Document:

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                                                                    EXHIBIT 10.7

                           FAR EAST ENERGY CORPORATION

                       NONQUALIFIED STOCK OPTION AGREEMENT

                               GENERAL INFORMATION

Name:               Bruce N. Huff

Award Date:         December 23, 2004

Number of Shares
Subject to Option:  400,000

Exercise Price:     $2.00

Vesting:            One fifth upon the Award Date and one fifth each succeeding
                    anniversary of the Award Date until fully vested

Expiration Date:    December 23, 2014

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                           FAR EAST ENERGY CORPORATION
                       NONQUALIFIED STOCK OPTION AGREEMENT

         THIS NONQUALIFIED STOCK OPTION AGREEMENT (this "AGREEMENT") is made as
of this 23rd day of December, 2004, by and between Far East Energy Corporation,
a Nevada corporation (the "CORPORATION"), and Bruce N. Huff ("PARTICIPANT").

         WHEREAS, the Participant has entered into an Amended and Restated
Employment Agreement dated the date hereof (as hereinafter amended, restated and
modified from time to time, the "EMPLOYMENT AGREEMENT") with the Corporation;

         NOW, THEREFORE, in consideration of the foregoing, of the mutual
promises hereinafter set forth and of such other good and valuable
consideration, the receipt, adequacy and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, do hereby agree
as follows:

1. GRANT OF OPTION; DEFINED TERMS.

         A. Capitalized terms used herein without definition shall have the
meaning ascribed to such terms in the Employment Agreement.

         B. Subject to the terms and conditions hereinafter set forth, the
Corporation, with the approval and at the direction of the Compensation
Committee of the Board of Directors (the "COMMITTEE"), and the Participant
hereby acknowledge and agree that the Corporation granted to Participant, as of
the Award Date, an option to purchase up to 400,000 shares of common stock of
the Corporation (the "COMMON STOCK") at a price of U.S. $2.00 per share (as may
be adjusted in accordance with Article 5, the "EXERCISE PRICE"). Such option is
hereinafter referred to as the "OPTION," and the shares of Common Stock
purchasable upon exercise of the Option are hereinafter referred to as the
"SHARES." The Option is intended by the parties hereto to be, and shall be
treated as, a nonqualified stock option (as such term is defined under Section
422 of the Internal Revenue Code of 1986, as amended).

         C. The right to exercise 20% of the Option (or a portion thereof) shall
vest and first become exercisable on the Award Date, and an additional 20% shall
vest on each succeeding anniversary of the Award Date until all of the Option is
vested (the "VESTING DATE(S)"), so that all of the Shares subject to the Option
shall be fully vested on December 23, 2008; provided, however, that Participant
has been continuously employed or otherwise retained by the Corporation during
the period from the Award Date until the applicable Vesting Date.

         D. The Option shall be immediately vested and exercisable in accordance
with the terms and conditions of, and to the extent provided in, the Employment
Agreement.

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2. TERMINATION OF OPTION. The Option and all rights hereunder with respect
thereto, to the extent such rights shall not have been exercised, shall
terminate and become null and void after December 23, 2014 (the "OPTION TERM").

3. EXERCISE OF OPTION.

         A. Participant may exercise the Option with respect to all or any part
of the number of Shares then exercisable hereunder by giving the Secretary of
the Corporation written notice of intent to exercise. The notice of exercise
shall specify the number of Shares as to which Participant is exercising and the
date of exercise thereof, which date shall be not less than five (5) days after
the giving of such notice (unless an earlier time shall have been mutually
agreed upon in writing). All or any portion of the vested portion of the Option
may be exercised by Participant at any time on or before December 23, 2014.

         B. Notwithstanding anything contained in this Article 3 to the
contrary, the Option may be exercised only in compliance with all applicable
securities laws and only by (i) Participant's completion, execution and delivery
to the Corporation of a notice of exercise and, if required by the Corporation,
an "investment letter" as supplied by the Corporation and (ii) the payment to
the Corporation, as provided in Article 3D hereof, of an amount equal to the
amount obtained by multiplying the Exercise Price by the number of Shares being
purchased pursuant to such exercise as shall be specified by Participant in such
notice of exercise. Except as otherwise provided in the Employment Agreement,
Participant shall not sell, transfer, assign, pledge for a loan, margin,
hypothecate or exchange the Option or the option shares, except pursuant to the
laws of descent and except that Participant's estate, executors or
administrators, or personal or legal representatives may exercise the Option in
accordance with the terms of Article 3C hereof in the event of the death or
Disability of Participant.

