Far East Energy - Corporate Presentation January 2014

Far East Energy Corporation
January 2014
Leading the way in high-perm China CBM

 Excellent way to play the opportunity presented by China’s strong gas demand and rising price profile
 Large, high permeability/high gas content block; strong proven reserves; high gas price and
exceptional access to market
 High Permeability – only large block so far in China with this critically important technical parameter
 Not necessary to drill high risk and expensive, multi-lateral horizontal wells
 Only Chinese CBM play where robust economics are probable
 Reserves - PRMS net 2P (proved + probable) reserves of 440.8 Bcf (12.5 Bcm); PV-10 2P US $2.1 billion
 High gas price – now at RMB 1.95/m3 (including the current subsidy of 0.25 RMB/m3 ) this is equivalent
to ~$9.12/Mcf via a 20 year take-or-pay pipeline contract. Subsidy increase to 0.6 RMB/m3 announced,
with expected implementation this year – would increase received price to ~$10.99/Mcf (RMB
2.35/m3)
 Exceptional offtake potential – 325 MMcf/d (9.2 MMcm/d) of offtake capacity has been installed by
provincial gas companies, in the vicinity of Shouyang (pipelines, power and LNG).
1
Shouyang – leading the way in high-perm China CBM

2
Shouyang Block Location Map
Qinshui Basin in Coal-Rich Shanxi Province
FEEC operates 1,168 km2
(288,570 ac)

Favorable Shouyang PSC
 PSC area is approximately 1203 km2 (297,242 acres), expiring in 2032 with approximately 1168 km2 (288,570 acres) operated by Far East
Energy (one of the largest PSCs in China)
 Far East has 100% interest in the current production/gas sales area (Area A1, certified by the Chinese Ministry of Land and Resources
(MLR) of 64.7 km2 (15,978.7 acres)
 Far East’s Area A1 is in the ODP process and will be held until expiration of the PSC on June 30, 2032
 Exploration period for the remaining 1103.1 km2 (272,582 acres) extended to June 30, 2016
 70% Far East /30% CUCBM split in remaining 1103 km2 (272,581 acres)
 CUCBM pays 30% development costs; FEEB recovers all exploration costs out of production
 ConocoPhillips has 3.5% Revenue Interest out of FEEC share
 PRC royalty is zero until reaching 50 MMcf/d (1.416 MMcm/d) of gas production, and up to 3% after reaching 500 MMcf/d
(14.16 MMcm/d)
3
Shouyang Production Sharing Contract Area
Taiyuan

SEC and PRMS Reserve Reports
Prepared by RISC as of 12/31/2012
4
SEC Reserve Report 12/31/2012 PRMS Reserve Report 12/31/2012
SEC Net Reserves Bcf (Bcm) PRMS Net Reserves Bcf (Bcm)
SEC Total Proved (1P) 51.3 (1.5) PRMS Total Proved (1P) 303.7 (8.6)
SEC Total Probable 392.4 (11.1) PRMS Total Probable 137.1 (3.9)
SEC Total Net 2P (Proved + Probable) Reserves 443.7 (12.6) PRMS Total Net 2P (Proved + Probable Reserves) 440.8 (12.5)
SEC Reserve Report 12/31/2012 PRMS Reserve Report 12/31/2012
SEC Future Cash Flow NPV-10 ($millions) PRMS Future Cash Flow NPV-10 ($millions)
SEC NPV-10 Proved (1P) $40.4 PRMS NPV-10 Proved (1P) $1,084.5
SEC NPV-10 Probable $775.7 PRMS NPV-10 Probable $966.0
Total 2P (Proved + Probable) NPV-10 $million $816.1 Total 2P (Proved + Probable) NPV 10 $2,050.5
Standardized measure of discounted future net cash flows
for SEC proved oil and gas reserves and the NPV10%
valuation for proved reserves is $40.4 million
Note: YE2013 Reserve Report is in progress

