Far East Energy (FEEC) DEFA14A Additional proxy soliciting materials

UNITED STATES

SECURITIES & EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

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Securities Exchange Act of 1934

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¨ Definitive Proxy Statement

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¨ Soliciting Material Pursuant to §240.14a-12

FAR EAST ENERGY CORPORATION

(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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(4) Date Filed:

The following presentation was prepared by Far East Energy Corporation.

Far East Energy Corporation

(“FEEC”)

Presentation to

Institutional Shareholder Services

November 30, 2006

2

Cautionary Statements

•

Far East Energy is scheduled to hold its 2006 annual meeting of stockholders on December 15, 2006, and filed a

definitive proxy statement with the Securities and Exchange Commission in connection with the meeting. Our

stockholders are strongly advised to read the proxy statement and the accompanying WHITE proxy card and any other

relevant documents filed with the Securities and Exchange Commission because they contain important information.

Stockholders will be able to obtain the proxy statement as well as any amendments or supplements to the proxy

statement and any other documents that we file with the Securities and Exchange Commission for free on the Securities

and

Exchange

Commission’s

website.

Their

website

is

located

at

www.sec.gov.

Copies

of

the

proxy

statement

and

any

amendments and supplements to the proxy statement will also be available for free at our website at

www.fareastenergy.com

or

by

writing

to

the

Secretary

of

Far

East

Energy,

400

N.

Sam

Houston

Parkway

East,

Suite

205, Houston, Texas 77060. You can also request copies of the proxy materials, as they become available, from our

proxy solicitor, Innisfree M&A Incorporated. Their toll-free number is 1-877-456-3442 or for international calls +412-232-

3651.

•

Statements contained in this presentation 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:

the

preliminary

nature

of

well

data,

including

permeability

and

gas

content,

and

commercial viability of the wells; risk and uncertainties associated with exploration, development and production of oil

and gas; drilling and production risks; our lack of operating history; limited and potentially inadequate cash resources;

expropriation and other risks associated with foreign operations; anticipated pipeline construction and transportation of

gas; matters affecting the oil and gas industry generally; lack of availability of oil and gas field goods and services;

environmental 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 filed on Form 10-Q, and subsequent filings with the Securities and

Exchange Commission.

•

Note to Investors:

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.

3

Far East Energy Corporation

•

Third largest coalbed

methane acreage holder in

China with over 1.3 million acres

•

Drilling program designed to maximize potential

production as quickly as possible

•

Highly experienced and qualified Board nominees

and management team committed to delivering on

drilling program and producing stockholder value

4

•

Approximately 1.3 million acres (5,250 km²) in China’s coal rich Shanxi

Province and Yunnan Province

•

Situated near the two major national pipelines running to Beijing and

Shanghai

•

Shanxi Provincial government’s commitment to 1,080-mile pipeline

network, a portion of which has been constructed

•

Seasoned management team with extensive gas industry,

international, and China-specific experience 

•

Sustained growth in the Chinese gas market provides compelling

economics for locally sourced CBM

Overview

5

CBM receives favorable royalty treatment

Market price vs. government established price

Reported

average

of

$6.65

per

Mcf,

with

a

higher

range

of

prices

for

residential, commercial and industrial terminals

Pipeline tariff approximately $1.60 Mcf per 600 miles (1,000 kilometers)

Potentially higher prices for LNG, if necessary or available

Strong

profit

potential

after

deducting

lifting

cost,

tariff

and

taxes

Shanxi project is located near national and intra-province pipelines

Shouyang Block –

Shanjing II Pipeline to Beijing

Qinnan Block -

West-East Pipeline to Shanghai

Shanxi Provincial government has recently constructed a portion of a

planned 1,080-mile long intra-province pipeline network

China Macro Gas Markets

6

Source: Oil and Gas Investor

Shanxi Province

7

Shanxi Project

FEEC

Drilling and

Dewatering

Activities

Source: Oil and Gas Investor

•

1,057,638 Acres (4,280

km²)

•

National and intra-province

pipelines in close proximity

•

66.5% participating interest

potential

•

Wells HZ01, HZ02, HZ03

and HZ04 in Shouyang

Block

8

Shanxi Intra-Provincial Pipeline

Planning Map

•

Shanxi Intra-Provincial        

Pipeline connecting FEEC

acreage to major

pipelines and

metropolitan areas in

Shanxi Province.

•

SY represents FEEC’s

Shouyang Block

•

QN represents FEEC’s

Qinnan Block

Source:  Natural Gas Corporation of Shanxi Province

9

Uncommonly High Perm and Gas

•

With our first horizontal wells, we believe we have discovered an

uncommon combination of high permeability/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.

