Far East Energy Executes Signing Ceremony for Enhong and Laochang Blocks in China.

Business Editors

HOUSTON--(BUSINESS WIRE)--Dec. 17, 2002

Far East Energy Corporation (OTCBB:FEEC) (Berlin:FEN) announced today that on Dec. 3, 2002, China United Coalbed Methane Co. Ltd. (CUCBM) and Far East Energy Corporation have signed the contract for cooperative exploration and development of coalbed methane (CBM) resources in the Enhong and Laochang areas of southern China's Yunnan Province. This follows the announcement on Nov. 26, 2002 by Far East Energy that the signing was to take place in Beijing, at the People's Great Hall in the People's Republic of China and attended by senior executives from Far East Energy, CUCBM, ConocoPhillips, ChevronTexaco and other governmental dignitaries in Beijing.

The CBM Production Sharing Contract (PSC), covering a 1,072 square kilometer (264,897 acre) project area near Qujing city, is the first of its kind in the Yunnan province to be signed with foreign partners. The province has abundant coal and CBM resources, and Far East Energy will contribute to its development, according to Huang Zhida, President of CUCBM. Currently, there is no production of conventional hydrocarbons in the province. Mr. Zhida also noted that the development and utilization of local CBM resources from the Enhong and Laochang areas can take pressure off the shortfall of gas supply, and will be helpful in accelerating the development of the local energy industry and economy.

Far East Energy is committed to drilling five exploration wells and eight pilot development wells during the next three-year exploration and production period. In the development and production period, both parties will make a joint investment and the profits from CBM production will be shared. The PSC covers a thirty-year relationship in which Far East Energy has a 60% interest and CUCBM has a 40% interest in the contract.

As stated by Mr. Zhida, it is estimated that the coalbed methane resources in Yunnan exceeds 450 billion cubic meters (15.75 trillion cubic feet), and 140 billion cubic meters (4.9 trillion cubic feet) is estimated to be found in the contract areas of the Enhong and Laochang blocks. China, with a total of 30-35 trillion cubic meters (1,060 tcf - 1,236 tcf) of CBM resources within a depth of 2,000 meters, is the second country after the United States, to conduct large-scale surface development.

CUCBM, which was established as a 50/50 joint venture between China National Petroleum Corporation (CNPC) and China Coal Construction Group Corporation in 1996, is the only professional organization authorized by the State Council which is responsible for exploration, development, production and sales of CBM, and the only company with the right to explore CBM in cooperation with foreign partners. So far, it has signed 14 PSC's with foreign companies, covering a combined contract area of 26,000 square kilometers (approx. 6,424,740 acres) and CBM resources of 2.5 trillion cubic meters (88.29 trillion cubic feet).

Headquartered in Houston, Far East Energy Corporation (OTCBB:FEEC) (Berlin:FEN) is an independent energy company engaged in the acquisition and development and utilization of clean energies, and has set a business strategy with an objective to achieving success in exploration, development, production and utilization of China's coalbed methane and coal mine methane natural gas resources.

This News Release may contain forward-looking statements relating to future plans, events or other matters. Such statements involve numerous risks and uncertainties. Actual events may differ materially. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this News Release.

No obligation is undertaken to release revisions to these forward-looking statements to reflect events or circumstances after the date of this News Release. Further information about the risks and uncertainties faced can be found in applicable filings with the Securities and Exchange Commission.