5
SYS-02
Perm: 300+ mD
Gas Content: 529 scf/ton
Approx Depth: 1320 m
1H Pilot Area
Perm: 80-100 mD
Average Depth: Approx 600 m
Average Gas Content: 400-600 scf/ton
Average Thickness: 3-4.5 m
SYS-05
Perm: 12 mD
Approx Depth:1420 m
SY-P12
Perm: 10 mD
SY-P9
Approx Depth: 828 m
SY-P20
Perm: 20 mD
SY-P17
Approx. Depth: 1241 m
SY-P7
Perm: 140 mD
Approx Depth: 540 m
SY-P13
Perm: 120 mD
Approx Depth: 645 m
SY-P11
Perm: 50 mD
SYS-03
SYE-06
Perm: 11 md
Approx Depth:1300 m
High Perm and Gas Content Across Entire Shouyang Block
SYSE-09
Perm: 20 mD
SYSE-05
SY-P18
Perm: 15 mD
SY-P19
SYE-04
SYE-18
Approx Depth:1300 m
SYE-07

Resource Investment Strategy Consultants (RISC) (Most
recently, April 2013) (Report on YE 2012 Reserves considered all
wells completed through 12/31/2012)
“Data from well tests and performance analysis indicates coal
permeability is in the range 10 to 300 millidarcies (mD) with an
average permeability of approximately 50 mD.”
RISC has participated in all of the CBM projects in Australia
and is one of the leading engineering groups in the world
for CBM.
High Permeability Confirmed
by CBM Experts
MHA Petroleum Consultants LLC (May 2013)
“Permeability in the area we evaluated varies from 28 to 110 mD.”
MHA is located in the Rocky Mountains and has worked
extensively on the San Juan, Raton, and Powder River
Basins (all high permeability CBM plays).
Energy & Geoscience Institute (EGI) at the
University of Utah (May 2013, work in progress)
Commenting on our Shouyang Block, “Preliminary results from
our study concur that perm in the area is at least 25 mD and
likely higher in portions of the block.”
Largest E&P research consortia at any university
worldwide. 70 member companies including PetroChina,
CNOOC, Shell, BP, Exxon, Chevron, ConocoPhilips, Saudi
Aramco, Statoil, Total.
7

8
High Permeability Confirmed
by CBM Experts
Ancell Energy Consulting, Inc. (2012)
“I have always believed that the most accurate reservoir permeability can be
determined during the single phase flow period because it eliminates many
unknowns ...that crop up during two phase flow...I believe the permeability (of
Shouyang) is in the range 80 to 120 mD.”
“I also spent over a year very successfully simulating Chinese anthracite coals that
have permeability on the unit range using these same techniques...I know the
permeability is higher than the less than 10 md present in all the other places I have
seen in China...I would not be associated with this project if I didn’t really believe
that. The prize here will be worth the effort.”
Inventor of the IFO test. Developer of the world’s
first reservoir simulator for CBM. One of the world’s
leading CBM reservoir engineers.
Netherland, Sewell & Associates (June 2007)
“Well deliverability and pressure data were reviewed in order to qualitatively
estimate the permeability of Coal Seam 15. In our opinion, Coal Seam 15 contains
high permeability, on the order of 100 millidarcies...”
“...the high permeability of the coal will likely enable appreciable amounts of gas to
be produced.”
“High permeability associated with Coal Seam 15 may allow for high recovery
efficiencies and relatively large drainage areas per well...”
NSAI is chosen by more companies to evaluate more
CBM properties than any other petroleum consulting
firm in the world.
Advanced Resources International, Inc. (July 2008)
“Based upon our analysis of the reservoir and well performance data described in
this report, we conclude that several coal properties needed for commercial gas
production exist in the pilot area. These include coal permeability (80-120 mD),
thickness and gas content (approximately
500 scf/ton on a dry, ash-free basis...)”
ARI was one of the worldwide pioneers in CBM
engineering and geoscience (1970s) and is recognized
as one of the leading CBM expert centers in the
world.

