Far East Energy Notes 66% Increase in Shouyang Block

- Far East Energy Notes 66% Increase in Shouyang Block

Friday, July 22, 2011
Far East Energy Corp.

Far East Energy announced the results of an independent report prepared by Netherland, Sewell & Associates, Inc. ("NSAI") evaluating, as of June 30, 2011, the net contingent gas resources and Net Present Value at 10% Discount ("NPV10") of the net contingent cash flow for the three target coal seams in Far East Energy's 485,000 acre (1960 square kilometers) Shouyang Block, situated in Shanxi Province, China.

The report, which is subject to certain limitations and assumptions described therein, gives a Best Estimate of NPV10 of $1.23 billion, which reflects a 66% increase over the previously prepared NSAI report as of December 2010; a High Estimate of $2.11 billion, which reflects a 44% increase; and a Low Estimate of $319.30 million, which reflects a 143% increase.

"Obviously, this is an exhilarating report. It reflects the great potential of the Shouyang Block project," said Michael R. McElwrath, CEO and President of Far East. "These estimates not only reinforce the belief we have had in this project since the beginning, but it also better defines the economic potential of the Shouyang Block. As you may recall when we released the December 2010 NSAI report we stated that it was our hope and belief that the numbers then reported by NSAI, were just the beginning indicators of the Shouyang Block's vast resource potential. Now, with the receipt of the latest NSAI report, a mere six months later, this is being borne out. As the Company continues its development of the Shouyang Block project, with operations now under the oversight of David Minor, Executive Director of Operations, we believe we are well positioned to enter the next development phase and expect to see increased well-by-well gas rates coupled with sustainability."

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Far East Energy Reports Shouyang Production Testing Results

- Far East Energy Reports Shouyang Production Testing Results

Monday, May 16, 2011
Far East Energy Corp.

Far East Energy announced the preliminary results of production testing on the SYS02, P8 and P12 pilot development test wells in the Shouyang Block. The SYS02 well is located midway between the northern and southern boundaries of the block and is approximately 20 kilometers south of the 1H production area. It is producing from a depth of 1274 meters which is several hundred meters deeper than the Company's wells in the northern portion of the block. Initial calculations indicate the Company has again found high permeability in the #15 coal seam, and that the high permeability observed at shallower depths also exists well down-structure at much greater depths.

The P8 is 12 kilometers due east of the 1H area. Preliminary production tests at the P8 also indicate high permeability. The P12 pilot development test well is located approximately 22 kilometers southeast of the 1H area and is producing between 35 and 60 Mcfpd, with indications of high permeability. If these preliminary high permeability results are maintained in the SYS02, P8, and P12, then this will indicate that the entire upper half of the block (approximately 980 square kilometers or 242,500 acres) may have high permeability and be potentially commercial.

In addition, drilling activities of pilot development test wells P18, and SYS05 are proceeding. These wells represent test wells reaching out as far to the east and south as the Company has drilled to date. The SYS05 well is located well into in the lower half of the block, approximately 14 kilometers south and 22 kilometers east of the SYS02 and 35 kilometers south of the producing 1H area. Pilot development test well P18 well is located 26 kilometers southeast of the 1H area, in the far eastern area of the block. These wells will give the Company an expanded look at the permeability of the #15 coal seam at a significant distance from the present producing area and well beyond the recently drilled SYS02 and P12 wells. These test wells will provide valuable information regarding the prevailing permeability in a previously-untested significant portion of the Shouyang Block.

As announced on May 4th, the Company is connecting 14 previously drilled wells to its gathering system. In addition, 3 wells currently being drilled, and 9 wells with locations prepared for drilling, will be connected. This will add a total of 26 additional wells to our original gathering system, bringing the total number of wells tied to the gathering system to 56.

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Far East Reports Net Present Value of Shouyang Block Resources

Far East Reports Net Present Value of Shouyang Block Resources

Wednesday, April 06, 2011
Far East Energy Corp.

Far East announced the results of an independent report by Netherland, Sewell & Associates (NSAI) evaluating, as of December 31, 2010, the contingent gas resources and Net Present Value at 10% Discount ("NPV10") of the net contingent cash flow for the three target coal seams in Far East Energy's 485,000 acre (1960 square kilometers) Shouyang Block, situated in Shanxi Province, China.

The report gives a Best Estimate of NPV10 of $738.3 million, and a High Estimate of $1.46 billion, net to Far East.

"Obviously, this is a very strong report, and one with which we are well pleased," said Michael R. McElwrath, CEO and President of Far East. "These estimates highlight the robust economic potential of the Block. And, it is important to note that we hope and believe that these numbers are just the beginning, as meaningful improvements in well-by-well gas rates and sustainability – which we certainly expect as we further develop, dewater, and optimize production – should have the impact of increasing these estimates, as well as reclassifying some of these resources as reserves."

McElwrath continued, "This report includes only our interest in the Contingent Resources and, of course, does not constitute a reserves report. While, under the terms of our gas sales agreement, we received payment for gas at year-end 2010, we did not flow gas through the system until mid-January, and even then that was frequently interrupted as we worked out the bugs in the gathering system during the testing and commissioning process. That lack of gas flow at year-end and our anticipation of frequent interruptions as testing and commissioning occurred, led us to decide that under the applicable rules we did not have a sufficiently completed gas sales system functioning as of year-end to recognize proven gas reserves in our December 31, 2010 financials. We will recognize proved gas reserves as appropriate in 2011, and will also provide a report indicating the probable and possible gas reserves at that time."

McElwrath continued, "With our current cash balance of $34 million, we will again accelerate the pace of our drilling program, and drilling should be funded until approximately the end of 2011. Additionally, we are also targeting a total of 200 to 250 wells in 2012, and 300 to 400 in 2013. Of course, the costs of these accelerated outyear drilling programs will be partially offset by growing revenues from gas sales, and discussions are underway with several international banks and other institutions for debt financing. Shouyang's potential becomes more apparent with each successive independent analysis that we receive, and we will proceed apace to realize the value of the underlying resource."