•

High permeability allows gas to move with greater ease through

coal, from greater distances to the well, and can result in prolific

wells similar to those in America’s San Juan Basin or Australia’s

Fairview Field.

•

High permeability, however, also means that water can move to

the well from greater distances and it will take longer to dewater.

10

High Perm/Gas = Higher Production

Sustainable Over Longer Period

•

The key to making high permeability work to our advantage 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.

•

Australia’s Fairview Field, which is known in the industry to be a

very productive field for CBM production, may be a good analog

to what we have discovered in our Shouyang Area.  The Fairview

Field’s wells were steadily drilled in a pattern around the first

wells, which resulted in enhanced dewatering and wells that

initially came in at a slower rate and in lower amounts because of

a lengthier dewatering period, steadily ramped up to high rates

sustained over many years.  Of course, until we achieve

sustained production from our wells, we cannot be sure if the

performance of our wells will mirror that of the Fairview Field.

11

Conceptual Downdip Drilling Plan

Conceptual downdip drilling plan in the region of  FCC HZ-01H

12

Resource Comparison

How does the Company’s Shanxi acreage compare with select U.S.

CBM Basins?

San Juan

Black Warrior

Raton

Shanxi Acreage

Coal Gas Content (Scf/ton) *

400-500

400-500

300-500

400-800

Coal Thickness: Typical net coal (feet) *

40

5

20

25-30

Pressure (psi) *

1500

400

400

450

Permeability (md) *

25

25

25

20-100

Source:

Data

on

U.S.

Basins

from

*

John

P.

Seidle,

Sproule

Associates,

Inc.

Coalbed

Methane

of

North

America

and

**

Gas

Research

Institute

Finding: preliminary technical data suggests that the Company’s

Shanxi acreage compares well to these U.S. CBM plays.

13

The Strategic Drilling Development

Plan

•

Our

development

plan

concentrates

drilling

in

areas

believed

to

have

potential

for

high

gas

production;

drilling

rapidly

in

those

areas

to

build

sufficient production to achieve significant sales.

•

Due to high gas content with high permeability in the area of our first

wells

in

Shouyang,

we

will

drill

the

next

three

wells

in

that

area

to

build

a

pattern

for

earliest

possible

maximum

potential

production.

The

area

is

well located, with one line of the Shanxi Provincial Pipeline system

planned to cross the location of our wells.

•

Drill an exploratory well in Qinnan, and if good results, then further wells

would be drilled nearby in order to dewater and create another 

production block, in keeping with our basic development plan.  Drill the

obligation well required in our Yunnan acreage. 

•

Working to arrange potential gas off-take with multiple possibilities,

including national trunk-lines, Shanxi Provincial Pipeline, various local

distribution companies, and direct end-users.  Competition among buyers

will be advantageous.

14

Financing the Strategic Drilling

Development Plan

•

We continually evaluate and update our cash projections of funds

necessary to accomplish the capital commitments and the drilling

operations plan. 

•

We completed a common stock placement resulting in

approximately $17 million of gross proceeds with net proceeds of

$16.65 million after commissions and fees of effectively 1.9%. It

was completed at a discount to market price at the time of pricing

of only 1.6% with no warrants attached.

•

The financing was part of our Board’s capital raising plan that

began in the early summer of 2006. 

•

This additional capital is intended to finance the drilling of

additional wells near the promising area of our Shouyang Block,

as well as the drilling of wells required to retain our acreage

position in the Qinnan Block of the Shanxi Province and in the

Yunnan Province.

•

Delay in funding would have jeopardized ability to maintain

dewatering momentum and substantially delayed the potential for

commercial  production of gas in the Shouyang Block.

15

Far East Energy -

The Right Team

in Place to Deliver Results

•

Our extremely qualified director nominees have over 170

years of combined energy experience.

•

Possess critical management experience in the energy field

ranging from the highest levels of major oil and gas

companies to senior energy policy making roles in the US

government.

•

Have delivered results on hundreds of major energy projects

and initiatives and have extensive relationships in China.

•

Five of our Six Nominees, including the Chairman of the

Board, are independent of management.

•

The Sixth nominee is our CEO.

16

Nominees

John

C.

Mihm,

Chairman,

retired

Senior

Vice

President

ConocoPhillips

Michael

R.

McElwrath,

CEO

and

President

Donald

A.

Juckett,

retired

US

Department

of

Energy,

established

US-China

Oil

&

Gas

Industry

Forum

Randall

D.