         C. In the event of the death or Disability of Participant at such time
that Participant shall possess an Option pursuant to the terms of this
Agreement, Participant, Participant's estate, executors or administrators, or
personal or legal representatives (as applicable) shall be entitled to exercise
the Option within three years following Participant's termination of employment
(but not beyond the Option Term). Any person, other than Participant, so
desiring to exercise Participant's Option shall be required, as a condition to
the exercise of the Option, to furnish to the Corporation such documentation as
the Corporation shall deem satisfactory to evidence the authority of such person
to exercise the Option on behalf of Participant. In the event of the exercise of
such Option by Participant's estate, executors or administrators, or personal or
legal representatives, all references herein to Participant shall, to the extent
applicable, be deemed to refer to and include such estate, executors or
administrators, or personal or legal representatives, as the case may be.

         D. The Exercise Price shall be paid in full by Participant for the
Shares purchased on or before the exercise date specified in the notice of
exercise, at Participant's option, in one or a combination of the following
methods: (i) in cash or by electronic funds transfer; (ii) by check payable to
the order of the Corporation; (iii) if authorized by the Board of Directors of
the Corporation (the "BOARD"), or the Committee, by a promissory note of the
Participant; (iv) by

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notice and third party payment in such manner as may be authorized by the Board
or the Committee; (v) by the delivery of shares of Common Stock of the
Corporation already owned by the Participant; or (vi) pursuant to a "cashless
exercise" procedure (the "CASHLESS EXERCISE RIGHT") pursuant to which the
Participant shall surrender to the Corporation this Option and a notice of
exercise, duly completed and executed by the Participant to evidence the
exercise of the Cashless Exercise Right by authorizing the Corporation to
withhold from issuance a number of Shares issuable upon such exercise of the
Option which, when multiplied by the Fair Market Value (as defined below) of
such Shares, is equal to the aggregate Exercise Price (and such withheld Shares
shall no longer be issuable under this Option). Shares of Common Stock used to
satisfy the Exercise Price of an Option shall be valued at their Fair Market
Value on the date of exercise.

         E. The "FAIR MARKET VALUE" shall be determined as follows:

                  (a) if the security at issue is listed on a national
         securities exchange or admitted to unlisted trading privileges on such
         an exchange or quoted on either the National Market System or the Small
         Cap Market of the automated quotation service operated by The Nasdaq
         Stock Market, Inc., the Fair Market Value shall be the last reported
         sale price of that security on such exchange or system on the day for
         which the Fair Market Value is to be determined or, if no such sale is
         made on such day, the average of the highest closing bid and lowest
         asked price for such day on such exchange or system; or

                  (b) if the security at issue is not so listed or quoted or
         admitted to unlisted trading privileges, the Fair Market Value shall be
         the average of the last reported highest bid and lowest asked prices
         quoted on the Electronic Bulletin Board operated by The Nasdaq Stock
         Market, Inc., or, if not so quoted, then by the National Quotation
         Bureau, Inc. on the last business day prior to the day for which the
         Fair Market Value is to be determined; or

                  (c) if the security at issue is not so listed or quoted or
         admitted to unlisted trading privileges and bid and asked prices are
         not reported, the Fair Market Value shall be determined in such
         reasonable manner as may be prescribed from time to time by the Board.

         F. Upon the exercise of all or any portion of the Option by
Participant, or as soon thereafter as is practicable, the Corporation shall
issue and deliver to Participant (or to any broker or, if acceptable to the
Corporation, to any other person designated by Participant) a certificate or
certificates evidencing such number of Shares as Participant has elected to
purchase. Such certificate or certificates shall be registered in the name of
Participant (or the designated broker or other person) and, if applicable, shall
bear an appropriate investment warranty legend, any legend required by an
applicable securities law, rule or regulation and, if applicable, a legend
referring to the restrictions provided hereunder and under the Employment
Agreement and any legend required by applicable law. Upon the exercise of the
Option and the issuance and delivery of such certificate or certificates,
Participant (or the person to whom such stock certificates are

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registered) shall have all the rights of a stockholder with respect to such
Shares and to receive all dividends or other distributions paid or made with
respect thereto. In the event that the capital stock of the Corporation is
converted in whole or in part into securities of any other entity, a
determination as to whether the securities of the other entity so received (if
any) shall be subject to the restrictions set forth in this Agreement shall be
made solely by the other entity.

4. RIGHTS PRIOR TO EXERCISE. Participant shall have no equity interest in the
Corporation or any voting, dividend, liquidation or dissolution rights with
respect to any capital stock of the Corporation solely by reason of having an
Option or having executed this Agreement. Prior to the exercise of all or a
portion of the Option, as set forth in Article 3A hereof, and the issuance and
delivery of a certificate or certificates evidencing the Shares purchased
pursuant to the exercise of all or a portion of such Option, Participant shall
have no interest in, or any voting, dividend, liquidation or dissolution rights
with respect to, the Shares, except to the extent that Participant has exercised
all or a portion of such Option and has been issued and received delivery of a
certificate or certificates evidencing the Shares purchased pursuant to such
exercise.

