Far East Energy Corp. reported an operations and financial update on the company’s oil and gas exploration and development activities on its properties in China.

Far East Energy said that a news service controlled by the government of China has disclosed that there will be an increase in the current subsidy on coal bed methane production in China. This increased subsidy will go into effect with the upcoming five year economic plan during the summer of 2011.

Far East Energy said the subsidy may be increased by as much as $0.96 per Mcf, bringing the company’s sale price for its product to $7.13 per Mcf.

Far East Energy has completed hydraulic fracturing operations on the SYS02 pilot development test well. The well was drilled to a depth of approximately 4,100 feet and was testing the #15 coal seam at the company’s properties in the Shouyang block.

Far East Energy is targeting three different coal seams on the Shouyang block and estimates that the net present value of the resources here range from $738.2 million to $1.46 billion. This estimate is based on a reserve report conducted by an independent petroleum engineering firm.

For more information on the company, go to www.fareastenergy.com