Document:

Warrant Agreement dated August 27, 2007

 Exhibit 4.2 
 WARRANT AGREEMENT 
 THIS WARRANT AGREEMENT (this “Agreement”) made as of
August 27, 2007 by and between Far East Energy Corporation, a Nevada corporation, with offices at 363 North Sam Houston Parkway East, Suite 380, Houston, Texas 77060 (“Company”), and Continental Stock Transfer & Trust
Company, a New York corporation, with offices at 7 Battery Place, New York, NY 10004 (“Warrant Agent”). 
 WHEREAS, the
Company has engaged in a public offering of shares of common stock, par value $0.001 per share, of the Company (“Common Stock”) and warrants (“Warrants”) to International Finance Corporation, each such Warrant
evidencing the right of the holder thereof to purchase one share of Common Stock for $2.61, subject to adjustment as described herein; and 
 WHEREAS, the Company has filed with the Securities and Exchange Commission a Registration Statement on Form S-3, No. 333-136032 (“Registration Statement”), for the registration, under the Securities Act of 1933, as
amended (“Securities Act”) of, among other securities, the Warrants and the Common Stock issuable upon exercise of the Warrants (the “Warrant Stock”); and 
 WHEREAS, the Company desires the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing to so act, in connection with the
issuance, registration, transfer, exchange, redemption and exercise of the Warrants; and 
 WHEREAS, the Company desires to provide for the
form and provisions of the Warrants, the terms upon which they shall be issued and exercised, and the respective rights, limitation of rights, and immunities of the Company, the Warrant Agent, and the holders of the Warrants; and 
 WHEREAS, all acts and things have been done and performed which are necessary to make the Warrants, when executed on behalf of the Company and
countersigned by or on behalf of the Warrant Agent, as provided herein, the valid, binding and legal obligations of the Company, and to authorize the execution and delivery of this Agreement. 
 NOW, THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto agree as follows: 
 1. Definitions. For the purposes of this Agreement: 
 1.1 “Additional Shares” shall mean all shares of Common Stock issued or sold by the Company or deemed to be issued or sold pursuant to Section 5.5 (including shares of Common Stock subsequently
reacquired or retired by the Company), other than any Excluded Issuance. 
 1.2 “Closing Price” shall mean,
with respect to each share of Common Stock for any day, (a) the last reported sale price regular way or, in case no such sale takes place on such day, the average of the closing bid and asked prices regular way, in either case as reported on
the principal national securities exchange on which the Common Stock is listed or admitted for trading or (b) if the Common Stock is not listed or admitted for trading on any national securities exchange, the last reported sale price or, in
case no such sale takes place on such day, the average of the highest reported bid and the lowest reported asked quotation for the Common Stock, in either case as quoted on the NASDAQ National Market System or the NASDAQ Small Cap Market or
(c) if the Common Stock is not listed or admitted for trading on any national securities exchange or quoted on the NASDAQ National Market System or the NASDAQ Small Cap Market, the last reported sale price or, in case no such sale 

 
takes place on such day, the average of the highest reported bid and the lowest reported asked quotation for the Common Stock, in either case as reported on
NASDAQ or a similar service if NASDAQ is no longer reporting such information. 
 1.3 “Convertible
Securities” means stock or other securities convertible into shares of Common Stock. 
 1.4 “Current Market
Price Per Share” means the average of the daily Closing Prices for the fie (5) consecutive Trading Days preceding the date in question. 
 1.5 “Effective Price” of Additional Shares shall mean the quotient determined by dividing the total number of Additional Shares issued or sold (or deemed to have been issued or sold under
Section 5.5 by the Company, into the aggregate consideration received (or deemed to have been received under Section 5.5) by the Company for such Additional Shares. 
 1.6 “Excluded Issuance” shall mean: 
 (a) shares of Common Stock and/or options, warrants or other Common Stock purchase rights issued and the Common Stock issued pursuant to
such options, warrants or other rights after the date hereof to employees, officers or directors of, or consultants or advisors to the Company or any subsidiary pursuant to stock purchase or stock option plans or other arrangements that are approved
by the Board of Directors; provided that such shares, options, warrants or other Common Stock purchase rights shall not be Excluded Issuances in any case where the grantee acquires the shares, or options, warrants or other rights to purchase Common
Stock at a price per share less than the Closing Price on the date of grant; 
 (b) shares of Common Stock issued pursuant to
the exercise of rights, options, warrants or convertible securities outstanding as of the date hereof; 
 (c) shares of Common
Stock issued or issuable (i) in a public offering under the Securities Act, (ii) upon exercise of warrants or rights granted to underwriters in connection with such a public offering; or (iii) in connection with any other offering
involving a capital raising transaction (other than as described in clause (i) in above) at a price no less than 5% below the Current Market Price Per Share; 
 (d) shares of Common Stock issued or issuable in connection with a bona fide business acquisition of the Company, whether by merger,
consolidation, sale of assets, sale or exchange of stock or otherwise, each as approved by the Board of Directors of the Company, however, excluding shares issued or issuable in connection with a transaction between the Company and an affiliate;

 (e) shares of Common Stock issued pursuant to a Company plan for reinvestment of dividends or interest; and 
 (f) shares of Common Stock issued or issuable in connection with any transaction where such securities so issued are deemed included in
the definition of Excluded Issuance by the affirmative vote or written consent of the Required Holders. 
 1.7
“Qualifying Dilutive Issuance” means an issuance or sale, or a deemed issuance or sale, of Additional Shares (other than an Excluded Issuance or an issuance or sale under Sections 5.1 through 5.4 hereof), for an Effective Price less
than the Current Market Price Per Share on the date of such issuance or sale. 
  

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 1.8 “Required Holders” means the holders of the Warrants representing at
least a majority of shares of Common Stock underlying the Warrants then outstanding. 
 1.9 “Trading Day”
means, with respect to any security, each Monday, Tuesday, Wednesday, Thursday and Friday, other than any day on which the principal exchange or market in which such security is traded are required or authorized by law to be closed and, if no such
exchange or market exists, any day on which banks in New York, New York are not required or authorized by law to be closed. 
 2. Appointment of
Warrant Agent. The Company hereby appoints the Warrant Agent to act as agent for the Company for the Warrants, and the Warrant Agent hereby accepts such appointment and agrees to perform the same in accordance with the terms and conditions set
forth in this Agreement. 
 3. Warrants. 
 3.1 Form of Warrant. The Warrants shall (a) be issued in registered form only, (b) be in the form of Exhibit A hereto (the “Warrant Certificate”), the provisions of which are
incorporated herein, (c) be signed by, or bear the facsimile signature of, the Chairman of the Board or Chief Executive Officer and Chief Financial Officer, Treasurer, Secretary or Assistant Secretary of the Company and (d) shall bear a
facsimile of the Company’s seal. In the event the person whose facsimile signature has been placed upon any Warrant shall have ceased to serve in the capacity in which such person signed the Warrant before such Warrant is issued, it may be
issued with the same effect as if he or she had not ceased to be such at the date of issuance. 
 3.2 Effect of
Countersignature. Unless and until countersigned by the Warrant Agent pursuant to this Agreement, a Warrant shall be invalid and of no effect and may not be exercised by the holder thereof. 
 3.3 Registration. 
 (a) Warrant Register. The Warrant Agent shall maintain books (“Warrant Register”) for the registration of original issuance and the registration of transfer of the Warrants. Upon the initial
issuance of the Warrants, the Warrant Agent shall countersign and register the Warrants in the names of the holder or holders thereof in such denominations and otherwise in accordance with instructions delivered to the Warrant Agent by the Company.

 (b) Registered Holder. Prior to due presentment for registration of transfer of any Warrant, the Company and the
Warrant Agent may deem and treat the person in whose name such Warrant shall be registered upon the Warrant Register (“registered holder”), as the absolute owner of such Warrant and of each Warrant represented thereby
(notwithstanding any notation of ownership or other writing on the Warrant Certificate made by anyone other than the Company or the Warrant Agent), for the purpose of any exercise thereof, and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary. 
 4. Terms and Exercise of Warrants. 
 4.1 Warrant Price. Each Warrant shall, when countersigned by the Warrant Agent, entitle the registered holder thereof, subject to
the provisions of such Warrant and of this Agreement, to purchase 

  

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from the Company the number of shares of Common Stock stated therein, at the price of $2.61 per share, subject to the adjustments provided in Section 5
hereof and the last sentence of this Section 4.1. The term “Warrant Price” as used in this Agreement refers to the price per share at which Common Stock may be purchased at the time a Warrant is exercised. The Company in its
sole discretion may lower the Warrant Price at any time prior to the Expiration Date (as defined in Section 4.2) for a period of not less than ten (10) days. 
 4.2 Duration of Warrants. The Warrants may be exercised only during the period (“Exercise Period”) commencing on
the date of issuance, and terminating at 5:00 p.m., New York City time on the earlier to occur of (a) August 27, 2012 or (b) the date fixed for redemption of the Warrant as provided in Section 7 of this Agreement
(“Expiration Date”). Except with respect to the right to receive the Redemption Price (as set forth in Section 7) in accordance with the terms of Section 7, each Warrant not exercised on or before the Expiration Date shall
become void, and all rights thereunder and all rights in respect thereof under this Agreement shall cease at the close of business on the Expiration Date. The Company in its sole discretion may extend the duration of the Warrants by delaying the
Expiration Date; provided, however, that the Company will provide notice to registered holder or holders of the Warrants of such extension of not less than 10 days. 
 4.3 Exercise of Warrants. 
 (a) Payment. Subject to the provisions of the Warrant and this Agreement, each Warrant, when countersigned by the Warrant Agent, may be exercised on any Trading Day during the Exercise Period by the registered
holder thereof by surrendering it, at the office of the Warrant Agent, or at the office of its successor as Warrant Agent, in the Borough of Manhattan, City and State of New York by delivering the following: (i) the subscription form, as set
forth in the Warrant, duly executed, and (ii) payment in full in lawful money of the United States, in cash, good certified check or good bank draft payable to the order of the Company (or as otherwise agreed to by the Company), the Warrant
Price for each full share of Common Stock as to which the Warrant is exercised and any and all applicable taxes due in connection with the exercise of the Warrant, and (iii) the original Warrant Certificate; provided, however, that the Warrant
shall not be exercisable and the Company shall not be obligated to issue Common Stock unless, at the time the holder seeks to exercise the Warrant, a prospectus relating to the Warrant Stock is current and the Common Stock has been registered or
qualified or deemed to be exempt under the securities laws of the United States and the state of residence of the holder of the Warrant. 
 (b) Issuance of Certificates. As soon as practicable after the exercise of any Warrant and the clearance of the funds in payment of the Warrant Price and the delivery to the Warrant Agent of the original
Warrant Certificate, the Company shall issue to the registered holder of such Warrant a certificate or certificates for the number of full shares of Common Stock to which he is entitled, registered in such name or names as may be directed by him,
her or it, and if such Warrant shall not have been exercised in full, a new countersigned Warrant for the number of shares as to which such Warrant shall not have been exercised. Subject to Section 9.3 and notwithstanding the foregoing, the
Company shall not be obligated to deliver any securities pursuant to the exercise of a Warrant and shall have no obligation to settle such Warrant exercise unless a registration statement under the Securities Act with respect to the Common Stock is
effective and such securities are qualified for sale or exempt from qualification under applicable securities laws of the state or other jurisdiction in which the registered holder reside. In no event will the Company be required to net cash settle
the warrant exercise. Warrants may not be exercised by, or securities issued to, any registered holder in any state in which such exercise would be unlawful. Except as otherwise provided in the Warrant, each certificate for Warrant Stock initially
issued upon the exercise of a Warrant pursuant to an exemption from qualification 