5. ADJUSTMENT OF PURCHASE AND NUMBER OF SHARES.

         A. ADJUSTMENT. The number and kind of securities purchasable upon the
exercise of this Option and the Exercise Price shall be subject to adjustment
from time to time upon the happening of certain events as follows:

                  (a) Reclassification, Consolidation or Merger. At any time
         while this Option remains outstanding and unexpired, in case of (i) any
         reclassification or change of outstanding securities issuable upon
         exercise of this Option (other than a change in par value, or from par
         value to no par value per share, or from no par value per share to par
         value or as a result of a subdivision or combination of outstanding
         securities issuable upon the exercise of the Option), (ii) any
         consolidation or merger of the Corporation with or into another
         corporation (other than a merger with another corporation in which the
         Corporation is a continuing corporation and which does not result in
         any reclassification or change, other than a change in par value, or
         from par value to no par value per share, or from no par value per
         share to par value, or as a result of a subdivision or combination of
         outstanding securities issuable upon the exercise of this Option), or
         (iii) any sale or transfer to another corporation of the property of
         the Corporation as an entirety or substantially as an entirety, the
         Corporation, or such successor or purchasing corporation, as the case
         may be, shall without payment of any additional consideration
         therefore, execute a new Option providing that the holder of this
         Option shall have the right to exercise such new Option (upon terms not
         less favorable to the holder than those then applicable to this Option)
         and to receive upon such exercise, in lieu of each share of Common
         Stock theretofore issuable upon exercise of this Option, the kind and
         amount of shares of stock, other securities, money or property
         receivable upon such reclassification, change, consolidation, merger,
         sale or transfer. Such new Options shall provide for adjustments which
         shall be as nearly equivalent as may be practicable to the adjustments
         provided for in this Section 5A. The provisions of this Section 5A(a)
         shall similarly

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         apply to successive reclassifications, changes, consolidations,
         mergers, sales and transfers.

                  (b) Subdivision or Combination of Shares. If the Corporation
         at any time while this Option remains outstanding and unexpired, shall
         subdivide or combine its capital stock, the Exercise Price shall be
         proportionately reduced, in case of subdivision of such shares as of
         the effective date of such subdivision, or, if the Corporation shall
         take a record of holders of its capital stock for the purpose of so
         subdividing, as of such record date, whichever is earlier, or shall be
         proportionately increased, in the case of combination of such shares,
         as of the effective date of such combination, or, if the Corporation
         shall take a record of holders of its capital stock for the purpose of
         so combining, as of such record date, whichever is earlier.

                  (c) Stock Dividends. If the Corporation at any time which this
         Option is outstanding and unexpired shall pay a dividend in shares of,
         or make other distribution of shares of, its capital stock, then the
         Exercise Price shall be adjusted, as of the date the Corporation shall
         take a record of the holders of its capital stock for the purpose of
         receiving such dividend or other distribution (or if no such record is
         taken, as at the date of such payment or other distribution), to that
         price determined by multiplying the Exercise Price in effect
         immediately prior to such payment or other distribution by a fraction
         (i) the numerator of which shall be the total number of shares of
         capital stock outstanding immediately prior to such dividend or
         distribution, and (ii) the denominator of which shall be the total
         number of shares of its capital stock outstanding immediately after
         such dividend or distribution. The provisions of this Section 5A(c)
         shall not apply under any of the circumstances for which an adjustment
         is provided in Section 5A(a) or 5A(b).

                  (d) Liquidating Dividends, Etc. If the Corporation at any time
         while this Option is outstanding and unexpired makes a distribution of
         its assets to the holders of its capital stock as a dividend in
         liquidation or by way of return of capital or other than as a dividend
         payable out of earnings or surplus legally available for dividends
         under applicable law or any distribution to such holders made in
         respect of the sale of all or substantially all of the Corporation's
         assets (other than under the circumstances provided for in the Sections
         5A(a) through (c)), the holder of this Option shall be entitled to
         receive upon the exercise hereof, in addition to the shares of Common
         Stock receivable upon such exercise, and without payment of any
         consideration other than the Exercise Price, an amount in cash equal to
         the value of such distribution per share of Common Stock multiplied by
         the number of shares of Common Stock which, on the record date for such
         distribution, are issuable upon exercise of this Option (with no
         further adjustment being made following any event which causes a
         subsequent adjustment in the number of shares of Common Stock issuable
         upon the exercise hereof), and an appropriate provision therefor should
         be made a part of any such distribution. The value of a distribution
         which is paid in other than cash shall be determined in good faith by
         the Board.

