Far East Completes Fourth Horizontal Well in Shouyang Block

Far East Energy Corporation announced that it has completed drilling its fourth horizontal well, FCC HZ04, in the Shouyang Block of its Shanxi Province Project in China. The horizontal well bore was drilled 750 meters through the No. 15 coal seam and dewatering is expected to begin as soon as the necessary equipment is moved to the well site.

"We are very pleased to have the HZ04 well drilling process completed," said Michael R. McElwrath, CEO and President. "With our first horizontal coalbed methane wells, we believe we have discovered an uncommon and highly desirable combination of high permeability and high gas content. High permeability in conjunction with high gas content and sufficient pressure generally results in higher gas production rates sustainable over a longer period of time. The same high permeability that allows gas to move with greater ease through the coal and from greater distances to the well, also means that water can move to the well from greater distances and it will take longer to dewater.

"We believe the key to realizing the potential benefits of high permeability and to achieving maximum production at the earliest possible date is to drill a pattern of additional wells in the area of our first wells as rapidly as possible in order to accelerate dewatering. The HZ04 well is strategically located to take advantage of what we believe is a highly gas- saturated part of the coal seam. We believe this well is also aligned to benefit both the HZ01 and HZ03 wells in terms of dewatering, and we expect to drill the next Shouyang wells nearby in that same well pattern."

Far East Energy is finalizing plans to begin drilling the FCC HZ05 horizontal well adjacent to the HZ04 well to enhance what the company believes is the potential for gas production in that grouping of wells. The company expects to begin drilling on FCC HZ05 as soon as possible. The company expects to follow the HZ05 with several additional wells to be drilled nearby in that same well pattern.

China Acreage Overview

The Shouyang and Qinnan Blocks are part of the 4,280 square kilometer (1,057,650 acres) coalbed methane (CBM) project in Shanxi Province that Far East holds under farmouts from ConocoPhillips. Including its 1,073 square kilometer (264,970 acres) project in the Yunnan Province, the total coalbed methane concessions of Far East Energy are approximately 1.3 million acres, a landmass slightly larger than the State of Delaware.

Based in Houston, Texas, with offices in Beijing, Kunming, and Taiyuan City, China, Far East Energy Corporation is focused on the acquisition of, and exploration for, coalbed methane in China through its agreements with ConocoPhillips and China United Coalbed Methane Corp. Ltd. (CUCBM).


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