  

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or registration under any applicable securities laws, and each certificate for Warrant Stock issued to any subsequent transferee of any such certificate,
shall (if required by law or issued pursuant to any exemption from registration) be stamped or otherwise imprinted with a legend in form and substance satisfactory to the Company. 
 (c) Valid Issuance. All Warrant Stock issued upon the proper exercise of the Warrant in conformity with this Agreement shall be
validly issued, fully paid and non-assessable. 
 (d) Date of Issuance. Each person in whose name any such certificate
for shares of Common Stock is issued shall for all purposes be deemed to have become the holder of record of such shares on the date on which the Warrant was surrendered and payment of the Warrant Price was made, irrespective of the date of delivery
of such certificate, except that, if the date of such surrender and payment is not a Trading Day, such person shall be deemed to have become a holder of such shares at the close of business on the next succeeding Trading Day. 
 5. Adjustments and Anti-Dilution Provisions. 
 5.1 Common Stock Distributions, etc. In case the Company shall (a) pay a dividend or make a distribution on its Common Stock in shares of Common Stock, (b) split or otherwise subdivide its outstanding
Common Stock into a greater number of shares or (c) combine its outstanding Common Stock into a smaller number of shares, the Warrant Price in effect immediately prior thereto shall be adjusted so that the price shall equal the price determined
by multiplying the Warrant Price in effect immediately prior to such event by a fraction, of which (i) the numerator shall be the number of shares of Common Stock outstanding immediately prior to such event and (ii) the denominator shall
be the number of shares of Common Stock outstanding immediately after such event. An adjustment made pursuant to this Section 5.1 shall become effective immediately after the record date in the case of a dividend or distribution and shall
become effective immediately after the effective date in the case of subdivision or combination. 
 5.2 Rights, Options or
Warrants Issuances. In case the Company shall issue rights, options or warrants to all or substantially all holders of its Common Stock entitling them (for a period commencing no earlier than the record date described below and expiring not more
than 60 days after such record date) to subscribe for or purchase shares of Common Stock (or Convertible Securities) at a price per share (or having an initial conversion price per share) less than the Current Market Price Per Share on the
record date for the determination of stockholders entitled to receive such rights or warrants, the Warrant Price in effect immediately prior thereto shall be adjusted so that the same shall equal the price determined by multiplying the Warrant Price
in effect immediately prior to such record date by a fraction, of which (a) the numerator shall be the number of shares of Common Stock outstanding on such record date plus the number of shares of Common Stock that the aggregate offering price
of the total number of shares of Common Stock so offered (or the aggregate initial conversion price of the Convertible Securities so offered, which shall be determined by multiplying the number of shares of Common Stock issuable upon exercise of
such Convertible Securities by the initial conversion price per share of Common Stock pursuant to the terms of such Convertible Securities) would purchase at the Current Market Price Per Share on such record date, and (b) the denominator shall
be the number of shares of Common Stock outstanding on such record date plus the number of additional shares of Common Stock offered (or into which the Convertible Securities so offered are convertible); provided, however, that no adjustment shall
be made if the Company issues or distributes to the holder the rights, options or warrants which the holder would have been entitled to receive had this Warrant been exercised prior to the record date. Any such adjustment shall be made successively
whenever any such rights, options or warrants are issued, and shall become effective immediately after the applicable record date therefor unless such rights, options or warrants are not immediately exercisable, in which case, any such adjustments
shall be made at the time such rights, options or warrants become exercisable. 
  

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 5.3 Distributions Other Than Common Stock. If the Company after the date hereof
shall distribute to all or substantially all holders of any class of Common Stock evidences of its indebtedness, cash or other assets, shares of capital stock of any class or any other securities or rights, options or warrants to subscribe therefor
(excluding (a) shares of Common Stock, rights, options or warrants referred to in Section 5.1 and (b) the distribution of rights to all holders of Common Stock pursuant to the adoption of a stockholders’ rights plan or the
detachment of such rights under the terms of such stockholders’ rights plan), then in each such case the Warrant Price shall be determined by multiplying the Warrant Price in effect immediately before the record date of such distribution by a
fraction (i) the numerator of which shall be such closing bid price per share of Common Stock on the last Trading Day of the Common Stock immediately prior to such record date, less the then fair market value (as determined in good faith by the
Board of Directors) of the portion of the assets or evidences of indebtedness so distributed or of such shares of capital stock, subscription rights or warrants applicable to one share of the Common Stock and (ii) the denominator of which shall
be the closing bid price per share of Common Stock per share of the Common Stock on the last Trading Day of the Common Stock immediately prior to such record date; provided, however, that no adjustment need be made for any transaction referred to in
this Section 5.3 if the registered holders of the Warrants are entitled to participate in the transaction on the same basis as holders of Common Stock participate in the transaction. 
 5.4 Effect of Reclassification, Consolidation, Merger or Sale on Exercise Privilege. If any of the following shall occur, namely:
(a) any reclassification or change of shares of Common Stock issuable upon exercise of the Warrants (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or
combination, or any other change for which an adjustment is provided in this Section 5); (b) any consolidation or merger or combination to which the Company is a party other than a merger or consolidation in which the Company is the
continuing corporation and which does not result in any reclassification of, or change (other than in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination) in, outstanding
shares of Common Stock; or (c) any sale, conveyance, transfer or lease of all or substantially all of the property or assets of the Company, directly or indirectly, to any person (any such event being called a “Capital
Reorganization”), upon the effective date of such Capital Reorganization, the holder shall have the right to receive, upon exercise of the Warrant, the kind and amount of shares of stock and/or other securities and/or property (including
cash) which the holder would have owned or have been entitled to receive in connection with such Capital Reorganization if the Warrant had been exercised immediately prior to such Capital Reorganization, assuming the holder (i) is not a person
with which the Company consolidated or into which the Company merged or which merged into the Company or to which such sale or conveyance was made, as the case may be (“Constituent Person”), or an affiliate of a Constituent Person
and (ii) failed to exercise his rights of election, if any, as to the kind or amount of securities, cash or other property receivable upon such Capital Reorganization. The provisions of this Section 5.4 shall similarly apply to successive
Capital Reorganizations. The Company shall not consummate any transaction that effects or permits any such event or occurrence unless each person whose shares of stock, securities or assets will be issued, delivered or paid to the stockholders,
prior to or simultaneously with the consummation of the transaction, expressly assumes, or in the case of the Company, acknowledges, by a subsequent Warrant or other document in a form substantially similar hereto, executed and delivered to the
holder hereof, the obligation to deliver to such holder such shares of stock, securities or assets as, in accordance with the foregoing provisions of this Section 5.4, such holder is entitled to purchase, and all other obligations and
liabilities under the Warrant, including obligations and liabilities in respect of subsequent adjustments that are required under the Warrant. 
  

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 5.5 Sale of Shares Below Current Market Price Per Share. 
 (a) Qualifying Dilutive Issuance. If at any time or from time to time after the date hereof, the Company makes a Qualifying
Dilutive Issuance, then, and in each such case, the then-effective Warrant Price shall be reduced, effective as of the opening of business on the date of such issuance or sale (or, if earlier, the date on which a binding agreement providing for such
issuance or sale was entered into), to a price determined by multiplying the Warrant Price in effect immediately prior to such issuance or sale by a fraction, of which: 
 (i) the numerator shall be (A) the number of shares of Common Stock outstanding immediately prior to such issuance or sale (or
deemed issuance or sale), plus (B) the number of shares of the class of Common Stock that the aggregate consideration received by the Company for such issuance or sale (or deemed issuance or sale) would purchase at the Current Market Price Per
Share, and 
 (ii) the denominator shall be the number of shares of Common Stock outstanding immediately prior to such issue
or sale plus the total number of Additional Shares so issued or sold. 
 (b) Convertible Securities, Rights, Options or
Warrants. For the purpose of the adjustment required under this Section 5.5, if the Company issues or sells Convertible Securities or rights, options or warrants to purchase shares of Common Stock or Convertible Securities and if the
Effective Price of such shares of Common Stock is less than the Current Market Price Per Share on the date of such issuance or sale, then, in each case, the Company shall be deemed to have issued at the time of the issuance of such rights, options
or warrants or Convertible Securities the maximum number of Additional Shares issuable upon exercise or conversion thereof and to have received as consideration for the issuance of such shares an amount equal to the total amount of the
consideration, if any, received by the Company for the issuance or sale of such rights, options or warrants or Convertible Securities plus the minimum amounts of consideration, if any, payable to the Company upon the exercise or conversion of such
rights, options or warrants or Convertible Securities (other than by cancellation of liabilities or obligations evidenced by such Convertible Securities); provided, however, that (i) subject to clause (c) below, if the minimum amounts of
such consideration cannot be ascertained, but are a function of antidilution or similar protective clauses, the Company shall be deemed to have received the minimum amounts of consideration without reference to such clauses; and (ii) if the
minimum amount of consideration payable to the Company upon the exercise or conversion of such rights, options, warrants or Convertible Securities is reduced over time or on the occurrence or non-occurrence of specified events other than by reason
of antidilution adjustments, the Effective Price shall be recalculated using the figure to which such minimum amount of consideration is reduced; provided, further, that if the minimum amount of consideration payable to the Company upon the exercise
or conversion of such rights, options, warrants or Convertible Securities is subsequently increased, the Effective Price shall be again recalculated using the increased minimum amount of consideration payable to the Company upon the exercise or
conversion of such rights, options, warrants or Convertible Securities. 
 No further adjustment of the Warrant Price, as
adjusted upon the issuance of such rights, options, warrants or Convertible Securities, shall be made as a result of the actual issuance of Additional Shares upon the exercise of any such rights, options or warrants or the conversion of any such
Convertible Securities. If any such rights, options or warrants or the conversion privilege represented by any such Convertible Securities shall expire without having been exercised, the Warrant Price as adjusted upon the issuance of such rights,
options, or warrants or 

  

