Exhibit 10.66
 
 
 FAR
EAST ENERGY CORPORATION
 
 THIRD
AMENDED AND RESTATED
 NONQUALIFIED
STOCK OPTION AGREEMENT
 
 Far East
Energy Corporation (the "Company") and Thomas Williams
("Optionee") hereby
agree to amend and restate the amended and restated stock option agreement
previously entered into between the Company and Optionee on December 27, 2007, a
copy of which is attached hereto, (the "2007 Option
Agreement").  This amendment and restatement is made solely
with respect to those Options which vested on or after January 1, 2005 and the
terms of that certain Second Amended and Restated Nonqualified Stock Option
Agreement entered into between the Company and the Optionee shall be in effect
with respect to all Options that vested on or before December 31,
2004.
  
 
 General
Information
 
 Name:
                  Thomas
      WilliamsAward
      Date:
                  February
      24, 2004FMV
      on the Award Date:
                  $2.09Affected
      Options:
                  300,000Exercise
      Price for the Affected Options:
                  $2.09Expiration
      Date:
                  February
      24, 2014
 
  FAR EAST
ENERGY CORPORATION
 THIRD
AMENDED AND RESTATED
 NONQUALIFIED
STOCK OPTION AGREEMENT
 
 THIS
THIRD AMENDED AND RESTATED NONQUALIFIED STOCK OPTION AGREEMENT (this "Agreement") is made and
entered into as of this 14th day of
January, 2009 by and between Far East Energy Corporation, a Nevada corporation
(the "Company"), and
Thomas Williams ("Optionee").
 
 WHEREAS,
the Company and Optionee previously entered into a Stock Option Agreement (the
"2004 Option Agreement")
dated as of February 24, 2004 setting forth the grant of options to purchase
400,000 shares of common stock of the Company, par value $0.001 per share (the
"Common
Stock");
 
 WHEREAS,
the Company and Optionee entered into an Amended and Restated Stock Option
Agreement (the "2007
Option Agreement") dated
December 27, 2007, solely with respect to 300,000 of the Option Shares (the
"Affected Options"),
which vested on or after January 1, 2005, in order to bring such options into
compliance with Section 409A of the U.S. Internal Revenue Code of 1986, as
amended (the "Code");
 
 WHEREAS,
the remaining 100,000 of the Option Shares remained subject to the 2004 Option
Agreement;
 
 WHEREAS,
the Company and Optionee desire to extend expiration of the Exercise Period for
the Affected Options under the 2007 Option Agreement from February 24, 2009 to
February 24, 2014; and
 
 WHEREAS,
by executing this Agreement, the Company and Optionee desire to amend, replace
and supersede the 2007 Option Agreement.
 
 NOW,
THEREFORE, in consideration of the premises and the covenants contained herein,
and other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, and intending to be legally bound, it is agreed as
follows:
 
 1.
              Non-Qualified Stock
      Options to Purchase Shares.
 
 (a)           Number of Option Shares and
Option Prices.  The Company granted the Affected Options to
Optionee under the 2007 Option Agreement as non qualified stock options, to
purchase shares of the Company's Common Stock (the "Option Shares"), with an
exercise price of $2.09 per share ("Option Price").
 
 (b)           Exercise
Period.  The Affected Options shall be exercisable, in whole or
in part, subject to the vesting schedule and other terms set forth in this
Agreement, until February 24, 2014 (the "Exercise
Period").
 
 (c)           Vesting
Schedule.  As of the date of this Agreement, the Affected
Options are fully (100%) vested.
 
 2.          
  Manner of
Exercise and Terms of Payment.  The Affected Options may be
exercised in whole or in part, subject to the limitations set forth in this
Agreement, upon delivery to the Company of timely written notice of exercise,
accompanied by full payment of the Option Price of such Affected Options for the
Option Shares with respect to which such Affected Options are
exercised.  The Option Price may be paid by delivering a certified
check or wire transfer of immediately available funds to the order of the
Company.  The person entitled to the shares so purchased shall be
treated for all purposes as the holder of such shares as of the close of
business on the date of exercise and certificates for the shares of stock so
purchased shall be delivered to the person so entitled within a reasonable time,
not exceeding thirty (30) days, after such exercise.
 
