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Far East Energy Releases RISC Contingent Resources Report for Shouyang CBM Block Indicating Significant Additions to Resources

RISC Estimates Net Contingent Resources of CBM at 2C Level of Certainty of 1.1 tcf, NPV10 of US$2.57 billion

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HOUSTON, July 11, 2012 /PRNewswire/ -- Far East Energy Corporation (OTC:BB FEEC) announced today the release of an independent engineering report prepared by Resource Investment Strategy Consultants (RISC) with respect to its coalbed methane (CBM) contingent resources located in its Shouyang block in Shanxi Province, China as of December 31, 2011.  The contingent resource estimates in the RISC report were prepared to the standards recognized by the Society of Petroleum Engineers (SPE) in the Petroleum Resources Management System (PRMS).

The RISC report estimates the net contingent resources at the 2C (Best Estimate) level of confidence for the Shouyang block under PRMS standards to be approximately 1.1 trillion cubic feet (tcf), with estimated future net revenue, on an NPV10 basis, of approximately US$2.6 billion.  The report estimates net contingent resources at the 3C (High Estimate) level to be approximately 1.3 tcf, with an estimated NPV10 of US$3.78 billion; and, the 1C (Low Estimate) is 736.1 billion cubic feet, with an estimated NPV10 of US$1.19 billion.   

Commenting on the RISC report, CEO Michael McElwrath said "As expected, these are excellent numbers that indicate the high potential of the Shouyang Block. These additions to contingent resources reinforce the potential and the significance of both the high permeability and the high gas content of the Block.  As a result, we believe that we, and our partners at China United Coal Bed Methane, have stewardship of a CBM block in China with textbook geological characteristics capable of being converted into strong value for our shareholders."

The full RISC report can be found at www.fareastenergy.com.

Additional Information Regarding Estimates of Contingent Resources
Contingent resources do not constitute SEC reserves and are defined as those quantities of petroleum which are estimated, as of a given date, to be potentially recoverable from known accumulations, but for which the applied project is not yet considered mature enough for commercial development because of one or more contingencies.  Contingent resources are further categorized in accordance with the level of certainty associated with the estimates and may be sub-classified based on project maturity and/or characterized by their economic status.  2C represents the mid-level of certainty for contingent resources.  The estimates in the RISC report were prepared in accordance with the definitions and guidelines set forth in the 2007 Petroleum Resources Management System approved by the Society of Professional Engineers.  The resources shown in the RISC report are estimates only and should not be construed as exact quantities.  Readers are urged to read the report in its entirety.

NPV10 for contingent resources may be considered a non-GAAP financial measure as defined by the SEC.  Because the standardized measure of discounted future net cash flows applies only to proved reserves, there are no directly comparable US GAAP financial measures to NPV10 for contingent resources.  NPV10 is computed on the same basis as the standardized measure of discounted future net cash flows for proved reserves but using the specified amount of contingent resources, as applicable, without deducting future income taxes and using estimates of future gas prices.  We believe NPV10 for contingent resources is a useful measure for investors for evaluating the relative monetary significance of our CBM properties. We further believe investors may utilize NPV10 for contingent resources as a basis for comparison of the relative size and value of our contingent resources to other companies that report similar information.  Our management uses this measure when assessing the potential return on investment related to our CBM properties and acquisitions.  However NPV10 for contingent resources is not a substitute for the standardized measure of discounted future net cash flows for proved reserves.  NPV10 for contingent resources does not purport to present the fair value of our proved CBM gas reserves or our contingent resources.

NPV10 for the contingent resources amounts above represent the present value of estimated future revenues to be generated from the production of the specified amounts of contingent resources, calculated using the assumptions set forth in the RISC report, without giving effect to non-property related expenses such as general and administrative expenses, debt service and depreciation, depletion and amortization, or future income taxes and discounted using an annual discount rate of 10%.

Far East Energy cautions that the disclosures shown above are based on estimates of contingent resources and future production schedules which are inherently imprecise and subject to revision, and the 10% discount rate is arbitrary.  In addition, costs and prices as of the measurement date are used in the determinations, and no value may be assigned to contingent resources.  Estimates of economically recoverable contingent resources and of future net revenues are based upon a number of variable factors and assumptions, all of which are to some degree subjective and may vary considerably from actual results. Therefore, actual production, revenues, development and operating expenditures may not occur as estimated. The contingent resources data are estimates only, are subject to many uncertainties, and are based on data gained from production histories and on assumptions as to geologic formations and other matters.  Actual quantities of CBM may differ materially from the amounts estimated.

The United States Securities and Exchange Commission ("SEC") permits oil and gas companies, in their filings with the SEC, to disclose only proved, probable and possible reserves as defined in U.S. Securities and Exchange Commission (SEC) Regulation S-X Section 210.4-10(a).  We use certain terms in this news release, such as "contingent resources" and "NPV-10," that are not permitted to be included in filings with the SEC.  Investors are urged to consider closely the disclosure in our Form 10-K, File No. 0-32455, available over the Internet at the SEC's website at http://www.sec.gov.

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

Resource Investment Strategy Consultants (RISC)
RISC is a resource industry consulting firm that has provided consulting services to some of the largest energy companies in the world.

Statements contained in this press release that state the intentions, hopes, estimates, 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: the preliminary nature of well data, including permeability and gas content; there can be no assurance as to the volume of gas that is ultimately produced or sold from our wells; the fracture stimulation program may not be successful in increasing gas volumes; 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 ("CUCBM"), to which we are an express beneficiary; additional wells may not be drilled, or if drilled may not be timely; additional 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; 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; our inability to extract or sell all or a substantial portion of our reserves and other resources; we may not satisfy requirements for listing our securities on a securities exchange; 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 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and subsequent filings with the Securities and Exchange Commission.

SOURCE Far East Energy Corporation



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http://www.fareastenergy.com

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