Keys,

Financial

Consultant

and

former

CFO

of

BPZ

Energy,

Inc.,

TransMeridian

Exploration,

Inc.

C.P.

Chiang,

retired

China

Project

Manager/Country

Manager

-

China,

Burlington

Resources.

Thomas

E.

Williams,

President

-

Maurer

Technology,

and

Vice

President

-

Research

&

Business

Development  of Noble Technology Services Division, both Noble Corporation subsidiaries

Management

Michael R. McElwrath, Chief Executive Officer, President and Director

formerly Acting Assistant Secretary of Energy; Director National Institute Petroleum & Energy Research

Bruce N. Huff, Chief Financial Officer, Secretary and Treasurer

formerly President and Chief Operating Officer of Harken Energy

Garry

Ward,

Senior

Vice

President

-

Engineering

Dr.

Zhendong

“Alex”

Yang,

Senior

Vice

President

–

Exploration

and

Production

Jeffrey

R.

Brown,

President

–

Far

East

Energy

(Bermuda)

Ltd.

Technical Advisors

Don

Gunther,

former

Vice

Chairman

Bechtel

Group

Ken

Ancell,

former

Executive

Vice

President

-

Tipperary,

Principal

-

Fairchild

Ancell

&

Wells,

(renowned

CBM

expert)

Nominees and Management

17

Line Management

Jeff

Brown,

President,

Far

East

Energy

(Bermuda),

Ltd.

-

former

China

Asset

Manager

-

Kerr-McGee

Garry

Ward,

Senior

Vice

President

-

Engineering

–

former

Reservoir

Manager

-

3TEC

Energy;

Vice

President

-

Engineering

and

Production

-

Floyd

Oil;

CBM

development

in

San

Juan

and

Powder

River

Basins

Dr.

Alex

Yang,

Senior

Vice

President

–

Exploration

&

Production

-

Pioneer

in

CBM

in

China;

former

Chief

Geologist

-

Amoco/Arco/BP

on

CBM

projects

in

Ordos

and

Qinshui

Basins,

China

Bob

Berry,

Drilling

Manager

–

former

Country

Manager

Kazakhstan

and

Russia

(coalbed

methane)

and

Uzbekistan,

also

Drilling

Manager

–

Chengdu,

China

-

China

Tight

Gas

Sand

Project

–

Enron

Global

Exploration

Field Operations, Planning and Marketing (Consultants)

Ken

Ancell

–

one

of

world’s

leading

CBM

reservoir

engineers,

SPE

Distinguished

Lecturer

for

CBM

Jay

Smith

–

former

Director

Strategic

Planning

BP

North

America;

Manager

Drilling

Technology

Sohio

Brian

Weatherl

–

former

CBM

Production

Manager

-

Williams

Exploration

&

Production

Company

David

Lue

–

former

Director

International

Business

Development

-

Duke

Energy;

Project

Director

for

China’s

West-East

Pipeline;

35-plus

years

pipeline

engineering/gas

sales/international

business

development 

Bill

Rehm

–

one

of

world’s

leading

authorities

on

under-balanced

horizontal

drilling

Will

Rogers

–

Senior

Drilling

Representative,

Texaco/Chevron

-

China;

multiple

CBM

exploration

wells

Exceptional Technical Operations

Team

18

The Sofaer

Group –

The Facts

•

The Sofaer

Group is trying to seize control of the

Board without paying for it.

–

They are seeking 66% of the Board even though they

own less than 15% of the outstanding stock.

–

They have no concrete business plan, no track record in

energy and no management team to direct the drilling

and production necessary to  build real stockholder

value.

19

The Sofaer

Group��s Plan –

Vague

Generalities

•

In contrast to FEEC’s

Strategic Drilling

Development Plan, the Sofaer

Group’s “Plan”

consists of a string of generalities.

They do not have:

–

A detailed business plan

–

A transition plan describing how change in control of

FEEC would be effected if their nominees are elected

–

A qualified and credible new management team. 

20

Sofaer’s

Nominees –

No Financial

Expert, Not Independent

•

None of the Sofaer

Group’s nominees qualify as an

SEC Audit Committee Financial Expert, according

to questionnaires they filled out  as part of the

nominating process.

•

Three of Sofaer’s

four nominees have received

fees, directly or indirectly, from FEEC calling into

question their independence under the listing

standards chosen by FEEC in accordance with

SEC reporting requirements.

21

The Sofaer

Group –

Self Interest,

Not Stockholder Interest

Sofaer

has not told stockholders the entire story about the

“death spiral”

financing proposal they offered FEEC last

year.