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         B. NOTICE OF ADJUSTMENTS. Whenever any of the Exercise Price or the
number of shares of Common Stock purchasable under the terms of this Option at
that Exercise Price shall be adjusted pursuant to Section 5A hereof, the
Corporation shall promptly make a certificate signed by its Chief Executive
Officer, President or a Vice President and by its Treasurer or Assistant
Treasurer or its Secretary or Assistant Secretary, setting forth in reasonable
detail the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated (including a description of the
basis upon which the Board made any determination hereunder), and the Exercise
Price and number of shares of Common Stock purchasable at that Exercise Price
after giving effect to such adjustment, and shall promptly cause copies of such
certificate to be mailed (by First Class and Postage Prepaid) to the registered
holder of this Option.

6. HEADINGS. The headings and other captions contained in this Agreement are for
convenience of reference only, and shall not be used in interpreting, construing
or enforcing any of the provisions of this Agreement.

7. ENTIRE AGREEMENT. This Agreement, together with the Employment Agreement,
sets forth all of the promises, agreements, conditions, understandings,
warranties and representations between the parties hereto with respect to the
Shares, and there are no promises, agreements, conditions, understandings,
warranties or representations, oral or written, express or implied, between them
with respect to the Shares other than as set forth herein and in the Employment
Agreement. Any and all prior agreements between the parties hereto with respect
to any stock acquisition rights regarding the Shares are hereby revoked. This
Agreement, together with the Employment Agreement, is, and is intended by the
parties to be, an integration of any and all prior agreements or understandings,
oral or written, with respect to the Option and the Shares.

8. NOTICES. Any and all notices provided for herein shall be sufficient if in
writing, and sent by hand delivery, by an overnight delivery service that
produces a signed receipt evidencing delivery or by certified or registered mail
(return receipt requested and first class postage prepaid), in the case of the
Corporation, to its principal office, and in the case of Participant, to
Participant's address as shown on the Corporation's records.

9. INVALID OR UNENFORCEABLE PROVISIONS. The provisions of this Agreement shall
be deemed severable, and the invalidity or unenforceability of any one or more
of the provisions hereof shall not affect the validity and enforceability of the
other provisions hereof. Participant agrees that the breach or alleged breach by
the Corporation of (a) any covenant contained in another agreement (if any)
between the Corporation and Participant or (b) any obligation owed to
Participant by the Corporation, shall not affect the validity or enforceability
of the covenants and agreements of Participant set forth herein.

10. MODIFICATIONS. No change or modification of this Agreement shall be valid
unless the same is in writing and signed by the parties hereto; provided,
however, that Participant hereby covenants and agrees to execute any amendment
to this Agreement which shall be required or desirable (in the opinion of the
Corporation or its counsel) in order to comply with any rule or

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regulation promulgated or proposed under the Internal Revenue Code of 1986, as
amended, by the Internal Revenue Service.

11. INCORPORATION OF EMPLOYMENT AGREEMENT BY REFERENCE. The Option is granted
pursuant to the terms of the Employment Agreement, the terms of which are
incorporated herein by reference, and the Option shall in all respects be
interpreted in accordance with the Employment Agreement. To the extent that any
conflict may exist between any term or provision of this Agreement and any term
or provision of the Employment Agreement (other than with respect to matters
that, pursuant to the Employment Agreement, may be altered in this Agreement),
such term or provision of the Employment Agreement shall control.

12. GOVERNING LAW. The validity, construction, interpretation and effect of this
Agreement shall exclusively be governed by and determined in accordance with the
laws of Texas (other than the conflicts-of-law or choice-of-law rules thereof),
except to the extent preempted by federal law, which solely to the extent of
such preemption shall govern. Venue shall lie only in the State and Federal
Courts in and for the County of Harris, Texas, as to all disputes arising under
this Agreement, and such venue is hereby consented to by the Corporation and
Participant.

13. COUNTERPARTS. This Agreement may be executed in counterparts, each of which,
when taken together, shall constitute one original agreement.

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         IN WITNESS WHEREOF, the Corporation has caused its duly authorized
officer to execute and attest to this Agreement, and to apply the corporate seal
hereto, and Participant has placed his or her signature hereon, effective as of
this 23rd day of December, 2004.

                                    CORPORATION:

                                    FAR EAST ENERGY CORPORATION

                                    By: /s/ John Mihm
                                        ----------------------------------------
                                            John Mihm, Director

                                    PARTICIPANT:

                                    By: /s/ Bruce N. Huff
                                        ----------------------------------------
                                            Bruce N. Huff

                                        8<PAGE>

                                                                    EXHIBIT 10.8

                           FAR EAST ENERGY CORPORATION

                       NONQUALIFIED STOCK OPTION AGREEMENT

                               GENERAL INFORMATION

Name:                Tun Aye Sai

Award Date:          December 23, 2004

Number of Shares
Subject to Option:   200,000

Exercise Price:      $2.00

Vesting:             One fifth upon the Award Date and one fifth each succeeding
                     anniversary of the Award Date until fully vested

Expiration Date:     December 23, 2014

<PAGE>

                           FAR EAST ENERGY CORPORATION
                       NONQUALIFIED STOCK OPTION AGREEMENT

         THIS NONQUALIFIED STOCK OPTION AGREEMENT (this "AGREEMENT") is made as
of this 23rd day of December, 2004, by and between Far East Energy Corporation,
a Nevada corporation (the "CORPORATION"), and Tun Aye Sai ("PARTICIPANT").