High Permeability Yields
Superior Economics
Shouyang High Perm is a Differentiating Factor in China
Many coal reservoirs in China have very high gas content,
but few also have the benefit of high permeability,
with none, so far, as high as Shouyang
 Coal reservoirs with high perm have a greater propensity for producing at higher levels relative to low
permeability seams
 Higher perm allows wells to maintain production for longer periods of time, enabling higher gas recovery rates,
and fewer wells can drain the same acreage, resulting in superior economics
 Similar discoveries in Black Warrior and San Juan Basins led to the incredible growth of the CBM industry in the U.S.
 Combination of high perm and high gas content are the characteristics that a major is looking for in a CBM play
9

Resource Comparisons
Technical data suggests that the
company’s Shouyang acreage compares very well
to premier U.S. CBM plays
San Juan Black Warrior Shouyang
Coal Gas Content, scf/ton
(m3/ton)(b)
400-500
(11.33-14.16)
350-500
(9.91-14.16)
400-1050(a)
(11.33-29.8)
Coal Thickness: Typical Net Coal, feet
(m)(b)
40
(12)
5
(1.5)
10-33
(3-10)
Pressure (psi)
(MPa)(b)
1500
(10.3)
400
(2.8)
400
(2.8)
Permeability (mD)(b) 25 75 50(d)
Recovery Factor, %(c) 80 65 70-87
Note: Actual results are likely to vary from the following preliminary estimates, which are based on various assumptions
Notes:
a. Based on recent gas content test results from several pilot development test wells.
b. Source: Data on U.S. Basins from John P. Seidle, Sproule Associates, Inc. and Southwest Partnership on Carbon Sequestration.
c. Source: MHA Petroleum Consultants LLC, May 2013.
d. Permeability in Shouyang ranges from 10-300 mD with an average of 50 mD according to RISC.
10
Units of Measure:
scf/ton = Standard cubic feet per ton m3/ton = Cubic meters per ton
Psi = Pounds per square inch MPa = megapascal
mD = Millidarcy

11
Infrastructure and Gas Pricing

First Pipeline Contract for a
Foreign CBM Operator in China
20 year gas sales
contract with Shanxi
Provincial Guoxin
Energy Development
Group (SPG)
Flowing in a
pipeline with
1.13 million cubic
meters (MMcm/d),
40 million cubic
feet per day
(40 MMcf/d) of
capacity.
95 wells currently
connected to sales
line. Additional
wells are being
connected.
Current wellhead price
including current
subsidies is 1.95
Rmb/m3, which could
rise to 2.35 Rmb/m3
(when announced
subsidies are
implemented)
Recently
negotiated gas
sales price increase
to 1.70 Rmb/m3
(inclusive of VAT)
(~$7.95) + current
government
subsidies of 0.25
Rmb/m3 (~$1.17)
which is
~$9.12/Mcf.
Announcement
made 11/2012 to
increase
government
subsidy to 0.6
Rmb/m3 bringing
gas price to
~$11.00/Mcf
Favorable “take-or-
pay” contract terms
Pipeline must
“take” all gas
produced up to
300,000 m3/d (10.6
MMcf/d), or pay
for available
volumes not taken.
Company has no
minimum delivery
obligation.
Ability to renegotiate
contract for volumes
in excess of
300,000 m3/d
Setting stage for
strong competitive
bidding for selling
gas into second
pipeline built to
the area.
Additional gas off-
take possibilities
Second pipeline
built to our block
presents possibility
of even higher
prices as two lines
may compete for
Far East Energy’s
gas; power plant,
LNG facility and
chemical plant are
all in progress and
near our 1H pilot
area
12

