Far East Energy Announces Completion of Gathering System, Nomination of First
Gas Sales, and Anticipated Payment Before December 31

    


    
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<p><span class="xn-location">HOUSTON</span>, <span class="xn-chron">Dec. 20, 2010</span> /CNW/ -- Far East Energy Corporation (OTC Bulletin Board: FEEC) today announced that the Company and its Chinese partner, CUCBM, have initiated the process for nomination of initial gas for sales, with delivery to occur between late December and <span class="xn-chron">January 20, 2011</span>.  In accordance with the Gas Sales Agreement, Shanxi Guoxin Energy Development Group, the Purchaser, will prepay for gas volumes each month when volumes are nominated.  Thus, it is anticipated that first payment will occur before <span class="xn-chron">December 31</span>, as previously projected by Far East.   The initial nomination of gas covers gas produced from wells that will be connected to the gathering system before year-end.</p>
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<p>FEEC also stated that the second-stage compressor has arrived on site for immediate installation.  Delivery of the first-stage compressors will be accepted before year-end.  Final commissioning and initial delivery of gas is scheduled to occur between <span class="xn-chron">January 15</span> and <span class="xn-chron">January 20</span>, although some gas may be delivered directly to second stage compression before <span class="xn-chron">December 31</span>.</p>
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<p>FEEC also reported that it has drilled 9 additional wells since <span class="xn-chron">August 31, 2010</span>; is currently drilling seven more wells, one of which is a parameter well approximately 20 kilometers to the south of the 1H Pilot Area; and is in the process of completing fracture stimulation operations on a total of 11 wells.</p>
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<p>In addition to the Pilot Area extension wells, the SYS-02 parameter well, being drilled 20 kilometers south of the 1H Pilot Area will test the southward extension of the high permeability the company has discovered in the northern part of the Shouyang Block.  This well has just spudded and should be testing the #15 coal seam in early <span class="xn-chron">January 2011</span>.  Far East has previously drilled a series of parameter wells to the west and southwest of its Pilot Area with permeability in the P7 parameter well, some 22 kilometers to the west, testing at approximately 100 millidarcies.</p>
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<p>Michael R. McElwrath, Far East CEO and President said, "Clearly the Company is pleased to report that in the 3.5 months since its 2010/2011 drilling program raise, 16 of the 60 wells planned at that time have either been drilled and are being fraced, or are currently underway, keeping us precisely on schedule.  However, the biggest news of all is that the gas nomination process has commenced, and first payment for gas should be forthcoming before year-end."  McElwrath added, "FEEC continues to check off major milestones according to projections, and we wish to thank all of our investors for their support."</p>
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    Far East Energy Corporation
    
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<p>Based in <span class="xn-location">Houston</span>, Texas, with offices in <span class="xn-location">Beijing</span>, Kunming, and Taiyuan City, <span class="xn-location">China</span>, Far East Energy Corporation is focused on coalbed methane exploration and development in <span class="xn-location">China</span>.</p>
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<p>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 1933, 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: there can be no assurance as to the volume of gas that is ultimately produced or sold from our wells; due to limitations under Chinese law, we may have only limited rights to enforce the gas sales agreement between Shanxi Province Guoxin Energy Development Group Limited and <span class="xn-location">China</span> United Coalbed Methane Corporation, Ltd., to which we are an express beneficiary; pipelines and gathering systems needed to transport our gas may not be constructed, or if constructed may not be timely, or their routes may differ from those anticipated; the pipeline and local distribution/compressed natural gas companies may decline to purchase or take our gas, or we may not be able to enforce our rights under definitive agreements with pipelines; conflicts with coal mining operations or coordination of our exploration and production activities with mining activities could adversely impact or add significant costs to our operations; certain of the proposed transactions with Dart Energy (formerly Arrow Energy) may not close on a timely basis or at all, including due to a failure to satisfy closing conditions or otherwise; the anticipated benefits to us of the transactions with Dart Energy may not be realized; the final amounts received by us from Dart Energy may be different than anticipated; Dart Energy may exercise its right to terminate the Farmout Agreement at any time; the Chinese Ministry of Commerce ("MOC") may not approve the extension of the Qinnan PSC on a timely basis or at all; our Chinese partner companies or the MOC may require certain changes to the terms and conditions of our PSC in conjunction with their approval of any extension of the Qinnan PSC; our lack of operating history; limited and potentially inadequate management of our cash resources; risk and uncertainties associated with exploration, development and production of coalbed methane; expropriation and other risks associated with foreign operations; disruptions in capital markets affecting fundraising; matters affecting the energy 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 2009 Annual Report and subsequent filings with the Securities and Exchange Commission.</p>
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For further information: Investor Relations, [phone], [email protected], or Bruce Huff, [phone], [email protected], or Catherine Gay, [phone], [email protected], all of Far East Energy Corporation Web Site: http://www.fareastenergy.com