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Convertible Securities shall be readjusted to the Warrant Price which would have been in effect had an adjustment been made on the basis of only the
Additional Shares, if any, actually issued or sold on the exercise or conversion of such rights, options, warrants or Convertible Securities, and on the basis that such Additional Shares, if any, were issued or sold for the consideration actually
received by the Company upon such exercise or conversion (other than by cancellation of liabilities or obligations evidenced by such Convertible Securities), plus the consideration, if any, actually received by the Company for the issue or sale of
all such rights, options, warrants and Convertible Securities, whether or not exercised, provided that such readjustment shall not apply to prior exercises of this Warrant. 
 (c) Subsequent Dilutive Issuances. In the event that the Company issues or sells (or is deemed to have issued or sold) Additional
Shares in a Qualifying Dilutive Issuance (the “First Dilutive Issuance”), then in the event that the Company issues or sells, or is deemed to have issued or sold, Additional Shares in a Qualifying Dilutive Issuance other than the
First Dilutive Issuance (a “Subsequent Dilutive Issuance”) pursuant to the same instruments as the First Dilutive Issuance, then and in each such case upon a Subsequent Dilutive Issuance the Warrant Price shall be reduced to the
Warrant Price that would have been in effect had the First Dilutive Issuance and each Subsequent Dilutive Issuance all occurred on the closing date of the First Dilutive Issuance. 
 5.6 Notice of Adjustment. Whenever the Warrant Price, exercise privilege or number of Warrant Stock shall be adjusted pursuant to
the terms of any of Section 5.1 through 5.5 hereof, the Company shall promptly mail to the holder a notice of the adjustment and an officer’s certificate briefly stating the facts requiring the adjustment and the manner of computing it.
Unless and until the holder shall receive an officer’s certificate setting forth an adjustment of the Warrant Price or the number of Warrant Stock, the holder may assume without inquiry that the Warrant Price and the number of Warrant Stock
have not been adjusted and that the last Warrant Price and number of Warrant Stock of which it has knowledge remain in effect. 
 5.7 Notice of Certain Transactions. In the event that: (a) the Company consolidates or merges with or into, or transfers substantially all of its assets to, another corporation or another corporation merges into the Company and,
in each case, stockholders of the Company must approve the transaction, or (b) there is a dissolution or liquidation of the Company, then the Company shall mail to the holder a notice in accordance with Section 10.2 stating the proposed
record or effective date. Failure to mail such notice or any defect therein shall not affect the validity of any transaction referred to in this Section 5.7. 
 5.8 Deferral of Issuance. In any case in which this Section 5 shall require that an adjustment be made following a record date
established for purposes of this Section 5, the Company may elect to defer (but only until five (5) Trading Days following the filing by the Company with the holder of the certificate described in Section 5.6) issuing to the holder of
any Warrant exercised after such record date the shares of Common Stock and other capital stock of the Company issuable upon such exercise over and above the shares of Common Stock and other capital stock of the Company issuable upon such exercise
only on the basis of the Warrant Price prior to adjustment; and, in lieu of the shares the issuance of which is so deferred, the Company shall issue or cause its transfer agent to issue due bills or other appropriate evidence prepared by the Company
of the right to receive such shares. If any distribution in respect of which an adjustment to the Warrant Price is required to be made as of the record date therefor is not thereafter made or paid by the Company for any reason, the Warrant Price
shall be readjusted to the Warrant Price which would then be in effect if such record date had not been fixed or such effective date had not occurred. 
  

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 5.9 Company Determination Final. Any determination that the Company or the Board
of Directors must make pursuant to this Agreement is conclusive absent manifest error. 
 5.10 No Adjustment. No
adjustment in the Warrant Price shall be required under Sections 5.1. through 5.5 until the adjustment would require an increase or decrease of at least one percent (1%) in the Warrant Price as last adjusted. Any adjustments which by reason of
this Section 5.10 are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Section 5.10 shall be made to the nearest cent or to the nearest one-hundredth of a
share, as the case may be. 
 5.11 Adjustment for Tax Purposes. The Company shall be entitled to make such reductions
in the Warrant Price, in addition to those required by this Section 5, as it in its discretion shall determine to be advisable in order that any stock dividends, subdivisions of shares, distributions of rights to purchase stock or securities or
distributions of securities convertible into or exchangeable for stock hereafter made by the Company to its stockholders shall not be taxable. 
 5.12 Adjustment of Number of Shares Purchasable. Upon any adjustment of the Warrant Price as provided in Section 5, the number of shares subject to the Warrant shall be adjusted so that the holder shall
thereafter be entitled to purchase, at the Warrant Price resulting from such adjustment, the number of shares of Common Stock (calculated to the nearest 1/100th of a share) obtained by multiplying the Warrant Price in effect immediately prior to
such adjustment by the number of Warrant Stock purchasable hereunder (whether or not the Exercise Period has commenced) immediately prior to such adjustment and dividing the product thereof by the Warrant Price resulting from such adjustment

 5.13 No Fractional Shares. Notwithstanding any provision contained in this Agreement to the contrary, the Company
shall not issue fractional shares upon exercise of Warrants. If, by reason of any adjustment made pursuant to this Section 5, the holder of any Warrant would be entitled, upon the exercise of such Warrant, to receive a fractional interest in a
share, the Company shall, upon such exercise, round up or down to the nearest whole number the number of the shares of Common Stock to be issued to the Warrant holder. 
 5.14 Form of Warrant. The form of Warrant need not be changed because of any adjustment pursuant to this Section 5, and
Warrants issued after such adjustment may state the same Warrant Price and the same number of shares as is stated in the Warrants initially issued pursuant to this Agreement. However, the Company may at any time in its sole discretion make any
change in the form of Warrant that the Company may deem appropriate and that does not affect the substance thereof, and any Warrant thereafter issued or countersigned, whether in exchange or substitution for an outstanding Warrant or otherwise, may
be in the form as so changed 
 5.15 No Dilution or Impairment. The Company will not, by amendment of its Articles of
Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other action, avoid or seek to avoid the observance or performance of any of the terms of the Warrant. Without
limiting the generality of the foregoing, the Company (a) will not increase the par value of any shares of stock receivable on the exercise of the Warrant above the amount payable therefor on such exercise, (b) will at all times reserve
and keep available the maximum number of its authorized shares of Common stock, free from all preemptive rights therein, which will be sufficient to permit the full exercise of the Warrant, and (c) will take all such action as may be reasonably
necessary or appropriate in order that all Common Stock issued upon exercise of a Warrant will be duly and validly issued, fully paid and non-assessable, and free from all taxes, liens, and charges. 
  

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 6. Transfer and Exchange of Warrants. 
 6.1 Registration of Transfer. The Warrant Agent shall register the transfer, from time to time, of any outstanding Warrant upon the
Warrant Register, upon surrender of such Warrant for transfer, properly endorsed with signatures properly guaranteed and accompanied by appropriate instructions for transfer. Upon any such transfer, a new Warrant representing an equal aggregate
number of Warrants shall be issued and the old Warrant shall be cancelled by the Warrant Agent. The Warrants so cancelled shall be delivered by the Warrant Agent to the Company from time to time upon request. 
 6.2 Procedure for Surrender of Warrants. Warrants may be surrendered to the Warrant Agent, together with a written request for
exchange or transfer, and thereupon the Warrant Agent shall issue in exchange therefor one or more new Warrants as requested by the registered holder of the Warrants so surrendered, representing an equal aggregate number of Warrants. 
 6.3 Fractional Warrants. The Warrant Agent shall not be required to effect any registration of transfer or exchange which will
result in the issuance of a warrant certificate for a fraction of a warrant. 
 6.4 Service Charges. No service charge
shall be made for any exchange or registration of transfer of Warrants. 
 6.5 Warrant Execution and Countersignature.
The Warrant Agent is hereby authorized to countersign and to deliver, in accordance with the terms of this Agreement, the Warrants required to be issued pursuant to the provisions of this Section 6, and the Company, whenever required by the
Warrant Agent, will supply the Warrant Agent with Warrants duly executed on behalf of the Company for such purpose. 
 7. Redemption. 
 7.1 Redemption. The Company shall have the right to require the holder to either (a) exercise all or any portion of the
Warrant outstanding and unexercised or (b) relinquish all or any portion of the Warrant outstanding and unexercised upon forty-five (45) days’ written notice in the event that the Trading Price of the Company’s Common Stock has
equaled or exceeded $3.92 per share (the “Trigger Price”) for fifteen (15) or more consecutive Trading Days. On each occasion that the Company elects to exercise its rights of redemption under this Section 7.1, the Company
must mail such written notice within ten (10) days following the satisfaction of all of the foregoing conditions. If the Warrant or any portion thereof is redeemed in accordance with this Section 7.1, the Holder shall have the right to
exercise the Warrant in respect of the shares of Warrant Stock subject to redemption until the close of business on the date next preceding the date fixed for redemption. On or after the date fixed for redemption, the Holder shall have no rights
with respect to the Warrant to the extent redeemed, except the right to receive $0.01 per share (the “Redemption Price”) of outstanding and unexercised and issuable upon exercise of the Warrant upon surrender of the Warrant. The
Trigger Price shall be subject to adjustment, as the Board of Directors determines to be fair and appropriate, for any combination, subdivision, split, reclassification, stock dividend, or any similar change affecting the Common Stock.
“Trading Price” means (a) if the Common Stock is actively traded on any national securities exchange or any NASDAQ quotation or market system, then the highest price at which sales of a share of Common Stock shall have been
sold during such Trading Day and (b) if the shares of Common Stock are not actively traded on any such exchange or system, then the highest sale price of a share of Common Stock during such Trading Day. 
  

 10 

 7.2 Exercise After Notice of Redemption. The Warrants may be exercised for cash at
any time after notice of redemption shall have been given by the Company pursuant to Section 7.1 hereof and prior to the time and date fixed for redemption. On and after the redemption date, the record holder of the Warrants shall have no
further rights except to receive, upon surrender of the Warrants, the Redemption Price. 
 8. Other Provisions Relating to Rights of Holders of
Warrants. 
 8.1 No Rights as Stockholder. A Warrant does not entitle the registered holder thereof to any of the
rights of a stockholder of the Company, including, without limitation, the right to receive dividends, or other distributions, exercise any preemptive rights to vote or to consent or to receive notice as stockholders in respect of the meetings of
stockholders or the election of directors of the Company or any other matter. 
 8.2 Lost, Stolen, Mutilated, or Destroyed
Warrants. If any Warrant is lost, stolen, mutilated, or destroyed, the Company and the Warrant Agent may upon receipt from the holder of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of
the Warrant and an indemnity reasonably satisfactory to it and, in case of mutilation, upon surrender and cancellation hereof, the Company will execute and deliver in lieu hereof a new Warrant of like tenor to the Holder; provided, however, in the
case of mutilation, no indemnity shall be required if the Warrant in identifiable form is surrendered to the Company for cancellation. 
 8.3 Registration of Common Stock. Until the expiration of the Warrants in accordance with the provisions of this Agreement, the Company agrees to use its reasonable best efforts to maintain the effectiveness of
the Registration Statement or file with the Securities and Exchange Commission a new registration statement, for the registration, under the Securities Act, of, and it shall use its best efforts to take such action as is necessary to qualify for
sale, in those states in which the Warrants were initially offered by the Company, the Warrant Stock. The Warrants shall not be exercisable and the Company shall not be obligated to issue Common Stock unless, at the time a holder seeks to exercise
the Warrants, a prospectus relating to Warrant Stock is current and the Common Stock has been registered or qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the Warrants. 
 9. Concerning the Warrant Agent and Other Matters. 
 9.1 Payment of Taxes. The issuance of a certificate or certificates for shares of Common Stock upon exercise of the Warrant shall be made without charge for any stamp or other similar tax in respect of such
issuance. However, if any such certificate is to be issued in a name other than that of the Warrant holder, the person or persons requesting the issuance thereof shall pay to the Company the amount of any tax which may be payable in respect of any
transfer involved in such issuance or shall establish to the satisfaction of the Company that such tax has been paid. 
 9.2
Resignation, Consolidation, or Merger of Warrant Agent. 
 (a) Appointment of Successor Warrant Agent. The
Warrant Agent, or any successor to it hereafter appointed, may resign its duties and be discharged from all further duties and liabilities hereunder after giving sixty (60) days’ notice in writing to the Company. If the office of the
Warrant Agent becomes vacant by resignation or incapacity to act or otherwise, the Company shall appoint in writing a successor Warrant Agent in place of the Warrant Agent. If the Company shall fail to make such appointment within a period of thirty
(30) days after it has been notified in writing of such resignation or incapacity by the Warrant Agent or by the holder 