Pipeline Off-Take and
Potential Additional Capacity
Current/Potential Off-Take Capacity (Approximations)
Market
Million Cubic Feet Per Day
(MMcf/d)/
(MMcm/d)
Current Contract with
SPG Pipeline (PL)
40/1.13
SPG Parallel PL(1) 50/1.42
Shanxi International PL(1)
(completed)
190/5.38
Power Plant(1)
(under construction)
25/0.71
LNG Facility(1)
(under construction)
20/0.57
Total Near-Term
Off-Take Potential
325/9.20
(1) Volumes stated represent maximum amounts that could potentially be contracted to these facilities. Preliminary discussions only; no formal contractual discussions to date. 13
View from hill - LNG facility
and power plant construction
Power plant north of our
2nd stage compressor

14
2013 Drilling Program Highlights

2013 Drilling Program Complete
Field Report as of 12/31/2013
15
SPUD IN 2013
COMPLETED
IN 2013
GATHERING SYSTEM
EXPANSION
in 2013
PEAK RIGS
IN FIELD
74 wells
47 production
27 appraisal
56
47 production
9 appraisal
95 wells
now connected
Up from 54 wells at
YE2012
31 rigs
June 2013

Increase Production, Gas Sales, Revenues
16

Contacts
Website
www.fareastenergy.com
Investor Relations Contacts
Jennifer H. Whitley – CFO
David Nahmias – Investor Relations
Huw Williams – Investor Relations, Asia
investorrelations@fareastenergy.com
+ 1 281 606 1600
Corporate Headquarters
333 N. Sam Houston Parkway E., Suite 230
Houston, Texas 77060
Telephone: +1 832 598 0470
18

“A Critical Mass of Wells is Necessary to Dewater
and Achieve Significant Production Increases”*
 Virtually all world-class CBM fields
have high permeability
 High perm is important to facilitate
robust economics
 The key is to drill enough wells to
get the core area dewatered
 The examples on the right show the
timelines for several well-known
world class projects
 Companies with large financial
resources took from 4 to 8 years and
as much as 21 to 110 wells to achieve
significant gas production.
 100+ wells may be required, but per
well gas production should be very
high.
 Black Warrior Basin (Alabama Brookwood)
1977 - first well drilled
1982 – first gas sold
1985 – first monetization
 Bowen Basin (Fairview Australia)
1993 - first well drilled
1998 - first gas sold
2005 (late) - first monetization
2008 - second large monetization
 San Juan Basin (Fruitland Coal, Colorado and
New Mexico) - Amoco
1977 – first coal well drilled
1982 (approximate) – first gas sales
 Powder River Basin (Montana/Wyoming) -
Marathon - drilled 100 wells in 15 months with no
appreciable gas production during that period. After a
few more months and another 10 wells, production
began to climb at a rate of 1 million cubic feet
(28,320 m3) per day per month. In other words,
Marathon had to have 100+ wells that had achieved
significant dewatering before gas production ramped up
substantially.
*Ancell Engineering, October 2009.
20

High Perm Development
Marathon Case Study
21
Early Production History
Powder River Basin Project
Northwest Location Twp 53N Rge 77W
High perm economics unlocked by having sufficient
number of wells to dewater core area
Shouyang gas content is 4 to 8 times higher, potentially yielding commensurately higher gas volumes
Marathon drilled 100+ wells in 15 months before appreciable gas production.
After sufficient dewatering had occurred, production began to climb at a rate of
1 million cubic feet (28,320 m3) per day month over month.
Among known analogs, this project required the highest
number of wells to dewater and achieve a large gas spike.

Modest number of wells in first 6 years; 65 wells drilled and completed
through 12/31/2012
 Only 21 wells drilled from 6/2004 to 6/2009
 Only 45 wells will have been dewatering or producing gas for more
than 2 years as of 6/30/2013
 Historic analogs demonstrate it may require as many as 110 wells
(refer to previous slides) to dewater a virgin high permeability area
sufficiently to trigger onset of the typical major production ramp up
 Eventually all high permeability fields produce commercial quantities
of gas when dewatered, usually resulting in major production* and
superior economics
22
Measured Pace of Drilling
*Marathon field grew by 1 MMcf/d month over month after 110 wells were drilled

