Far East Energy Announces December 31, 2010 Receipt of Initial Cash Payment for Gas

HOUSTON, January 10, 2011 /PRNewswire/ --

Far East Energy Corporation (OTC Bulletin Board: FEEC) announced today that on December 31, 2010, the Company's Chinese partner, CUCBM, received the initial cash payment for gas produced from the Shouyang Block in Shanxi Province, China. Thus, as previously projected, the first payment for Shouyang Block gas occurred before year-end 2010.

In accordance with the Gas Sales Agreement, Shanxi Guoxin Energy Development Group, the Purchaser, will prepay for gas volumes each month when volumes are nominated. In early December 2010, Far East nominated gas for delivery in January, covering gas anticipated to be produced from wells connected to the gathering system by year-end 2010. Final commissioning and initial delivery of gas is still scheduled to occur between January 15 and January 20, 2011.

Michael R. McElwrath, Far East CEO and President said, "We are pleased to continue the trend of delivering major milestones on schedule. 2010 was a banner year for Far East, and we will make every effort to assure that 2011 is even better."

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.

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 (the "Purchaser") and China United Coalbed Methane Corporation, Ltd. ("CUCBM"), to which we are an express beneficiary; we depend on CUCBM to remit our share of the payments received from the Purchaser under the gas sales agreement; 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; certain of the proposed transactions with Dart Energy (formerly Arrow Energy) 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 Dart Energy may not be realized; the final amounts received by us from Dart Energy may be different than anticipated; Dart Energy 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; risk and uncertainties associated with exploration, development and production of coalbed methane; 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 2009 Annual Report and subsequent filings with the Securities and Exchange Commission.