 3.          
  Rights as
Stockholder.  Optionee or a permitted transferee of the
Affected Options shall have no rights as a stockholder of the Company with
respect to any shares of Common Stock subject to such Affected Options prior to
his or her exercise of such Affected Options.
  
  
 4.       
     Adjustment of Purchase Price
and Number of Shares.  The number and kind of securities
purchasable upon the exercise of these Affected Options and the Option Prices
for such Affected Options shall be subject to adjustment from time to time, as
provided in Schedule A attached hereto.
 
 5.       
     Investment
Representation.  Optionee represents and warrants to the
Company that Optionee is acquiring these Affected Options and the Option Shares
for Optionee's own account for the purpose of investment and not with a view
toward resale or other distribution thereof in violation of the Securities Act
of 1933, as amended ("1933
Act").  Optionee acknowledges that the effect of the
representations and warranties is that the economic risk of any investment in
the Affected Options and Option Shares must be borne by the Optionee for an
indefinite period of time.  This representation and warranty shall be
deemed to be a continuing representation and warranty and shall be in full force
and effect upon such exercise of the Affected Options granted
hereby.
 
 6.      
      Exercisability.  The
Affected Options shall be exercisable only by Optionee, subject to the terms
herein, during his lifetime or by his assigns, heirs, executors or
administrators, as the case may be.  The Affected Options granted
hereunder and the Option Shares underlying the Affected Options may only be
assigned in compliance with Section 7 herein and applicable securities
laws.
 
 7.          
  Non-Transferability.  Optionee
recognizes that the Option Shares received pursuant to this Agreement will be
subject to various restrictions on sale and/or transfer, including but not
limited to, the restrictions imposed by Rule 144 under the 1933
Act.  Notwithstanding any rights that Optionee may possess under the
1933 Act and any applicable state securities laws, Optionee hereby agrees that
he or she shall not be entitled, and the Company shall be under no obligation,
to remove the resale restriction from these Affected
Options.  Optionee additionally agrees that the Company is under no
obligation to remove the resale restriction from any number of Option Shares
exceeding ten percent (10%) of the average weekly trading volume in the
Company's securities during the ninety (90) days preceding the intended
sale.
 
 8.
              Miscellaneous.
 
 (a)           Amendment and Restatement;
Termination of Other Agreements.  This Agreement constitutes an
amendment, modification and restatement of the 2007 Option Agreement and sets
forth the entire understanding of the parties hereto with respect to the
Affected Options, and supersedes the 2007 Option Agreement and all other prior
arrangements or understandings among the parties regarding such
matters.
 
 (b)           Notices.  Any
notices required hereunder shall be deemed to be given upon the earlier of the
date when received at, or (i) the third business day after the date when sent by
certified or registered mail, (ii) the next business day after the date sent by
guaranteed overnight courier, or (iii) the date sent by telecopier or delivered
by hand, in each case, to the addresses set forth below:
 
 If
      to the Company:
              Far
      East Energy Corporation
 363 N.
Sam Houston Parkway
 Suite
380
 Houston,
TX 77060
 Attention:  Michael
R. McElwrath
 
 With
      copies to:
              Baker
      & McKenzie LLP
 2300
Trammell Crow Center
 2001 Ross
Avenue
 Dallas,
Texas 75201
 Attn:  W.
Crews Lott
 
 If
      to the Optionee:
              Thomas
      Williams
 1030 West
25th Street
 Houston,
Texas 77008
  
  or to
such other addresses as the parties may specify in writing.
 
 (c)           Amendments and
Waivers.  The provisions of this Agreement may not be amended
or terminated unless in a writing signed by the Optionee and the
Company.
 
