Bis zu 90% sparen! Kostenloser Depotgebühren-Check
030-275 77 6400
DAX+0,47 % EUR/USD+0,08 % Gold-1,06 % Öl (Brent)0,00 %

FALCON - ALLE DATEN, ALLE FAKTEN - 500 Beiträge pro Seite



Beitrag schreiben

Begriffe und/oder Benutzer

 

dieser thread soll dazu dienen, interessierten und bereits investierten alle informationen zu falcon oil and gas auf schnellem und einfachem wege bereitzustellen, ohne dass man sich erst durch seitenlange diskussionen wühlen muss. bitte hier NUR infos posten, die diskussionen finden in diesem thread nebenan statt:

http://www.wallstreet-online.de/informer/community/thread.ht…
die wohl bislang umfangreichste zusammenstellung zu falcon oil and gas hat ein user aus dem stockhouse-forum zusammengetragen. hier findet man eigentlich alles, was bis zum heutigen tag zu berichten ist:

http://www.stockhouse.ca/bullboards/viewmessage.asp?no=12408…
FO veröffentlicht aktualisierten Zeitrahmen für die Fertigstellung und Flowtests der ersten Brunnen.

http://www.falconoilandgas.com/releases/10-11-06.html
MGI veröffentlicht ein Update, dass die aktuellen Verzögerungen einbezieht. Das Kursziel von $8,00 bleibt jedoch unverändert.

http://websrv.mgisecurities.com/file_share/research/FO%20OCT…
Institutional Holders Summary Falcon Oil & Gas Ltd FO.V (TSXV)

% Shares Owned: 24.16%
# New Positions: 19
# of Holders: 27
# Closed Positions: 4
Total Shares Held: 63,538,701
# Increased Positions: 2
3 Mo. Net Change: 36,621,543
# Reduced Positions: 4
Price Range Quarter: 3.58 - 3.58
# Net Buyers: (2)

(Quelle: http://www.stockhouse.com/bullboards/wraplink.asp?url=stocks…)
Update MGI-Report:

Date: Fri, 1 Dec 2006 09:29:40
Drilling Results Continue to Indicate Large Gas Potential – Flow Testing is Slowly but Steadily Approaching

Stock Rating: Speculative BUY
Target Price: $8.00

Falcon Oil & Gas (TSX-V: FO) released an operational update with regard to its ongoing drilling program in Hungary on November 27. Importantly, both the Mako-7 and the Magyarcsanad-1 well have encountered gas shows as expected.

With regards to fracture stimulation and flow testing, there has been a minor delay to the arrival of crews, but two crews are now expected to be working simultaneously by late December, with the first expected to start work within the next two weeks.

Based on operations continuing roughly as planned, our view of Falcon Oil & Gas remains effectively unchanged while we continue to await test results with much anticipation.

We reiterate our Speculative Buy recommendation on Falcon Oil & Gas with an unchanged target price of $8.00, based on a 1.0x multiple of our in-house estimate of Future net asset value. Our target price represents a potential return of 110.5% from the recent closing price of $3.80. Our recommendation remains speculative, mainly due to the company’s lack of production base or reserves in this formative stage of development.

Please CLICK on LINK BELOW for FULL COMMENT
http://websrv.mgisecurities.com/file_share/research/FO%20Dec…
Operations Update in Hungary

09:35 EST Thursday, December 21, 2006

(TSXV Symbol: FO)


BUDAPEST, Hungary, Dec. 21 /CNW/ - Falcon Oil & Gas Ltd. (TSXV: FO) ("Falcon") announced that it has received written approval from the Hungarian Mining Authority based on the Geological Closing Report covering the estimated resource underlying Falcon's two exploration licenses. The Mining Bureau approval is based on the Hungarian Geological Survey recommendation.


Approval of Closing Report


On December 21, 2006, Falcon received written acceptance and approval of the formal Closing Report which it submitted to the Hungarian government authorities in October 2006. This government action means that the Hungarian government has validated and agrees with Falcon's geological and technical evaluation and conclusions about the existence, extent, and potential recoverable volumes of gas within the Basin Centered Gas Accumulation ("BCGA") underlying Falcon's exploration licenses. The approved Mining Plot covers 100 per cent of the area used by the Scotia Group, Inc., for their resource estimate, in a report ("Scotia Report") dated effective August 15, 2006 (previously filed at www.Sedar.com). This area is a continuous basin centered gas accumulation. The Mining Plot approval is for a period of 35 years with an extension for 17 1/2 additional years.

Marc A. Bruner, Chairman and CEO of Falcon, stated, "The approval and acceptance of the Closing Report represents a major achievement and the most important step toward obtaining the long-term production license covering this large resource. The Hungarian government's formal recognition that this BCGA is present in their country will enable Falcon to move forward with its drilling and development plan, and also will have significant benefits for Hungary, it's citizens and the region."

Dr. Gyorgy Szabo, a member of Falcon's Board of Directors stated further, "The company must still complete its environmental impact study and submit other documents in order to obtain the production licenses. Falcon expects this process to take a period of up to several months. However, the government's acceptance of Falcon's Closing Report indicates agreement with the Scotia Report and the analogy of this discovery to the Pinedale Field"


Commencement of Completion Operations


Falcon has started completion operations. The company continues to drill the Mako 7 which is already the deepest well at 19,862 feet (6054 meters) in Hungarian history.

Multiple zones of interest have been identified for completion and testing in each of the wells. Falcon plans to complete and obtain initial flow tests of the deepest zones first and continue testing of zones progressively farther up hole, subject to the results from lower zones. Results from the testing operations will be announced from time to time over the next several weeks or months.


Testing Infrastructure Completed Ahead of Schedule


Falcon has completed construction of a seven-mile (12-kilometer), 12-inch diameter high pressure gas gathering pipeline and related infrastructure that ties the Mako-6 well into the MOL transmission line which delivers gas to MOL's Algyo gas processing plant, approximately ten miles from the connection. During the initial testing phase, Falcon expects flaring to be limited to clean-up flow and an initial flow test of each well completion. Longer term testing will utilize the pipeline


About Falcon Oil & Gas Ltd.


Falcon Oil & Gas Ltd. is a British Columbia corporation which is in the business of oil and gas exploration and production. It has operations in Hungary through its wholly-owned subsidiary TXM Oil and Gas Exploration, and in Romania through its wholly-owned subsidiary JVX Energy Corporation. Further information about Falcon is available at www.falconoilandgas.com.


Falcon's discovered resources are not reserves. Only those quantities of oil and gas that are anticipated to be economically recoverable from discovered resources are classified as reserves. Until such time as Falcon's discovered resources are proven to be reserves, there is a risk that Falcon may not achieve ongoing operations from which it may generate significant revenue.


In the interests of providing Company shareholders and potential investors with information regarding the Company, including the Company's assessment of its and its subsidiaries' future plans and operations, certain statements included in this press release may constitute forward-looking information or forward-looking statements (collectively, "forward-looking statements"). All statements contained herein that are not clearly historical in nature are forward-looking, and the words "anticipate", "believe", "expect", "estimate" and similar expressions are generally intended to identify forward-looking statements. Similarly, forward-looking statements in this press release include, but are not limited to anticipated developments of the Company's drilling project in Hungary and the timing thereof, the Company's drilling project in Romania and the timing thereof, capital investment levels and the allocation thereof, pipeline capacity, government royalty rates, reserve and resources estimates, the level of expenditures for compliance with environmental regulations, site restoration costs including abandonment and reclamation costs, exploration plans, acquisition and disposition plans including farmout plans, net cash flows, geographic expansion and plans for seismic surveys. In addition, please note that statements relating to "reserves" or "resources" are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves and resources described can be profitably produced in the future. Such statements represent the Company's internal projections, estimates or beliefs concerning, among other things, an outlook on the estimated amounts and timing of capital expenditures, anticipated future debt levels and incentive fees or revenues or other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance. These statements are only predictions. Actual events or results may differ materially. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievement since such expectations are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause the Company's actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, the Company and the foregoing list of important factors is not exhaustive. These forward-looking statements are made as of the date hereof disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise. Company shareholders and potential investors should carefully consider the information contained in the Company's filings with Canadian securities administrators at www.sedar.com before making investment decisions with regard to the Company.


The TSX Venture Exchange does not accept responsibility for the adequacy

or accuracy of this release.

For further information: Falcon Oil & Gas Ltd., Marc A. Bruner, President, Chairman & CEO; Michael K. Lam, Corporate Development North America, (416) 303-8810; Alexander Hubbard-Ford, Corporate Development Europe, +44 (0) 79 8448 1541; Canada - Brisco Capital Partners Corp, Graeme Dick, (403) 313-9663; United Kingdom - 4C-Burvale, Carina Corbett, John Carrick-Smith, +44 (0) 20
FO in der .at Presse:

07. Jänner 2007 - 19:31 MEZ
Reiche Gasfunde in Ungarn
Unter einer Zwiebel-Anbauregion in Süd-Ungarn wurde mit 600 Milliarden Kubikmetern eines der größten Gasvorkommen Europas entdeckt
Budapest - In der Nähe der südungarischen Stadt Mako wurde eines der größten Gasvorkommen Europas entdeckt - berichten ungarische Medien an diesem Wochenende. Es handle sich um rund 600 Mrd. Kubikmeter, deren Förderung in der durch ihre Zwiebelproduktion bekannten Region noch in diesem Jahr beginnen könnte. Laut der Tageszeitung "Nepszava" (Wochenend-Ausgabe) habe die ungarische Tochter der kanadischen Firma Falcon Oil & Gas, die TXT GmbH für Erdöl- und Gas-Forschung, das Gasfeld entdeckt und seitens des ungarischen Staates eine Fördergenehmigung für 35 Jahre erhalten.
Das Gas könnte jedoch nicht mit der üblichen Technik gefördert werden, da es sich in einer Tiefe von 6.000 bis 10.000 Metern befindet. Dennoch könnten die Vorräte laut Expertenmeinung mit der modernsten Gerätschaft effizient gefördert werden. Die anfallenden Kosten von 1.000 Kubikmetern sollen 20 Dollar (15,3 Euro) betragen, wobei der Weltmarktpreis dieser Gasmenge 300 Dollar (229 Euro) ausmache.

Abhängigkeit von Russland sinkt

Das Gasvorkommen von Mako soll einen bedeutenden Einfluss auf den ungarischen Gasmarkt haben, da es dessen Versorgungssicherheit erhöht und die Abhängigkeit vom russischen Gas senkt, schreibt das Blatt. Ungarn deckt gegenwärtig seinen Gasbedarf von 14 Mrd. m3 im Jahr zu 80 Prozent mit russischem Gas. Da das ungarische Gas nicht durch Transport- oder Transitgebühren verteuert werde, könne es wesentlich billiger als das russische Gas auf den ungarischen und europäischen Markt gelangen.

Der Beginn der Gasförderung bei Mako würde ferner Arbeitsplätze schaffen und dem Staat zu bedeutenden Einnahmen verhelfen, da von dem verkauften Erdgas 12-prozentige Bergwerkbezüge - eine Förder-Abgabe - zu bezahlen sind. Diese Einnahmen könnten innerhalb weniger Jahre namhafte Beträge erreichen, hieß es. In den 60er- und 70er-Jahren hat es in Ungarn in der Inlands-Gasförderung noch ein "Goldenes Zeitalter" mit größeren Fördermengen gegeben. (APA)

(Quelle: http://derstandard.at/?url=/?id=2718423)
In Ungarn erscheinen derzeit diverse Artikel zum Thema FO, hier einer davon:

Hungary deep gas drill to make country natural gas exporter, Falcon to go to BSE

Thursday, January 11, 2007 11:26:00 AM

Hungary can become an exporter of natural gas within five years if the sizeable resources of the Makó Trough are recovered from the great depths economically and the site is equipped with the necessary processing and delivery infrastructure, Falcon Oil & Gas Ltd. Chairman-CEO Marc A. Bruner said.

Oil and gas exploration and production company Falcon Oil & Gas Ltd., a British Columbia corporation, has operations in Hungary through its wholly-owned subsidiary TXM Oil and Gas Exploration, and in Romania through its wholly-owned subsidiary JVX Energy Corporation.

Falcon said in late September 2006 that there was a 90% probability that its Makó Trough, the company's deep gas exploration project in southeast Hungary, had a recoverable gas resource of 21.8 trillion cubic feet (617 billion cubic meter or some 4 billion barrels of oil equivalent).

In an interview with broadsheet Népszabadság Bruner said extraction would technically be possible even from next month, but they would be able to give a final assessment on recoverable gas only six months from now.

The press speculated there could be even 600 billion cubic metres of gas in the deep, but TXM managing director György Szabó stressed this estimate did not come from the company. He noted, however, that the non-traditional gas field with a length of 80 km and a width of 35 km, could hold even more than this amount.

Falcon has pumped USD 150 million into the Makó project in the past two years. They also build a pipeline to the MOL network. “We have capital of similar size available for further works," Bruner said.

He added that they were currently in talks with the Budapest Stock Exchange (BSE) to float Falcon there. The company is listed on the Toronto bourse already. The aim of the Budapest listing, which would take place in April, is not capital generation, Bruner stressed.

The risky Makó project absorbs HUF 50 million a day. As they drill extremely deep, they have to fight extreme pressure and even 250 degrees Celsius on occasion. Falcon has teamed up - not for the first time - with US-based Halliburton (with annual revenues of over USD 20 bn) and another acknowledged player in the trade, Schlumberger. Their jointly elaborated technology is used in Europe for the first time in Makó where they have drilled to a measured depth of 6,085 metres, a local record.

Rigs have been drilling in the Makó Trough for decades. The deepest drill in the area (Hódmezõvásárhely) went to 5,842.5 metres in 1972 but could locate recoverable gas.

If Falcon manages to exploit gas economically, it will not only help push prices lower but will also mean competition for Gazprom's deliveries and reduce dependence from Russia, Bruner noted.

At the current recovery pace, Hungary's crude stock (20 m cubic metres) is expected to be depleted within 15-20 years and natural gas resources (73 bn cubic metres) should run out in 20-25 years. Explorations such as the Makó Trough, however, may alter this scenario.

(Quelle: http://www.portfolio.hu/en/cikkek.tdp?cCheck=1&k=2&i=10707)
Wirtschaft
Kurzer Stopp der ,,Freundschaft“
Ölreserve musste angezapft werden

Ungarn hat kürzlich auf seine Ölreserven zurückgegriffen, nachdem Russland wegen eines Streits mit Weißrussland den Hahn der durch Europa verlaufenden Freundschafts-Pipeline abgedreht hatte. Die russischen Öllieferungen nach Ungarn und in andere europäische Länder wurden am vergangenen Montag eingestellt, weil Weißrussland eine Steuer für den Transit erhoben hatte. Die Maßnahme war eine Antwort auf die Verteuerung der russischen Gaslieferungen an den westlichen Nachbarn.
Auch eine Steuer für den Ölexport an Weißrussland wurde eingeführt. Die russische Ölfirma Transneft behauptete, Weißrussland habe einige Tage vor dem Pipeline-Stopp 80.000 Tonnen Öl abgezapft, die für Europa bestimmt waren. Mittwochnacht setzte der Ölstrom wieder ein, nachdem die weißrussische Regierung die Transitsteuer wieder aufgehoben hatte. Täglich werden 218.000 Tonnen russischen Öls über Weißrussland nach Europa geleitet.

Alternativen der Energieversorgung
In Ungarn verursachte der Lieferstopp keine Versorgungsprobleme. Wirtschafts- und Verkehrsminister János Kóka bevollmächtigte am Dienstag dennoch die Energiefirma MOL, die strategische Reserve als Kontingent für eine längere Unterbrechung der Lieferungen zu öffnen. Kóka teilte mit, er habe der täglichen Entnahme von 15.000 Tonnen Rohöl zugestimmt. Wie er hinzufügte, beträgt der tägliche Verbrauch in Ungarn nur 13.000 Tonnen. Ungarn verfügt über eine Rohölreserve von 500.000 Tonnen. Zwischen Mittwochnachmittag und Donnerstag, als wieder Öl in Ungarn eintraf, wurden rund 10.000 Tonnen verbraucht. Die wieder aufgenommenen Lieferungen betrugen täglich 25.000 Tonnen. Nach Angaben von MOL-Sprecher Szabolcs Ferencz wurden vor dem Rückgriff auf die strategischen Reserven technische Reserven im Umfang von 34.000 Tonnen verbraucht. Die Wiederauffüllung werde voraussichtlich noch in diesem Monat abgeschlossen, fügte der Sprecher hinzu. Das Benzin wurde nicht teurer, weil die strategische Reserve mit 3 Ft pro Liter bereits im Preis einberechnet ist.
Zwar bereitete das russisch-weißrussische Scharmützel in Ungarn nur geringe Probleme, aber das Problem der Energiesicherheit rückte wieder einmal in den Mittelpunkt. Die Agentur Standard and Poor’s erklärte, sie wolle das Risikorating der MOL nicht verändern, Ungarn sei aber viel zu abhängig vom Import russischer Energieträger. Dies erwies sich bereits im vergangenen Jahr, als wegen eines Konflikts zwischen Russland und der Ukraine der Gastransport gestoppt wurde. Ungarn, das seinen Erdgasbedarf zu 70% mit Importen aus Russland deckt, erlitt während der Krise eine Verknappung um 40%. Kóka erklärte aber in der vergangenen Woche, die nach der Verunsicherung im vergangenen Jahr entwickelte Strategie bedürfe keiner Änderungen. Bei Erdöl (24% des Energieverbrauchs) sei Ungarn weit weniger importabhängig als bei Gas (44%).
Nach dem zeitweiligen Abgeschnittensein vom russischen Gas schaute sich die ungarische Regierung nach Alternativen um. Wie der Rest von Europa beteiligt sich auch Ungarn an dem 4 bis 6 Mrd. teuren Nabucco-Pipeline-Projekt, das den Gastransport aus Ländern wie Aserbaidschan und dem Iran ermöglichen wird. Interessiert ist Ungarn auch an der Verlängerung der Blue-Stream-Pipeline nach Europa. Bisher führt sie das russische Erdgas nur bis zur Türkei. Vage sind noch die Pläne für die LNG-Pipeline, die von Kroatien aus den Transfer nordafrikanischen Erdgases ermöglichen soll. Unklar ist, wo die Regierung das Geld für all diese Vorhaben aufbringen will. Minister Kóka sagt, man habe zwar noch keine konkreten Vereinbarungen getroffen, doch sei man zur Finanzierung eines jeden dieser Konzepte in der Lage. Ungarn hat starke Ambitionen, einen großen Teil der europäischen Gasreserven zu beherbergen. MOL hat einen Vertrag über die Anlegung einer Reserve von 1,2 Mrd. Kubikmetern erhalten.
Das Land hat Chancen, sich zum Gasexporteur zu entwickeln, wenn die bei der südungarischen Stadt Makó entdeckten Vorkommen wirtschaftlich ausgenutzt werden können. Die kanadische Firma Falcon Oil & Gas Ltd. führt hier Bohrungen durch. Der Geschäftsführer des Unternehmens Marc A. Bruner sagte der Tageszeitung Népszabadság in der vergangenen Woche, ein Bericht über die Menge des wirtschaftlich erschließbaren Gases werde innerhalb von sechs Monaten erstellt. Zuvor hatte Falcon berichtet, es gebe eine 90%ige Chance, aus der Lagerstätte 509 Mrd. Kubikmeter Gas zu gewinnen. Die Wahrscheinlichkeit der Förderung von 1,28 Bio. Kubikmetern liege bei 50%.

Michael Logan

(Quelle: http://www.budapester.hu/?do=article&id=2321&issue=126)
12/01/2007 18:30 >> =DJ INTERVIEW:Falcon Starts Hungary Gas Production In 2 Mths

Of DOW JONES NEWSWIRES BUDAPEST (Dow Jones)
Canadian oil and gas exploration company Falcon Oil & Gas Ltd. (FO.V) is planning to start production of natural gas at the Mako field in Hungary within 60 days, Falcon''s President and Chief Executive Marc Bruner told Dow Jones Newswires Friday. "We think we''ll start production within sixty days," Bruner said, contradicting press reports which have said Falcon hasn''t decided yet whether to proceed with gas production in Hungary. "My belief is that (production) will be economical. We will know within six months," Bruner added. Falcon has found approximately 54 trillion of cubic feet of natural gas in Hungary, according to the Scotia Group Inc., which Falcon cooperated with. "This is an estimated recoverable resource and the upper case is 116 trillion of cubic feet of gas," Bruner added. The executive refused to reveal an estimated daily output in the early phase of exploitation. "If this deposit is everything we believe it is, within five years Hungary can be a gas-exporting country instead of an importing one," Bruner said. The company is also considering the possibility of listing on the Budapest Stock Exchange. "We will seek a listing for our shares (on the Budapest bourse) ... If we''ll do it, we''ll do it in the next couple of months," Bruner said. He added that his company may consider raising further funds through a secondary offering in Toronto, where its shares are already listed, at some point in the future - "probably at higher prices than where we are now." "We are prepared to do whatever is required in order to do what we need to do here (in Hungary)," Bruner stressed. Company Web site: http://www.falconoilandgas.com -By Edith Balazs, Dow Jones Newswires; +361-267-0623; edith.balazs@dowjones.com (END)

Dow Jones Newswires 12-01-07 1730GMT
Copyright (c) 2007 Dow Jones & Company, Inc.

(Quelle: http://www.intesatrade.it/intesa/News/DettaglioNotizieOggi&i…)
3:12 GMT, Jan 15, 2007

INTERVIEW: Canada's Falcon Oil and Gas confident of viability of giant Hungarian gas resource

By Balazs Szladek

BUDAPEST. JANUARY 15. INTERFAX CENTRAL EUROPE - Canadian exploration
firm Falcon Oil and Gas believes that natural gas resources in its Mako
concession area in Southern Hungary, estimated to hold enough gas to
possibly meet Hungary's consumption needs for decades, are economically
recoverable despite the "unconventional" nature of the field, Falcon Oil
and Gas Chairman and CEO Marc A. Bruner told Interfax in an interview.
"I'm confident that it's going to be economical, it's my gut reaction
from having done it successfully before with some other companies,"
Bruner said. "The chances that the aggregate total gas would not be
enough to work [with] is not probable in my view. If the technology
works as we think it's going to work, [the field could] provide
significant flows of gas, more than anything you've seen before in
Hungary."
Falcon Oil and Gas has been exploring the Mako field since late 2005.
Late last year, independent industry auditors the Scotia Group issued a
resource estimate on Falcon's Hungarian fields, reporting a 90%
probability that gas resources could reach 21.8 trln cubic feet, or more
than 600 bln cubic meters, equivalent to more than 40 years of Hungary's
entire domestic gas consumption.
According to the report, whose findings were accepted by Hungarian
mining authorities in late December, there also exists a 10% probability
that gas resources in the Mako Trough - measuring 80 kilometers in
length and 35 kilometers in width - could total as much as 116.1 trln
cubic feet, and a 50% probability that resources could reach 54.9 trln
cubic feet, or more than 1,500 bln cubic meters.
"Those are very large figures, and they're saying that the most likely
case is the 54 trln [cubic feet]," Bruner said of the findings of the
report. "That's the most likely case, and certainly that would make it a
giant gas field."
Environmental impact studies of the field are currently underway, while
test production, which the company hopes will confirm the economic
viability of drilling, is expected to start in 60-90 days, said Bruner.
These upbeat estimates have raised hopes that Hungary, now importing 80%
of its gas, could even become a net exporter of natural gas (see
separate story). However, public enthusiasm over the size of the project
has been cooled by the difficult geological characteristics of the field
and subsequent concerns whether these resources can ever be classified
as proven reserves and extracted economically.
The Mako gas deposits are "unconventional" deposits, for the most part
lying at least twice as deep as conventional deposits. A recent test
drilling took Falcon to more than 6,000 meters, the largest depth ever
reached in Hungary. These depths involve higher pressures and
temperatures, and drilling operations take exponentially longer - the
first 3,000 meters of a well can be drilled in 30-45 days, but drilling
down another 3,000 meters can take at least four months.
Rocks at this depth also have lower porosity and permeability levels,
which indicate the amount and accessibility of hydrocarbon particles in
pieces of rock.
While admitting these challenges, Bruner stressed that such
"unconventional" fields are becoming increasingly conventional, thanks
to the depletion of older fields but also to new technologies that have
sprung up over the past decade.
"Before 1995-96, nobody heard of unconventional gas in the U.S., but
today it represents 25% of our production," the CEO said. "According to
the US Geological Survey, 60% of all the reserves that are left in the
onshore U.S. are unconventional gas reserves. Some 70% of all our rigs
are drilling for unconventional gas reserves.
"So this is not some untried, untested technology, this is a technology
that's been perfected since the mid-1990s," he added.
Bruner noted that Falcon's Pinedale, Wyoming, field in the U.S., a
similar "unconventional" deposit that is now the biggest gas field on
the US West Coast, was discovered in 1949 and most of its rigs drilled
in the 1970s, but it could not be turned economical until 1998, when new
technologies helped increase production rates more than tenfold.
Similarly, the Mako Trough deposits were already discovered in the 1960s
and 1970s by the then stated-owned predecessor of oil/gas company MOL.
However, despite taking three years to drill as deep as 5,800 meters,
the company had to abandon its efforts, as it was unable to economically
recover gas or even determine with any certainty whether it would be
able to do so with the technology available at the time.
"I recognize [the Mako field] to be something very similar to the
deposits in the U.S., as rocks are rocks, no matter where they are,"
Bruner said. "MOL knew what they had found here; they just didn't have
the technology to get it out, because it was not invented until
1997-1998 by [US firms] Halliburton and Schlumberger."
With USD 300 mln earmarked for the project, Falcon has already drilled
five wells in the area, and has also built a pipeline connection to
MOL's nearby Algyo natural gas production facility, which in turn is
connected to the nationwide gas network. While Bruner said it will take
time to ramp up production at the Mako field, he noted that eventually
this will have to be followed by further infrastructure developments.
"The current system is fine for a while; however, we're going to need
additional processing capacity [as well as] additional pipeline
capacity," Bruner said. "But when you have a big gas supply, that's not
going to be a big issue, and I'm very confident that we'll be able to
find solutions to that," the CEO said, adding that Falcon has so far
been "pleased" with the cooperation with MOL and the availability of
qualified local personnel.
The CEO added that drilling and operating test wells normally cost twice
as much as exploitation wells, so initial costs of production should be
no cause for discouragement.
"Whatever the costs are, it's not appropriate to say that that's going
to be the development cost, because that's totally wrong," according to
Bruner. "We should be able to lower the cost by as much as 50% when we
go into the exploitation phase."

BS/JT/RV

For further information please contact the reporter at email:
balazs.szladek@interfax-news.hu or by telephone on: (+36) 1 269 7808

(Quelle: http://www.interfax.com/5/230888/news.aspx)
Will ich hier auch mal ein wenig updaten :D

Hungary, the next gas giant?
Canada-based Falcon Oil and Gas may start production from existing test wells at its massive Mako Trough exploration area within 90 days, the company’s president, Marc A. Bruner, told Platts in an interview January 12. The potential of the Mako site is turning the common wisdom about Hungary’s hydrocarbon resources on its head. For most of the past decade, the story has been one of a slow but steady decline in reserves and production. But if its gas can be recovered economically, Mako could become one of the biggest gas fields in Europe and turn Hungary into a gas exporter. While uncertainties remain, Falcon is confident enough to be investing considerable sums, and energy analysts are cautiously optimistic. “We have found a lot of gas,” said Bruner. “The deposit appears to be a gas column 2,500 m high, 80 km long and up to 35 km wide. And when you go below 3,000 m, it’s all gas.”
The resources do appear to be huge. According to an independent resource assessment by the Texas-based Scotia Group, there is a 90% probability that recoverable resources at Mako are at least 21.8 trillion cubic feet (617 billion cubic meters). At the 50% probability level, which Bruner called the “most likely case,” resources at Mako rise to 54.9 Tcf (1.55 trillion cu m). Hungary’s total annual domestic consumption, meanwhile, is just 13–14 Bcm.

However, Mako’s resources are unconventional – specifically, basincentered gas (BCG) and shale gas – and are located at 3,000–6,000 m below the surface, far deeper than any

resources recovered in Hungary to date. Drilling wells to reach this gas will be more expensive and time-consuming than is the case with conventional resources. Another problem is heat, as the temperatures at these depths can reach extremes of 250° C or more. Mako is not a new discovery, Bruner stressed. Hungary’s state-owned oil company – the predecessor to today’s MOL – found the field in the mid-1960s, shot 2D seismic and started drilling. It took them 45 days to drill 3,000 m, where they reached the first of four geological layers and where the gas resources begin. It took another three years to drill to a depth of about 5,800 m. The equipment at the time could not handle the heat, pressure or density of the rock they found at those levels. “The Geologists knew there was gas,” Bruner said. “But no one on planet earth could complete this kind of impermeable rock until 1997 or 1998 in America. The technology didn’t exist.”

Falcon has brought in Halliburton and Schlumberger to work on the field as contractors, employing technology used in the US, but which has not been employed outside North America yet. But Bruner stresses that about 70% of the gas rigs in America are now used for unconventional gas deposits. “This is tested technology,” he said. Bruner also points out that not all the gas at Mako is very deep. Indeed, the Scotia report described resources at four separate geological layers, and it appears that over 50% of the recoverable gas is in the relatively shallow, easy-to-reach top layer, called the Szolnok formation. “The nice thing about that is we can drill it in 30–45 days,” Bruner said. “So we know those costs are going to be a whole lot less than the deeper wells that are going to take four months to drill.” Falcon has raised $300 million to develop the Mako field, of which it has spent $150 million, Bruner said.

Going forward, the company has not ruled out the possibility of bringing in new partners to obtain additional financing, if and when that is needed. The company is considering a listing of its shares on the Budapest Stock Exchange, in addition to its current listing in Toronto. While this would not aim to bring in new capital initially, a new share issue would remain a possibility in the future.

Falcon can start gas extraction from its current wells once it has a production license. “We need to complete our environmental impact study,” Bruner said. “We believe the license will be finalized soon.” Falcon’s 37- year production license is expected to have an option to extend for 18 years. Bruner declined to comment on the expected initial flow rates once production begins. “We think they are going to be substantial, but I can’t quote any flows,” he said.

The location of the field is favorable – very close to the infrastructure created by MOL in the 1960s to exploit the nearby Algyo and Pusztafoldvar fields. Indeed, those fields are found at either edge of the Mako Trough, and are fed by a shale layer deep in the Mako Trough, according to Bruner. Algyo and Pusztafoldvar together have already produced over 700 million barrels of oil equivalent, and are expected to yield an ultimate combined recovery of about 1 billion boe, he said. “These two fields were only the tip of the gasberg. A full 70% of the resource hasn’t been exploited.”

Bigger than Pinedale
Bruner likens the Mako Trough to Wyoming’s Pinedale field, also a BCG accumulation, which has estimated reserves of 21 Tcf (600 Bcm) and is the fourth largest onshore field in the United States. As former chairman of Ultra Petroleum, which operates at Pinedale, Bruner is familiar with both fields, and he believes Mako is bigger. While Pinedale covers just 36 square miles, Mako’s area is over 300 sq miles, he said. And while Pinedale’s “sweet spot” of relatively porous, easier-to-drill rock yields about 500 ft of net pay, at Mako the sweet spot – the upper Szolnok layer – is about 2,000 ft of net pay, he said. “So you have something four times as high and ten times the area of Pinedale.” Another advantage is Mako’s layer of shale, below the Szolnok formation, which is still actively emitting gas. “The source rock is still generating gas today. This is very promising for Hungary,” Bruner said. “All the basincentered gas deposits in the United States are all dead deposits. But you’ve got the burner on here, which means gas is being generated faster than it can escape. This is a very good thing.”

Falcon has already built an 18-km pipeline from the field to MOL’s Algyo gas processing site. The pipeline can handle 2.8 million cu m per day, but this could be easily increased through compression or the construction of a parallel pipeline, Bruner said. MOL is also happy that it will be able to keep its processing facility occupied, he said. With relatively inexpensive expansion, MOL’s site would be capable of handling up to 14 Mcm from Falcon for processing.

In terms of selling its gas, Falcon is clearly focused Hungary in the coming years, where it will compete with Russian gas imports. “Gas-to-gas competition with Gazprom will be a good thing, and in all probably will probably lower people’s gas bills,” Bruner said. In the longer term, Falcon is eyeing export markets. “It is entirely possible that within five years, Hungary could be a gas exporting country,” Bruner said. “But that’s providing we all work together and everyone is focused on making things happen,” he added, referring to the need to use the existing HAG pipeline from Austria for exports, rather for importing Russian gas as it is now. Romania and Serbia are also potential export markets, he said. Bruner acknowledged that the costs of extraction at Mako will be more expensive from lower depths, but he believes that overall costs should be very competitive. “Pinedale’s finding costs are now the lowest in the US, at $0.80 per thousand cf,” he noted ($28.57/1,000 cu m). “Mako is a tremendous resource. Everyone thinks these are the scraps that have fallen off the table, and that this is just the residual that’s left.” But Bruner refutes this logic. “This was always the big field,” he said – not Algyo or Pusztafoldvar.

Expensive but secure
Analysts believe that Mako will have a significant positive impact on the security of Hungary’s gas supply, and in the long term they believe exports from the field are likely. However, they note that the project is not without challenges – particularly in terms of costs and meeting environmental conditions. “I think it is very likely that the field will come on stream,” energy analyst Peter Tordai of KBC Securities said. “Falcon has invested an awful lot of money if it doesn’t want to produce.” In a positive scenario, Mako could reach peak production of approximately 15–20 Bcm/year sometime in 2010–2013, Tordai said. In addition, MOL will likely still produce about 3 Bcm. While Hungary would still have long-term take-or-pay obligations with Gazprom, it would be much less dependent on Russian gas, Tordai said. Getting there will not be easy, however. Tordai believes that the environmental permitting process will be difficult, mainly due to the large volumes of slurry that will be created by the hydraulic fracturing processes that are needed to break up the highly dense rock at lower levels in the field. The problem will be magnified by the fact that wells will have to be densely placed to fully exploit the field’s unconventional resources. “That’s a big issue to deal with, and it definitely pushes up production costs. So the project is very sensitive to crude oil price,” he said.

While production at Mako would likely be comfortably profitable at the oil price levels of over $70 per barrel seen at times in 2006, at current levels of about $52 profitability is a question, Tordai believes. “I’m optimistic because I think the long-term trend in crude prices is still heading upward, despite the recent drop in prices.” Judit Barta, managing director of Hungary’s GKI Energy Research, also believes the field will come on stream and will have important benefits in the security of supply. However, she doubts it will serve to lower gas prices in the country. Production will likely be more expensive than at similar fields in the US, she said, because Hungary’s high geothermal activity means much greater temperatures at low depths.

Source: Platts Jan 19 2007
Falcon Oil & Gas Ltd. Announces Negotiations Relating to an Extension of Letter of Intent With Macquarie Bank

BUDAPEST, Hungary, Jan 31, 2007 /PRNewswire-FirstCall via COMTEX/ -- Falcon Oil & Gas Ltd. (TSXV: FO) announced today that it is negotiating with Macquarie Bank Limited ("Macquarie") to extend the term of the nonbinding letter of intent relating to a credit agreement which would provide Falcon with a US$250,000,000 credit facility as announced in the press release dated October 4, 2006.
Falcon Oil & Gas Ltd. Provides Interim Summary and Operational Update
Last Update: 10:44 AM ET Feb 12, 2007

BUDAPEST, Hungary, Feb 12, 2007 /PRNewswire-FirstCall via COMTEX/ -- Falcon Oil & Gas Ltd. (TSXV: FO), in response to the recent fluctuation in the price of Falcon Oil & Gas Ltd.'s ("Falcon" or the "Company") common shares and the increase in trading volume, announced that while there have been no new material developments, it has decided to provide the following interim summary and operational update regarding its drilling program in Hungary.
As a result of the preliminary information which Falcon has gathered over the last several weeks of testing, Falcon continues to be highly optimistic about its Mako Trough project, and the commercial viability of this 54.9 tcf Contingent Resource (estimated recoverable portion)(1)(2). (The 54.9 tcf figure is based on a P50 probability, as described in the Scotia Report, dated September 15, 2006, previously filed on Sedar at www.sedar.com.) These interim results are summarized in the technical review below. Falcon emphasizes that these results have so far confirmed all of the expectations and estimates previously announced publicly, and that it has achieved its original objectives first defined in 2005:
* Conduct a continuous drilling program on the Tisza and Mako Licenses;
* Identify the primary target zones for hydrocarbon development;
* Confirm and define the over-pressured gas cell of the Mako Trough;
* Shorten the lead time to first production from the Mako Trough.

Falcon further points out the following:

1. The Delineation Wells: The Pusztaszer-1, Szekketas-1, and Magyarcsanad-1 wells (the "Delineation Wells") are currently being tested and evaluated. As described in detail in the Operational Update below, we have encountered significant hydrocarbons in the Delineation Wells. The primary purpose of the Delineation Wells was for these wells to serve as a benchmark in identifying the boundaries of the Basin Centered Gas Accumulation ("BCGA") and to aid the Company in understanding the mechanics of the BCGA system within the Mako Trough.
2. Established Existence of BCGA: The original purpose of the Delineation Wells and the overall work program to date -- to prove the existence of the BCGA -- has been completely accomplished with the Hungarian government's formal written acknowledgement and acceptance of the existence and large extent of the BCGA, as issued by the government and announced by the Company on December 21, 2006. This was the most important milestone in the process of securing a long-term production license. Falcon is extremely pleased with the status of its ongoing efforts toward obtaining a long-term production license covering all or most of the BCGA underlying the Company's licenses. When issued, the production license will be valid for 35 years, with the possibility of extending it for an additional 17.5 years.
The Hungarian Geological Survey's "Expert Opinion" (issued on December 21, 2006), states that Falcon's report "demonstrates a continuous BCGA cell" and that it "recommends approval of the estimate of unconventional gas ..." as calculated in the Scotia Report -- that is, 54.9 tcf, including 42.2 tcf in the Szolnok formation (based on a P50 probability). The Geological Survey further states in its Expert Opinion that "the [Scotia Report] ... data can be legitimately used toward a mining plot [long-term production license] designation."
3. Deep Wells: Completion work has commenced on the Mako-6 deep well but no zones have been perforated as of this date. Falcon has drilled the Mako-7 in the center of the BCGA and that well is preparing to log through casing. When the Mako-7 is completed, the 801 rig will be moved 18 kilometres to the northwest where the Mako-8 well will continue with Falcon's deep test strategy.
4. Szolnok Development Plan: The Szolnok formation is currently estimated to contain approximately 77% of the total 54.9 tcf assigned in the Scotia Report (based on a P50 probability). Now that the Company has received the Hungarian government's unequivocal recognition of the BCGA, the Company is proceeding under an aggressive and comprehensive BCGA evaluation plan initially targeting the Szolnok segment of the shallower BCGA gas system. The Szolnok is the horizon in the Mako Trough most analogous to the well- established BCGA projects in the U.S., such as the Pinedale Anticline in Wyoming. The Szolnok program will include multiple wells to be drilled to the base of the Szolnok formation and completed in the Szolnok (and above, if warranted). With wells averaging 10,000 to 14,760 feet (3,000 to 4,500 meters) in depth in the center of the Basin, the Company expects this development plan to include drilling and completion costs averaging approximately $10 million per well for the initial wells and $7 million for the full cycle development wells. This is the same trend of cost reduction due to operational improvement and economy of scale demonstrated in the established North American BCGA developments.
The Szolnok plan has already been initiated with the drilling of the new Mako-4, which is currently at 3,300 feet (1,012 meters), as the first dedicated "shallow" well clearly inside the hydrocarbon-generating area of the Mako Trough BCGA. This location is within the axis of the Mako Trough, approximately five kilometers southeast of the Mako-6 and 13 kilometers northwest of the Magyarcsanad-1 well, both of which had significant gas in the Szolnok as interpreted from electric and mud logs. Following the Mako-4, Falcon is currently planning to drill three additional Szolnok tests. These wells will be drilled to the northwest of the Mako-4. The Foldeak-1 well will be located less than one kilometer east of the Mako-6. The Szikancs-1 will be drilled six kilometers northwest of Mako-6 and less than one kilometer east of the Mako-7. Szikancs North-1 is projected to be drilled approximately four kilometers northwest of the Mako-7.
Falcon intends to drill, case and complete these four wells with multiple fracture stimulation treatments over as large an interval of the gross pay section as possible, followed by flow-testing and tying into the existing Falcon pipeline. These locations, in the vicinity of Falcon's existing pipeline facilities, will allow for efficient use of the Company's and third party infrastructure and related facilities (gathering and pipelines, processing facilities, etc.). The wells will be drilled with the Crosco 403 rig, which will continue to focus exclusively on drilling wells in the Szolnok evaluation plan. The development plan for 2008 will include significantly expanding these development operations with multiple rigs.
5. Incidental H2S: As referenced in the Operational Update below regarding the Szekketas-1, the Company encountered traces of hydrogen sulfide (H2S) in the Triassic formation that appeared to be present in or migrating from the Endrod or Triassic formations. Falcon believes that these traces do not indicate a broader presence of H2S in other zones, nor do they represent a significant problem. This opinion is based on the facts that the Company did not encounter H2S in the Magyarcsanad-1 well, and that this is likely to be limited to the Triassic formation, which is not present throughout the Basin. Encountering H2S caused a delay in Falcon's ongoing testing of the S-1, while Falcon awaited delivery of H2S monitoring and safety equipment. The Company determined that all safety precautions must be implemented immediately, and has done so, without regard to delays. Testing has resumed and the Company is carefully monitoring the situation.
6. Financial Strength to Continue Existing Program: Falcon has no debt and over $110 million in cash in its account, which Falcon presently believes is more than sufficient for the exploration phase of its operations, including the testing program and the Szolnok program, as described above.
In summary, Falcon is extremely pleased with its progress to date and remains prepared to overcome any challenges it may face as it continues operations in Hungary.
OPERATIONAL UPDATE
Executive Summary Pusztaszer #1: A total of three fracs were performed in the Pusztaszer #1, of which two were in the Basement Gneiss Breccia at 3825-3865 and 3745-3815 meters. Although no gas was recovered in the first two fracs, the third frac recovered significant gas. The third frac was a test of a limited sandstone interval in the Szolnok formation at 3368-3378 meters. This resulted in a positive test with gas recovered at the perimeter of the BCGA gas cell in the over-pressured Szolnok formation. The well is currently shut-in for pressure build-up, and the Company has not completed testing. Additional Szolnok and Algyo zones of interest remain to be evaluated.
Executive Summary Szekkutas #1: The Szekkutas #1 was drilled as a gas cell Delineation Well on the eastern margin of the BCGA. Two zones within the Basement Triassic consisted of naturally fractured Dolomite. These intervals 3505-3495 meters and 3437-3447 meters, proved to contain minor gas.
A thin, naturally fractured, marl-rich Endrod section of the BCGA was then fracture treated though perforations at 3386-3391 meters. During flow back and clean up after frac, traces of hydrogen sulfide (H2S) were detected. The production test was immediately halted until appropriate monitoring and safety equipment could be mobilized to location. A revised testing program was developed to minimize the impact of H2S on personnel and equipment. It is believed that the H2S encountered on this test is derived from Triassic Dolomites through natural fractures that continue up into the Endrod. Commingling the gas flow stream with other formations in this well and gas from other wells will easily enable pipeline specifications to be met. Completion Operations have now resumed and flow testing will follow.
Upon conclusion of the Endrod test, a further 550 meters (1804 feet) of the shallower gas bearing Szolnok formation will be tested and evaluated. ApexPE (well known as BCGA fracture treatment specialists) has been contracted and will manage and direct the overall fracture treatment strategy.
Executive Summary Mako #6: The Mako 6 was drilled to a depth of 5692 meters, where 5 1/2" casing was set. Due to extreme bottom hole pressures (17,100 psi), temperatures (238 degrees C), APA (well known high pressure/high temperature experts) was contracted for the completion design strategy. APA concluded that specialized equipment is required and the Company is in the process of assembling this equipment.
The precautionary measures, completion equipment, materials, and applied safety factors now implemented meet or exceed the Company's key service providers' Health, Safety and Environment company policies. This will now allow the contractors to provide the services required to safely and successfully test the well.
Falcon's current schedule has operations commencing on or about the end of February and fracture treating the lower most Synrift section during March. ApexPE will be actively involved in the design, management, and execution of the stimulation operations.
Executive Summary Magyarcsanad #1: While drilling this well, Falcon encountered a gas influx which equated to a 4000 psi shut-in well pressure. The high pressure gas influx originated in the Endrod formation at 4,057 meters. Upon cementing the 5-1/2" casing the Company encountered another high-pressure gas influx through a channel in the cement allowing the migration of gas to surface. The gas is currently being vented and flared in a controlled manner with the liquid hydrocarbons being gathered and stored. Upon measurement and testing, Falcon determined that the gas is of good quality and the condensate is sweet.
Rigless operations are scheduled to commence within the next three weeks that will include a circumferential survey of the cement quality. Falcon is currently finalizing a workover and completion program for the well that will include the termination of the migrating gas and condensate flow as well as the testing of the Endrod and Szolnok formations.
This well provides an important delineation accepted by the Hungarian Authorities to the southern most part of the Mako Trough BCGA cell.
Executive Summary Mako #7: The Mako-7 reached a TD on December 21, 2006. This well was drilled to a Hungarian record depth of 6,085 meters MD. Cement clean out and completion operations are presently underway. When operations are complete, the 801 rig will be mobilized to the Mako-8 location for a 5,700-meter well to test synrift facies or Basement, whichever occurs first.
Executive Summary Mako #4: Rig 403 initiated drilling on January 30, 2007. This well represents a dedicated shallow Szolnok test. The projected total depth is 4,200 meters. As of this report Falcon has drilled and set the 13-3/8" casing at a depth of 1,012 meters. Drilling operations are continuing as programmed.
Orion veröffentlicht ebenfalls ein Update:

Falcon Oil and Gas Ltd.
(FO, TSX-V - C$2.28)

12-Month Target: C$5.63
Rating: Overweight (Speculative)
Potential Return: 147%



What Happened?

In response to the recent fluctuation in the price of Falcon's common shares and the increase in trading volume, the company provided an update on its activities in Hungary.
* Delineation wells: the Pusztaszer-1 (P-1), Szekkutas-1 (S-1) and Magyarcsanad-1 (M-1) wells are currently being tested and evaluated. The primary purpose of the delineation wells is to test the aerial extent of the Basin Centred Gas Accumulation (BCGA).
* Deep wells: completion work has commenced on the Mako-6 deep well but no zones have been perforated to date. Falcon has drilled and cased the offsetting Mako-7 well in the centre of the BCGA and is preparing to log the well.
* BCGA development plan (Szolnok Development): it is currently estimated that the Szolnok Formation contains 77% of the 54.9 Tcf of gas assigned to the Mako Trough (based on a P50 probability). The company plans to drill multiple wells to the base of the Szolnok Formation (3,000 to 4,500 metres) in the central portion of the trough. The first of these wells, the Mako-4 well, is currently drilled to a depth of 1,012 metres, in an area that is clearly inside the hydrocarbon-generating area of the BCGA.



What Does it Mean?

* The delineation wells have shown mixed results. The P-1 and S-1 wells both showed encouraging results in the BCGA, but did not test significant quantities of gas in the underlying basement sediments. Up to 10 more zones in the BCGA in the S-1 and one more zone in the BCGA in the P-1 will need to be tested. The M-1 well has not been perforated; it has been cemented but the cement is breached and hydrocarbons (gas and condensate) are entering the well. The company plans to test the well in the upcoming months.
* Overall, the BCGA in the Szolnok and Endrod formations show positive indications of hydrocarbon saturation but the economics of producing the wells cannot yet be determined. We do not expect definitive data on flow rates for at least three months.
* As a result of drilling activity this quarter, Falcon's cash balance has been reduced to $US110 million from $US185 million in Q3/06. Since September 30, 2006, the company drilled the Magyarcsanad-1 and Mako-7 wells, tied-in the Mako-6 well to MOL facilities, shot additional 3-D seismic and started the well completion and testing program on the P-1, S-1, M-1 and Mako-6 wells. Falcon believes that its current cash position is more than sufficient for the exploration phase of its operations, including the testing program and the Szolnok program.
* We reiterate our Overweight (Speculative) recommendation and C$5.63 target price.
Falcon Oil & Gas Ltd. Announces Improved Well Completion Strategy
Last Update: 1:35 PM ET Feb 26, 2007

BUDAPEST, Hungary, Feb 26, 2007 /PRNewswire-FirstCall via COMTEX/ -- Falcon Oil & Gas Ltd. (TSXV: FO) announces its revised and improved well completion strategy for its Hungarian basin centered gas operations that is designed to achieve more timely and efficient testing and completions for the wells it has drilled in the Mako Trough. Falcon estimates that the improvements to its completion strategy will not increase the costs of Falcon's operations.
Since the commencement of Falcon's exploration strategy and drilling program under its Mako Trough Licenses (the "Drilling Program") in December, 2005, up to today, Falcon has reached total depth in five wells and is drilling a sixth well. Falcon's Drilling Program involved conducting a continuous drilling program followed closely by a comprehensive testing program using work-over rigs and/or other testing units available on the open market. However, as a result of the continuing strong demand for such equipment and materials in Europe and globally, and the resulting difficulty in obtaining commitments from service companies for appropriate work-over equipment and materials, Falcon has had to evaluate the impact of such shortages on the Drilling Program and testing operations.
In order to minimize further delays, Falcon will immediately begin to utilize, for both drilling and testing purposes, the two Crosco rigs which Falcon has under long term contracts. The Crosco 403 rig is currently drilling the Mako-4 well. Rather than case and suspend the Mako-4 well, Falcon will use the Crosco 403 rig to test the Mako-4 well before moving the Crosco 403 rig to the Foldeak-1 location, where Falcon will conduct drill-test-complete programs.
Similarly, the Crosco 801 rig will remain on the Mako-7 well, where to date it has been used for drilling, to commence testing and completion of the Mako-7 well. At completion of the testing operations, or when the CUDD unit can be released from the Mako-6 well and mobilized to the Mako-7 well, Falcon will move the Crosco 801 rig to the Mako-8 location where Falcon will conduct drill-test-complete programs.
Falcon will also conduct testing operations on the Mako-6 well, using a CUDD unit which is under a long term contract to Falcon. This CUDD unit will also be available to Falcon for future testing programs as and when required.
Falcon currently has a work-over rig on location at the Szekkutas-1 well site. After the current availability, Falcon must relinquish use until approximately mid-April. However, Falcon believes that its work on the Szekkutas-1 well can be completed and the work-over rig mobilized to the Magyarcsanad-1 site for a short-term testing program prior to relinquishing the work-over rig.
Falcon will continue the testing of the Mako-4, the Mako-6, the Mako-7 and the Szekkutas-1 wells over the next several weeks, and estimates that information on flow rates resulting from the expected completions on such wells will be available beginning early in the second quarter of 2007. Falcon will continue with its Szolnok development plan, as previously announced.
Marc A. Bruner, Chairman and CEO of Falcon commented that, "Our continuous drilling strategy was designed to optimize the evaluation time required for the initial test wells which we've drilled on our 575,000-acre licenses. Due to the equipment shortage, we're now opting to use our exploration rigs for both drilling and testing." Mr. Bruner added, "Falcon will continue aggressively pursuing its Szolnok drilling plan, and will search for a long term solution to its testing objectives that will complement and enhance its continuous drilling strategy."

(Quelle: http://www.marketwatch.com/news/story/falcon-oil--gas-ltd/st…)
Falcon Oil & Gas Ltd. Receives Long-Term Production License in Hungary

Last Update: 12:10 PM ET May 22, 2007

BUDAPEST, Hungary, May 22, 2007 /PRNewswire via COMTEX/ -- Falcon Oil & Gas Ltd. (TSXV: FO) ("Falcon") today announced that it has received final written approval from the Hungarian Mining Authority for a long-term production license (known as a "Mining Plot" under Hungarian law) covering all oil and gas in the identified Basin Centered Gas Accumulation ("BCGA") resource underlying Falcon's two exploration licenses.
On May 21, 2007, Falcon's Hungarian operating subsidiary, TXM Oil and Gas LLC, received formal written approval and issuance of the long-term production license ("Production License") that was applied for in October 2006. The issuance of the Production License was the final step necessary for Falcon to secure its right and ability to implement its drilling and development plan for this large hydrocarbon resource in southeast Hungary. The Production License will continue as long as Falcon continues operations on the properties.
CEO and Chairman, Marc A. Bruner, stated, "The issuance of the long-term production license is the culmination of years of dedicated work by Falcon and the cooperation and expertise of the Hungarian government in analyzing and recognizing the estimated recoverable portion of this Contingent Resource(1)(2). Falcon extends its appreciation to the Mining Authority, environmental authorities and related mayors and municipalities, and commits to conduct its business and carry out a development program that will mutually benefit the company and the people of Hungary. We are excited about this project and our long-term future relationship with the Hungarian government and the people of Hungary."
The Production License follows the government's approval of the company's Closing Report on December 21, 2006, as previously announced. With its approval of the Closing Report, the Hungarian government validated and agreed with Falcon's geological and technical evaluation and conclusions about the existence, extent, and estimated recoverable portion of this BCGA Contingent Resource underlying Falcon's exploration licenses. The approved Mining Plot covers the area as defined by the Scotia Group, Inc., for its resource estimate, in an independent report ("Scotia Report") dated effective August 15, 2006 (previously filed at http://www.Sedar.com).
Dr. Gyorgy Szabo, a member of Falcon's Board of Directors, stated, "Falcon has acquired more than 1,100 square kilometres of 3D seismic, drilled five wells, commenced drilling of a sixth well, constructed a high capacity gathering pipeline and entered into a detailed testing and evaluating program. Now that Falcon has received approval of the Mining Plot, the company will put the necessary systems and personnel in place to develop this extensive resource, consistent with the results of our ongoing testing program."
Notes Regarding Contingent Resource Estimate:
(1) The resource estimate has been conducted using the definitions specified by the Canadian Oil and Gas Evaluation Handbook. The Mako Trough Resource falls under the "Discovered Resources" classification. The values refer to the probabilistically estimated recoverable fraction of "Contingent Resources" within that classification. Contingent resources are those quantities of oil and gas estimated on a given date to be potentially recoverable from known accumulations but are not currently economic. The economic nature of this resource has not yet been assessed due to the early stage of data gathering for the Mako Trough resource. The recoverable portion of this "Contingent Resource" is contingent upon the demonstration of productive capability of the various zones of interest through well testing and longer term production testing which has not occurred as of the effective date of the report.
(2) Estimates are as at August 15, 2006, the effective date of the Scotia Report.
About Falcon Oil & Gas Ltd.
Falcon Oil & Gas Ltd. is a British Columbia corporation which is in the business of oil and gas exploration and production. It has operations in Hungary through its wholly-owned subsidiary TXM Oil and Gas Exploration and in Romania through its wholly-owned subsidiary JVX Energy Corporation. Further information about Falcon is available at http://www.falconoilandgas.com.

Contacts:
Falcon Oil & Gas Ltd.
Marc A. Bruner, President, Chairman & CEO

Weber Shandwick Worldwide
Peter Duda
+1 (212) 445-8213



Falcon's discovered resources are not reserves. Only those quantities of oil and gas that are anticipated to be economically recoverable from discovered resources are classified as reserves. Until such time as Falcon's discovered resources are proven to be reserves, there is a risk that Falcon may not achieve ongoing operations from which it may generate significant revenue.
In the interests of providing Company shareholders and potential investors with information regarding the Company, including the Company's assessment of its and its subsidiaries' future plans and operations, certain statements included in this press release may constitute forward-looking information or forward-looking statements (collectively, "forward-looking statements"). All statements contained herein that are not clearly historical in nature are forward-looking, and the words "anticipate", "believe", "expect", "estimate" and similar expressions are generally intended to identify forward-looking statements. Similarly, forward-looking statements in this press release include, but are not limited to anticipated developments of the Company's drilling project in Hungary and the timing thereof, the Company's drilling project in Romania and the timing thereof, capital investment levels and the allocation thereof, pipeline capacity, government royalty rates, reserve and resources estimates, the level of expenditures for compliance with environmental regulations, site restoration costs including abandonment and reclamation costs, exploration plans, acquisition and disposition plans including farmout plans, net cash flows, geographic expansion and plans for seismic surveys. In addition, please note that statements relating to "reserves" or "resources" are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves and resources described can be profitably produced in the future. Such statements represent the Company's internal projections, estimates or beliefs concerning, among other things, an outlook on the estimated amounts and timing of capital expenditures, anticipated future debt levels and incentive fees or revenues or other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance. These statements are only predictions. Actual events or results may differ materially. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievement since such expectations are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause the Company's actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, the Company and the foregoing list of important factors is not exhaustive. These forward-looking statements are made as of the date hereof disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise. Company shareholders and potential investors should carefully consider the information contained in the Company's filings with Canadian securities administrators at http://www.sedar.com before making investment decisions with regard to the Company.
The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.


(Quelle: http://www.falconoilandgas.com/releases/5-22-07.htm)
Falcon Oil & Gas Ltd. Announces Initial Test Results at Magyarcsanad-1 Well
Mako Trough Well Tests Positive for Oil and Gas within the Endrod formation


BUDAPEST, Hungary, May 23 /PRNewswire/ -- Falcon Oil & Gas Ltd. (TSXV: FO) ("Falcon" or the "Company") is pleased to announce that the Company has encountered a productive oil and gas interval in the Magyarcsanad-1 exploration well. The productive interval was encountered within the Endrod formation at a depth of 4,057 meters.

In an initial rate test in a seven meter gross interval, which the Company has not yet fracture stimulated, the Magyarcsanad-1 well flowed 377 barrels of oil per day of light crude oil (48 degree API gravity) and 745,000 cubic feet of gas per day. The total thickness of the Endrod formation behind casing is 362 meters.

The initial rate test had an estimated flowing bottom hole temperature of 182 degrees Celsius (360 degrees Fahrenheit) and a 3,843 pounds per square inch (psi) flowing tubing pressure. Down hole pressure measurements, surface fluid and gas samples were continuously monitored through the initial test period to aid the Company's plans for possible appraisal drilling. The liquid hydrocarbons from the well were sold to a third-party under an oil sales contract. Gas was flared. Falcon will move forward with the Magyarcsanad-1 well testing program, and will fracture stimulate the entire 362 meters of the Endrod formation that is behind casing.

Falcon CEO and President, Marc A. Bruner, said, "The naturally flowing Endrod oil zone encountered at the Magyarcsanad-1 adds a new dimension to our project, as the scope of our exploration program in Hungary expands to include oil."

The Magyarcsanad-1 well is located in the southern area of Falcon's Mako License and is approximately 16.5 kilometers south of Falcon's Mako-6 well and approximately nine kilometers east of the Mako-1, Mako-2 and Mako-3 wells, which were drilled several years prior to Falcon's acquisition of the Mako License. The Mako-1, Mako-2 and Mako-3 wells encountered gas and oil shows within the Endrod formation. The Magyarcsanad-1 well was drilled by Falcon as a southern delineation well to assist in defining the boundaries of a Basin Centered Gas Accumulation (BCGA) within the Mako Trough.

The recent and newly completed 3-D seismic acquisition program is being processed and integrated into the Company's previously acquired 3-D programs. This new seismic program covers the Magyarcsanad-1 discovery and will be important in defining possible offset appraisal wells.

About Falcon Oil & Gas Ltd.

Falcon Oil & Gas Ltd. is a British Columbia corporation which is in the business of oil and gas exploration and production. It has operations in Hungary through its wholly-owned subsidiary TXM Oil and Gas Exploration, and in Romania through its wholly-owned subsidiary JVX Energy Corporation. Further information about Falcon is available at www.falconoilandgas.com.

Contacts:
Falcon Oil & Gas Ltd.
Marc A. Bruner, President, Chairman & CEO

Weber Shandwick Worldwide
Peter Duda
+1 (212) 445-8213

Falcon's discovered resources are not reserves. Only those quantities of oil and gas that are anticipated to be economically recoverable from discovered resources are classified as reserves. Until such time as Falcon's discovered resources are proven to be reserves, there is a risk that Falcon may not achieve ongoing operations from which it may generate significant revenue.

In the interests of providing Company shareholders and potential investors with information regarding the Company, including the Company's assessment of its and its subsidiaries' future plans and operations, certain statements included in this press release may constitute forward-looking information or forward-looking statements (collectively, "forward-looking statements"). All statements contained herein that are not clearly historical in nature are forward-looking, and the words "anticipate", "believe", "expect", "estimate" and similar expressions are generally intended to identify forward-looking statements. Similarly, forward-looking statements in this press release include, but are not limited to anticipated developments of the Company's drilling project in Hungary and the timing thereof, the Company's drilling project in Romania and the timing thereof, capital investment levels and the allocation thereof, pipeline capacity, government royalty rates, reserve and resources estimates, the level of expenditures for compliance with environmental regulations, site restoration costs including abandonment and reclamation costs, exploration plans, acquisition and disposition plans including farmout plans, net cash flows, geographic expansion and plans for seismic surveys. In addition, please note that statements relating to "reserves" or "resources" are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves and resources described can be profitably produced in the future. Such statements represent the Company's internal projections, estimates or beliefs concerning, among other things, an outlook on the estimated amounts and timing of capital expenditures, anticipated future debt levels and incentive fees or revenues or other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance. These statements are only predictions. Actual events or results may differ materially. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievement since such expectations are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause the Company's actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, the Company and the foregoing list of important factors is not exhaustive. These forward-looking statements are made as of the date hereof disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise. Company shareholders and potential investors should carefully consider the information contained in the Company's filings with Canadian securities administrators at www.sedar.com before making investment decisions with regard to the Company.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

SOURCE Falcon Oil & Gas Ltd.

For further information: Peter Duda of Weber Shandwick Worldwide, +1-212-445-8213, for Falcon Oil & Gas Ltd.
Hi Leute, bin wieder da;)

Falcon Oil & Gas Ltd. Provides Operational Update on Mako-6 and Magyarcsanad
BUDAPEST, Hungary, June 6, 2007 /PRNewswire via COMTEX News Network/ --

Falcon Oil & Gas Ltd. (TSXV: FO) ("Falcon" or the "Company") has issued an operational update as part of its ongoing commitment to public disclosure announcing the following:

Falcon has resumed testing operations on the Mako-6 well in the lowermost part of the Basal Conglomerate, after fracture stimulating ("fracing") this interval in April 2007 with 79,000 pounds of proppant and 3,100 bbls of frac fluid. Prior to this current testing operation, the Company opened the well for flow, had gas flow to surface immediately and, due to the presence of manageable levels of H2S, the well was shut-in to wait for the correct equipment to flow the well safely. The well was then shut-in with frac fluid load still remaining for over a month.

The well is currently being tested through perforations from 5,326 to 5,328 meters in the Lower Basal Conglomerate. The fracced interval being tested is from 5,279 meters to 5,365 meters, a total of 86 meters; 69 meters Basal Conglomerate and 17 meters Synrift. The Basal Conglomerate is 273 meters thick from 5075 meters to 5348 meters. This remaining 204 meters of Basal Conglomerate will be tested following the completed analysis of results from current test. The Company is encouraged with the initial gas shows from this test and believes the gas shows will remain constant or will improve in the upper part of the Basal Conglomerate where rock quality increases and sand packages thicken. Falcon intends to announce details on the gas shows from this test after flow-back of frac fluid and bottom sediment has been completed.

On June 3, 2007, the test was resumed with an 8/64" choke. Within 8 hours of opening the well and recovering 208 bbls of frac fluid, gas surfaced in burnable quantities, which are too small to measure. After flow testing the well for 29 hours and recovering approximately 800 bbls of the frac fluid, it was noted that the flow-back was producing greater than expected quantities of bottom sediment. On June 4, the well was opened up to a 12/64" choke to assist in the clean-up. The well continued to produce gas in burnable quantities through the test separator throughout the day. On June 5, the well experienced a partial to complete tubing plug, which temporarily caused the well to cease flowing. After three hours of no frac fluid recovery, the well unloaded large quantities of bottom sediment, resulting in significant quantities of gas flow in and an 8-foot to 10-foot flare and increased flowing tubing pressures. Falcon will continue to flow test the well, recover as much of the frac load fluid as possible, ensure the tubing and perforations are free and clear of any obstructions, and, if required, assist the well bore unloading process via coil tubing-nitrogen. About two-thirds of the frac load water has been recovered.

Preparations to fracture stimulate the Magyarcsanad well are underway. Falcon is currently rigging up and will commence the well intervention and testing program in the coming weeks. Falcon is engineering a two stage frac that is designed to treat the effective Endrod interval through the existing perforation at 4,060 meters and introduce 4 sets of new perforations. The new perforations will straddle the existing perforations (2 sets above and below). The combined two stage frac will consist of approximately 350,000 pounds of proppant. The treatment is designed to stimulate the entire Endrod formation that is behind casing with a total effective frac height of nearly 300 meters. It is anticipated actual testing operation will commence the end of June.

About Falcon Oil & Gas Ltd.

Falcon Oil & Gas Ltd. is a British Columbia corporation which is in the business of oil and gas exploration and production. It has operations in Hungary through its wholly-owned subsidiary TXM Oil and Gas Exploration and in Romania through its wholly-owned subsidiary JVX Energy Corporation. Further information about Falcon is available at http://www.falconoilandgas.com..

Contacts: Falcon Oil & Gas Ltd. Marc A. Bruner, President, Chairman & CEO Weber Shandwick Worldwide Peter Duda +1 (212) 445-8213

Falcon's discovered resources are not reserves. Only those quantities of oil and gas that are anticipated to be economically recoverable from discovered resources are classified as reserves. Until such time as Falcon's discovered resources are proven to be reserves, there is a risk that Falcon may not achieve ongoing operations from which it may generate significant revenue.

In the interests of providing Company shareholders and potential investors with information regarding the Company, including the Company's assessment of its and its subsidiaries' future plans and operations, certain statements included in this press release may constitute forward-looking information or forward-looking statements (collectively, "forward-looking statements"). All statements contained herein that are not clearly historical in nature are forward-looking, and the words "anticipate", "believe", "expect", "estimate" and similar expressions are generally intended to identify forward-looking statements. Similarly, forward-looking statements in this press release include, but are not limited to anticipated developments of the Company's drilling project in Hungary and the timing thereof, the Company's drilling project in Romania and the timing thereof, capital investment levels and the allocation thereof, pipeline capacity, government royalty rates, reserve and resources estimates, the level of expenditures for compliance with environmental regulations, site restoration costs including abandonment and reclamation costs, exploration plans, acquisition and disposition plans including farmout plans, net cash flows, geographic expansion and plans for seismic surveys. In addition, please note that statements relating to "reserves" or "resources" are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves and resources described can be profitably produced in the future. Such statements represent the Company's internal projections, estimates or beliefs concerning, among other things, an outlook on the estimated amounts and timing of capital expenditures, anticipated future debt levels and incentive fees or revenues or other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance. These statements are only predictions. Actual events or results may differ materially. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievement since such expectations are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause the Company's actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, the Company and the foregoing list of important factors is not exhaustive. These forward-looking statements are made as of the date hereof disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise. Company shareholders and potential investors should carefully consider the information contained in the Company's filings with Canadian securities administrators at http://www.sedar.com before making investment decisions with regard to the Company.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

SOURCE Falcon Oil & Gas Ltd.

Marc A. Bruner, President, Chairman & CEO of Falcon Oil & Gas Ltd.; or Peter Duda of Weber Shandwick Worldwide, for Falcon Oil & Gas Ltd., +1-212-445-8213

http://www.falconoilandgas.com
Copyright (C) 2007 PR Newswire. All rights reserved
Falcon Announces Search for Strategic Partners

Last Update: 9:08 AM ET Jun 27, 2007

BUDAPEST, Hungary, June 27, 2007 /PRNewswire-FirstCall via COMTEX/ -- Falcon Oil & Gas Ltd. (TSXV: FO) ("Falcon" or the "Company") announced that it has retained BMO Capital Markets as its exclusive financial advisor to help identify potential strategic partners. Falcon will focus on companies which can add value to the Company's oil and gas project in Hungary by contributing to the technical understanding of the assets, accelerating development, securing services required for commercial production of oil and gas, and/or granting access to high-value end markets.
Falcon President, Chairman and CEO Marc A. Bruner stated, "Today's announcement is part of the Company's long-term plan and commitment to prepare for large-scale drilling and development on our 245,000-acre production license, and reflects our focus on laying the foundation to move beyond exploration to production. Falcon's short-term goals and strategy have not changed. We will determine the most appropriate course of action as we continue to evaluate our results in the field over the next several weeks and months, as we work to take appropriate steps to address the commercial development phase."

Quelle: http://www.marketwatch.com/news/story/falcon-announces-searc…
Aus den BB, eine Zusammenfassung des Conference Call:

I just spent three hours doing a full transcript. Hope it helps.
Notes on Conference Call 28 June 2007

Present: Mark Bruner, Lyle Nelson, John Gustavson, Peter Duda, Rod Wallace

Peter Duda apologised for not returning calls yesterday – will endeavour to get back to investors who rang yesterday but did not have their calls returned.

MB: Thank you for joining the call to discuss the announcement yesterday that it has asked BMO Capital markets to be its exclusive financial adviser to identify strategic partners. We organised today’s call to address certain misconceptions that we understand may have arisen from yesterdays announcement. We want to make sure that everyone understands rationale behind the announcement that we are seeking strategic partners. Comments on context for yesterdays announcement and then take questions.

We made the announcement because we have been approached by potential strategic partners to discuss possible cooperation for the next phase of Falcon’s operation and wanted to inform the market that we have started the official process to identify the right strategic partners. We believe important to inform the market of this process and these discussions. Falcon began working with BMO to put together a data room to present the assets and opportunities. We have received the 245,000 acre Production Licence which was a critical step and culmination of years of hard work and dedication from our team of experts. The licence gave Falcon long term production rights and reinforces need for large scale drilling plan. It also gave Falcon a more tangible opportunity to present to potential strategic partners who would contribute to the development of Falcon’s long term operations.

In fact, prior to yesterday some potential partners already approached us on unsolicited basis which we believe is a testament to strength and potential viability of our operations. Now is right time to put in place formal process for identifying the best possible strategic partners to help move forward long term. We brought BMO in to assist us in executing a formal and competitive process. Discussions have begun and we will continue according to this process. We believe this is the right approach to achieve which is not only favourable to what we could achieve in the market but also best value for shareholders. With all that said let me provide some clarification about these potential strategic partners. The types of partners would provide various types support to operation over the long term would be for example oil service companies that might want to secure long term alliance with Falcon related to development on Production Licence or major upstream oil and gas companies with large field development capabilities. Or companies with expertise in gas transportation, gas processing and/ or infrastructure. Or companies with access to end market s for gas consumption or power companies. Our search may result in more than one partner each of which brings different value to Falcon in its long term development. We believe this information that all investors would want to know and we are following our obligation to disclose to investors.

Next like to communicate that the assets, Falcon understands better than any of the other players out there and it has taken time and dedication to gain that understanding and to put that information together in an executable plan. Now we are in a position to show the information to potential partners who would help Falcon in its ongoing testing and completion phase and assist the company in moving beyond exploration and into its production phase. This testing programme has taken longer than anyone likes or anticipated but very pleased with the current status. The future appraisal of the current wells requires more than 50 new frac stimulations in 5 wells in the Mako trough. 10 of these are in BC. A minimum of 12 for Endrod and a minimum of 28 in Szolnok this will require considerable resources and will take over a year to complete, Simultaneously move from exploration to production phase, such as putting in place the appropriate strategic partners. As moves forward, we will provide updates to our shareholders. Finally there are no changes to announce with regards to changes in the status of our operations and our financing remains stable.

We have drilled 6 wells and delineated one of the largest gas fields ever discovered in Europe and received a long term production licence. We continue to evaluate our results that we have to date and are able to continue moving forward in the immediate future. Our short term objectives and strategy have not changed. Endrod formation has produced both oil and gas under a stimulated natural flow in Magy1. Total Endrod sequence will shortly be tested with 2 fracture stimulations over the entire Endrod interval of 300m behind casing – results will significantly influence the future teseting of strategy M4,6 and 7 and in short will help define our next steps and where they should be and where we should commit our resources. Because of the pressure 7 58ths casing has been laid in Mako 4 and waiting Magy1 results to determine depth to drill to and we are searching required casing for H2S so tubing and packer completion is not necessary.

Regardless of if we drill only to the Szolnok which we estimate to be another 300 metres or deeper into the Endrod we will require this casing. The previously reported discoveries of H2S are entirely manageable and are not expected to affect operation. It is important to recognise that this is a significant project with potentially 1000s of wells and this will be a multibillion project and will last many years – we must be prepared to move forward from exploration to production. We do see a need to identify appropriate partners to assist the company in many important respects. Although there is a tendency by some to regard each piece of information as critical – we do not agree. Strategic partners will be interested not because of the results of any one fracture but because of potential opportunity of entire resource under our production licence.

Questions

Jamie Somerville

Q: Give us idea potential timelines of testing and when you could conclude discussions with partners

A: MB: We are going to be fraccing Magy1 in July and results of that in August. At that point assess and decide next move. That’s what is driving us short term. I would like to explain why take this approach why not moving forward with other operations until we have the result of the test on the Magy1 well. Why so important to see the results from Magy1 before we proceed forward?

JG: Its important to realise when I started this whole programme in 1997/8 I saw the Mako trough as being the kitchen so to speak the source rock forr all the oil and gas fields around the Mako trough and in ensuing years thanks to Falcon and MB activities in actuality we also determined that there was a giant BCGA. First the BCGA was confirmed. Now recently it was announced in press release in Endrod natural fracturing in the Endrod had provided unstimulated flow of both oil and gas. To me fulfilment of dream indeed in kitchen where oil and gas generated.

I can tell you this and it is subject to further QCing? (13.11 minutes) that over the last couple of days the scientists have gone through all the wells and HOD1 and Mako1 drilled by MOL and it is very significant that in all of these wells we are now able to see and we think we see correlation across the area in the Endrod in the form of oil shows in some of the other wells in the form of oil slicks on cuttings so we now think we see a basin wide, lets call it, “oil generating zone” in the Endrod. Assuming that this is correct and assuming that the type of brittleness that we saw in the Magy1 well which created natural fractures created by mother nature, this is very, very important event and clearly therefore the first test that MB talked about in the Magy1, the flow we saw so those fracs we put in in July may literally change the nature of the programme because everything would then be aimed at proving up more reserves in the Endrod.

MB: I also wanted to mention that the previous [Scotia] report that we had in the Upper Endrod had no reserves associated with it. So it is very important to understand what is happening in the Magy1 because it will dictate next move we make in the field. Other question we are in the early stages in negotiating with strategic partners. We are in the process of having confidentiality agreements signed. Interestingly enough I absolutely have been contacted by other people since that press release yesterday. It is early days and early in the process. Certainly in my view to find the right partners we are looking at months to be able to do that. Beyond that I can tell you that we have some very interested people. Data room is ready and it took a long time to put together and we are ready to go there.

Question: The other reason I am asking about timelines is your financial situation. Obviously, you raised a substantial amount money roughly a year ago, how the timeline for finding potential strategic partners ties into any requirement further financing for the company to continue appraising what you have found in Hungary?

MB: I think the financial position was approximately $100m end of March. We have less than that now but adequate working capital to do what we need to do. It is important to always have adequate working capital. Depending what happens here, in terms of what we want to do money will be a factor in terms of how slow or fast we go. Now have substantial working capital to conduct our short term operations.

MICHAEL from RAYMOND JAMES

Q. Expected production of each of your projects?

Early days – we have essentially 6 wells drilled and we are going to be selecting 5 out of the 6 to complete and this will take a substantial period of time and too early to answer until we have tested different zones and different layetrs. We have to start at the bottom and work our way up. I'd love to be able to answer but wont have the information. Can tell you we really didn’t realise that we were going to have to do as many fracs jobs as it looks like we have to do. The good news is that we have over 50 to do, it will take some time but we are very excited about those possibilities.

Q. Can you estimate a reserve size?

We have actually put out a 51-101 report over a year ago that Scotia prepared and this is a resource evaluation since there is not any production. This is based on volumetric calculations, electrical logs, pores and other mud logs and that kind of thing. We have got ideas or some other people have given their ideas as to what they think we have. What we are excited about now is that something that was not even mentioned in the previous report is going to be a pretty big deal now.

Q. How much cash are you burning per month?

We are not drilling any wells right now. We do not have a drilling operation going on. And limited completion programme. Burn rates are not high right now. Working capital is in good shape. Depending what happens let the resource or the wells we complete tell us how fast or how slow we need to go to evaluate it and properly decide what the next course of action is. We’re in good shape.

Q. You had $100m end of March. What have you got now?

MB. I can’t answer that question because we haven’t filed any financial statements yet. It is the policy of the company to maintain proper working capital and we have that. We don’t have any issues in the short term. Of course to go and get very aggressive out here, you know, this would be difficult to go spend a lot of money to go do that. We feel that based on the information that we are going to be picking up here in the near future we can decide how fast or how slow we want to go.

Q. Have you thought about the different types of financing you could do?

One of the purposes of what are trying to do now is to find a strategic partner and one of the nice things, I mean, we think we have identified quite a big resource here with 50 frac jobs to do. Any sort of partner that we bring in is going to have to come in not just with expertise but with money. We actually believe we will get better value with that strategic partner than if we went to the market to raise money.

Q. Any issues with the sourness of the gas?

Yes there is an issue. It is not an insurmountable issue. This is important for everyone to understand. We have a fraction of 1% in some of the deeper sections of our wells and what that requires is, that requires us because of that concentration it requires us to use tubing and packers to test each of our zones. In the future whenever we drill wells, we will have the necessary lead time to order the proper casing and it takes a lot of lead time to get this casing. We will run the right casing in the hole where we won’t have the issue. In Mako4 not going to deepen that well until we have the right casing so we don’t have to do a tubing and packer completion. This is not the first time people have run into H2S and had to use tubing and packers to test with. One of the issues is that it is true that this takes more time to do and it is also more expensive. But it is not a problem in terms of production in the wells that we currently have and it certainly wont be problem in the new wells that we drill. Its just going to be more time and it is going to be more expensive.

Q. Jan von Holsbeg

Can you give us a sense of the extensive nature of oil containing zone, how big is it?

MB: This question about the thickness of Endrod in Mako6, Mako7, Mako4 and Magy1 I think it would be appropriate that he understands how thick it is. One interesting things you should know too is that it is a marl. It is about 40% limestone 20% dolomite and has some sand in it. Its pretty uniform through the section.

Rob (Falcon engineer): The Mako6 has 685m and the Mako7 has 570m. Getting towards the centre of the basin, it will thicken up in the centre of the trough, of the Mako trough, so maybe getting up to almost a kilometre of section. And then obviously then off to the margins such as in the Magy1 where we actually have more like 300m or so. It is up to 600-700m in the middle of the basin and what we are doing is trying to ascertain how much of that is fractured marl. It varies through the sequence in what you would take that as being your net pay is fractured marl but the Magy1 well it will give us a very good indication of how much of that 700m is actually fractured pay.

MB: I’d like to mention will be putting out a press release to summarise some of these things.

Rob: A forward programme explaining why the 50 fracs are needed and where they’ll be will be coming out quite shortly.

Q. Gordon Nichols

I wanted to ask about the Macquarie credit line Where are you with that. This area you are working in - are there any other companies working on borders

MB: The deal we have with Macquarie is, we are still chatting with them, but it was estimating that we need to be producing for certain period of time to access the line of credit. With what’s happened with as many different pay zones that we have got to frac, it is evident that it will take a substantial period of time because if you go into production it means you stop fraccing. So making a deal at this time with Macquarie is not on the cards until completion programme is finished

The next question. The only other company that is on our borders is MOL. And they have some property to the west south and north of us. I don’t know exactly what the percentages are but at least in the deeper parts of the Synrift and the Basal Conglomerate and the Lower Endrod, most of this deposit is on our property. We can say that with a lot of confidence because of the 3D seismic we have shot. When you get up into the Upper Endrod and Szolnok, they have a percentage of whatever is there in the upper sections. Even in upper section we have majority of what is prospective, at least that is our interpretation.

Ian McQueen

I think you will probably give an update on the Basal Conglomerate in the Mako6 well, can you comment on that please and the other question is how would the H2S affect your ability to produce from the six existing wells.

MB: First of all, we are going to make an announcement at the appropriate time on Mako6 so I am not able to comment on that. On the second part of your question. What happens here in terms of testing procedure is that these are test wells not production wells, but because we have the H2S, we need to have tubing and packers in order to be able to test the different zones. If we didn’t have to use tubing and packers we could test up through casing and everything would be much much quicker.

We also are going to have to whenever we test a particular frac job, because we want to understand what the productivity and the concentrations of the gas concentrations whether it be methane, CO2, H2S condensate or oil or water or whatever, we have got to test each individual zone to be able to determine what its productive rates are. And in any particular section the important thing is for example in the Basal Conglomerate when you finish this in the Basal Conglomerate, you would pull the plugs out of whatever you plugged off to produce at all, or whatever portion you want to produce. And the answer is when all the different frac jobs are done, you are going to run a permanent H2S resistant tubing and packer in the hole to be able to produce it and to put online.

Lyle: That is exactly correct.

That’s what we will be doing. We will be using tubing and packers. This is not going to be necessary in our view for the Mako4 well because we are going to be running a long string of H2S resistant casing in that well, as soon as we locate it, * so we don’t have that problem and the completion process can go quicker. Once the testing stage is finished in these different wells and we understand what each individual zone will contribute we are able at that point to do multiple frac jobs and stages for example like they do up at Pinedale all at one time and not test each individual sequence. So that is going to be real big advantage in the future when we go to exploitation phase. But right now we need to know what we have got. All of our strategic partners are going to want to have the same type of testing programme that I have just described to you so they understand whenever we ramp up the operation to go into the exploitation phase what size drilling rigs we are going to need, what depths we are going to be drilling to and what we are going to be completing in. This is a process that unfortunately takes time and unfortunately will take more time in these 6 wells because of the fact that we have these minor amounts of H2S

Paul Ballantyne with Paul Greatbatch here at Genesis

Q. The first potential partner you mentioned in the list you gave was a service company. Are there any constraints on the progress of your activities through access to contractors or services? Are you now deprioritising the Szolnok formation and if so could you give us a sense of what the thinking behind that? Have there been any issues in the conversion of exploration licences to production licences?

MB: Taking last question, no in terms of any issues, we now have the pl in hand. There are reporting requirements and things we have to do in terms of to the government. We have the production licence well in hand.

In terms of the service providers we have used Halliburton and Schlumberger and one of the real important things is that on our last frac job on the Mako10 [!?] we had 23000 horse power on location and I think that’s more horsepower than has ever been at least in Hungary and if not Europe and one of the things that we found and I think this is important is that we had no problem fraccing these wells. We can frac these wells. We are not concerned about that risk factor.

Also at this time we don’t have any issues with access to the service providers. When I was Chairman of Ultra Petroleum we made those service company deals with Halliburton and Integrated Solutions and I’m very confident that at the particular time when we absolutely demonstrate the potential of a lot of different frac jobs and these service companies feel comfortable, I really feel comfortable that some kind of arrangements can be made with some of these service companies at the appropriate time. This may be early days. Frankly at this point I would put them on lower part of the list in terms of making a deal now. I mean I don’t want to discourage anyone from talking to us. On curve of who is going to be the most interested, I think its going to be these gas marketers and these upstream majors and large independents. And certainly the majors and the upstream independents feel comfortable with where are with the 50 frac jobs we have got to do in terms of going forward with this. *

John Tunburry

Q. When can we expect firm announcement on flow rates and what is worst case for announcement?

MB: As I mentioned the next frac job we are going to do is the Magy1 and those two frac jobs to frac 300m is going to happen in July. That’s what we expect. We expect to have the results in August. Its important to understand that we have 50 frac jobs to do. That’s going to take some time, also we have modelled these 50 intervals that have good chance of being economical. I think the probability of a large number of those frac jobs failing is small in my opinion. One other thing to mention. You have to start at the bottom and work your way up when you are completing these wells. We drilled Mako4 in order to do the Szolnok and what has happened is that we hit the overpressure quite early and based on our interpretation of the 3D seismic, we feel we have at least another 300-400m to get through Szolnok. We had to set the 7 5’8 casing.

One of the things that has happened to us is that we’ve got this oil discovery in Magy1 and we want to see what it does before we decide whether to stop at that 300-400m or do we want to drill deeper down into the Endrod. So unfortunately that has put the Szolnok programme back because what you can’t do, although I guess you could, is go to one of the deeper wells, Mako6 or Mako7, and skip 15 frac jobs and then jump up into the Szolnok but with as much money as we have spent and with what appears to be a very large discovery, I don’t think make a lot of sense to do that. The unfortunate thing you know at this point, is that we may need some patience to see what happens in Szolnok. We have some Szolnok possibilities on some of the edge wells that we are evaluating now to maybe look at those.

Q: We have been waiting for flow rates for some time and looking at the expectation that we have some flow rates in July.

We will have frac July and the results in August.

Q: At least August?

My hope sooner. Some of my Engineers told me not to give absolute dates. My hope is that it would be sooner rather than later, lets see how it goes.

Darron Preston

Q: I am slightly mystified as to the current status on Mako6. I know that we are still cleaning up the frac fluid but suddenly it seems to have gone completely off the radar as it were and I am surprised we are not going to have an earlier cleanup. Perhaps you can explain why it seems to have gone a little bit more on the backburner?

MB: Its not on the backburner, it is something we are working on every day. Let just me give you a little history on the Mako6 if I might. When we fraced the Mako6 we had to be ready for the H2S you recall the delays after we had some H2S shows on the S1 well. We had to be ready for this. We had some significant gas flows almost immediately with about 20% of our load back and we had some H2S entry into the borehole and we immediately had to kill the well. So the situation is in order to get ready to flow the well with the tubing and the packer, we shut that well in for over 5 weeks. So when we brought it back on, we were experiencing some plugging and one of the things we mentioned in the press release is that we have some obstructions and some plugging, that we are dealing with. That’s where we are right now, it something we are trying to resolve, and until we make a press release I am not really prepared to comment any further than that.

Q. Do we have some sort of time as to when the press release will be issued regarding the situation at M6?

MB: As soon as we have it resolved in terms of what we are doing, we will give you the press release.

Jim Gerald

Q. Can you get JG to comment on the thickness and extent of the oil in the Endrod that he and his team have mapped?

JG: I cannot give you the exact thickness. The Hungarian scientists did their best in mapping it. We are now looking at it. But we are talking of the order of hundreds of metres. It varies a little bit across the basin but it is very formidable. That’s my best estimate. That’s a forward looking statement and all that. It is literally in last two days that I had the talk with the scientist so it requires more look. To me the original prospect generated here10 years into this, this is really exactly what I was looking for originally. Now, in my opinion, we know where the giant Algyo field got its oil from and so on. But I am not prepared to give you numbers because they are not my numbers and I need to have the details. But I am sure Marc with your permission that I may say that it is something that that is worthy of a press release in the very near future. (background laughter)

Q. We have had two significant delays from H2S so far with S1 and Mako6. Have you nailed down the source of the H2S in the basement yet?

JG: This is in contrast, it is not the type of H2S you find for example around the Caspian where Chevron is finding several percent in its gas. This is due to minor inclusions of pyrite iron sulphide in the rocks in the deeper part down in the Triassic dolomites that form the basement and it is from that that the H2S is generated. Again I am here relating Hungarian scientists that I talk with frequently and I will say that this is a question that we have no doubt that this is indeed the case so therefore we do not expect any surprises it is common in many and most wells and consequently Falcon also has to be prepared to deal with it as you heard Marc say. It is vexing and irritating and it has been delaying but it is something that can be handled and MOL’s processing equipment and so on is available and can handle this at the surface from a treatment standpoint. *

MB: I might add that over in Magy1, what we are producing in terms of what H2S is coming out of the gas would go into the pipeline and be taken in the plant at MOL. It is more of a casing problem at this point than a pipeline problem.

Q. Do you have an engineering report planned to follow up Scotia report?

We have a very good group of people at falcon. I want to let everyone know we are working with John and its very interesting before John sold this to Falcon, John had talked to a lot of these strategic investors himself and is familiar with a lot of the technical teams of a lot of these people and John has been working with us throughout this process. It is frankly my belief that JG understands better than anyone. He is going to be working in the data rooms with our team of people at Falcon and these strategic investors. So a lot of them already know he is going to be working with us.

JG: If I could answer this even more directly. At present time we are trying our best to find parallels from other fields in the world. I am happy to say that there are indeed fields that produce from this type of marl as we are talking about in the Endrod so we try to make our models from that. We are then trying to come up with the most likely result we can get. We have been charged by Falcon to come up with what do these fracs cost and what might we expect and this will then give Falcon the management tools to go forward with this number of fracs. Of course, if indeed predictions come true then Falcon has wonderful problem to decide whether or not they should let such excellent wells continue to flow and provide cash flow. It is a tough decision to cut off a very very good flowing well to test another zones. That’s a wonderful problem to have.

MB: A lot of people might want to know our thoughts on probability of finding a partner. Do you think we are going to have any trouble finding a partner?

JG: I have to defer on one point. *I am not totally familiar with the Bank of Montreal you know detail things but assuming that the confidentiality agreement are the standard across the industry, I am absolutely, I have no doubt whatsoever this is a giant business opportunity for many types of companies you are talking about. And my own experience up to the point where you and I made the deal, up to that point I was talking with several major companies and I was talking with large electricity companies. The latter were actually just looking for who could operator and I JG, with just a small consulting company, could obviously not operate like you have been able to do. So such possible strategic deals should now be available to you particularly as the gas situation and the energy situation in Europe has sharpened.

Jamie Somerville

Q. Looking at chart of your share price the market valuation has been pretty volatile. In looking for strategic partners firstly I wanted to ask do you have any preference for retention of any interest, any operating interest. Secondly whether you can give any indication as to what you actually think a fair market valuation of this asset is at this point in time, regardless of upcoming coming test results.

MB: I think that is a difficult question because we don’t have the test to put a value on it. It is my belief that with the Szolnok with the previous 51-101 that was done with Scotia and what we have discovered now that the value is considerably higher than certainly our market cap now and I feel very comfortable that a deal with a strategic partner - we have property big enough to make several deals with several strategic partners, it doesn’t need to be one. Any kind of deal is certainly going to require capital not only to finish what we have already started with the 6 wells* but to do additional drilling, infrastructure and that kind of thing. I just don’t think there’s much question with 50 fracs to do and once JG finishes modelling the potential of those 50 frac jobs, I am very comfortable that we are going to find some people to make a deal with. There are certainly some obvious things that you should be thinking about and who some of those people might be. In this part of the world this is the right place at the right time and the right deposit that could change the complexion of Europe if it works out in the way we hope and believe it will, so I don’t think there’s any question there’s are a lot of people who are going to be interested and there are already people that are interested, I’ll tell you. And we are talking now.

Q. With regard to retaining operatorship or control?

I am not going to rule out a strategic partner in terms of operations. I don’t rule that out. I am not saying we have to have that. I am saying its my belief that it is big enough that we could have several operators and we could operate different parts of it and we could still operate in there. I think there is flexibility and we have flexibility to cut many kinds of transactions that would be beneficial to shareholders. I am very confident on this that we going to do very well there.
Falcon Oil & Gas Ltd. Completes Fracture Stimulations of Magyarcsanad-1

Last Update: 4:38 PM ET Jul 31, 2007

BUDAPEST, Hungary, July 31, 2007 /PRNewswire-FirstCall via COMTEX/ -- Falcon Oil & Gas Ltd. (TSXV: FO) ("Falcon" or the "Company"), today announced that it has completed the fracture stimulations of the Magyarcsanad-1 well according to the plan that was discussed on Falcon's June 28, 2007 conference call. The Endrod sequence in Magyarcsanad-1 was tested with two fracture stimulations. The Company continues to expect to have results from the fracture stimulations during August 2007, and plans to announce such results during that time.
Further information regarding the overall fracture stimulation program will be forthcoming after the test results on Magyarcsanad-1 have been analyzed.

Quelle: http://www.marketwatch.com/news/story/falcon-oil--gas-ltd/st…
Falcon Oil & Gas Ltd. to Host Quarterly Investor Conference Call
13:02 EDT Friday, August 10, 2007

BUDAPEST, Hungary, Aug. 10 /PRNewswire-FirstCall/ -- Falcon Oil & Gas Ltd. (TSXV: FO) ("Falcon" or the "Company"), will host its first quarterly investor conference call on Wednesday, August 29, 2007 at 8:30 a.m. (ET) to provide updates on the Company's financials, operations, well status and strategic partner discussions. Going forward, Falcon will be holding investor conference calls on a quarterly basis.

The conference call will be available live via telephone. To participate in the conference call within the U.S. and Canada, dial (866) 688-0039. To participate in the conference internationally, dial (706) 679-3130. The conference call will also be broadcast live on the Internet and may be accessed at www.falconoilandgas.com. The web cast will be archived on the Company's website.

The conference call will be available for replay via telephone beginning at 12:00 p.m. (ET) on Wednesday, August 29 2007, until Wednesday, September 12, 2007, at 11:59 p.m. (ET). To listen to a replay of the conference within the U.S. and Canada, dial (800) 642-1687 or internationally (706) 645-9291. The replay code is 13162665.

(Quelle: http://www.marketwatch.com/news/story/falcon-oil--gas-ltd/st…)
Falcon Oil & Gas Ltd. Releases Review From the Scotia Group

BUDAPEST, Hungary, Aug 28, 2007 /PRNewswire-FirstCall via COMTEX/ -- Falcon Oil & Gas Ltd. (TSXV: FO) ("Falcon" or the "Company"), today released a copy of a review completed by the Scotia Group, an independent, third party consultant to Falcon. The document provides a review of Falcon's operations and accomplishments, and provides recommendations for the Mako Trough.
The Scotia Group conducted its review in accordance with standards set out in the Canadian Oil and Gas Evaluation Handbook (the "COGE Handbook") prepared jointly by the Society of Petroleum Evaluation Engineers (Calgary Chapter) and the Canadian Institute of Mining, Metallurgy & Petroleum (Petroleum Society).

Below please find the full content of the review.

24 August 2007

Mr. Marc A. Bruner
President, Chairman & CEO
Falcon Oil and Gas, Ltd.
1601 Blake Street
Suite 505
Denver, Colorado 80202

RE Mako Trough, Hungary Operations Review

Dear Mr. Bruner:

INTRODUCTION



Falcon Oil and Gas Ltd. (Falcon) and TXM Hungary, a division of Falcon, have requested The Scotia Group, Inc. (Scotia) to conduct a review of their operations in the Mako Trough of Hungary. The review is focused as follows:

-- Processes utilized to date in the evaluation
-- Operational and geologic
-- Accomplishments to date
-- Recommended alterations for improvement
-- Recommendations as to the next steps



Scotia was contracted by Falcon in June 2006 to conduct a resource assessment of certain properties in the Mako Basin of Hungary. The study "Resource Estimate Mako Trough, Effective Date August 15, 2006" found there to be evidence of hydrocarbon resources within the Mako and Tisza exploration licenses controlled by Falcon.
The resources were found to lie in four prospective horizons: Szolnok, Lower Endrod, Basal Conglomerate, and Synrift Sequence.
The volumes were previously stated in our report entitled "Resource Estimate Mako Trough, Effective Date August 15, 2006."
Falcon's initial phase of exploration was to drill six wells and conduct a 3D survey of the exploration license in an effort to delineate the resource. In addition, Falcon was to conduct extensive testing and evaluation of the exploration wells to gain a better understanding of the rock properties and geologic environment. These objectives have been accomplished.
Scotia, as been Falcon's independent advisor since 2006, is of the opinion that Falcon has been diligent and prudent in its operations to date and, as advisor to Falcon, offers the following observations, comments and recommendations related to accomplishments, improvement considerations and recommendations of next steps and the way forward.
ACCOMPLISHMENTS
Following due diligence by Gustavson, Falcon conducted a 3D survey of the Foldeak region of the prospective area of interest. The survey was completed in late 2004. Following evaluation of the data, Falcon entered an agreement to participate in the Tisza and Mako exploration licenses.
In the later half of 2005, Falcon conducted two further 3D surveys, the Gater and Hod-Szikancs respectively.
Falcon also sought and was granted an extension to the exploration license in December of 2005.
Pusztaszer-1
In late 2005, Falcon began its initial exploration drilling program with the Pusztaszer-1. The well was designed as a delineation well to test the northeastern extent of the Mako Trough. The well was drilled to a total depth of 3,785 meters and encountered Gneiss Basement, the Endrod and Szolnok formations. The Pustaszer was then tested in the Szolnok formation following small fracture stimulation. The well tested approximately 200 Mcfd and 200 bwpd. Although the rate was small, the well established several key points:

-- The well increased Falcons confidence in the recent seismic survey
-- The well established the ability to frac the Szolnok at this depth.
-- The well tested gas establishing the presence of mobile hydrocarbons in
the Solzonk formation.



The results of the Pusztaszer are very encouraging, especially the fact that the well established the presence of mobile gas in the Szolnok formation.
Szekkutas 1
The next well to be drilled and tested in early 2006 was the Szekkutas 1. The well was designed to test the northwest extension of the Mako Trough and was drilled to a total depth of 3,585 meters. The well encountered the Triassic Basement, Endrod and the Szolnok formations. The well tested 130 Mcfd and 549 bwpd from the Triassic Basement. The Endrod tested gas at an unstabilized rate of 1,577 Mcfd at 50 to 100 ppm hydrogen sulfide and 150 Mcfd at similar H2S concentrations from the Szolnok. The presence of H2S in these concentrations required Falcon to abort the test due to safety considerations; however, the well provided much needed critical information.

-- Hydrogen sulfide may be present in the objective formations. Reviews of
the other area wells to date had not encountered H2S in any substantial
concentration. The Falcon drilling program had not allowed for H2S in
these concentrations and would have to be modified accordingly.

-- The well established mobile gas in the northwestern portion of the
basin in the objective horizons of the Endrod and Szolnok.



The results of the Szekkutas are very encouraging in the further evaluation.
Mako 6
The Mako 6 was the next well in the evaluation program to be drilled and tested. The Mako 6 was drilled to a total depth of 5,692 meters and was the first deep test in the basin. The well encountered the Synrift, Basal Conglomerate, Endrod and Szolnok formations. Petropysical analysis of the log and core data indicated the possible presence of hydrocarbons in all formations, establishing a possible hydrocarbon column of 2 kilometers. A test of the Synrift was attempted which proved tight. An interval at the base of the Basal Conglomerate was tested with initial rates of up to 700 Mcfd with associated H2S of 400 ppm, and improving. The test was aborted when a suspected down-hole failure occurred. The actual cause of the failure is speculative at present but appears to be the movement of a barite plug from below the test interval. The well provided the following information.

-- Falcon established the ability to drill and complete at depths of 5,600
meters.
-- The well tested mobile gas from the Basal Conglomerate.
-- Established a possible hydrocarbon column of 2 kilometers.
-- Established the presence of hydrocarbon in the center basin.
-- Confirmed the presence of H2S in the Basal Conglomerate.



Hod-North 3D Seismic
While conducting drilling operations on the Szekkutas 1 and the Mako 6, Falcon completed its fourth 3D survey in the area, the Hod-North.
Mako 7
The Mako 7 was the next evaluation well to be drilled and was designed to be a second deep basin test. The well was drilled to a total depth of 6,085 meters and encountered the Basal Conglomerate, Endrod and Szolnok formations. Petrophysical analysis indicates the possible presence of hydrocarbon in all formations encountered, but no testing has been accomplished to date. If the well tests hydrocarbons it may indicate the presence of a 2.5 kilometer hydrocarbon column.
Magyarcsanad 1
The next well in the evaluation program to be drilled was the Magyarcsanad 1. This well was designed to test the southern end of the Mako Trough. The well was drilled to a total depth of 4,272 meters and encountered the Endrod and Szolnok formations. The well tested oil from the Endrod formation at unstabilized rates of 360 bopd and 1,100 Mcfd, declining to 65 bopd and 137 Mcfd without stimulation.
This is very encouraging in that it establishes the presence of mobile high gravity oil in the Endrod formation. In addition, it indicates the Endrod in the area of the wellbore to be a naturally fractured reservoir capable of delivering hydrocarbon. If future analysis and testing establishes the Endrod to contain a pervasive natural fracture system, charged with hydrocarbon and capable of transmissibility of the hydrocarbon, this could significantly add to hydrocarbon resources of the basin.
The Endrod formation was recently frac'd to evaluate the effectiveness of fracture stimulation to this play.
Mako 4
The next evaluation well drilled was the Mako 4, designed to test the Szolnok formation in the southern portion of the basin. The well was drilled to a total depth of 4,011 meters. The well encountered the Szolnok formation and is suspended pending completion of the current Geologic and Operational review.
Szekkutas and Mako-Kelet 3D Seismic
The first half of 2007, Falcon completed its largest 3D survey acquisition of 870 square kilometers. This completes 1,149 square kilometers of seismic acquisition, covering almost all the BCGA in Falcon's License area. All the seismic surveys are being combined and reprocessed into a single data set for interpretation and analysis.
Licenses Conversion
In May 2007, Falcon achieved a significant milestone with the conversion of a major portion of the exploration licenses to a 245,775 acre production license.
SUMMARY OF ACCOMPLISHMENTS
The successful development of BCGAs in the United States is the result of the recognition of the nature of the unconventional resource and the development of advanced technology for gas recovery. Falcon assembled some of the most noted experts in the field of geology and operations to bring that technology to the Mako Basin. To that end, Falcon has be diligent in acquiring the appropriate knowledge and technology.
In summary Scotia is encouraged by the results to date achieved by Falcon. The company has accomplished the following:

-- Established the presence of hydrocarbon in all intervals tested to
date, no significant negative test have occurred in the prospective
horizons.
-- Proven the existence of a BCGA in the Mako Trough of Hungary.
-- Produced evidence of a possible BCOA within the Mako Trough.
-- Established the company's ability to effectively operate in a HP/HT
(high pressure/high temperature) H2S environment in a prudent effective
manner.
-- Established the company's ability to manage and maintain relationships
with the Mining Authority of Hungary.



RECOMMENDATIONS
Each new basin has its own characteristics. Falcon has recognized that in addition to tight reservoirs in a BCGA, there are likely other non- conventional reservoirs, including those involving adsorbed gas and natural fractures. Scotia has held extensive advisory discussions with Falcon regarding the recognition and characterization of a wide range of unconventional and conventional reservoir that may occur in the Mako Basin.
While encouraged by the results to date, Scotia recommends the following be undertaken as the company proceeds with the evaluation of the area of interest.

-- Falcon should conduct a review both technical and operational of all
activities to date. The objective of this review will be to produce
improvement recommendations as to data quality, data preservation, data
integration, operational improvements, HS&E standards and improvements,
emergency response and preferred and required improvements in drilling
design.
-- Falcon should take the time to fully integrate the current geologic
data set. This would include all 3D surveys, petrochemical,
petrophysical and well test data. Scotia would further recommend that
Falcon slow, if not suspend, current evaluation activities until this
integration and interpretation is completed.
-- All future well designs must consider H2S and CO2 in the selection of
tubular, wellhead and down hole equipment.
-- All well site activity and procedures must consider the presence of H2S
and CO2.
-- Falcon should develop, in conjunction with the proper Hungarian
authority, an Emergency Response Plan.
-- In the technical and operational review, particular attention needs to
be paid to the mineralogy of the core samples and their compatibility
to various completion and drilling fluids.
-- The company should investigate the feasibility and value of utilizing
massive hydraulic fracture stimulations in future wells.
-- The company should investigate the value of utilizing horizontal and/or
multi-lateral wells in conjunction with under-balanced drilling,
especially in the Endrod.
-- Target conventional reservoirs at the top of overpressure similar to
those seen in the western basins of the United States. These are
likely to provide production while the deep basin is explored.
-- Consider that there might be adsorbed gas similar to that associated
with coal and shale gas and conduct on-site sample degassing
experiments if such conditions are indicated.
-- Carefully examine cores for natural fractures.
-- Develop regional geological models for the origin of natural fracture
systems, including jointing (expansion) and associated with faulting.
-- Utilize seismic impedance data to identify contrasts in impedance that
might be tied to natural fractures.
-- Used 3-D visualization methods with stratigraphic datum impedance data
to identify geobodies related to fracturing and overpressure.



In summary, Falcon has made significant progress in the evaluation of the prospective acreage in a relatively short period of time. The results to date are positive and very encouraging. All objective formations of the basin have tested hydrocarbons, thus proving the existence of mobile oil and gas within the objective horizons. Falcon's data collection and analysis efforts appear to be both comprehensive and advanced as is appropriate for the setting.
As is often the case, the analysis of collected data often does not keep pace with drilling. As of the summer of 2007, Falcon is at the peak of its efforts to complete the analysis of available seismic, petrophysical and well test data and integrate it to formulate reservoir models to aid in efforts to drill and test according to the geology. Plans for future operations will take full advantage of what has been learned to date.
Falcon must now position itself both technically and financially for the next phase of evaluation. The geologic model and interpretation must be advanced utilizing the data gained from Phase I of the exploration activity. The drilling, testing and completion programs need to be redesigned based upon the HP/HT and H2O and CO2 environment encountered.
QUALIFICATIONS AND LIMITATIONS
Independence and Conflict of Interest
This report has been prepared by The Scotia Group. Scotia is an independent oil and gas advisory firm headquartered in Dallas, Texas. All evaluations performed by Scotia are strictly fee-based and Scotia has not and will not receive any benefit which may be regarded as affecting its ability to render an unbiased opinion on the petroleum interests held by Falcon.
Use of This Report
This report was prepared exclusively for Falcon, and should not be duplicated or distributed to any third parties without the express written consent of Falcon and The Scotia Group, except as required by law. The Scotia Group authorizes Falcon to publicly disclose this Report and the information contained within in the Falcon conference of August 29, 2007.
Available Data
This study was based on data supplied by Falcon, on public domain information and on nonproprietary data from in-house files. The supplied data was reviewed for reasonableness from a technical perspective. As is common in oil field situations, basic physical measurements taken over time cannot be verified independently in retrospect. As such, beyond the application of normal professional judgment, such data must be accepted as representative. While we are not aware of any falsification of records or data pertinent to the results of this study, Scotia does not warrant the accuracy of the data and accepts no liability for any losses from actions based upon reliance on data which is subsequently shown to be falsified or erroneous.
We carried out our review in accordance with standards set out in the Canadian Oil and Gas Evaluation Handbook (the "COGE Handbook") prepared jointly by the Society of Petroleum Evaluation Engineers (Calgary Chapter) and the Canadian Institute of Mining, Metallurgy & Petroleum (Petroleum Society).
Professional Qualifications
Scotia personnel who prepared this report are degreed professionals with the appropriate qualifications and experience to complete the project brief. Scotia and its staff do not claim expertise in accounting, legal and environmental matters, and opinions on such matters do not form part of this report.
Scotia is pleased to aid Falcon in the evaluation of the Mako Trough. We hope you find our independent view of your operations and activities within the region constructive. We look forward to discussing these recommendations in detail at your convenience.

Sincerely,

THE SCOTIA GROUP, INC.
Lonnie J. McDade, P.E.
Vice President

Contact:
Weber Shandwick Worldwide
Peter Duda /JJ Rissi
+1 (212) 445-8213 / +1 (212) 445-8224



(Quelle: http://www.marketwatch.com/news/story/falcon-oil--gas-ltd/st…)
Falcon Oil & Gas Ltd. Announces Completion of First Phase of Operations and Provides Operational and Financial Update

BUDAPEST, Hungary, Aug 29, 2007 /PRNewswire-FirstCall via COMTEX/ -- Falcon Oil & Gas Ltd. (TSXV: FO) ("Falcon" or the "Company") today announced the completion of its first phase of operations in the Mako Trough, and provided updates on the Company's operational activities and financial position. The Company also filed its second quarter financial information and accompanying management discussion and analysis (MD&A) with the Canadian Securities Administrators.
Marc A. Bruner, Falcon President, Chairman and CEO, said, "I am pleased to announce that Falcon has successfully completed the first phase of exploration in the Mako Trough and has achieved several critical milestones in the last 18 months. With six exploratory wells drilled to date, we believe we have discovered a very significant basin centered gas resource. We have flowed gas from both the Szolnok and Basal Conglomerate formations, proving the presence of the basin centered gas accumulation which was confirmed when the Hungarian Government awarded us a production license in May of this year. In addition to this, we have also flowed oil and gas on test from the Endrod Formation, where we believe we have discovered a potential basin centered, fracture oil play."
Mr. Bruner continued, "We also recently completed the acquisition of over 1,100 square kilometers of 3D seismic data. As we move forward to the next project phase, we will be analyzing this seismic data along with all the other data we have acquired in order to optimize our planning. As announced previously, we are also talking with other potential partners who have expressed interest in participating in this very exciting project."
Operational Update
As part of the first phase of exploration, Falcon completed the following activities over the last 18 months:

-- Successfully drilled six exploratory wells including the deepest well
in Hungary.
-- Secured a production license from the Hungarian government covering all
oil and gas in the identified basin centered gas accumulation (BCGA)
resource under the exploration license.
-- Acquired over 1,100 square kilometers of 3D seismic data.
-- Conducted extensive testing and evaluation of the exploration wells, as
outlined below.

Delineation wells
-- Testing of Pusztaszer-1 delineated the Northwestern extent of the Mako
Trough, established the presence of mobile gas in the Szolnok, and
confirmed the ability to frac at this depth.
-- The Szekkutas-1 well established mobile gas in the Northeastern portion
of the basin in the objective horizons of the Endrod and Szolnok.
-- Magyarcsanad-1 tested the Southern end of the Mako Trough, and flowed
gas and oil from natural fractures in the Endrod Formation. As
previously announced, as part of Falcon's overall testing program,
Falcon executed two facture stimulations of the Magyarcsanad-1
exploration well at the end of July 2007. To date, results confirmed
flowed gas and oil from fractures. The well has yet to fully clean out
fracture fluid, therefore the following are initial indications of flow
rates only.



The Pre-Fracture Treatment (natural flow) unstabilized flow through perforations at 4,058-4,062 meters yielded an initial rate of 387 barrels of oil per day (bopd) and declined to 63 bopd in 23 days. The gas rates over the same period were 665 thousand cubic feet per day (mcfg/d) and 137 mcfg/d respectively. Additional perforations were added at 4,135-4,137 and 3,909-3,910.5 meters and the well was then fracture treated in stages with a total of 329,000 pounds of proppant and 9,200 bbls of fluid. Falcon has recovered 60% of the frac volume to date. The Post Fracture Treatment unstabilized flow yielded an initial rate of 91 bopd and declined to 35 bopd in 19 days. The gas rates over the same period were 400 mcfg/d and 85 mcfg/d, respectively.
The well is currently shut-in for bottom hole pressure evaluation and analysis. Falcon is also evaluating the recent in-flow production and temperature logs. Based on the test results to date, Falcon believes that the oil is coming out of a natural fracture system, and the Company is examining all potential future completion techniques to develop this fracture play, such as the drilling of horizontal wells that might join up multiple fracture zones. The seismic data should help considerably in defining the fault and fracture patterns in this resource, and these options will be examined as part of the near term technical data review period.

Other exploratory wells
-- Mako-7 was drilled as a second deep basin test. Petrophysical and
mudlog analysis indicated the presence of hydrocarbons in a 2.5 km
column in the Szolnok, Endrod and Basal Conglomerate Formations.
-- Mako-4 was drilled to the Szolnok formation and is suspended pending
completion of the current geologic review.
-- The Mako-6 was the first deep test in the Basin, reaching a total depth
of 5,692 meters. A test of the Synrift was attempted which proved
tight. An interval at the base of the Basal Conglomerate was tested
with initial rates of up to 700 mcfg/d, with associated hydrogen
sulfide of 400 parts per million (ppm), and diminishing. The test was
aborted when a suspected down-hole failure occurred. Material
extracted from plugged tubing was identified as part of a barite plug
that had been placed below the test interval. Following a planned
evaluation program, the Mako-6 could be re-entered for possible testing
in the Upper Basal Conglomerate, Endrod and Szolnok formations. The
Company has not established a time table for additional work to be
performed in the well bore.



