HOUSTON, December 22 /PRNewswire/ -- Far East Energy Corporation through its wholly owned subsidiary Far East Energy (Bermuda), Ltd. (FEEB), and Arrow Energy International Pte Ltd (AEI), will continue until further notice their Farmout Agreement whereby, subject to the satisfaction of certain conditions, Arrow would farm-in to a 75.25% operating interest in FEEB's interest in the Qinnan Coalbed Methane Production Sharing Contract, in Shanxi Province, China. In March 2009, AEI invested US$10 million in FEEB, through an exchangeable note investment, and simultaneously entered into the Farmout Agreement. Interest on the note is accruing at a rate of 8% per annum, effective October 16, 2009, and the note matures in mid-March 2011. The note remains exchangeable at AEI's option at any time prior to maturity, based on a price of 47.5 cents (US) per share of Far East Energy stock, although the warrant issued in connection with the transaction has expired in accordance with its terms.

The Farmout Agreement may be terminated at any time by FEEB or AEI by written notice to the other party. Neither FEEB nor Arrow has indicated any intention of serving such notice, and the parties are in discussions as to possible additional or alternative ways to cooperate.

About Far East Energy Corporation

Based in Houston, Texas, with offices in Beijing, Kunming, and Taiyuan City, China, Far East Energy Corporation is focused on CBM 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: pipelines may not be constructed or their routes may differ from those mentioned; pipeline and local distribution/CNG companies may decline to purchase or take our gas; the gas produced at our wells may not increase to commercially viable quantities or may decrease; we may have insufficient capital to develop the Shouyang field; weather may significantly delay the planned drilling program; wells may be damaged or adversely impacted during the production process, resulting in decreases in the amount of gas produced, or that can be produced; certain proposed transactions with 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 transactions with Arrow may not be realized; the final amounts received by us from Arrow may be different than anticipated; Chinese Ministry of Commerce (MOFCOM) may not approve the extensions of the Qinnan Production Sharing Contract (Qinnan PSC) on a timely basis or at all; PetroChina or MOFCOM may require certain changes to the terms and conditions of the Qinnan PSC in conjunction with their approval of any extension; our lack of operating history; limited and potentially inadequate management of our cash resources; risk and uncertainties associated with exploration, development and production of CBM; 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 Annual Report on Form 10-K for2008 and subsequent filings with the Securities and Exchange Commission.

SOURCE: Far East Energy Corporation

CONTACT: David Nahmias, +1-901-218-7770, dnahmias@fareastenergy.com, orBruce Huff, +1-832-598-0470, bhuff@fareastenergy.com, or Catherine Gay,+1-832-598-0470, cgay@fareastenergy.com, all of Far East Energy Corporation