         NOW, THEREFORE, in consideration of the mutual promises hereinafter set
forth and of such other good and valuable consideration, the receipt, adequacy
and sufficiency of which are hereby acknowledged, the parties hereto, intending
to be legally bound, do hereby agree as follows:

1. GRANT OF OPTION.

         A. Subject to the terms and conditions hereinafter set forth, the
Corporation, with the approval and at the direction of the Compensation
Committee of the Board of Directors (the "COMMITTEE"), and the Participant
hereby acknowledge and agree that the Corporation granted to Participant, as of
the Award Date, an option to purchase up to 200,000 shares of the common stock
of the Corporation ("COMMON STOCK") at a price of U.S. $2.00 per share (as may
be adjusted in accordance with Article 5, the "EXERCISE PRICE"). Such option is
hereinafter referred to as the "OPTION," and the shares of Common Stock
purchasable upon exercise of the Option are hereinafter referred to as the
"SHARES." The Option is intended by the parties hereto to be, and shall be
treated as, a nonqualified stock option (as such term is defined under Section
422 of the Internal Revenue Code of 1986, as amended).

         B. The right to exercise 20% of the Option (or a portion thereof) shall
vest and first become exercisable on the Award Date, and an additional 20% shall
vest on each succeeding anniversary of the Award Date until all of the Option is
vested (the "VESTING DATE(S)"), so that all of the Shares subject to the Option
shall be fully vested on December 23, 2008; provided, however, that Participant
has been continuously employed or otherwise retained by the Corporation during
the period from the Award Date until the applicable Vesting Date.

2. TERMINATION OF OPTION. The Option and all rights hereunder with respect
thereto, to the extent such rights shall not have been exercised, shall
terminate and become null and void after December 23, 2014 (the "OPTION TERM").

3. EXERCISE OF OPTION.

         A. Participant may exercise the Option with respect to all or any part
of the number of Shares then exercisable hereunder by giving the Secretary of
the Corporation written notice of intent to exercise. The notice of exercise
shall specify the number of Shares as to which Participant is exercising and the
date of exercise thereof, which date shall be not less than five (5) days after
the giving of such notice (unless an earlier time shall have been mutually
agreed upon

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in writing). All or any portion of the vested portion of the Option may be
exercised by Participant at any time on or before December 23, 2014.

         B. Notwithstanding anything contained in this Article 3 to the
contrary, the Option may be exercised only in compliance with all applicable
securities laws and only by (i) Participant's completion, execution and delivery
to the Corporation of a notice of exercise and, if required by the Corporation,
an "investment letter" as supplied by the Corporation and (ii) the payment to
the Corporation, as provided in Article 3D hereof, of an amount equal to the
amount obtained by multiplying the Exercise Price by the number of Shares being
purchased pursuant to such exercise as shall be specified by Participant in such
notice of exercise. Participant shall not sell, transfer, assign, pledge for a
loan, margin, hypothecate or exchange the Option or the option shares, except
pursuant to the laws of descent and except that Participant's estate, executors
or administrators, or personal or legal representatives may exercise the Option
in accordance with the terms of Article 3C hereof in the event of the death or
Disability of Participant. "DISABILITY" as used in this Agreement shall mean the
inability of Participant to substantially perform his duties under this
Agreement, as a result of a physical or mental illness or personal injury he has
incurred, as determined by an independent physician selected with the approval
of the Corporation and Participant.

         C. In the event the Participant ceases to be an employee of the
Corporation for any reason, except due to the Participant's death or Disability,
the Option to the extent exercisable, may be exercised for three months
following termination of employment (but not beyond the Option Term). To the
extent the Option is not exercisable at the time of termination of employment,
the Option shall be immediately forfeited.

         D. In the event of the death or Disability of Participant at such time
that Participant shall possess an Option pursuant to the terms of this
Agreement, Participant, Participant's estate, executors or administrators, or
personal or legal representatives (as applicable) shall be entitled to exercise
the Option within three months following the Participant's death or Disability
(but not beyond the Option Term). Any person, other than Participant, so
desiring to exercise Participant's Option shall be required, as a condition to
the exercise of the Option, to furnish to the Corporation such documentation as
the Corporation shall deem satisfactory to evidence the authority of such person
to exercise the Option on behalf of Participant. In the event of the exercise of
such Option by Participant's estate, executors or administrators, or personal or
legal representatives, all references herein to Participant shall, to the extent
applicable, be deemed to refer to and include such estate, executors or
administrators, or personal or legal representatives, as the case may be.