  

 11 

 
of the Warrant (who shall, with such notice, submit his Warrant for inspection by the Company), then the holder of any Warrant may apply to the Supreme Court
of the State of New York for the County of New York for the appointment of a successor Warrant Agent at the Company’s cost. Any successor Warrant Agent, whether appointed by the Company or by such court, shall be a corporation authorized to
exercise banking or corporate trust powers and shall be subject to supervision or examination by federal or state authority. After appointment, any successor Warrant Agent shall be vested with all the authority, powers, rights, immunities, duties,
and obligations of its predecessor Warrant Agent with like effect as if originally named as Warrant Agent hereunder, without any further act or deed; provided that, if for any reason it becomes necessary or appropriate, the predecessor Warrant Agent
shall execute and deliver, at the expense of the Company, an instrument transferring to such successor Warrant Agent all the authority, powers, and rights of such predecessor Warrant Agent hereunder; and upon request of any successor Warrant Agent
the Company shall make, execute, acknowledge, and deliver any and all instruments in writing for more fully and effectually vesting in and confirming to such successor Warrant Agent all such authority, powers, rights, immunities, duties, and
obligations. 
 (b) Notice of Successor Warrant Agent. In the event a successor Warrant Agent shall be appointed, the
Company shall give notice thereof to the predecessor Warrant Agent, the transfer agent for the Common Stock and International Finance Corporation not later than the effective date of any such appointment. 
 (c) Merger or Consolidation of Warrant Agent. Any corporation into which the Warrant Agent may be merged or with which it may be
consolidated or any corporation resulting from any merger or consolidation to which the Warrant Agent shall be a party shall be the successor Warrant Agent under this Agreement without any further act. 
 9.3 Fees and Expenses of Warrant Agent. 
 (a) Remuneration. The Company agrees to pay the Warrant Agent reasonable remuneration for its services as such Warrant Agent
hereunder and will reimburse the Warrant Agent upon demand for all expenditures that the Warrant Agent may reasonably incur in the execution of its duties hereunder. 
 (b) Further Assurances. The Company agrees to perform, execute, acknowledge, and deliver or cause to be performed, executed,
acknowledged, and delivered all such further and other acts, instruments, and assurances as may reasonably be required by the Warrant Agent for the carrying out or performing of the provisions of this Agreement. 
 9.4 Liability of Warrant Agent. 
 (a) Reliance on Company Statement. Whenever in the performance of its duties under this Agreement, the Warrant Agent shall deem it necessary or desirable that any fact or matter be proved or established by the
Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a statement signed by the Chairman
of the Board, the Chief Executive Officer or the Chief Financial Officer of the Company and delivered to the Warrant Agent. The Warrant Agent may rely upon such statement for any action taken or suffered in good faith by it pursuant to the
provisions of this Agreement. 
 (b) Indemnity. The Warrant Agent shall be liable hereunder only for its own gross
negligence, willful misconduct or bad faith. The Company agrees to indemnify the Warrant 

  

 12 

 
Agent and save it harmless against any and all liabilities, including judgments, costs and reasonable counsel fees, for anything done or omitted by the
Warrant Agent in the execution of this Agreement except as a result of the Warrant Agent’s, the Warrant Agent’s representative’s, employees’ or agent’s gross negligence, willful misconduct, or bad faith. 
 (c) Exclusions. The Warrant Agent shall have no responsibility with respect to the validity of this Agreement or with respect to
the validity or execution of any Warrant (except its countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in the Warrant; nor shall it be responsible to make
any adjustments required under the provisions of Section 5 hereof or responsible for the manner, method, or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment; nor shall it by any
act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of Common Stock to be issued pursuant to this Agreement or any Warrant or as to whether any shares of Common Stock will when issued
be valid and fully paid and nonassessable. 
 9.5 Acceptance of Agency. The Warrant Agent hereby accepts the agency
established by this Agreement and agrees to perform the same upon the terms and conditions herein set forth and among other things, shall account promptly to the Company with respect to Warrants exercised and concurrently account for, and pay to the
Company, all moneys received by the Warrant Agent for the purchase of shares of Common Stock through the exercise of Warrants. 
 10. Miscellaneous
Provisions. 
 10.1 Successors. All the covenants and provisions of this Agreement by or for the benefit of the
Company or the Warrant Agent shall bind and inure to the benefit of their respective successors and assigns. 
 10.2
Notices. Any notice, statement or demand authorized by this Agreement to be given or made by the Warrant Agent or by the holder of any Warrant to or on the Company shall be sufficiently given when so delivered if by hand or overnight delivery
or if sent by certified mail or private courier service within five days after deposit of such notice, postage prepaid, addressed (until another address is filed in writing by the Company with the Warrant Agent), as follows 
  

					
		 	Far East Energy Corporation.	 	
		 	363 N. Sam Houston Parkway East, Suite 380
		 	Houston, Texas 77061	 	
		 	Attn: Chief Executive Officer	 	
		
	 with a copy in each case
to:                    
	 	
			
		 	Baker & McKenzie LLP	 	
		 	2300 Trammell Crow Center
		 	2001 Ross Avenue	 	
		 	Dallas, TX 75201	 	
		 	Facsimile: 214-978-3099	 	
		 	Attn: Amar Budarapu	 	

 Any notice, statement or demand authorized by this Agreement to be given or made by the holder of any Warrant or
by the Company to or on the Warrant Agent shall be sufficiently given when so delivered if by hand or overnight delivery or if sent by certified mail or private courier service within five days after deposit of such notice, postage prepaid,
addressed (until another address is filed in writing by the Warrant Agent with the Company), as follows: 
  

					
		 	Continental Stock Transfer & Trust Company
		 	7 Battery Place	 	
		 	New York, NY 10004	 	
		 	Facsimile: (212) 616-7616	 	
		 	Attn: Michael Mullings	 	

  

 13 

					
	 with a copy in each case
to:                    
	 	
			
		 	International Finance Corporation.	 	
		 	2121 Pennsylvania Avenue, N.W.	 	
		 	Washington, D.C. 20433	 	
		 	Fax: (202) 974-4768	 	
		 	Attn: Director, Oil Gas, Mining and Chemicals Department

 10.3 Applicable Law. This Agreement, and the provisions, rights,
obligations, and conditions set forth herein, and the legal relations between the parties hereto, including all disputes and claims, whether arising in contract, tort, or under statute, shall be governed by and construed in accordance with the laws
of the State of New York without giving effect to its conflict of law provisions that would cause the application of any other law (other than Section 5-1401 of the New York General Obligations Law). 
 10.4 Persons Having Rights under this Agreement. Nothing in this Agreement expressed and nothing that may be implied from any of
the provisions hereof is intended, or shall be construed, to confer upon, or give to, any person or corporation other than the parties hereto and the registered holders of the Warrants, any right, remedy, or claim under or by reason of this
Agreement or of any covenant, condition, stipulation, promise, or agreement hereof. All covenants, conditions, stipulations, promises, and agreements contained in this Agreement shall be for the sole and exclusive benefit of the parties hereto and
their successors and assigns and of the registered holders of the Warrants. 
 10.5 Examination of the Warrant
Agreement. A copy of this Agreement shall be available at all reasonable times at the office of the Warrant Agent in the Borough of Manhattan, City and State of New York, for inspection by the registered holder of any Warrant. The Warrant Agent
may require any such holder to submit his Warrant for inspection by it. 
 10.6 Counterparts. This Agreement may be
executed in any number of original or facsimile counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. 
 10.7 Effect of Headings. The Section headings herein are for convenience only and are not part of this Agreement and shall not
affect the interpretation thereof. 
 10.8 Amendments. This Agreement may be amended by the parties hereto without the
consent of any registered holder for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained herein or adding or changing any other provisions with respect to matters or questions arising
under this Agreement as the parties may deem necessary or desirable and that the parties deem shall not adversely affect the interest of the registered holders. In furtherance of the foregoing, the Company may lower the Warrant Price or extend the
duration of the Exercise Period pursuant to Sections 4.1 and 4.2, respectively, without the consent of the registered holders. 
  

 14 

 10.9 Severability. This Agreement shall be deemed severable, and the invalidity or
unenforceability of any term or provision hereof shall not affect the validity or enforceability of this Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable term or provision, the parties
hereto intend that there shall be added as a part of this Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible and be valid and enforceable. 
 [Signature page follows] 
  

 15 

 IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto as of the day and year first above
written. 
  

			
	FAR EAST ENERGY CORPORATION
		
	By:	 	 /s/ Bruce N. Huff

	Name:	 	Bruce N. Huff
	Title:	 	Chief Financial Officer
	
	CONTINENTAL STOCK TRANSFER & TRUST COMPANY, as Warrant Agent
		
	By:	 	 /s/ Michael G. Mullings

	Name:	 	Michael G. Mullings
	Title:	 	Vice President, Compliance

  

 16Stock Subscription Agreement dated August 24, 2007

 Exhibit 10.1 
 STOCK SUBSCRIPTION AGREEMENT 
 This STOCK SUBSCRIPTION AGREEMENT (“Agreement”) is
made and entered into as of August 24, 2007 (“Subscription Date”) by and between Far East Energy Corporation, a Nevada corporation (“Company”), and International Finance Corporation
(“Purchaser”). 
 Preliminary Statement 
 The Purchaser desires to purchase and the Company desires to offer and sell to the Purchaser the number of shares of the Company’s common stock, par value $0.001 per share (“Company Common
Stock”) set forth opposite the Purchaser’s signature on the last page of this Agreement (such shares, the “Shares”) and a warrant (“Warrant”) to purchase the number of shares of the Company Common
Stock set forth opposite the Purchaser’s signature on the last page of this Agreement (“Warrant Shares”). 
 Agreement 
 The parties, intending to be legally bound, agree as follows: 
 ARTICLE 1 
 SALE OF SECURITIES 

 1.1 Purchase of Securities. The Purchaser will purchase from the Company the Shares at a price of U.S. $1.306 per Share in cash
(the total price paid for such Shares, the “Total Purchase Price”). In consideration therefor and pursuant to the other terms and conditions of this Agreement, the Company agrees to issue to the Purchaser a stock certificate for the
Shares and a Warrant to purchase the Warrant Shares. The Purchaser understands that the Company is under no obligation to sell any Shares or issue any stock certificate or Warrant to the Purchaser unless the Company accepts and signs this Agreement.

 1.2 Registration. The offering and sale of the Shares and the Warrant (the “Offering”) are being made pursuant to
(a) an effective Registration Statement on Form S-3, as amended (No. 333-132631), which became effective on May 10, 2006 (including the Base Prospectus, the “Registration Statement”) filed by the Company with the
Securities and Exchange Commission (the “SEC”), (b) if applicable, certain “free writing prospectuses” (as that term is defined in Rule 405 under the Securities Act of 1933, as amended, the “Securities
Act”), that have or will be filed with the SEC and delivered to the Purchaser on or prior to the date hereof, and (c) a prospectus supplement containing certain supplemental information regarding the Shares and terms of the Offering
that will be filed with the SEC (the “Prospectus Supplement”) and delivered, or otherwise made available, to the Purchaser along with the Company’s counterpart to this Agreement. 

