The People's Republic of China

31/12/2011

Map of Enhong contract area

Far East Energy (Bermuda), Ltd

Enhong and Laochang Area, Yannan Pronvince

Coalbed Methane

China United Coalbed Methane Corporation Ltd

Modification Agreement for Production Sharing Agreement

The operator shall conduct regular environmental, health and safety audits of systems, facilities, seismic, drilling, and production operations as determined by the joint management committee to ensure compliance with operator’s and industry standards. All costs for such regular audits shall be charged to the joint account.

The contractor may give preference to the employment of Chinese personnel in the performance of the coalbed methane (CBM) operations in accordance with relevant regulations. For this purpose, the contractor may submit in advance to China united coalbed methane corporation ltd (CUCBM) and the joint management committee (JMC) respectively a plan for the employment of Chinese personnel listing all the posts and number of the persons involved. CUCBM shall, at the request of the contractor and in accordance with the plan, provide or assist in recruiting Chinese employee candidates for such employment. The contractor shall, as the CBM Operations require, with the approval of CUCBM and JMC, revise the training and employment plan to make the plan the most efficient and economical for CBM operations. For the performance of CBM operations, the contractor may have the obligation to employ competent Chinese personnel and to employ those who have become qualified after having being trained in accordance with the training program. The contractor may give preference in employing the Chinese Personnel who have participated in the training program provided by the contractor.

Chinese goods, equipment and service, provided that they are competitive in terms of price quality and terms of delivery.

During the second phase of the exploration period, Far East Energy shall drill 8 well, and expend at least the U.S. dollar equivalent to 4.85 million.

Any dispute mentioned, including without limitation disputes arising under Art. 27.2, that has not been settled through such consultation within 60 days after the dispute arises shall be settled through arbitration. If agreed upon by the parties, such dispute shall be referred to arbitration conducted by the China International Economic and Trade Arbitration Commission (“CIETAC”) in accordance with the arbitration proceeding rules. If the parties fail to reach an agreement on CIETAC arbitration within 60 days after a Party has requested in writing that a dispute be referred to arbitration, at the election of either Party, the dispute shall be finally settled by arbitration in accordance with the rules of the Hong Kong International Arbitration Centre (“HKIAC”). There shall be 3 arbitrators and the location of the arbitration shall be at HKIAC in Hong Kong.