         E. Notwithstanding anything contained in this Article 3 to the
contrary, the Committee or the Board of Directors of the Corporation (the
"BOARD"), may, in its sole discretion, permit the Option to vest and be
exercisable in whole or in part immediately prior to the time of a Change in
Control notwithstanding that the Option is not fully vested, and the Participant
shall have the right to exercise this Option from and after the date of the
Change in Control. A "CHANGE IN CONTROL" shall mean to have occurred at such
time as either (i) any "person", as such term is used in Section 14(d) of the
Securities Exchange Act of 1934, as

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amended (other than the Company, or any employee benefit plan (or related trust)
maintained or sponsored by the Company, or an entity controlled by the Company)
(a "PERSON"), is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Securities Exchange Act of 1934, as amended, or any successor rule),
directly or indirectly, of fifty percent (50%) or more of the combined voting
power of the Company's outstanding voting securities then entitled to vote
generally in the election of directors (the "OUTSTANDING VOTING SECURITIES");
provided that the following shall not be deemed to result in a Change in
Control: (A) any acquisition directly from the Company; or (B) any acquisition
by merger, consolidation, share exchange or similar transaction that is not
described in clause (ii) of this Section 3E as long as no Person resulting from
such transaction obtains beneficial ownership of fifty percent (50%) or more of
the then Outstanding Voting Securities or (ii) a consolidation, share exchange
or similar transaction involving the Company in which the stockholders of the
Company immediately prior to such transaction do not own, directly or
indirectly, at least fifty percent (50%) of the Outstanding Voting Securities or
voting power of the issued and outstanding capital stock of the Company's
successor immediately after such transaction.

         F. The Exercise Price shall be paid in full by Participant for the
Shares purchased on or before the exercise date specified in the notice of
exercise, at Participant's option, in one or a combination of the following
methods: (i) in cash or by electronic funds transfer; (ii) by check payable to
the order of the Corporation; (iii) if authorized by and the Board or the
Committee, by a promissory note of the Participant; (iv) by notice and third
party payment in such manner as may be authorized by the Board or the Committee;
(v) by the delivery of shares of Common Stock of the Corporation already owned
by the Participant; or (vi) pursuant to a "cashless exercise" procedure (the
"CASHLESS EXERCISE RIGHT") pursuant to which the Participant shall surrender to
the Corporation this Option and a notice of exercise, duly completed and
executed by the Participant to evidence the exercise of the Cashless Exercise
Right by authorizing the Corporation to withhold from issuance a number of
Shares issuable upon such exercise of the Option which, when multiplied by the
Fair Market Value (as defined below) of such Shares, is equal to the aggregate
Exercise Price (and such withheld Shares shall no longer be issuable under this
Option). Shares of Common Stock used to satisfy the Exercise Price of an Option
shall be valued at their Fair Market Value on the date of exercise.

         G. The "FAIR MARKET VALUE" shall be determined as follows:

                  (a) if the security at issue is listed on a national
         securities exchange or admitted to unlisted trading privileges on such
         an exchange or quoted on either the National Market System or the Small
         Cap Market of the automated quotation service operated by The Nasdaq
         Stock Market, Inc., the Fair Market Value shall be the last reported
         sale price of that security on such exchange or system on the day for
         which the Fair Market Value is to be determined or, if no such sale is
         made on such day, the average of the highest closing bid and lowest
         asked price for such day on such exchange or system; or

                  (b) if the security at issue is not so listed or quoted or
         admitted to unlisted trading privileges, the Fair Market Value shall be
         the average of the last reported highest

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         bid and lowest asked prices quoted on the Electronic Bulletin Board
         operated by The Nasdaq Stock Market, Inc., or, if not so quoted, then
         by the National Quotation Bureau, Inc. on the last business day prior
         to the day for which the Fair Market Value is to be determined; or

                  (c) if the security at issue is not so listed or quoted or
         admitted to unlisted trading privileges and bid and asked prices are
         not reported, the Fair Market Value shall be determined in such
         reasonable manner as may be prescribed from time to time by the Board.

         H. Upon the exercise of all or any portion of the Option by
Participant, or as soon thereafter as is practicable, the Corporation shall
issue and deliver to Participant (or to any broker or, if acceptable to the
Corporation, to any other person designated by Participant) a certificate or
certificates evidencing such number of Shares as Participant has elected to
purchase. Such certificate or certificates shall be registered in the name of
Participant (or the designated broker or other person) and, if applicable, shall
bear an appropriate investment warranty legend, any legend required by an
applicable securities law, rule or regulation and, if applicable, a legend
referring to the restrictions provided hereunder and any legend required by
applicable law. Upon the exercise of the Option and the issuance and delivery of
such certificate or certificates, Participant (or the person to whom such stock
certificates are registered) shall have all the rights of a stockholder with
respect to such Shares and to receive all dividends or other distributions paid
or made with respect thereto. In the event that the capital stock of the
Corporation is converted in whole or in part into securities of any other
entity, a determination as to whether the securities of the other entity so
received (if any) shall be subject to the restrictions set forth in this
Agreement shall be made solely by the other entity.