 ARTICLE 2 
 DEFINITIONS 
 For purposes of this Agreement, to the extent not defined below, capitalized terms
shall have the meanings provided therefore in the relevant section where their usage first appears, and the following terms shall have the meanings and definitions set forth below: 
 2.1 “Accounting Standards” shall mean the generally accepted accounting principles in the United States, applied consistently, as in
effect from time to time. 
 2.2 “Affiliate” shall mean, with respect to any Person, any Person directly or indirectly
Controlling, Controlled by or under common Control with, that Person. 
 2.3 “Annual Monitoring Report” shall mean the
annual monitoring report, in form and substance satisfactory to the Purchaser and the Company, setting out the specific social, environmental and developmental impact information to be provided by the Company in respect of its Operations, as such
form of Annual Monitoring Report may be amended or supplemented from time to time with the Purchaser’s consent. 
 2.4
“Applicable S&E Law” shall mean all applicable statutes, laws, ordinances, rules and regulations of the People’s Republic of China, including but not limited to any license, permit or other governmental Authorization,
imposing liability or setting standards of conduct concerning any environmental, social, labor, health and safety or security risks of the type contemplated by the Performance Standards. 
 2.5 “Articles of Incorporation” shall mean the Articles of Incorporation of the Company, as amended. 
 2.6 “Assignment Agreements” shall mean the Assignment Agreement-Quinnan PSC, dated June 17, 2003, by and between Phillips China,
Inc., a Delaware corporation and the Company and the Assignment Agreement-Shouyang PSC, dated June 17, 2003, by and between Phillips China Inc., a Delaware corporation, and the Company. 
 2.7 “Auditors” shall mean Payne Smith & Jones, P.C. or another independent accounting firm. 
 2.8 “Authority” shall mean any national, supranational, regional or local government or governmental, administrative, fiscal, judicial,
or government-owned body, department, commission, authority, tribunal, agency or entity, or central bank (or any Person, whether or not government owned and howsoever constituted or called, that exercises the functions of a central bank).

 2.9 “Authorizations” shall mean any consent, registration, filing, agreement, notarization, certificate, license,
approval, permit, authority or exemption from, by or with any Authority, whether given by express action or deemed given by failure to act within any specified time period and all corporate, creditors’ and stockholders’ approvals or
consents. 
  

 2 

 2.10 “Base Prospectus” shall mean the prospectus contained in the Registration
Statement. 
 2.11 “Bylaws” shall mean the Amended and Restated Bylaws of the Company. 
 2.12 “CAO” shall mean the Compliance Advisor Ombudsman, the independent accountability mechanism for the Purchaser that impartially
responds to environmental and social concerns of affected communities and aims to enhance outcomes. 
 2.13 “CAO’s
Role” shall mean the following responsibilities of the CAO: (a) to respond to complaints by persons who have been or are likely to be directly affected by the social or environmental impacts of the Purchaser’s projects; and
(b) to oversee audits of the Purchaser’s social and environmental performance, particularly in relation to sensitive projects, and to ensure compliance with the Purchaser’s social and environmental policies, guidelines, procedures and
systems. 
 2.14 “Certificate of Incumbency and Authority” shall mean a certificate provided to the Purchaser by the Company
in the form of Annex E to this Agreement. 
 2.15 “Coercive Practice” shall have the meaning ascribed to that
term in the Anti-Corruption Guidelines set forth in Annex C to this Agreement. 
 2.16 “Collusive Practice”
shall have the meaning ascribed to that term in the Anti-Corruption Guidelines set forth in Annex C to this Agreement. 
 2.17
“Control” shall mean the possession, directly or indirectly, by a Person of the power to direct or cause the direction of the management and policies of another Person through the ownership of voting securities or otherwise;
provided that the direct or indirect ownership of twenty percent (20%) or more of the voting power of the total share capital of a Person is deemed to constitute control of that Person. 
 2.18 “Corrupt Practice” shall have the meaning ascribed to that term in the Anti-Corruption Guidelines set forth in Annex C
to this Agreement. 
 2.19 “Environmental and Social Action Plan” shall mean the plan developed by the Company, a copy of
which is attached as Annex F to this Agreement, setting out specific social and environmental measures to be undertaken by the Company, to enable its Operations to comply with the Performance Standards, as such Action Plan may be amended
or supplemented from time to time with the Purchaser’s consent, which was publicly disclosed on July 20, 2007. 
 2.20
“ESHS Management System” shall mean the Company’s environmental, social health, and safety management system enabling it to identify, assess and manage risks in respect of its Operations on an ongoing basis. 
 2.21 “ESRS” shall mean the environmental and social review summary, agreed by both the Purchaser and the Company in accordance with the
Purchaser’s Disclosure Policies, that was publicly disclosed on July 20, 2007. 
  

 3 

 2.22 “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 2.23 “Farmout Agreements” shall mean the Farmout Agreement-Qinnan PSC, dated June 17, 2003, by and between Phillips
China Inc., a Delaware corporation, and the Company, as amended, and Farmout Agreement-Shouyang PSC, dated June 17, 2003, by and between Phillips China Inc., a Delaware corporation, and the Company. 
 2.24 “Fraudulent Practice” shall have the meaning ascribed to that term in the Anti-Corruption Guidelines set forth in
Annex C to this Agreement. 
 2.25 “Material Adverse Effect” shall mean a material adverse effect on the assets,
properties, operations, or financial condition of the Company and its Subsidiaries taken as a whole. 
 2.26 “Obstructive
Practice” shall have the meaning ascribed to that term in the Anti-Corruption Guidelines set forth in Annex C to this Agreement. 
 2.27 “Operations” shall mean the operations, activities and facilities of the Company and the Subsidiaries (including the design, construction, operation, maintenance, management and monitoring, as
applicable in the United States of America and the People’s Republic of China). 
 2.28 “Performance Standards” shall
mean the Purchaser’s Performance Standards on Social & Environmental Sustainability, dated April 30, 2006, copies of which have been delivered to and receipt of which has been acknowledged by the Company. 
 2.29 “Production Sharing Contracts” shall mean the Production Sharing Contract for Exploitation of Coalbed Methane Resources in Enhong
and Laochang, Yunnan Province, the People’s Republic of China, dated January 25, 2002, by and between China United Coalbed Methane Corp. Ltd. and the Company, and the Production Sharing Contract for Exploitation of Coalbed Methane
Resources for the Qinnan Area in Shanxi Province, Qinshui Basin, the People’s Republic of China, dated April 16, 2002, by and between China United Coalbed Methane Corporation Ltd. and the Phillips China Inc. 
 2.30 “Project Documents” shall mean the Production Sharing Contracts, the Farmout Agreements, the Assignment Agreements and any
amendment or supplement thereto, or replacement or novation thereof. 
 2.31 “Rule and Regulations” shall mean the rules and
regulations of the SEC. 
 2.32 “Sanctionable Practice” shall mean any Corrupt Practice, Fraudulent Practice, Coercive
Practice, Collusive Practice, or Obstructive Practice, as defined in this Agreement and interpreted in accordance with the Anti-Corruption Guidelines set forth in Annex C to this Agreement. 
  

 4 

 2.33 “SEC Documents” shall mean the Registration Statement, the Base Prospectus and any
other preliminary prospectus or prospectus filed with the SEC in connection with the sale and purchase of the Shares pursuant to this Agreement, and each periodic report on Form 10-K, 10-Q, or 8-K that the Company has filed under the Securities Act
or the Exchange Act and in accordance with the Rules and Regulations during the twelve months prior to the Subscription Date; provided, however, that for purposes of Section 9.4, such term shall mean any and all periodic reports and any other
documents or disclosures filed with the SEC, and any press release or other public disclosure made by the Company (without regard to a date or time limitations). 
 2.34 “Subsidiary” shall mean with respect to the Company, an Affiliate over fifty percent (50%) of whose capital is owned, directly or indirectly by the Company. 
 2.35 “Transaction Documents” shall mean this Agreement and the Warrant. 
 2.36 “World Bank” shall mean the International Bank for Reconstruction and Development, an international organization established by
Articles of Agreement among its member countries. 
 ARTICLE 3 
 CLOSING; DELIVERY 
 3.1 Closing. The closing (“Closing”)
of the purchase and sale of the Shares to the Purchaser hereunder shall be held at the Company’s offices at 363 N. Sam Houston Parkway E., Suite 380, Houston, Texas 77060, on the third business day after the satisfaction or waiver (subject to
applicable law) of the latest to be satisfied or waived of the conditions set forth in Article 7 of this Agreement (other than those conditions that by their nature are to be satisfied at the Closing), or at such other time and place as the Company
and the Purchaser mutually agree upon. The date on which the Closing occurs is hereinafter referred to as the “Closing Date”. On or before the Subscription Date, the Company shall deliver to the Purchaser an executed Company
Certification and Subscription Request, substantially in the form of Annex D. 
 3.2 Delivery. At the Closing, on the
basis of the representations and warranties contained in, and subject to the terms and conditions of, this Agreement, the Purchaser shall pay the Company the Total Purchase Price in immediately available funds. As soon as practicable, and in any
case on or before three (3) business days after the Closing, the Company shall deliver or cause the delivery to the Purchaser a stock certificate representing the number of Shares purchased by such Purchaser and a Warrant for the purchase of
the Warrant Shares. Time shall be of the essence, and delivery at the time and place specified or otherwise agreed pursuant to this Agreement is a further condition of the obligation of the Purchaser hereunder. At the Closing, the Company shall also
deliver the documents and instruments required to be delivered pursuant to Article 7 hereof. 
  

 5 

 ARTICLE 4 
 REPRESENTATIONS AND WARRANTIES OF THE COMPANY 
 The Company represents and warrants to the Purchaser
that, as of the Subscription Date, except as set forth in the disclosure schedule delivered to the Purchaser and signed by the Company in connection with the execution and delivery of this Agreement (the “Company Disclosure
Schedule”), the following representations and warranties are true and correct: 
 4.1 Organization and Standing. The Company
and each of its Subsidiaries have been duly incorporated or formed, as applicable, and are validly existing, and in good standing under the laws of their respective jurisdiction of incorporation or formation. The Company and each of its Subsidiaries
have all requisite power and authority to own and operate its properties and assets and to carry on their business as presently conducted. The Company and each of its Subsidiaries are qualified to do business as a foreign entity in every
jurisdiction in which the failure to be so qualified would have a Material Adverse Effect. Other than Far East Energy (Bermuda), Ltd., none of the Company’s Subsidiaries are a “significant subsidiary” as such term is defined in Rule
405 of the Rules and Regulations. 
 4.2 Power. The Company has all requisite power and authority to execute and deliver the
Transaction Documents and to carry out and perform its obligations under the terms of the Transaction Documents. 
 4.3 Validity. The
execution, delivery, and performance of the Transaction Documents by the Company have been duly authorized by all requisite action, and each of the Transaction Documents constitutes the legal, valid, and binding obligation of the Company enforceable
in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, or similar laws relating to or affecting the enforcement of creditors’ rights. 
 4.4 No Conflict. The execution and delivery of the Transaction Documents, the issuance, sale and delivery of the Shares and the Warrant by the
Company under this Agreement, the performance by the Company of its obligations under the Transaction Documents and/or the consummation of the transactions contemplated hereby and the application of the proceeds from the sale of the Shares, as
described under “Use of Proceeds” in the most recent prospectus relating to the sale of the Shares, will not conflict with, result in the breach or violation of, or constitute (with or without the giving of notice or the passage of time or
both) a violation of, or default under, (a) any material bond, debenture, note or other evidence of indebtedness, indenture, mortgage, deed of trust, loan agreement, joint venture or other agreement or instrument or under any material lease,
license, franchise, permit, to which the Company is a party or by which it or its properties may be bound or affected, (b) the Articles of Incorporation or the Bylaws, or (c) any statute or law, judgment, decree, rule, regulation,
ordinance or order of any Authority applicable to the Company, any of its Subsidiaries or their respective properties, except in the case of clause (c) for such conflicts, breaches, violations or defaults that would not be likely to have a
Material Adverse Effect. 
  

