over 200 Dymaxion wells have been drilled on CBM projects.

In order to obtain the exclusivity and technological rights in China, PACE will issue shares valued at $AUS 2,000,000 based on the 10 day average trading price. In addition, PACE will provide initial funding by way of a loan to the joint venture of up to $AUS 2,500,000 to be used to acquire a drilling rig.

Mitchell Drilling is Australia's largest privately owned drilling company, servicing the Australian and international resource industries including the United States and India. They are an efficient, technologically advanced, and continuously improving drilling organisation, with a dedication to providing efficient solutions to client projects. Mitchell Drilling began operations in 1969 focussing on coalfield exploration. The company acquired a reputation for expertise and exceptional reliability resulting in steady expansion. Mitchell Drilling is well known in the resource industry for its technological innovation. Mitchell Drilling's mission is to be a world leader in CBM drilling technology, offering a complete Integrated Service able to supply the entire project from conception to completion.

Nathan Mitchell, President and CEO commented, "Clients are not content with outdated techniques and equipment, which I think is why we are so sought after, and which is why we are receiving so much international attention. I'm really proud of the team we have here who make that possible. We are excited by the great new opportunities that PACE has brought to us in China."

Dev Randhawa, President and CEO of PACE stated, "We are very pleased to be associated with Mitchell Drilling and their exceptional track record. Their expertise and drilling technology will enhance our ability to advance our CBM projects in China and improve upon our commercial success."

This transaction is subject to regulatory approval.

PACIFIC ASIA CHINA ENERGY INC. is a Canadian based resource company specializing in the strategic development of Coal Bed Methane projects in China. Common Shares of PACIFIC ASIA CHINA ENERGY INC. are listed on the TSX Venture Exchange under the symbol "PCE".


Dev Randhawa, President and CEO

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release.

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