Source: EIA
China Energy Demand Projected Evolution, 2011-2030
Cumulative % change in projected energy mix (base year = 2010)
Source: Interfax, FEEC
 China has indicated intent to expand natural gas pricing
reform in the coming year
 Current price subsidy of $1.17/Mcf projected to increase to
approximately $3.04/Mcf
 100% refund of VAT tax
 PRC royalty set to zero until gas production exceeds
50 MMcf/d, and maximum PRC royalty of 3% after gas
production exceeds 500 MMcf/d
China CBM Incentives
Specifically incentivizing CBM development
Source: China Statistical Yearbook 2010
China Estimated Gas Resources
By type, 2010
 China is the world’s largest
consumer of energy, and its
growth in energy use is
projected to outstrip the rest
of the world
 Energy demand projected to
shift from coal to natural gas
and renewables:
 Gas demand projected to
double by 2017 and more
than quadruple by 2030
 China’s gas resources are
largely unconventional, and
CBM accounts for more than
one third total supply:
 China’s policy seeks to
specifically incentivize
development of CBM
resources via subsidies and
favorable fiscal terms
Source: WoodMackenzie, EIA
-1.2% -2.4% -3.2%
-4.4%
-5.6%
-7.0%
-8.2% -8.8% -9.4% -9.7% -9.6% -9.7% -10.0% -10.2% -10.6% -10.8% -10.9% -10.9% -10.9% -10.7%
1.0% 1.3% 1.3% 1.4% 1.5% 1.7% 1.8% 2.0% 2.0% 2.1% 2.3% 2.3% 2.4% 2.4% 2.5% 2.6% 2.7%
0.9% 1.4% 1.7% 2.4% 2.8% 3.2% 3.6% 3.6% 3.6% 3.5% 3.5% 3.4% 3.3% 3.3% 3.3% 3.4% 3.4%
0.9% 1.1% 1.4%
1.6% 1.9% 2.1% 2.3% 2.5% 2.6% 2.8% 2.9% 3.0% 3.1% 3.2% 3.4% 3.5% 3.6%
1.6%
1.9%
2.5%
2.6%
2.6% 2.4% 1.9% 1.6% 1.4% 1.5% 1.7% 1.9% 2.0% 1.9% 1.8% 1.4%
0.9%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Coal Natural Gas Renewables Nuclear Liquids
2011
Coal
60%
Gas
6%
Other
34%
Coal
71%
Gas
3%
Other
26%
China Projected Energy Mix
2010 2030
Conventional
2%
Conventional
Yet-to-Find
24%
Coalbed
Methane
35%
Shale Gas
29%
Tight Gas
10%
Total = 3,687 Tcf
Overview of Chinese Gas Market
Energy demand continues upswing, while gas increases in importance
23

More stringent coal standards may create an opportunity for the gas sector, with stricter environmental requirements and limits on coal
imports potentially driving up domestic prices and reducing the cost advantage of coal. (Interfax 5/31/2013)
Cities are adopting gas for power generation and heating in lieu of coal. The Beijing municipal government will ban coal use within the
fourth ring road – the city centre – by the end of this year, and within the sixth ring road by 2015. (Interfax 5/31/2013)
China – responsible for one-quarter of global carbon emissions – pledged as early as 2009 to cut carbon intensity by 40-45% from 2005
levels by 2020. The central government is counting on the displacement of coal by cleaner-burning fuels, such as
relatively low-carbon gas, to meet the target. (Interfax 5/23/13)
Chinese natural gas demand expected to double by 2017 and quadruple by 2030 (Gavin Thompson, Wood Mackenzie,
Head of Asia Pacific Gas Research, May 2012)
With gas demand increasing from just over 150 billion cubic meters (approximately 5.3 Tcf) now to more than 600 Bcm (approximately 21.2
Tcf) by 2030, China will have to rely on unconventional supplies such as CBM and coal-to-gas, as well as both piped
and liquefied natural gas (LNG) imports (Gavin Thompson, Wood Mackenzie, Head of Asia Pacific Gas Research, May 2012)
Coalbed methane, coal-to-gas to exceed shale gas production until after 2020 (Gavin Thompson, Wood
Mackenzie, Head of Asia Pacific Gas Research, May 2012)
Chinese government officials have stated that given that CBM is an integral part of the Chinese energy infrastructure, the
country’s aim is to see a 250% increase in CBM production over the next five years and a 300% increase in the
amount of natural gas used by 2020
Increasing Focus on Unconventional Gas
24