 6 

 4.5 Status of Authorizations. Except for the filings with the SEC and as required by any
“blue sky” laws and for Authorizations set forth in Section 4.5 of the Company Disclosure Schedule, the Company need not give any notice to, make any filing with, or obtain any Authorization of any Authority in order to consummate the
transactions contemplated by this Agreement. The Company and its Subsidiaries possess all necessary Authorizations from any Authority that are necessary for the operation of their respective business as currently conducted, except where such failure
to possess could not reasonably be expected to have a Material Adverse Effect and except for those not yet required to be obtained in which the failure to possess could reasonably be expected to have a Material Adverse Effect, which the Company and
its Subsidiaries intend to obtain in due course. Neither the Company nor any of its Subsidiaries has received any written notice of proceedings relating to the revocation or modification of any such Authorization which, if the subject of an
unfavorable decision, ruling or finding, could reasonably be expected to have a Material Adverse Effect. 
 4.6 No Amendments. Neither
the Articles of Incorporation nor the Bylaws have been amended since March 15, 2005. 
 4.7 Authorized Capital. The
authorized, subscribed and paid-in capital and options and warrants of the Company at the time immediately prior to the Closing and immediately after the Closing are set forth in Section 4.7 of the Company Disclosure Schedule, subject to any
exercise of warrants, options or other right to purchase or otherwise acquire equity securities of the Company outstanding on the Subscription Date. All of the issued and outstanding shares of Common Stock were validly issued, fully paid and
nonassessable. All subscriptions, warrants, options, convertible securities, and other rights (contingent or other) to purchase or otherwise acquire equity securities of the Company issued and outstanding as of the Subscription Date, or material
contracts, commitments, understandings, or arrangements by which the Company or any of its Subsidiaries is or may be obligated to issue shares of Common Stock, or securities or rights convertible or exchangeable for shares of Common Stock, are in
all material respects as set forth in the SEC Documents. Except as set forth in the SEC Documents, or as a result of exercises of stock options pursuant to the Company’s stock option and incentive plans, no Common Stock nor any subscription,
warrant, option, convertible security, or other right (contingent or other) to purchase or otherwise acquire equity securities of the Company is outstanding on the Subscription Date. 
 4.8 Shares Duly Authorized. The Shares are duly and validly authorized and when issued and delivered against payment pursuant to the terms of this
Agreement will be duly and validly issued, fully paid, and nonassessable, and will be free of any liens or encumbrances with respect to the issuance thereof; provided, however, that the transfer of the Shares shall be subject to federal securities
laws at the time a transfer is proposed. The Shares will conform to the description of the material terms thereof contained in the Base Prospectus under the caption “Description of Capital Stock”. 
 4.9 No Immunity. Neither the Company nor any of its Subsidiaries nor any of its or their properties enjoys any right of immunity from set off,
suit or execution with respect to the Company’s obligations under any Transaction Document or otherwise. 
  

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 4.10 Financial Condition. Except as the Company may have publicly disclosed (and then solely to
the extent so disclosed) in the SEC Documents, press releases or in other “public disclosures” as such term is defined in Section 101(e) of Regulation FD of the Exchange Act, in each case, filed or made through and including the date
hereof, since June 30, 2007, there has not been any Material Adverse Effect. 
 4.11 Financial Statements. The consolidated
financial statements of the Company and its Subsidiaries and the related notes thereto included in the SEC Documents present fairly, in all material respects, the financial position and the liabilities of the Company and its Subsidiaries as of the
dates indicated and the results of operations and cash flows for the periods therein specified subject, and in the case of unaudited statements only, to normal year-end audit adjustments. Except as set forth in such financial statements (or the
notes thereto), such financial statements (including the related notes) have been prepared in accordance with the Accounting Standards. 
 4.12 Taxes. The Company and each of its Subsidiaries has timely filed all federal, state, local and foreign income and franchise and other tax returns required to be filed by any jurisdiction to which it is subject and has paid all
taxes due in accordance therewith, except where the failure to so timely file or pay would not be likely to result in a Material Adverse Effect. 
 4.13 Litigation. Except as disclosed in the SEC Documents, neither the Company nor its Subsidiaries are engaged in any litigation, action, suit or proceeding before any court, governmental agency or body, domestic or foreign, now
pending or, to the actual knowledge of the Company, threatened in writing against the Company or its Subsidiaries wherein an unfavorable decision, ruling or finding would reasonably be expected to have a Material Adverse Effect. 
 4.14 Compliance. Neither the Company nor any of its Subsidiaries (a) is in violation of its Articles of Incorporation or Bylaws (or
other applicable governing documents) (b) is in default, and no event has occurred which, with notice or lapse of time or both, would constitute a default, in the due performance or observance of terms and conditions contained in any material
indenture, mortgage deed of trust, loan agreement or other agreement or instrument to which it is a party or by which it is bound or to which any of its properties or assets is subject or (c) is in violation of any law, ordinance, rule or
regulation of any foreign, federal, state or local government or any agency thereof, or any writ, order or decree, to which it or its property or assets may be subject or has failed to obtain any Authorization necessary to the ownership of its
properties or the conduct of its business, except, in the case of clause (b) and (c) where such default, violation failure would not be likely to result in a Material Adverse Effect. 
 4.15 Environmental Matters. To the best of the Company’s knowledge and belief, there are no material social or environmental risks or issues
in respect of its Operations other than those identified by the disclosed ESRS. The Company has not received nor is aware of (a) any existing or threatened complaint, order, directive, claim, citation or notice from any Authority or
(b) any material written communication from any Person, in either case, concerning the failure of its Operations to comply with any matter covered by the Performance Standards, 

  

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which has, or could reasonably be expected to have, a Material Adverse Effect or any material adverse impact on the implementation or conduct of the
Operations in accordance with the Performance Standards. 
 4.16 Sanctionable Practices. The Company has not committed or engaged in
nor has it authorized its Affiliates or any person acting on the Company’s or its Affiliate’s behalf to commit or engage in, with respect to the transactions contemplated by the Transaction Documents and the Project Documents, any
Sanctionable Practices. 
 4.17 Insurance. The Company’s insurance policies cover such risks and contain such policy limits,
types of coverage and deductibles as are, in the Company’s judgment, adequate to insure fully against the material risks to which the Company and its Subsidiaries and its or their employees, business, properties and other assets would
reasonably be expected to be exposed in the operation of the business as currently conducted. All of the Company’s insurance policies are valid and enforceable policies, all premiums due and payable under such policies have been paid and the
Company is otherwise in compliance in all material respects with the terms of such policies and bonds. The Company has no knowledge or belief of any threatened termination of, or material premium increase with respect to, any of such policies.

 4.18 Registration Statement. The Registration Statement is effective under the Securities Act and no stop order preventing or
suspending the effectiveness of the Registration Statement or suspending or preventing the use of the Base Prospectus and the Prospectus Supplement has been issued by the SEC and no proceedings for that purpose have been instituted or, to the
knowledge of the Company, are threatened by the SEC. 
 4.19 Project Documents. Each Project Document is a valid and binding
agreement, enforceable against the Company and its Subsidiaries, as applicable, in accordance with its terms, except as such enforceability (a) may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (b) is subject to general principles of equity (regardless of whether enforceability is considered in a proceeding at equity or at law) and,
except to the extent described in any SEC Document, the Company and any Subsidiary of the Company are not in any material default and have no knowledge of any material default of the counterparties thereto, under any such Project Document.

 4.20 All Material Facts Disclosed. The Registration Statement, Base Prospectus, and Prospectus Supplement filed with the SEC and
the documents incorporated therein (a) conform in all material respects to the requirements of the Securities Act and the Rules and Regulations, and (b) do not contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading. 
  

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 ARTICLE 5 
 COVENANTS OF THE COMPANY 
 The Company covenants with the Purchaser as follows: 
 5.1 Environmental. The Company and its Subsidiaries shall: 
 (a) undertake its Operations in compliance with the Environmental and Social Action Plan and otherwise comply with the Performance Standards, and use its reasonable efforts, including exercising any voting or approval
rights it might have under any Project Document or other agreement governing construction or operations relating to the Company’s properties or assets to ensure that its agents, contractors and subcontractors comply with the Performance
Standards the Environmental, Health and Safety Guidelines of the World Bank Group, and Applicable S&E Law; 
 (b) periodically review the
form of the Annual Monitoring Report and advise the Purchaser as to whether revision of the form is necessary or appropriate in light of changes to the Operations, or in light of environmental or social risks identified by the ESHS Management
System, and revise the form of the Annual Monitoring Report as agreed with the Purchaser; 
 (c) use all reasonable efforts to ensure the
continuing operation of the ESHS Management System to assess and manage the social and environmental performance of the Operations and to comply with the Performance Standards; 
 (d) not amend the Environmental and Social Action Plan in any material respect without the prior written consent of the Purchaser; 
 (e) not undertake, or invest in any Person engaged in, any of the activities set forth on Annex B to this Agreement; 
 (f) within ninety (90) days after the end of each calendar year end, deliver to the Purchaser the Annual Monitoring Report in a form and substance
substantially satisfactory to the Purchaser and the Company consistent with the requirements of this Agreement confirming compliance with the Environmental and Social Action Plan, the social and environmental covenants of this Agreement and
Applicable S&E Law or, as the case may be, identifying any non-compliance or failure, and the actions being taken to remedy any such deficiency; and 
 (g) within three (3) business days after its occurrence and discovery thereof by any executive officer of the Company or any other Company employee that (i) has primary management responsibilities or primary
oversight responsibility for the implementation and monitoring of the ESHS Management System or (ii) is designated under the ESHS Management System as having primary responsibility for any such matter, notify the Purchaser, of any social,
labor, health and safety, security or environmental incident, accident or circumstance having, or which could reasonably be expected to have, any material adverse impact on the implementation or operation of the Operations in compliance with the
Performance Standards or a Material Adverse Effect, specifying in each case the nature of the incident, accident, or circumstance and the impact or effect arising or likely to arise therefrom, and the measures the Company is taking or plans to take
to address them and to prevent any future similar event and keep the Purchaser informed of the on-going implementation of those measures. 
  

