Far East Energy Corporation Announces Major Production Milestone (1 Million Cubic Feet Per Day) and Closes Registered Direct Placement

HOUSTON, Aug. 26 /PRNewswire-FirstCall/ -- Far East Energy Corporation (BULLETIN BOARD: FEEC) announced today that gas production from the Shouyang Block in Shanxi Province, China, has surpassed one million cubic feet per day.

"We are very pleased to have reached this significant production milestone," said Michael R. McElwrath, President and CEO of Far East. "In the past eight months, production has doubled, and more importantly, based on historical production data of other properties with similar characteristics, we would expect it to double again - and to perhaps triple - in the next four months. Our pilot area has reached the stage at which high permeability coal seams often begin to exhibit geometric production increases, and we are hopeful that we will see that kind of growth in production by year-end."

The Company also announced that, on August 25, 2010, it completed the sale of approximately 105.5 million shares of common stock at a price of $0.33 per share for aggregate gross proceeds of over $34 million in a registered direct offering.

"Not only are we pleased with the quality of the investor group, which consists primarily of several large, long-only mutual funds, but we are also pleased that the funds were raised at a minimal discount to market and with no warrants," said McElwrath.

"We are receiving these funds at an inflection point in the Company's history with the rising gas production and the recent completion of the Shanxi Province Guoxin Energy Development Group Limited (SPG) pipeline through the Shouyang Block. We intend to use the proceeds to complete our in-field gathering system and drill, complete and test new wells as we seek to rapidly increase gas production in the Shouyang Block and prepare to deliver gas under the SPG gas sales agreement," said Michael R. McElwrath. "Our current development plans consist of drilling and completion of approximately sixty (60) new wells in the Shouyang Block."

Far East Energy Corporation

Based in Houston, Texas, with offices in Beijing, Kunming, and Taiyuan City, China, Far East Energy Corporation is focused on coal-bed methane exploration and development in China.

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 China 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; certain of the proposed transactions with Arrow Energy International Pte Ltd ("Arrow") 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 Arrow may not be realized; the final amounts received by us from Arrow may be different than anticipated; Arrow 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; the pipelines currently under consideration may not be constructed, or if constructed may not be timely, or their routes may differ from those currently anticipated; the pipeline and local distribution/compressed natural gas companies may decline to purchase or take our gas, or the timing of any definitive agreement may take longer than anticipated and the terms may not as advantageous as expected; risk and uncertainties associated with exploration, development and production of coalbed methane; expropriation and other risks associated with foreign operations; disruptions in capital markets effecting 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 SEC.

Far East Energy Corporation

CONTACT: Bruce Huff, [phone], [e-mail], or David
Nahmias, [phone], [e-mail], or Catherine Gay,
[phone], [e-mail], all of Far East Energy Corporation

Web Site: http://www.fareastenergy.com/