Shanxi Province Pipelines
(also Connected to Shaanjing II Pipeline to Beijing)
25

Strong & Growing Local and
Regional Market
 Taiyuan is the Capital of Shanxi Province with a population of over 4.2 million, as of 2010
 Taiyuan is positioned to increase the role of gas in its energy mix
 The city intends all buses and taxis to be gas-powered by 2015, with 62 vehicular gas refilling stations to be built by the same period
 Local Surrounding Area
 Nanyanzhu and Shouyang: Plans have been announced to convert all homes in Nanyanzhu and Shouyang to the local CBM grid
 Chemical plant under construction 12 kilometers south of 1H pilot area using CBM as a feedstock
 120 MW power plant (25 MMcf/d) and a 20 MMcf/d (566,400 m3/d) LNG facility
(see photo – across the street from our sales facility and very close proximity to our 1H production area)
Map not to scale and city, village locations are approximate
Far East Energy sales facility on left
Third parties building industrial park w LNG
facility and 120 MW gas-fired power plant
26

 35+ years of experience
 Former U.S. Assistant Secretary of Energy under the elder President Bush (41st president)
during period of highest CBM growth in United States; Responsible for all fossil energy
programs and policy
 Director of National Institute Petroleum & Energy Research
Highly Experienced Management Team
Michael R. McElwrath
CEO, President & Director
Dr. Zhendong Yang
Senior Vice President - Geology
 Pioneer in China CBM, Chief Geologist with Amoco, Arco, BP CBM projects
Rebecca Le
President, CFO FEEB
 CBM Drilling & Production Manager; District Manager for Halliburton - Russia
Robert Hockert
China Country Manager
 CPA, MPA, BBA; Amerada Hess, PriceWaterhouse, CitiCorp, Con Edison
 Former Finance Director of Global Energy Development PLC, CFO of Zero Emission Energy
Plants, Ernst & Young LLP, CPA
Jennifer H. Whitley
CFO
27

 Former Founder, Director, President or CFO of publicly and privately held banking,
energy and technology companies
 Chairman, retired U.S. Department of Energy
 Director, Office of Natural Gas
 Director, DC Office of American Association of Petroleum Geologists
 Established U.S.- China Oil & Gas Industry Forum working with NDRC
Board of Directors
C. P. Chiang
William A. Anderson
Dr. Donald A. Juckett
 Former China Country Manager of Burlington Resources
 40 years with Exxon, British Gas, Tenneco, etc.
John C. Mihm
 Retired Senior Vice President of ConocoPhillips
 China background dates to 1983
Lucian L. Morrison
 Founder and Director of numerous trust and investment companies
 Former Chairman and CEO of Wing Corp. (exploration and production company)
Thomas E. Williams  Retired President of Mauer Technology and VP, R&BD of Noble Technology Services
Division (both Noble Corporation subsidiaries)
 Over 35+ years of experience
 Former U.S. Assistant Secretary of Energy
 Director of National Institute Petroleum & Energy Research
Michael R. McElwrath
28

