Far East Energy Announces Bank Financing for 2012 Development Programs

HOUSTON, December 5, 2011 -

Far East Energy Corporation (OTCBB:FEEC) announced today the closing of a $25 million loan facility with Standard Chartered Bank.  The Facility Agreement (”Agreement”) provides for a $25 million credit facility to be used for project costs with respect to the Shouyang Area in Shanxi Province, China, as well as for general corporate purposes.  The Agreement has an initial 9-month term ending August 28, 2012, which may be extended by three (3) months upon satisfaction of certain other conditions.  Far East made an initial draw of $17.87 million in anticipation of first half 2012 operations and to pay finance costs and related expenses, and additional draws may be made under the Agreement in amounts specified from time to time.

“We are gratified that the Shouyang project has sufficiently progressed to be able to attract capital without diluting existing shareholders,” stated Michael R. McElwrath, Chairman and CEO of Far East Energy.  “This capital can carry us deep into 2012 or, potentially, to the point of entry into a joint venture or other strategic alliance should we determine that a partnership with a major industry player would further accelerate development and optimize shareholder value.”

Far East recently announced the signing of a Modification Agreement to its Shouyang Production Sharing Contract (PSC), which, upon approval by the Ministry of Commerce, will extend the exploration period of its Shouyang PSC.  “With the signing of the extension and the availability of this loan facility, we have cleared our biggest remaining hurdles while preserving shareholder value; and we have the running room necessary to tap Shouyang’s vast potential,” said McElwrath.  “Standard Chartered is one of the leading banks in the world with a very strong Asian presence and expertise in the energy sector, and we are grateful for their support in developing the coalbed methane resources in the Shouyang Area.” 

“China is one of Standard Chartered’s most important markets, where we combine our long history and deep local knowledge with our international network and capabilities.  We are committed to our relationship with Far East Energy Corporation and are pleased to support our client in executing on their strategy in the coalbed methane market in China,” said Peter Gaw, Global Head of Oil & Gas, Standard Chartered.  

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. For more information please visit, www.fareastenergy.com.

Standard Chartered - leading the way in Asia, Africa and the Middle East

Standard Chartered is a leading international banking group. It has operated for over 150 years in some of the world’s most dynamic markets and earns more than 90 per cent of its income and profits in Asia, Africa and the Middle East. This geographic focus and commitment to developing deep relationships with clients and customers has driven the bank’s growth in recent years. Standard Chartered PLC is listed on the London and Hong Kong stock exchanges as well as the Bombay and National Stock Exchanges in India.

With 1,700 offices in 70 markets, the group offers exciting and challenging international career opportunities for around 85,000 staff. It is committed to building a sustainable business over the long term and is trusted worldwide for upholding high standards of corporate governance, social responsibility, environmental protection and employee diversity. Standard Chartered’s heritage and values are expressed in its brand promise, ‘Here for good’.

For more information please visit www.standardchartered.com

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; the fracture stimulation program may not be successful in increasing gas volumes; 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 and China United Coalbed Methane Corporation, Ltd., to which we are an express beneficiary; additional wells may not be drilled, or if drilled may not be timely; additional 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; the Chinese Ministry of Commerce (”MOC”) may not approve the extension of our production sharing contracts (”PSCs”) on a timely basis or at all, or, if so, on commercially advantageous terms; the MOC’s failure to approve the extension of the Shouyang PSC by March 1, 2012 could limit the Company’s ability to borrow additional amounts under the credit facility; the MOC’s failure to approve the extension of the Shouyang PSC by May 30, 2012 could result in the early termination of the credit facility and require immediate repayment of all outstanding amounts thereunder; the Company’s inability to comply with certain quarterly financial covenants, satisfy certain continuing representations, or remedy a material adverse effect to the business of the Company or to certain other conditions could result in early termination of the credit facility and require immediate repayment of all outstanding amounts thereunder; the total amounts we may borrow from Standard Chartered Bank may be different than anticipated;our Chinese partner companies or the MOC may require certain changes to the terms and conditions of our PSCs in conjunction with their approval of any extension of our PSCs, including a reduction in acreage; 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; proved reserves may not be reported in a timely manner or at all and, if reported, may be smaller than anticipated; our inability to extract or sell all or a substantial portion of our estimated Contingent Resources; we may not satisfy requirements for listing our securities on a securities exchange; 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 2010 Annual Report and subsequent filings with the Securities and Exchange Commission.

Investor Relations, +1-281-606-1600, Investorrelations at fareastenergy.com, or Bruce Huff, +1-832-598-0470, bhuff at fareastenergy.com, or Catherine Gay, +1-832-598-0470, cgay at fareastenergy.com, all of Far East Energy Corporation