Far East Energy Obtains Gas Development Rights in Guizhou Province of China.

Business Editors

HOUSTON--(BUSINESS WIRE)--June 5, 2002

Far East Energy Corporation (OTC:FEEC) announced today the formal signing of a twenty (20) year contract to extract coal mine methane hydrocarbon gas in the Guizhou Province of the People's Republic of China (PRC) in cooperation with Panjiang Coal-Electricity (Group) Co. Ltd. ("Panjiang"), one of China's largest industrial companies, and the largest coal mining company in southern China.

Under this agreement, Far East Energy has been granted the exclusive rights to extract and sell coal mine methane hydrocarbon gas from six operating mines covering 120 square kilometers or (29, 653 acres) which contains an estimated gas resources of 24.4 billion cubic meters (or 861 billion cubic feet) which is 100% owned by Panjiang. Far East Energy will have a 100% participation in the project for the first seven (7) years, 90% in year eight (8), 80% years 9-16, and 50% years 17-20. In exchange for these participation rights Far East Energy will pay USD $3.3 million to Panjiang, which will be spread out over a three-year period. These funds will be utilized by Panjiang to support pipeline and other infrastructure costs to deliver gas for local residential usage.

Far East Energy's Chairman & CEO, Lal Gondi, stated, "We are extremely pleased to announce our continued success in acquiring strong assets in the southern provinces of China. We continue to focus on gaining market share for natural gas properties in China as the demand for natural gas and hydrocarbons is extremely high and shows signs of continued growth. This is an exciting event for both our team and our shareholders."

Far East Energy plans to use the methane gas as a feedstock for local ammonia production with additional plans to provide gas to pipelines for residential and commercial use to nearby cities. The southern Provinces of China are agriculturally rich, which drives heavy demand for ammonia and fertilizer. Currently, coal is the primary feedstock for ammonia production in the China, which results in a lower nitrogen-based fertilizer and is less desirable. When natural gas is used, a higher nitrogen-based ammonia and fertilizer can be produced. The demand for higher nitrogen-based products continues to rise, and Far East Energy should benefit as a result of this growing demand.

Bill Jackson, President and COO also stated, "This contract further emphasizes our company's commitment and ability to seek out strategic opportunities in China with a clear focus on shareholder returns. Our ability to reduce harmful greenhouse gas emissions, improve safety at the mines and to successfully negotiate commercial contracts truly positions Far East Energy as an energy leader in the Asian market. Through our existing contracts, the experience of our team and our ability to develop and execute projects, we believe Far East Energy is well-positioned for the future."

Joe Cooper, VP of CBM Operations also stated, "Based on my analysis and the recent review of this field by the United States EPA and Raven Ridge Resources Inc., the Panjiang agreement in Guizhou offers a clear path to natural gas reserves for Far East Energy and gives us an opportunity to accelerate our production schedule. This agreement in combination with our Yunnan agreements truly fits well into our strategy. We are very optimistic and eager to move forward with developments."

In recent news, Far East Energy announced the acquisition of coalbed methane hydrocarbon gas rights to 1,330 square kilometers (329,000 acres) through two production sharing contracts in the Yunnan Province of China, which is an adjoining Province to the west of the Guizhou Province. In those contracts Far East Energy has a 60% interest in the properties in partnership with China United Coalbed Methane Co. Ltd. (CUCBM), which has a 40% interest in the contracts. China considers the development of coal bed methane and coal mine methane properties in China as a strategic initiative, and CUCBM has formed similar production sharing relationships with Texaco (NYSE:CVX), Amoco, Phillips Petroleum (NYSE:P), Virgin Oil, British Petroleum (NYSE:BP), and other global energy leaders. It is estimated by the Yunnan Provincial Coal Geological Bureau that Far East Energy's production sharing area contains a potential resource in excess of 6.3 gross trillion cubic feet of methane gas, and a net 3.78 trillion cubic feet.

Together, Yunnan and Guizhou Provinces represents an opportunity of 4.64 net trillion cubic feet of hydrocarbon gas for Far East Energy.

Far East Energy Corporation is an independent energy company engaged in evaluation, acquisition, exploration and development of natural gas, coalbed and coal-mine methane gas properties.

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.