Cautionary Statements
Please note that any comments made today about expectations are to be considered forward-looking statements and are subject to risks and uncertainties. Many factors could cause actual
results to differ materially. Accordingly, please refer to the accompanying slides and our SEC filings on our website that define forward-looking statements and list risk factors and other
events that could impact future results, which cautionary statement is incorporated herein by reference. Also please note that the Company undertakes no duty to update forward-looking
statements.
Statements contained in this presentation that state the intentions, hopes, estimates, 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: the preliminary nature of well data, including permeability and gas content; the volume of gas that is ultimately produced or sold from our wells may be less than anticipated; 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 whether due to poor weather conditions, lack of availability of drilling rigs, poor execution by our drilling contractors, or other reasons; 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 Company’s
inability to comply with certain covenants and obligations, satisfy certain continuing representations, or remedy a material adverse effect to the business of the Company or other events of
default could result in early termination of the Standard Chartered Bank credit facility and the outstanding senior secured notes and require immediate repayment of all outstanding amounts
thereunder; the Company may be unable to enter into a resources-based lending facility or obtain additional debt financing on commercially advantageous terms, if at all; the Company may
not have sufficient capital to drill sufficient appraisal wells to retain productive acreage upon expiration of the exploration period under the Shouyang production sharing contract; 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 Annual Report on Form 10-K, quarterly reports on Form 10-Q and subsequent filings with
the Securities and Exchange Commission. Statements contained in this presentation speak only as of the date hereof. We assume no obligation to update any of these statements.
29

• Definition of Technical Terms:
Certain technical terms used in this presentation associated with descriptions of the potential for oil and gas properties are not consistent with the definition of “Proved Reserves” in
the SEC rules and thus the SEC guidelines prohibit us from including such terms in filings with the SEC. Such terms used herein are defined as follows:
– PRMS Reserves: This term refers to those quantities of petroleum anticipated to be commercially recoverable by application of development projects to known accumulations
from a given date forward under defined conditions under the Petroleum Resources Management System (PRMS) methodology promulgated by the Society of Professional
Engineers. PRMS reserves must further satisfy four criteria: they must be discovered, recoverable, commercial and remaining (as of the evaluation date) based on the
development project(s) applied.
– Original Gas-in-Place: This term refers to discovered and undiscovered gas-in-place, which is the quantity of hydrocarbons which is estimated, on a given date, to be
contained in known accumulations, plus those quantities already produced therefrom, plus those estimated quantities in accumulations yet to be discovered.
– Recoverable CBM Resources: Recoverable CBM resources refer to a calculation based on geologic and/or engineering data similar to that used in estimates of proved
reserves; but technical, contractual, economic, or regulatory uncertainties preclude such resources from being classified as proved reserves. Recoverable CBM resources
may also be estimated assuming future economic conditions different from those prevailing at the time of the estimate.
– SPE Contingent Resources: Those quantities of CBM estimated, as of a given date, to be potentially recoverable from known accumulations by application of development
projects, but which are not currently considered to be commercially recoverable due to one or more contingencies.
– Estimated Ultimate Recovery: The sum of resources remaining as of a given date and the cumulative production as of that date.
• Note to Investors:
The SEC permits oil and gas companies, in their filings with the SEC, to disclose only proved reserves that a company has demonstrated by actual production or conclusive formation
tests to be economically and legally producible under existing economic and operating conditions. We discuss certain terms and methodologies, such as PRMS reserves and
contingent resources, that are not permitted to be included in filings with the SEC. Investors are urged to consider closely the disclosures in our Form 10-K, File No. 0-32455,
available on our website at http://www.fareastenergy.com under the heading, “SEC Filings.” You can also obtain our Form 10-K and our other SEC filings over the Internet at the
SEC's website at http://www.sec.gov. This presentation contains information about adjacent properties on which we have no right to explore. U.S. investors are cautioned that
petroleum/mineral deposits on adjacent properties are not necessarily indicative of such deposits on our properties. This presentation also includes various estimates and
comparisons contained in studies and reports posted on our website at http://www.fareastenergy.com under the heading “Presentations.” Actual results are likely to vary from the
results in the studies and reports.
30