 (d)           Binding
Effect.  This Agreement will bind and inure to the benefit of
the respective successors (including any successor resulting from a merger or
similar reorganization), assigns, heirs, and personal representatives of the
parties hereto.
 
 (e)           Governing
Law.  This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Texas.  Venue
shall lie only in the State and Federal Courts in and for the County of Harris,
Texas as to all disputes arising under this Agreement, and such venue is hereby
consented to by the parties hereto.
 
 (f)           Counterparts.  This
Agreement may be executed in any number of counterparts, each of which shall be
considered to be an original instrument and to be effective as of the date first
written above.  Each such copy shall be deemed an original, and it
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart.
 
 (g)           Interpretation.  Unless
the context of this Agreement clearly requires otherwise, (i) references to
the plural include the singular, the singular the plural, the part the whole,
(ii) references to one gender include all genders, (iii) "or" has the
inclusive meaning frequently identified with the phrase "and/or" and (iv)
"including" has the inclusive meaning frequently identified with the phrase "but
not limited to."  The section and other headings contained in this
Agreement are for reference purposes only and shall not control or affect the
construction of the Agreement or the interpretation thereof in any
respect.
 
 [SIGNATURE
PAGE FOLLOWS]
  
  IN
WITNESS WHEREOF, the undersigned have executed, or have caused this Agreement to
be executed, as of the day and year first above written.
 
 
 
 FAR
      EAST ENERGY CORPORATION
                OPTIONEE
 
 
 By:
      /s/ Michael R.
      McElwrath
                  /s/ Thomas WilliamsMichael
      R. McElwrath
                  Thomas
      WilliamsChief
      Executive Officer
     [Signature
page to Second Amended and Restated Nonqualified Stock Option
Agreement]
 
  SCHEDULE
A
 
 Adjustment of Purchase Price
and Number of Shares
 
 1.           
 Adjustment.  The
number and kind of securities purchasable upon the exercise of each Affected
Option and the Option Price of such Affected Option shall be subject to
adjustment from time to time upon the happening of certain events as
follows:
 
 (a)            Reclassification,
Consolidation or Merger.  At any time while an Affected Option
remains outstanding and unexpired, in case of (i) any reclassification or change
of outstanding securities issuable upon exercise of such Affected Option (other
than a change in par value, or from par value to no par value per share, or from
no par value per share to par value or as a result of a subdivision or
combination of outstanding securities issuable upon the exercise of such
Affected Option), (ii) any consolidation or merger of the Company with or into
another corporation (other than a merger with another corporation in which the
Company is a continuing corporation and which does not result in any
reclassification or change, other than a change in par value, or from par value
to no par value per share, or from no par value per share to par value, or as a
result of a subdivision or combination of outstanding securities issuable upon
the exercise of such Affected Option), or (iii) any sale or transfer to another
corporation of the property of the Company as an entirety or substantially as an
entirety, the Company, or such successor or purchasing corporation, as the case
may be, shall without payment of any additional consideration therefor, execute
a new option providing that the holder of such option shall have the right to
exercise such new option (upon terms not less favorable to the holder than those
then applicable to such option) and to receive upon such exercise, in lieu of
each share of Common Stock theretofore issuable upon exercise of such option,
the kind and amount of shares of stock, other securities, money or property
receivable upon such reclassification, change, consolidation, merger, sale or
transfer.  Such new option shall provide for adjustments which shall
be as nearly equivalent as may be practicable to the adjustments provided for in
this Section 1 of Schedule A.  The provisions of this subsection 1(a)
shall similarly apply to successive reclassifications, changes, consolidations,
mergers, sales and transfers.
 
