Our Company

About Our Company | FEEC Leadership

WHO WE ARE

Far East Energy Corporation (FEEC) was formed to acquire explore, develop, and produce, oil and gas, with heavy emphasis on coalbed methane which has emerged as a lower cost/lower risk/higher return resource. Our world headquarters is in Houston, Texas, and we have satellite offices in Beijing, Kunming and Taiyuan City, China.

CORPORATE HISTORY

FEEC began operations on December 31, 2001. The company's early efforts focused on the evaluation of domestic and global opportunities to develop natural gas and coalbed methane (CBM) natural gas properties.

Upon the completion of substantial examination and due diligence for CBM opportunities, FEEC, on January 25, 2002, entered into two Product Sharing Contracts (PSCs) with China United Coalbed Methane Company, Ltd. (CUCBM), which has exclusive authority over all coalbed methane gas in China. FEEC and CUCBM will jointly explore, develop, produce and sell CBM in a total area of 1,073 square kilometers, in Enhong and Laochang areas of Yunnan Province, People's Republic of China. It is estimated by the Yunnan Provincial Coal Geological Bureau that the joint venture area contains total gas-in-place in excess of 5.3 trillion cubic feet (Tcf) of methane gas. FEEC has the right to earn a minimum of 60% interest in the joint venture (with CUCBM having the election to participate and share in costs and production up to 40%).

On June 17, 2003, FEEC acquired its preeminent holdings, obtaining two farmout agreements from ConocoPhillips China Inc., covering over one million acres in the Shanxi Province of Northern China.

Based on estimates by ConocoPhillips China Inc. (Phillips) and Yunnan Provincial Coal Geology Bureau all of FEEC ’s project areas in China combined potentially contain 18.3 Tcf to 24.9 Tcf of total gas-in-place. Using a conservative recovery rate of 50%, recoverable CBM resources are potentially 9.2 Tcf to 12.5 Tcf (FEEC’s share is 5.9 to 12.2 Tcf depending upon CUCBM participation). We received final approval of the farmout agreements from the Ministry of Commerce in China in March 2004 and we are now proceeding with testing and drilling programs.

On January 25, 2002, we entered into one PSC with CUCBM to develop two areas in the Yunnan Province: (1) the Enhong area, which covers approximately 145,198 acres and (2) the Laochang area, which covers approximately 119,772 acres. We are the operator under the PSC. The term of the PSC with CUCBM consists of an exploration period, a development period and a production period. The exploration period is divided into two phases, Phase I and Phase II. We have completed Phase I. The Phase II portion of the exploration period will expire on June 30, 2007, unless extended. CUCBM has agreed in principle to extend the exploration period for both blocks from June 30, 2007 to June 30, 2009, contingent upon our performance of certain drilling activities in the first half of 2007. Following completion of Phase II of the exploration period, we may elect to continue the PSC and conduct development and production operations on any CBM discoveries. The development period as to any CBM field in the Enhong-Laochang project will begin after the approval of a development plan submitted by us with respect to that field by the State Council of the People’s Republic of China and confirmed by CUCBM. The production period as to any CBM field in the Enhong-Laochang project will begin after the date of commencement of commercial production of that CBM field. Our agreement with CUCBM expires on January 1, 2033.

In June 2003, we entered into two farmout agreements and assignment agreements with Phillips pursuant to which we acquired a 40% net undivided interest from Phillips in two PSCs between Phillips and CUCBM for the Shanxi Province (Shanxi Agreements). The Shanxi Agreements cover a total of 1,057,650 acres. The project area covered by the first PSC is located in the Shouyang Block of the Shanxi Province (northern block near Taiyuan City encompassing approximately 485,000 acres), which we refer to as the Shouyang PSC. The project area covered by the second PSC is located in the Qinnan Block of the Shanxi Province (southern block near Jincheng and Quinshui encompassing approximately 572,000 acres), which we refer to as the Qinnan PSC. The assignment agreements and related amendments to the farmout agreements substituted us for Phillips as the principal party and operator for the projects under the PSCs. These agreements were approved by CUCBM on March 15, 2004, and ratified by the People’s Republic of China’s ministry of Commerce (MOC) on March 22, 2004.

The term of each of the Shanxi Agreements consists of an exploration period, a development period and a production period. The exploration period is divided into three phases called Phase I, Phase II, and Phase III. We have completed our Phase I and Phase II obligations under the Shanxi Agreements and elected to enter into Phase III. The Phase III exploration periods under each of the two Shanxi PSCs will expire on June 30, 2007 unless extended. CUCBM has agreed in principle to extend the exploration period under the Shanxi Agreements from June 30, 2007 to June 30, 2009, and CUCBM’s obligations under this agreement in principle are contingent upon our performance of certain drilling activities in the first half of 2007. The development period as to any CBM field in the Shanxi Province project will begin after the approval of an overall development plan, submitted by us with respect to that field to the State Council of the PRC and confirmed by CUCBM. The production period as to any CBM field in the Shanxi Province project will begin after the date of commencement of commercial production of that CBM field. Our agreement with CUCBM expires on April 1, 2034.

Our work commitment to complete Phase III in the Shanxi Province consists of a total of 12,000 meters of horizontal drilling in the coal seam. This obligation can be met by combining the drilling results in the Shouyang and Qinnan Blocks. The wells we have drilled as of March 9, 2007 total approximately 7,100 meters of horizontal drilling in coal seam. Therefore, as of March 9, 2007 we will be required to drill additional wells to fulfill the 12,000 meter obligation.