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 (h) publicly disclose any new concession areas acquired by the Company or any of its Subsidiaries, to the
extent not otherwise included in the SEC Documents or the Company’s other public disclosures. 
 5.2 Access. Upon the
Purchaser’s request, and with reasonable prior notice to the Company, the Company shall permit representatives of the Purchaser and the CAO, during normal office hours, to (a) visit any of the sites and premises where the business of the
Company or its Subsidiaries is conducted; (b) inspect any of the sites, facilities, plants and equipment of the Company or its Subsidiaries; (c) have access to the books of account and all records of the Company and its Subsidiaries; and
(d) have access to those employees, agents, contractors and subcontractors of the Company and its Subsidiaries who have or may have knowledge of matters with respect to which the Purchaser seeks information; provided that no such reasonable
notice shall be required in the event of a default under or breach of any Transaction Document; provided, further, that in the case of the CAO, such access shall only be for the purpose of carrying out the CAO’s Role. 
 5.3 Sanctionable Practices. The Company agrees not to engage in (and the Company shall not authorize or permit any Affiliate or any other Person
acting on its behalf to engage in) with respect to any transaction contemplated by the Transaction Documents and the Project Documents, any Sanctionable Practice. The Company further covenants that should the Purchaser notify the Company of its
concern that there has been a violation of the provisions of this paragraph, the Company shall cooperate in good faith with it and its representatives in determining whether such a violation has occurred, and shall respond promptly and in reasonable
detail to any notice from the Purchaser, and shall furnish documentary support for such response upon the Purchaser’s request. 
 5.4
Insurance. The Company shall insure and keep insured with financially sound and reputable insurers, all its assets and business, including all of the Operations, against material risks, including the insurances specified in
Annex A, under forms of policies and with insurers reasonably acceptable to the Purchaser; provided, however that the obligations under this Section 5.4 will not apply to the insurance coverage described in Sections 1(a) and
(c) of Annex A to this Agreement until such time as the Company begins production outtake at the wells covered by the Project Documents. 
 5.5 Use of Proceeds. The Company shall not use the proceeds of the Offering in reimbursement of, or for expenditures in the territories of any country which is not a member of the World Bank or for goods
produced in or services supplied from any such country. 
 5.6 Information Rights and Reporting. The Company agrees as follows:

 (a) As long as the Company has a class of equity securities registered under Section 12(g) of the Exchange Act or is subject to
Section 15(d) of the Exchange Act, the Company shall file electronically with the SEC or otherwise make publicly available, all quarterly and annual financial statements that would be required to be contained in a filing with the SEC on Forms
10-Q and 10-K. 
  

 11 

 (b) As long as the Company does not have a class of equity securities registered under Section 12(g)
of the Exchange Act or is not subject to Section 15(d) of the Exchange Act, then the Company shall provide to the Purchaser: (i) within one hundred and twenty (120) days after the end of each fiscal year, audited annual financial
statements (a balance sheet as of the end of such financial year and the related statements of income, stockholders’ equity and cash flows for the financial year then ended) for the Company on a consolidated basis, prepared in accordance with
the Accounting Standards and certified by the Auditors; and (ii) within sixty (60) days after the end of each quarter of each fiscal year (excluding the fourth quarter of each fiscal year) quarterly financial statements (a balance sheet as
of the end of such quarter and the related statements of income, stockholders’ equity and cash flows for the quarter then ended) for the Company on a consolidated basis, prepared in accordance with the Accounting Standards (other than the
inclusion of footnotes and subject to customary year end adjustments). 
 (c) The Company will disclose in its periodic reports on Form 10-K,
10-Q, or 8-K (or applicable successor reports) filed under the Exchange Act with the SEC or otherwise made publicly available as contemplated in clause (a) above, or otherwise prepared and provided in accordance with clause (b) above, all
payments made to the government of the People’s Republic of China in all material respects, which shall include the material tax, royalty and other material payments made annually by the Company or any Affiliate to local and/or national
governments in the People’s Republic of China under any concession agreement, host country agreement or the Project Documents. 
 (d)
The Company shall provide to the Purchaser a copy of any management letters delivered by the Auditors and such other information as the Purchaser from time to time reasonably requests with regard to any material developments in or affecting the
Company’s business. 
 (e) The Company shall provide the Purchaser with any annual business plan and any annual budget of the Company.

 (f) The Company shall provide the Purchaser with any copies of material filings made with respect to the Company with government agencies,
including notification of material litigation which could reasonably be expected to have a Material Adverse Effect. 
 5.7 Anti-Money
Laundering Provision. The Company will institute, maintain and comply with appropriate internal procedures and controls, satisfactory to Purchaser, and follow best international banking standards, for the purpose of: 
 (a) preventing the Company or any of its affiliates from being used for money laundering, the financing of terrorist activity, fraud, or other corrupt or
illegal purposes or practices; and 
  

 12 

 (b) ensuring that the Company will not enter into any transaction with, or for the benefit of, any
individuals or institutions named on lists of sanctioned persons promulgated by the United Nations Security Council or its committees resolutions in connection with money laundering or anti-terrorism matters. 
 5.8 Provision of Information. If at any time the Purchaser notifies the Company in writing that the Purchaser no longer wishes to receive the
information or documentation required to be delivered pursuant to Section 5.1(f), 5.1(g), 5.6(b), 5.6(d) or 5.6(e), the Company shall immediately discontinue providing such information and documentation to the Purchaser. Thereafter, if the
Purchaser notifies the Company in writing that it again wishes to begin receiving such information and documentation, the Company shall immediately again begin providing such information and documentation to the Purchaser as required by such
Sections. 
 ARTICLE 6 
 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER 
 The Purchaser represents and warrants to the Company, as of the
Subscription Date, with respect to the Offering as follows: 
 6.1 Organization and Standing. The Purchaser is an international
organization, established by Articles of Agreement among its member countries. 
 6.2 Power. The Purchaser has all requisite
power to execute and deliver the Transaction Documents and to carry out and perform its obligations under the terms of the Transaction Documents. 
 6.3 Validity. The execution, delivery, and performance of the Transaction Documents by the Purchaser have been duly authorized by all requisite action, and each of the Transaction Documents constitutes the legal, valid, and binding
obligation of the Purchaser enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, or similar laws relating to or affecting the enforcement of creditors’ rights. 
 6.4 No Conflict. The execution and delivery of the Transaction Documents, the performance by the Purchaser of its obligations under the
Transaction Documents and/or the consummation of the transactions contemplated hereby will not conflict with, result in the breach or violation of, or constitute (with or without the giving of notice or the passage of time or both) a violation of,
or default under, (a) the Articles of Agreement of the Purchaser, or (b) any statute or law, judgment, decree, rule, regulation, ordinance or order of any Authority applicable to the Purchaser or their respective properties, except in
the case of such conflicts, breaches, violations or defaults that would not be likely to have a Material Adverse Effect. 
 6.5 Status of
Authorizations. The Purchaser need not give any notice to, make any filing with, or obtain any Authorization of any Authority in order to consummate the transactions contemplated by this Agreement, other than any such notices or filings that
have been made by the Purchaser. 
  

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 6.6 Underwriter. The Purchaser is not an “underwriter” within the meaning of
Section 2(a)(11) of the Securities Act in connection with its purchase of the Shares and Warrant. 
 6.7 Receipt of Base
Prospectus. Purchaser acknowledges receipt of the Base Prospectus prior to the date of any “offer” or “sale” (as such terms are defined in the Securities Act) of the Shares and the Warrant. 
 6.8 Residence; Accredited Investor. Purchaser’s principal residence is the District of Columbia, United States. Purchaser is an
“accredited investor” within the meaning of SEC Rule 501 of Regulation D, as presently in effect. 
 ARTICLE 7 
 CONDITIONS OF PURCHASER’S OBLIGATIONS 
 The obligations of the Purchaser to consummate the transactions under this Agreement shall be subject to the satisfaction of each of the conditions set forth below, unless waived by the Purchaser, on or prior to the date of the Closing.

 7.1 Agreement. The Transaction Documents will be entered into and shall be in full force and effect. 
 7.2 Representations, Warranties and Obligations. The representations and warranties of the Company set forth in Article 4 of this Agreement
will be true and correct in all material respects as the Closing Date and the Subscription Date as though made on and as of such date; the Company will have performed all obligations and complied in all material respects with all covenants required
to be performed or complied with by the Company under this Agreement on or prior to the date of the Closing. The Purchaser shall have received a certificate of the Chief Executive Officer or Chief Financial Officer of the Company to that effect.

 7.3 Authorizations. The Company has obtained and provided to the Purchaser copies of all necessary Authorizations listed in
Section 4.5 of the Company Disclosure Schedule and resolutions of the Board of Directors of the Company and/or a committee thereof relating to transactions contemplated by this Agreement and all of those Authorizations and resolutions are in
full force and effect. 
 7.4 Opinion of Counsel. The Purchaser will have received an opinion of counsel to the Company in form and
substance reasonably satisfactory to the Purchaser. 
 7.5 Expenses. The Company shall have paid Purchaser all fees and expenses owing
to the Purchaser which are due on the date of the Closing, and all expenses owing pursuant to Section 9.1 of this Agreement as of the date of the Closing and for which the Company has received an invoice. 
 7.6 Documents. The Purchaser is satisfied that the Project Documents are fully effective and unconditional and that there is no default under any
of the Project Documents. 
  

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 7.7 No Material Adverse Effect. Since December 31, 2006, nothing has occurred which has or
may reasonably be expected to have a Material Adverse Effect. 
 7.8 Insurance Requirements. The Purchaser has received copies of all
insurance policies evidencing compliance with the requirements of Annex A to this Agreement (other than the insurance coverage described in Sections 1(a) and (c) of Annex A to this Agreement), including the renewal certificate for
the ACE policy and a copy of the Huatai policy upon receipt by the project company, together with a certification from the Company’s insurers or insurance agents confirming that all premiums for the following policies have been paid:
(a) Control of Well, (b) Excess Liability and (c) ACE DIC/DIL Foreign Liability. 
 7.9 Company Certifications. The
Purchaser has received certifications by the Company, substantially in the form of Annex D to this Agreement, with respect to the conditions specified and expressed to be effective as of the date of the Closing. 
 7.10 Certificate of Incumbency and Authority. The Purchaser has received a Certificate of Incumbency and Authority. 
 ARTICLE 8 
 CANCELLATION RIGHT 

 8.1 Cancellation of Purchaser’s Subscription. Notwithstanding any other provision of this Agreement, the Purchaser may, by
written notice to the Company, cancel the right of the Company to request a subscription of any of the Shares if at any time prior to the date of the Closing: (a) in the reasonable opinion of the Purchaser, a Material Adverse Effect has
occurred, (b) there exists any situation which reasonably demonstrates that performance by the Company of its obligations under any of the Transaction Documents cannot be expected, or (c) the date of the Closing has not occurred on or
before September 30, 2007 (other than as a result of the Purchaser’s breach of this Agreement). Notwithstanding any other provision of this Agreement, the Company may, by written notice to the Purchaser, terminate this Agreement if the
date of the Closing has not occurred on or before September 30, 2007 (other than as a result of the Company’s breach of this Agreement). 
 ARTICLE 9 
 MISCELLANEOUS 
 9.1 Expenses. In addition to any fees and expenses payable by the Company pursuant to the letter between the Company and the Purchaser dated May 21, 2007, within ten (10) days of the receipt of any
invoice or other written request, the Company shall pay to the Purchaser, as the Purchaser may direct, or, as the case may be, reimburse the Purchaser any amount paid by the Purchaser, on account of: (a) all taxes, duties, fees or other charges
payable on or in connection with the execution, issue, delivery or registration of this Agreement and any other documents related to it and (b) the reasonable fees and expenses of the Purchaser’s counsel incurred in connection with the
preparation of the investment by the Purchaser provided for under this Agreement, and the preparation and/or review, execution and, where appropriate, translation and registration of this Agreement and any other documents related to it. In the event

  

 15 

 
that Purchaser brings any action or proceeding, to enforce the terms and conditions of this Agreement and the Purchaser is the prevailing party (as
determined by the court, agency or other authority before which such action, proceeding or arbitration is commenced), the reasonable costs and expenses incurred by the Purchaser in relation to such efforts to enforce or protect its rights under this
Agreement and any other documents related to it, including reasonable legal and other professional consultants’ fees. The provisions of this Section 9.1 shall survive the execution and delivery of this Agreement. 
 9.2 Survival. The representations and warranties contained herein shall survive the execution and delivery of this Agreement and the sale of the
Shares and Warrant. The covenants herein shall survive the execution and delivery of this Agreement for so long as the Purchaser “beneficially owns” (within the meaning of Rule 13d-3 under the Exchange Act) 1,000,000 Shares (including any
Warrant Shares) (the “Threshold Shares”). The Threshold Shares shall be subject to appropriate and equitable adjustment in the event of stock splits, dividends, subdivisions, recapitalizations and similar transactions. 