 (b)           Subdivision or Combination
of Shares.  If the Company at any time while an Affected Option
remains outstanding and unexpired, shall subdivide or combine its capital stock,
the Option Price of such Affected Option shall be proportionately reduced, in
case of subdivision of such shares, as of the effective date of such
subdivision, or, if the Company shall take a record of holders of its capital
stock for the purpose of so subdividing, as of such record date, whichever is
earlier, or shall be proportionately increased, in the case of combination of
such shares, as of the effective date of such combination, or, if the Company
shall take a record of holders of its capital stock for the purpose of so
combining, as of such record date, whichever is earlier.
 
 (c)           Stock
Dividends.  If the Company at any time while an Affected Option
is outstanding and unexpired shall pay a dividend in shares of, or make other
distribution of shares of, its capital stock, then the Option Price of such
Affected Option shall be adjusted, as of the date the Company shall take a
record of the holders of its capital stock for the purpose of receiving such
dividend or other distribution (or if no such record is taken, as at the date of
such payment or other distribution), to that price determined by multiplying
such Option Price in effect immediately prior to such payment or other
distribution by a fraction (a) the numerator of which shall be the total number
of shares of capital stock outstanding immediately prior to such dividend or
distribution, and (b) the denominator of which shall be the total number of
shares of capital stock outstanding immediately after such dividend or
distribution.  The provisions of this subsection 1(c) shall not apply
under any of the circumstances for which an adjustment is provided in subsection
1(a) or 1(b).
 
 (d)           Liquidating Dividends,
Etc.  If the Company at any time while an Affected Option is
outstanding and unexpired makes a distribution of its assets to the holders of
its capital stock as a dividend in liquidation or by way of return of capital or
other than as a dividend payable out of earnings or surplus legally available
for dividends under applicable law or any distribution to such holders made in
respect of the sale of all or substantially all of the Company's assets (other
than under the circumstances provided for in the foregoing subsections (a)
through (c)), the holder of such Affected Option shall be entitled to
receive
  
  upon the
exercise hereof, in addition to the shares of Common Stock receivable upon such
exercise, and without payment of any consideration other than the Option Price
of such Affected Option, an amount in cash equal to the value of such
distribution per share of Common Stock multiplied by the number of shares of
Common Stock which, on the record date for such distribution, are issuable upon
exercise of such Affected Option (with no further adjustment being made
following any event which causes a subsequent adjustment in the number of shares
of Common Stock issuable upon the exercise hereof), and an appropriate provision
therefor should be made a part of any such distribution.  The value of
a distribution which is paid in other than cash shall be determined in good
faith by the Board of Directors.
 
 2.         
   Notice of
Adjustments.  Whenever any of the Option Price of an Affected
Option or the number of shares of Common Stock purchasable under the terms of
such Affected Option at that Option Price shall be adjusted pursuant to Section
1 hereof, the Company shall promptly make a certificate signed by its President
or a Vice President and by its Treasurer or Assistant Treasurer or its Secretary
or Assistant Secretary, setting forth in reasonable detail the event requiring
the adjustment, the amount of the adjustment, the method by which such
adjustment was calculated (including a description of the basis on which the
Company's Board of Directors made any determination hereunder), and the Option
Price and number of shares of Common Stock purchasable at that Option Price
after giving effect to such adjustment, and shall promptly cause copies of such
certificate to be mailed (by first class and postage prepaid ) to the registered
holder of such Affected Option.
  
  NOTICE OF
EXERCISE
 
 (To be
signed only upon exercise of Affected Option)
 
 TO: Far
East Energy Corporation
 
 The
undersigned, the owner of Affected Option to purchase ___________ shares of
common stock, par value $0.001 per share, of Far East Energy Corporation, a
Nevada corporation (the "Company"), hereby irrevocably elects to exercise such
Affected Option and herewith pays for the shares by giving the Company a
personal check or wire transfer in the amount of the Option Price as specified
in the Agreement.  The undersigned requests that the certificates for
such shares be delivered to them according to instructions indicated
below.
 
 DATED
this ___ day of _____________ 20___.
 
 
 
 By:
 
 Instructions
for delivery: