Falcon Oil & Gas Ltd. - Farm-in Carry Commitments.

Falcon Oil & Gas Ltd.
(“Falcon” or “Company”)

Farm-in Carry Commitments

25 August 2023 – Falcon Oil & Gas Ltd. (TSXV: FO, AIM: FOG) notes that Falcon Oil & Gas Australia Limited’s (“Falcon Australia”) joint venture partner, Tamboran (B2) Pty Limited (“Tamboran”), has given notice that the 2014 farm-in commitments have now been met, having reached the associated cost carry commitment of A$264 million.

Falcon Australia has been carried by its partners, formerly Origin Energy and more recently Tamboran since 2014 through the drilling and testing of five vertical wells and three horizontal wells. The wells have delivered key information of the continuous nature and productivity of the Amungee Member B-shale across the Beetaloo Sub-basin, Northern Territory, Australia. The gross carry of A$264 million was in addition to the uncapped carry for Stage 1 of the three stage work programme which amounted to approximately A$85 million, with total spend in the Beetaloo to date by Falcon Australia’s current and previous joint venture partners totalling A$349 million.

Falcon Australia benefits from an additional carry on future well costs of up to A$30m (AU$6.75m net to Falcon Australia split between 2023 and 2024) under the terms of the binding letter of intent as announced on 11 October 2022, when Tamboran acquired Origin Energy B2 Pty Limited’s participating interest in the exploration permits.

Falcon also has optionality in respect of its exposure to future activity within the exploration permits and is able to elect to participate up to 22.5 per cent on future wells following the introduction of drilling spacing units ("DSUs") (formerly referred to as “proration units”) on sole risk operations as part of the binding letter of intent announced on 11 October 2022. Wells drilled outside of an existing DSU establish a new DSU. The size of the DSU varies depending on (a) the type and length of the well to be drilled and (b) whether or not the well is classified as a “commitment well” under the terms of the exploration permit. A non-commitment well creates a DSU to a maximum of 6,400 acres, while a commitment well creates a DSU to a maximum of 25,600 acre. This flexibility ensures that Falcon Australia can tailor its participation in each proposed well to best preserve its capital while at the same time maximising exposure to the development of the Beetaloo.