9.3 Assignment; Successors and Assigns. This Agreement may not be assigned by either party without the prior written consent of the other
party. This Agreement and all provisions thereof shall be binding upon, inure to the benefit of, and are enforceable by the parties hereto and their respective successors and permitted assigns. 
 9.4 Confidentiality. The Purchaser acknowledges and agrees that it has received and may in the future receive Confidential Information regarding
the Company and the Purchaser’s disclosure of such Confidential Information would cause substantial harm and damages to the Company and its Subsidiaries. The Purchaser shall hold any Confidential Information it receives from the Company in
confidence, and shall not, without the consent of the Company, reveal any Confidential Information to any Person other than the Purchaser’s directors, officers, employees, employees of the World Bank, attorneys, independent auditors, rating
agencies, contractors and consultants (including, without limitation, technical and financial advisors) who need to know such information in connection with the performance of their duties for the Purchaser. “Confidential
Information” shall mean any written information concerning the businesses and affairs of the Company that the Company has provided or shall in the future provide to the Purchaser that is clearly and conspicuously identified as
“Confidential Information”, but excluding information that: (a) in contained in any SEC Documents; (b) is or becomes available to the public from a source other than the Purchaser; (c) was available to the Purchaser prior to
its disclosure to the Purchaser by the Company; (d) was or is developed by the Purchaser independently of, and without reference to, the Confidential Information; (e) is required to be disclosed by action of any court, tribunal or
regulatory authority or by any requirement of law, legal process, regulation, or governmental order, decree or rule, or is necessary for the Purchaser to disclose in connection with any proceeding in any court or tribunal or before any regulatory
authority in order to preserve its rights; (f) the Company agrees in writing may be disclosed; or (g) is or becomes available to the Purchaser from sources which to the Purchaser’s knowledge are under no obligation of confidentiality
to the Company. In the event that the Purchaser receives a request or is required to disclose any Confidential Information pursuant to clause (e) above, the Purchaser shall (to the extent permitted by law), promptly notify the Company of the
existence of such request or requirement to disclose such Confidential Information. 
  

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 9.5 Notices. All notices, requests, and other communications under the Transaction Documents shall
be in writing and will be deemed to have been duly given and received (a) when personally delivered, (b) when sent by facsimile upon confirmation of receipt, (c) one business day after the day on which the same has been delivered
prepaid to a nationally recognized courier service, or (d) five business days after the deposit in the United States mail, registered or certified, return receipt requested, postage prepaid, in each case addressed to the Company at 363 N. Sam
Houston Parkway E., Suite 380, Houston, Texas 77060, Attn: Chief Executive Officer, facsimile number, (832) 598-0479, with a copy to Amar Budarapu, Esq., Baker & McKenzie LLP, 2300 Trammell Crow Center, 2001 Ross Avenue, Dallas,
Texas 75201, facsimile number, (214) 978-3099, and as to the Purchaser addressed to International Finance Corporation, 2121 Pennsylvania Avenue, N.W., Washington, D.C. 20433, facsimile number, (202) 974-4768, Attn: Director, Oil Gas,
Mining and Chemicals Department, with a copy (in the case of communications relating to payments) sent to the attention of the Director, Department of Financial Operations, at facsimile number (202) 522-7419. Any party hereto from time to time
may change its address, facsimile number, or other information for the purpose of notices to that party by giving notice specifying such change to the other parties hereto. The Purchaser and the Company may each agree to accept notices and other
communications to it under the Transaction Documents by electronic communications pursuant to procedures reasonably approved by it; provided that approval of such procedures may be limited to particular notices or communications. 
 9.6 Governing Law; Jurisdiction. 
 (a)
The Transaction Documents, and the provisions, rights, obligations, and conditions set forth therein, and the legal relations between the parties thereto, including all disputes and claims, whether arising in contract, tort, or under statute, shall
be governed by and construed in accordance with the laws of the State of New York without giving effect to its conflict of law provisions that would cause the applications of any other law (other than Section 5-1401 of the New York General
Obligations Law). 
 (b) For the exclusive benefit of the Purchaser, the Company irrevocably agrees that any legal action, suit or proceeding
arising out of or relating to the Transaction Documents may be brought in the courts of the United States of America located in the Southern District of New York or in the courts of the State of New York located in the Borough of Manhattan. By the
execution of the Transaction Documents, the Company irrevocably submits to the jurisdiction of any such court in any such action, suit or proceeding. Final judgment against the Company in any such action, suit or proceeding shall be conclusive and
may be enforced in any other jurisdiction, including the People’s Republic of China, by suit on the judgment, a certified or exemplified copy of which shall be conclusive evidence of the judgment, or in any other manner provided by law.

 (c) Nothing in the Transaction Documents shall affect the right of the Purchaser to commence legal proceedings or otherwise sue the
Company in any other appropriate jurisdiction, or concurrently in more than one jurisdiction, or to serve process, pleadings and other legal papers upon the Company in any manner authorized by the laws of any such jurisdiction. 
  

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 (d) The Company also irrevocably consents, if for any reason its authorized agent for service of process
of summons, complaint and other legal process in any action, suit or proceeding is not present in New York, New York, to the service of such papers being made out of the courts of the United States of America located in the Southern District of New
York and the courts of the State of New York located in the Borough of Manhattan by mailing copies of the papers by registered United States air mail, postage prepaid, to the Company at its address specified pursuant to Section 9.5. In such a
case, the Purchaser shall also send by facsimile, or have sent by facsimile, a copy of the papers to the Company. 
 (e) Service in the
manner provided in Sections 9.6(d) in any action, suit or proceeding will be deemed personal service, will be accepted by the Company as such and will be valid and binding upon the Company for all purposes of any such action, suit or proceeding.

 (f) The Company irrevocably waives to the fullest extent permitted by applicable law: (i) any objection which it may have now or in
the future to the laying of the venue of any action, suit or proceeding in any court referred to in this Section 9.6; (ii) any claim that any such action, suit or proceeding has been brought in an inconvenient forum; (iii) its right
of removal of any matter commenced by the Purchaser in the courts of the State of New York to any court of the United States of America; and (iv) any and all rights to demand a trial by jury in any such action, suit or proceeding brought
against such party by the Purchaser. 
 (g) To the extent that the Company may be entitled in any jurisdiction to claim for itself or its
assets immunity in respect of its obligations under the Transaction Documents from any suit, execution, attachment (whether provisional or final, in aid of execution, before judgment or otherwise) or other legal process or to the extent that in any
jurisdiction that immunity (whether or not claimed) may be attributed to it or its assets, the Company irrevocably agrees not to claim and irrevocably waives such immunity to the fullest extent permitted now or in the future by the laws of such
jurisdiction. 
 (h) The Company hereby acknowledges that the Purchaser shall be entitled under applicable law, including the provisions of
the International Organizations Immunities Act, to immunity from a trial by jury in any action, suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby brought against the Purchaser in any court of the
United States of America. The Company hereby waives any and all rights to demand a trial by jury in any action, suit or proceeding arising out of or relating to the Transaction Documents or the transactions contemplated by the Transaction Documents,
brought against the Purchaser in any forum in which the Purchaser is not entitled to immunity from a trial by jury. 
 (i) To the extent that
the Company may, in any action, suit or proceeding brought in any of the courts referred to in Section 9.6(b) or any other court in the United States of America, the People’s Republic of China or elsewhere arising out of or in connection
with this Agreement, be entitled to the benefit of any provision of law requiring the Purchaser in such action, suit or proceeding to post security for the costs of the Company, or to post a bond or to take similar action, the Company hereby
irrevocably waives such benefit, in each case to the 

  

 18 

 
fullest extent now or in the future permitted under the laws of the United States of America or any state thereof of the People’s Republic of China or,
as the case may be, the jurisdiction in which such court is located. 
 9.7 Severability. In the event that any provision of this
Agreement or the application of any provision hereof is declared to be illegal, invalid, or otherwise unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall not be affected except to the extent necessary to delete
such illegal, invalid, or unenforceable provision unless that provision held invalid shall substantially impair the benefits of the remaining portions of this Agreement. 
 9.8 Headings. The headings in this Agreement are for convenience of reference only and shall not constitute a part of this Agreement, nor shall they affect its meaning, construction, or effect. 
 9.9 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed to be an original instrument and all of
which together shall constitute one and the same instrument. Facsimile or electronic signatures shall be deemed originals for all purposes hereunder. 
 9.10 Entire Agreement. This Agreement embodies the entire understanding and agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings
relating to the subject matter hereof. 
 9.11 Further Assurances. The parties agree to execute and deliver all such further
documents, agreements and instruments and take such other and further action as may be necessary or appropriate to carry out the purposes and intent of this Agreement. 
  

 19 

 IN WITNESS WHEREOF, the Purchaser has caused this Agreement to be signed by the undersigned thereto duly
authorized, as of the Subscription Date. 
  

							
	 U.S. $15,000,000
 Amount of Investment
 (U.S. $1.306 per Share)
	 		 	 INTERNATIONAL FINANCE CORPORATION

				
	 11,485,452
	 		 	By:	 	 /s/ Kalada Harry

	(Number of Shares)	 		 	Name:	 	Kalada Harry
		 		 	Title:	 	 Acting Director Oil, Gas, Mining & Chemicals Department

				
	 4,019,908
 (Number of Warrant Shares)

	 		 		 	

 This Agreement is hereby confirmed, agreed and accepted by the Company as of the Subscription Date. 
  

			
	FAR EAST ENERGY CORPORATION
		
	By:	 	 /s/ Bruce N. Huff

	Name:	 	Bruce N. Huff
	Title:	 	Chief Financial Officer

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