4. RIGHTS PRIOR TO EXERCISE. Participant shall have no equity interest in the
Corporation or any voting, dividend, liquidation or dissolution rights with
respect to any capital stock of the Corporation solely by reason of having an
Option or having executed this Agreement. Prior to the exercise of all or a
portion of the Option, as set forth in Article 3A hereof, and the issuance and
delivery of a certificate or certificates evidencing the Shares purchased
pursuant to the exercise of all or a portion of such Option, Participant shall
have no interest in, or any voting, dividend, liquidation or dissolution rights
with respect to, the Shares, except to the extent that Participant has exercised
all or a portion of such Option and has been issued and received delivery of a
certificate or certificates evidencing the Shares purchased pursuant to such
exercise.

5. ADJUSTMENT OF PURCHASE AND NUMBER OF SHARES.

         A. ADJUSTMENT. The number and kind of securities purchasable upon the
exercise of this Option and the Exercise Price shall be subject to adjustment
from time to time upon the happening of certain events as follows:

                  (a) Reclassification, Consolidation or Merger. At any time
         while this Option remains outstanding and unexpired, in case of (i) any
         reclassification or change of outstanding securities issuable upon
         exercise of this Option (other than a change in par

                                        4
<PAGE>

         value, or from par value to no par value per share, or from no par
         value per share to par value or as a result of a subdivision or
         combination of outstanding securities issuable upon the exercise of the
         Option), (ii) any consolidation or merger of the Corporation with or
         into another corporation (other than a merger with another corporation
         in which the Corporation is a continuing corporation and which does not
         result in any reclassification or change, other than a change in par
         value, or from par value to no par value per share, or from no par
         value per share to par value, or as a result of a subdivision or
         combination of outstanding securities issuable upon the exercise of
         this Option), or (iii) any sale or transfer to another corporation of
         the property of the Corporation as an entirety or substantially as an
         entirety, the Corporation, or such successor or purchasing corporation,
         as the case may be, shall without payment of any additional
         consideration therefore, execute a new Option providing that the holder
         of this Option shall have the right to exercise such new Option (upon
         terms not less favorable to the holder than those then applicable to
         this Option) and to receive upon such exercise, in lieu of each share
         of Common Stock theretofore issuable upon exercise of this Option, the
         kind and amount of shares of stock, other securities, money or property
         receivable upon such reclassification, change, consolidation, merger,
         sale or transfer. Such new Options shall provide for adjustments which
         shall be as nearly equivalent as may be practicable to the adjustments
         provided for in this Section 5A. The provisions of this Section 5A(a)
         shall similarly apply to successive reclassifications, changes,
         consolidations, mergers, sales and transfers.

                  (b) Subdivision or Combination of Shares. If the Corporation
         at any time while this Option remains outstanding and unexpired, shall
         subdivide or combine its capital stock, the Exercise Price shall be
         proportionately reduced, in case of subdivision of such shares as of
         the effective date of such subdivision, or, if the Corporation shall
         take a record of holders of its capital stock for the purpose of so
         subdividing, as of such record date, whichever is earlier, or shall be
         proportionately increased, in the case of combination of such shares,
         as of the effective date of such combination, or, if the Corporation
         shall take a record of holders of its capital stock for the purpose of
         so combining, as of such record date, whichever is earlier.

                  (c) Stock Dividends. If the Corporation at any time which this
         Option is outstanding and unexpired shall pay a dividend in shares of,
         or make other distribution of shares of, its capital stock, then the
         Exercise Price shall be adjusted, as of the date the Corporation shall
         take a record of the holders of its capital stock for the purpose of
         receiving such dividend or other distribution (or if no such record is
         taken, as at the date of such payment or other distribution), to that
         price determined by multiplying the Exercise Price in effect
         immediately prior to such payment or other distribution by a fraction
         (i) the numerator of which shall be the total number of shares of
         capital stock outstanding immediately prior to such dividend or
         distribution, and (ii) the denominator of which shall be the total
         number of shares of its capital stock outstanding immediately after
         such dividend or distribution. The provisions of this Section 5A(c)
         shall not apply under any of the circumstances for which an adjustment
         is provided in Section 5A(a) or 5A(b).