Additional Information Regarding Estimates of Reserves and Resources
• The estimates in the RISC SEC reserve report as of December 31, 2012 were prepared in accordance with the definitions and regulations of the U.S. Securities and Exchange
Commission and the FASB Accounting Standards Codification Topic 932, Extractive Industries-Oil and Gas with the exclusion of future income tax and Chinese VAT. The estimates
in the RISC PRMS reserve and contingent resources report as of December 31, 2011 were prepared in accordance with the definitions and guidelines contained within the Petroleum
Resources Management System promulgated by the Board of the Society of Professional Engineers in March 2007.
• Pre-Tax PV10 for SEC Proved Reserves, Pre-Tax PV10 for PRMS Reserves, and the standardized measure of discounted future net cash flows do not purport to be, nor should they
be interpreted to present, the fair value of the coal bed methane reserves. An estimate of fair value would take into account, among other things, the recovery of reserves not presently
classified as proved, the value of unproved properties, and consideration of expected future economic and operating conditions.
• Estimated future production of SEC proved reserves and estimated future production and development costs of SEC proved reserves are based on current costs and economic
conditions. Future income tax expenses are computed using the appropriate year-end statutory tax rates applied to the future pretax net cash flows from SEC proved reserves, less
the tax basis of Far East Energy. All wellhead prices are held flat over the forecast period for all reserve categories. The estimated future net cash flows are then discounted at a rate
of 10%.
• Pre-Tax PV10 for SEC proved reserves may be considered a non-GAAP financial measure as defined by the SEC and is derived from the standardized measure of discounted future
net cash flows for SEC proved reserves, which is the most directly comparable US GAAP financial measure. Pre-tax PV10 for SEC proved reserves is computed on the same basis
as the standardized measure of discounted future net cash flows for proved reserves but without deducting future income taxes. As of December 31, 2012, our estimated discounted
future income taxes were $0 and our standardized measure of after-tax discounted future net cash flows for proved reserves was $40.4 million.
• Pre-Tax PV10 for PRMS reserves may be considered non-GAAP financial measures as defined by the SEC. There do not exist any directly comparable US GAAP measures. Pre-tax
PV10 for PRMS reserves is computed on the basis set forth in the RISC PRMS reserve and contingent resources report as of December 31, 2011 and includes proved, probable and
possible reserves as described therein.
• We believe pre-tax PV10 is a useful measure for investors for evaluating the relative monetary significance of our natural gas properties. We further believe investors may utilize our
pre-tax PV10 as a basis for comparison of the relative size and value of our proved reserves to other companies because many factors that are unique to each individual company
impact the amount of future income taxes to be paid. Our management uses this measure when assessing the potential return on investment related to our coal bed methane
properties and acquisitions. However pre-tax PV10 is not a substitute for the standardized measure of discounted future net cash flows.
• Far East Energy cautions that the disclosures shown above are based on estimates of proved, probable or possible reserve quantities and future production schedules which are
inherently imprecise and subject to revision, and the 10% discount rate is arbitrary. Estimates of economically recoverable oil and natural gas reserves and of future net revenues are
based upon a number of variable factors and assumptions, all of which are to some degree subjective and may vary considerably from actual results. Therefore, actual production,
revenues, development and operating expenditures may not occur as estimated. The reserve data are estimates only, are subject to many uncertainties and are based on data gained
from production histories and on assumptions as to geologic formations and other matters. Actual quantities of oil and natural gas may differ materially from the amounts estimated.
Additional Information Regarding Statements of Valuation
Statements of valuation contained in this presentation are presented for illustrative purposes only and do not represent the actual value that Far East may realize in an arm’s length
transaction on commercially reasonable terms, which may be significantly more or less favorable than suggested by such statements. Valuation of assets is a complex process involving the
application of subjective business and financial judgment in determining the most appropriate and relevant methods of financial analysis and the application of those methods to the particular
circumstances. In making such statements of valuation, Far East did not apply any generally accepted valuation methods, but presented such statements solely for illustrative purposes in
comparison to other CBM fields. Such statements do not purport to be appraisals or necessarily reflect the prices at which any assets actually may be sold, which are inherently subject to
uncertainty. 31

Far East Energy - Corporate Presentation January 2014

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