Far East Energy Announces Major Production Milestone (1 Million Cubic Feet Per Day) and Closes Registered Direct Placement

HOUSTON, August 26, 2010 - Far East Energy Corporation (OTC Bulletin Board: FEEC) announced today
that gas production from the Shouyang Block in Shanxi Province, China, has
surpassed one million cubic feet per day.

"We are very pleased to have reached this significant production
milestone," said Michael R. McElwrath, President and CEO of Far East. "In the
past eight months, production has doubled, and more importantly, based on
historical production data of other properties with similar characteristics,
we would expect it to double again - and to perhaps triple - in the next four
months. Our pilot area has reached the stage at which high permeability coal
seams often begin to exhibit geometric production increases, and we are
hopeful that we will see that kind of growth in production by year-end."

The Company also announced that, on August 25, 2010, it completed the
sale of approximately 105.5 million shares of common stock at a price of
US$0.33 per share for aggregate gross proceeds of over US$34 million in a
registered direct offering.

"Not only are we pleased with the quality of the investor group, which
consists primarily of several large, long-only mutual funds, but we are also
pleased that the funds were raised at a minimal discount to market and with
no warrants," said McElwrath.

"We are receiving these funds at an inflection point in the Company's
history with the rising gas production and the recent completion of the
Shanxi Province Guoxin Energy Development Group Limited (SPG) pipeline
through the Shouyang Block. We intend to use the proceeds to complete our
in-field gathering system and drill, complete and test new wells as we seek
to rapidly increase gas production in the Shouyang Block and prepare to
deliver gas under the SPG gas sales agreement," said Michael R. McElwrath.
"Our current development plans consist of drilling and completion of
approximately sixty (60) new wells in the Shouyang Block."

Far East Energy Corporation

Based in Houston, Texas, with offices in Beijing, Kunming, and Taiyuan
City, China, Far East Energy Corporation is focused on coal-bed 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 and China United Coalbed Methane
Corporation, Ltd., to which we are an express beneficiary; 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; certain of the proposed transactions with Arrow Energy
International Pte Ltd ("Arrow") 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 Arrow may not be
realized; the final amounts received by us from Arrow may be different than
anticipated; Arrow 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; the pipelines currently under consideration
may not be constructed, or if constructed may not be timely, or their routes
may differ from those currently anticipated; the pipeline and local
distribution/compressed natural gas companies may decline to purchase or take
our gas, or the timing of any definitive agreement may take longer than
anticipated and the terms may not as advantageous as expected; risk and
uncertainties associated with exploration, development and production of
coalbed methane; expropriation and other risks associated with foreign
operations; disruptions in capital markets effecting 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
SEC.

Bruce Huff, +1-832-598-0470, bhuff at fareastenergy.com, or David Nahmias, +1-901-218-7770, dnahmias at fareastenergy.com, or Catherine Gay, +1-832-598-0470, cgay at fareastenergy.com, all of Far East Energy Corporation