                                        5
<PAGE>

                  (d) Liquidating Dividends, Etc. If the Corporation at any time
         while this Option is outstanding and unexpired makes a distribution of
         its assets to the holders of its capital stock as a dividend in
         liquidation or by way of return of capital or other than as a dividend
         payable out of earnings or surplus legally available for dividends
         under applicable law or any distribution to such holders made in
         respect of the sale of all or substantially all of the Corporation's
         assets (other than under the circumstances provided for in the Sections
         5A(a) through (c)), the holder of this Option shall be entitled to
         receive upon the exercise hereof, in addition to the shares of Common
         Stock receivable upon such exercise, and without payment of any
         consideration other than the Exercise Price, an amount in cash equal to
         the value of such distribution per share of Common Stock multiplied by
         the number of shares of Common Stock which, on the record date for such
         distribution, are issuable upon exercise of this Option (with no
         further adjustment being made following any event which causes a
         subsequent adjustment in the number of shares of Common Stock issuable
         upon the exercise hereof), and an appropriate provision therefor should
         be made a part of any such distribution. The value of a distribution
         which is paid in other than cash shall be determined in good faith by
         the Board.

         B. NOTICE OF ADJUSTMENTS. Whenever any of the Exercise Price or the
number of shares of Common Stock purchasable under the terms of this Option at
that Exercise Price shall be adjusted pursuant to Section 5A hereof, the
Corporation shall promptly make a certificate signed by its Chief Executive
Officer, President or a Vice President and by its Treasurer or Assistant
Treasurer or its Secretary or Assistant Secretary, setting forth in reasonable
detail the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated (including a description of the
basis upon which the Board made any determination hereunder), and the Exercise
Price and number of shares of Common Stock purchasable at that Exercise Price
after giving effect to such adjustment, and shall promptly cause copies of such
certificate to be mailed (by First Class and Postage Prepaid) to the registered
holder of this Option.

6. HEADINGS. The headings and other captions contained in this Agreement are for
convenience of reference only, and shall not be used in interpreting, construing
or enforcing any of the provisions of this Agreement.

7. ENTIRE AGREEMENT. This Agreement sets forth all of the promises, agreements,
conditions, understandings, warranties and representations between the parties
hereto with respect to the Shares, and there are no promises, agreements,
conditions, understandings, warranties or representations, oral or written,
express or implied, between them with respect to the Shares other than as set
forth herein. Any and all prior agreements between the parties hereto with
respect to any stock acquisition rights regarding the Shares are hereby revoked.
This Agreement is, and is intended by the parties to be, an integration of any
and all prior agreements or understandings, oral or written, with respect to the
Option and the Shares.

8. NOTICES. Any and all notices provided for herein shall be sufficient if in
writing, and sent by hand delivery, by an overnight delivery service that
produces a signed receipt evidencing

                                        6
<PAGE>

delivery or by certified or registered mail (return receipt requested and first
class postage prepaid), in the case of the Corporation, to its principal office,
and in the case of Participant, to Participant's address as shown on the
Corporation's records.

9. INVALID OR UNENFORCEABLE PROVISIONS. The provisions of this Agreement shall
be deemed severable, and the invalidity or unenforceability of any one or more
of the provisions hereof shall not affect the validity and enforceability of the
other provisions hereof. Participant agrees that the breach or alleged breach by
the Corporation of (a) any covenant contained in another agreement (if any)
between the Corporation and Participant or (b) any obligation owed to
Participant by the Corporation, shall not affect the validity or enforceability
of the covenants and agreements of Participant set forth herein.

10. MODIFICATIONS. No change or modification of this Agreement shall be valid
unless the same is in writing and signed by the parties hereto; provided,
however, that Participant hereby covenants and agrees to execute any amendment
to this Agreement which shall be required or desirable (in the opinion of the
Corporation or its counsel) in order to comply with any rule or regulation
promulgated or proposed under the Internal Revenue Code of 1986, as amended, by
the Internal Revenue Service.

11. GOVERNING LAW. The validity, construction, interpretation and effect of this
Agreement shall exclusively be governed by and determined in accordance with the
laws of Texas (other than the conflicts-of-law or choice-of-law rules thereof),
except to the extent preempted by federal law, which solely to the extent of
such preemption shall govern. Venue shall lie only in the State and Federal
Courts in and for the County of Harris, Texas, as to all disputes arising under
this Agreement, and such venue is hereby consented to by the Corporation and
Participant.

12. COUNTERPARTS. This Agreement may be executed in counterparts, each of which,
when taken together, shall constitute one original agreement.

                            [SIGNATURE PAGE FOLLOWS.]

                                        7
<PAGE>

         IN WITNESS WHEREOF, the Corporation has caused its duly authorized
officer to execute and attest to this Agreement, and to apply the corporate seal
hereto, and Participant has placed his or her signature hereon, effective as of
this 23rd day of December, 2004.

                           CORPORATION:

                           FAR EAST ENERGY CORPORATION

                           By: /s/ Michael R. McElwrath
                               -------------------------------------------------
                                    Michael R. McElwrath, Chairman and Chief
                                    Executive Officer

                           PARTICIPANT:

                           By: /s/ Tun Aye Sai
                               -------------------------------------------------
                                    Tun Aye Sai

                                        8

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