Here is what they neglected to mention:

•

The terms included a promissory note that Sofaer

could convert at potentially

very high discounts (up to 50%) to the market price of our common stock.

•

The proposal could have allowed Sofaer

to convert a short-term promissory

note into a controlling interest in Far East at a very significant discount.

•

Not only did the conversion terms of the note include a significant number of

warrants (40% of the shares to be issued upon conversion of the note) that

would have been highly dilutive, the proposed financing included

a commission

of up to 7% (appropriately called a “set-up”

fee) and an additional 2.5 million

warrants at the time of funding, assuming a funding of $10 million. 

In other words, the Sofaer

Group could have made millions on

their proposed deal and could have had the potential to take

control of Far East at a fraction of its market value.

22

The Sofaer

Group –

Self Interest,

Not Stockholder Interest

The

Sofaer

Group

is

not

looking

out

for

the

interests

of

ALL

stockholders,

only

themselves,

in

our

view.

•

Sofaer’s

actions prevented Far East from using the opportunity to raise money at

the height of the market for our stock last spring.

•

In fact, the Sofaer

Group agreed to allow Far East to proceed with other

financing initiatives months after that opportunity passed, but only if Far East

agreed to, among other things pay them additional money in the form of advisory

fees for the contemplated financing initiatives completed by Far

East.

We believe these are the actions of a self-interested

hedge fund that cares only for their quick profit at

the expense of other stockholders.

400 N. Sam Houston Parkway

Suite 205

Houston, Texas 77060

Main Number:    832-598-0470

www.VoteFarEastEnergy.com

OTCBB:  FEEC

24

Appendix –

ConocoPhillips

Shanxi

Data

Shanxi Analysis

•

Significant amount of well data available

•

Ash content, isotherm data, and gas content measurements for several wells in the region

•

Three

seismic

profiles

analyzed

for

each

block

covering

areas

of

no

well

control

•

Three main coal seams identified and evaluated:

–

Coals 3, 9, and 15 have substantial thickness in both blocks

–

Coals are laterally continuous and are of high grade

–

Coals capable of holding large volumes of gas

•

Total number of acres analyzed was 489,000

Source: ConocoPhillips

25

•

Location data for over 850 wells in Qinnan area; 165 wells in Shouyang area

•

Tops and thickness data for 678 wells in Qinnan area; 136 wells in Shouyang

area

Shouyang wells clustered in north part of block; Qinnan wells clustered in

east part of block

•

Ash content, isotherm data, and gas content measurements for several wells

in the region

•

Production data for 3 wells in Qinnan area and 3 wells in Shouyang block

•

Three seismic profiles were available for each block covering areas of no well

control

•

Topographic control grid

•

Qinshui Basin boundary and outcrop pattern of coal seams

Appendix –

Shanxi Project

26

•

Geologic evaluation has identified three prospective areas within the Shouyang and

Qinnan Blocks from 900-3000 ft (300 to 1000 meters)  in depth

Shouyang North Area 204,335 acres total (827 Km²);  82,710 acres (334 Km²) within

well control area

Qinnan East Area 113,904 acres total (461 Km²);  53,431 acres (216 Km²) within well

control area

Qinnan West Area 171,103 acres (692 Km²) total

•

Three main coal seams have been identified and evaluated

Coals 3, 9, and 15 have substantial thickness in both blocks

Coals are laterally continuous and are of high grade

Semi-anthracite rank makes the coals capable of holding large volumes

of gas

Coals are well-cleated and have good permeability

Coals demonstrate high desorption rates

•

Other less continuous coals within the section offer additional potential not captured

in this evaluation

Appendix –

Shanxi

Project

27

Contract Area:

1,057,000 acres (4,280 Km²)

Participating Interests:

Exploration: 

Far East Energy 100%

Development:

COP has a 3.5% ORRI*

Far East

70%-100% costs and

66.5%-96.5% of production

COP

3.5% ORRI

CUCBM

0%-30% WI**

*   ConocoPhillips (COP) has elected a 3.5% ORRI (out of FEEC interest) at end of Phase II

** China United Coalbed Methane Corp Ltd. (CUCBM) has the right to participate in any

development with up to 30% participating interest

Appendix –

Shanxi Project

28

Appendix –

Yunnan Projects at a

Glance

•

Two large CBM projects

•

159,000 -

265,000 net acres

•

Partners with CUCBM

•

E&P costs reimbursed to

FEEC from initial production

revenues

Source: Oil and Gas Investor