The focus of Falcon's current activity will be to analyze the results gathered to date alongside information from the 3D seismic program as part of a technical and operational review period in order to plan and implement the final project phase of resource development. The Company believes that this is the prudent and best approach in order to determine which wells to complete, and how to best complete the wells.
Because Falcon is not drilling during this phase, the non-active personnel and machinery are being released, as is prudent to manage costs.
In line with the requirements of the Hungarian government, Falcon plans to submit the development plan to the Hungarian government by the end of 2007.
Financial Update
As of June 30, 2007, Falcon reported approximately $53 million in cash and cash equivalents.
Strategic Partner Update
Falcon continues its search to identify a strategic partner or partners who could add value to the Company's oil and gas project in Hungary by contributing to the technical understanding of the assets, accelerating development, securing services required for commercial production of oil and gas, and/or granting access to high-value end markets. Discussions are taking place, and confidentiality agreements have been established with prospective partners. The type of partnerships currently under consideration are farm-in joint ventures that explicitly prohibit acquisitions of Falcon stock. The Company is committed to informing investors when a strategic partner has been identified.
Independent Scotia Group Report
Also released by Falcon yesterday is a copy of a review completed by the Scotia Group, an independent, third party consultant to Falcon. The document provides a review of Falcon's operations and accomplishments.
Conference Call Update
The Company will host its quarterly investor conference call on Wednesday, August 29, 2007 at 8:30 a.m. (ET) to provide updates on the Company's financials, operations, well status and strategic partner discussions.
The conference call will be available live via telephone. To participate in the conference call within the U.S. and Canada, dial (866) 688-0039. To participate in the conference internationally, dial (706) 679-3130. The conference call will also be broadcast live on the Internet and may be accessed at www.falconoilandgas.com. The web cast will be archived on the Company's website.
The conference call will be available for replay via telephone beginning at 12:00 p.m. (ET) on Wednesday, August 29, 2007, until Wednesday, September 12, 2007, at 11:59 p.m. (ET). To listen to a replay of the conference within the U.S. and Canada, dial (800) 642-1687 or internationally (706) 645-9291. The replay code is 13162665.

Contacts:
Weber Shandwick Worldwide
Peter Duda /JJ Rissi
+1 (212) 445-8213 / +1 (212) 445-8224


(Quelle: http://www.marketwatch.com/news/story/falcon-oil--gas-ltd/st…)
Transkript vom letzten Conference Call (erstellt durch Lanman vom $MAB-Board bei stockhouse.com):

Thank you. Thank you everyone for joining us today for Falcons operational and financial update. As for today’s call agenda, I will first provide a financial update. Next, we’ll review Falcons progress in the first stage of this project, and I will address Falcons current status. Then we’ll look ahead at the next phases for completing this project, as we continue our progress. At the end of the prepared remarks, as time permits, we will answer your questions.

Yesterday, we filed our quarterly report for the period ending June 30 2007, and distributed a press release outlining the findings of a review completed by the Scotia Group, and independent 3rd party consultant to Falcon. The document provides a review of Falcons operations and accomplishments. I hope you had the opportunity to review Falcons MD&A in the filing on Sedar and the Scotia report that was released yesterday for further details about the status of our operations.

Today we issued a press release to provide an update on Falcons operations and finances, which we will discuss with you today. As you saw in our press release, Falcon reported at least $53,000,000 in cash and cash equivalents as of June 30 2007. We also had a net working capital of approx $41,000,000. Moving on to our operations, looking back at what we’ve achieved over the last 18 months, Falcon is extremely pleased at the progress that we’ve made. The goal of Falcons 1st phase of operation in the Mako trough was to delineate the resource and to secure the production license. To that end, Falcon achieved all these critical milestones. To enumerate, in just 18 months from the start of drilling Falcons 1st well in the Mako trough, to the time that Falcon secured its production license from the Hungarian Government, Falcon has drilled six exploratory wells, and discovered what we believe to be a very significant Basin Centered Gas Resource, or BCGA. Among these 6 exploratory wells, Falcon gave priority to completion of delineation wells in order to secure the production license. These edge wells, i.e. the Pusztaszer #1, Szekkutas #1, and the Magyarcsanad #1 well were drilled to show the limits of the BCGA. This was successful and in May of this year Falcon was awarded a long term production license covering all oil and gas in the identified BCGA resource underlying Falcons two exploration licenses. Finally, we recently acquired 1,149 sq kilometers of 3D seismic data. Falcon has invested approximately $17,000,000 to acquire four seismic surveys which collectively cover approximately 72% of the Mako trough and 80% of the area covered by the production license. These surveys have now been merged into one single continuous 3d seismic survey covering approximately 1085 square kilometers. This seismic data set was an essential part of the evaluation of the Mako trough, if we were to understand the variability and reservoir quality such as porosity, permeability, and the identification of sweet spots as well as hydrocarbon presence and type, and the distribution and variability of the pressure cell. Falcon has also engaged eSeis, a widely recognized expert in this area to process the data for the following properties. Lithology fluids, AVO, effective porosity, reservoir quality, absorption, pore pressure and velocity modeling.

To summarize, this was a tremendous amount of work to accomplish in a relatively short period of time and Falcon has proven its ability to work in an international environment and close co-ordination with the Hungarian Government to make great progress. I will discuss the status of the exploratory wells that we have drilled in a moment, but before I do that, I want to emphasize that while a discussion of wells is appropriate, we can not loose site of the long term potential of what we are working on in Hungary. As you may already be aware an independent Scotia report dated August 16th 2006 indicated that the Mako trough is potentially a world class resource of approximately 54 TCF. Now, this is a huge project that we are undertaking and it may take a number of years to successfully reach completion. To that end, we view this project in three major phases. The first phase we believe we have successfully completed. This was the exploration and delineation phase which consisted of drilling six exploratory wells, securing the production license, and conducting several 3D surveys to delineate the resource potential. We are now beginning phase two of the project which focuses on the resource evaluation. This phase includes evaluation of the wealth of information we gathered to gain a better understanding of the rock properties and geological environment. Before we can move on to effectively develop this resource, it is absolutely necessary and prudent that we take time to analyze Falcons results to date, along side with information from the 3D seismic program, determine which wells to complete, and how to best complete the wells. During this phase, which we expect to take three to six months, our in-house experts are working closely with our independent consultants and the Scotia Group onsite, who have recently reviewed all information, advised on the focus of Falcons technical activity and interpretive results available to date. I hope you seen Scotia’s review which we released last night. Because we are not drilling during this phase, non active personnel and machinery are being released, as is prudent to manage costs. The technical and operational review we are undertaking is necessary and the right thing to do in order to put in place the most objective plan for the third phase, which will be the development phase. It is absolutely critical to Falcon, as it is to all our stakeholders, that we take the time to understand information that we have gathered so that there are no mistakes in the crucial stage of development. As required by the Hungarian Government, Falcon is scheduled to submit a development plan before year end 2007.

I’ll now update you on the status of Falcons exploratory wells. First I will discuss our delineation of edge wells starting with the Magyarcsanad #1. Since our last conference call at the end of June we executed the fracture stimulation of the Magyarcsanad and began to gather and analyze results. To date, results confirmed the flow of gas and oil from natural fractures. This well has yet to fully clean up, which had to do with the high compression of the rock and sand dictating the rate of cleanup. This is not unusual. Therefore the rates we announced today in our press releases are only initial indications of flow rates. The well is currently shut in for bottom hole pressure evaluation and analyses. We are also evaluating the recent inflow, production and temperature loss. Based on the tests we have so far, we believe the oil is coming out of a natural fracture system. Falcon is examining all potential future completion techniques to develop this fracture play, including, for example, the drilling of horizontal wells that might join up multiple fracture zones. The seismic data should help considerably in defining the fault and fracture patterns in this resource, and these options will be examined as part of the near term technical review period. Now, on to other delineation wells that we have drilled. Through our testing of Pusztaszer #1 we’ve delineated the north-western extent of the Mako Trough, established the presence of mobile gas in the Szolnok, and confirmed the ability to frac at this depth. Regarding the Szekkutas #1 well, we established mobile gas in the north-eastern portion of the basin, and the objective horizons of the Endrod and Szolnok. While the edge wells Pusztaszer, Szekkutas, and Magyarcsanad were critically important to define the edges of the BCGA and secure one of the largest production licenses ever granted in Europe, it’s important to realize that the company believes that the big gas resource is in the center of the basin. And except for one frac job in the middle of the basin, this area has not been touched.

Moving on to Falcons other exploratory wells, the Mako 6 was the first deep test of the basin reaching a total depth of 5692 meters. A test of the Synrift was attempted, which was proved tight. An interval at the base of the Basal Conglomerate was tested with initial rates of up to 700,000 cubic feet of gas per day and building, with associated hydrogen sulfide of 400 parts per million and diminishing. The test was aborted prior to cleanup when a suspected down hole failure occurred. Material extracted from plugged tubing was identified as part of a barite plug that had been placed below the test interval. Following a planned evaluation program, the Mako 6 could be re-entered for possible testing in the upper Basal Conglomerate, Endrod and Szolnok formations. The company has not established a timetable for additional work to be performed in the borehole. The Mako 7 was drilled as a deep basin test. Petrophysical and mud log analysis indicated the presence of hydrocarbon in a two and a half kilometer column in the Szolnok, Endrod, and Basal Conglomerate formations. Mako 4 was drilled to the Szolnok formation and is suspended pending completion of the current geologic review. Because Falcon identified the presence of hydrogen sulfide in a number of exploration wells, the future drilling, testing, and extraction plan will be designed to safely manage the presence of hydrogen sulfide in production wells. Falcon is planning to procure appropriate casing for this purpose.

I’d also like to bring you up to date on the Strategic Partner Initiative. As we neared the completion of our first phase of exploration, it became clear to us that given the magnitude of this project, the company’s interest and the interest of its stakeholders would best be served by bringing in one or more strategic partners. Since that announcement I’m truly pleased that Falcon has signed confidentiality agreements with a number of potential partners in the double digit range, who have invested their time and effort to get to know Falcon, visit sites, look at data, and familiarize themselves with our operations. We believe that world leading oil companies are well represented in this potential group of partners. To be clear, the term sheet outlying the potential partnership was discussed with potential partners before confidentiality agreements were signed. In the agreement they signed, a standstill agreement, explicitly prohibits them from trading in Falcon stock for several years. Each of these potential partners has indicated they are interested in a joint venture in terms of its potential to offer strategic material upside to all partners. It is important to mention here that this is not an effortless or cost free undertaking for the potential partners. It has required sincere interest in the resource and progress Falcon has made for these companies to review what we have done and to consider potential partnership with us.

Back to what I said earlier. One reason strategic partners are and will be interested in working with us is not because of the results of any single frac job, but because of potential opportunity for the entire resource under our production license. Now we don’t have a definitive timeline for when we will have a strategic partner that we can announce, but I can tell you that I’m truly excited about the quality of the companies that have expressed an interest in working with us as partners.

We want to identify the right partner that would be best positioned to contribute to the development of this resource. It’s also possible that our search may result in one or more partners, each of which brings different value to Falcon in its long term development. We believe this is the right approach and is in the best interest of our shareholders. To recap, we’ve outlined that the types of partners that we’re interested in having discussions with will provide various types of support to Falcons operations over the long term, such as oil field service companies that might want to secure long term alliance with Falcon related to the development on our production license, or, major oil and gas companies with large scale development capabilities, midstream companies with expertise in gas transportation, gas processing and infrastructures, companies with access to end markets for gas consumption, and, companies with experience in establishing unconventional plays. While we believe that we’ll be able to reach partnership agreements that benefit both parties, in the event Falcon isn’t able to make a deal that doesn’t serve the companies interests and that of its shareholders, then we are prepared to continue on our own.

Before I turn the call over to your questions, I want to address one other item. As you might have read in our proxy filed last week, we are proposing an expansion of our board of directors from four to nine members, and I’ve nominated five new independent directors. You can read more about them in the proxy, but I’ll provide a few highlights now.

Igor Akhmerov is from Kilchberg, Switzerland. He is the Chief Executive Officer of Avalar Energy Group, and advisor to the executive director of TNK-BP. David E. Fisher is from Bridel, Luxembourg. He is a director of Terra Industries and director and chairman of Real Associates limited. Darryl H. Gilbert is from Calgary Alberta. Some of you might recognize Darryl as one of the leading petroleum engineers in Canada. Jan Van Holsbeeck is from Luxemburg. He is an investment advisor and director of Plaza Luxembourg SA. Professor Ferenc Horvath is from Hungary, he is director of the Institute of Geography and Earth Sciences at Eotvos Lorand University, and head of the Department of Geophysics. The new nominees represent a geographically diverse set of leaders with experience in energy, natural resources, business and geophysics. I look forward to working with this distinguished group. In summary, let me close with the closing paragraph of the Scotia Report, an independent third party which has validated our progress to date, and I quote:
“Falcon has done a great deal of significant evaluation in a relatively short period of time. The results to date are positive and very encouraging. All objective formations of the basin have tested hydrocarbons, thus proving the existence of mobile oil and gas within the objective horizons.”

We are pleased that Scotia noted in its review that as an independent advisor to Falcon since 2006 they are of the opinion that Falcon has been diligent and prudent in its operations to date. With that, we’d be happy to take your questions. Also with me for the Q&A period are Sam Swift, consultant, Evan Wasoff, CFO, Mike Sumptner, country manager in Hungary, James Edwards, Chief Operating Officer, Rod Wallis a Falcon geologist, Roger Young, Chief Technical Officer of eSeis, and Lonnie McDade, Vice President of the Scotia Group.
Ladies and Gentlemen, given the number of calls with us today, please limit your inquiry to one question each.

Alan Stepa of Dundee Securities:
I was curious, you talked about your cash position as of the end of June. I’m curious based on the spending in July and so far in August, how much cash do you currently have?

MAB: We’re not able to give you that number, but what I can tell you is that we finished our drilling operations in the middle of May, and most of our expense was not just the cost of the rig itself but the associated consulting firms and other equipment and materials. That’s been gone since the middle of May, so our burn rate has drastically decreased.

Richard Craig of Smith and Williams:
Although your original Mako 6 plumbed the ultimate depth of the basin, presumably as you go forward into the development phase your not looking to go down to anything like that depth. It may be a bit early to sort of guess how deep you’re likely to go but do you have any sort of theories as to what depth you might be developing your resources and what cost per well is most likely to be?

MAB: I think what is most likely to determine that is the evaluation process and the interpretation of the 3D seismic, and tying that data set into what we’ve done so far. I think it’s premature to say we wouldn’t drill wells to that depth, in fact we’re very bullish about what we’ve seen so far at that depth. Rod Wallis, do you have any comments that maybe add to what I just said?

RW: That’s absolutely correct. We certainly are still quite excited about the Basal Conglomerate as well as the Endrod and Szolnok formations and wouldn’t be writing them off. One of the things to note about the Basal Conglomerate is that it’s extremely high pressure, that makes it very difficult to handle, but one thing that I get excited about is the gas expansion from that very high pressure. So a very small amount of gas coming into the well bore at that depth and pressure is a lot of gas when it expands at the top of the well bore, and can give you some very high rates, so no, I’m certainly not saying we are not going to be going down to the Basal Conglomerate as part of the development.

Jamie Somerville of Genuity Capital Markets:
My question is in regards to the Magyarcsanad well. What are the forward requirements exactly, in terms of any more fracture treatments planned, and when you might release any fracture stimulation equipment and crews if you are planning to do so.

MAB: I think right now, again, Jamie, we plan to evaluate the data that we’ve gathered so far and continue to gather on that well, but one of the real critically important things here is the interpretation of the 3D seismic, and we do have Roger Young with us, from eSeis, I hope there are some questions for him, but my belief is that at this time, with the information we have, we’re looking at a fracture play and the oil is coming out of the fractures, so the most likely case, again we have to wait to see what the interpretation is going to be, but the most likely way forward, would be to drill horizontally to intercept more of the fractures than we’ve already intersected here. So that would be the most likely case. But we really wouldn’t have an idea of where to go until we see the orientation of the fractures with the 3D seismic, so we can figure out what the azimuth should be. Sam Swift, would you have any comments more associated with the fracture play that might give Jamie a better idea of what we consider to be the fracture play in the Magyarcsanad?

SS: I might just add a couple of things. We’re absolutely certain of the one fracture at 4060 in the Magyarcsanad, and we strongly suspect that the so called loss of circulation zone down at 4245 meters is probably a second fracture, so we have pretty strong evidence to believe that there are a family of these fractures in that Endrod formation.

MAB: Thank you Sam. I hope that answered your question Jamie.
Paul Moase of Griffith, Moase, and Partner

Good morning, a couple of questions sir, one is cash and cash equivalents, can you confirm that none of that cash is in these asset backed collateralized paper?

MAB: Thanks Paul, Evan Wasoff would you answer that question please?


EW: Our cash and cash equivalents are in exclusively cash and Canadian government backed securities. They are all extremely liquid and very minimal risk involved. The bulk of our cash does sit in Canada, we do keep our cash in Canada and obviously over the last couple of years it has been very beneficial to the company.

Kevin Carter of S and H capital dot com ???

I just wanted to know you mentioned that you were going to continue working to get a JV, how long will you work on that before you decide to go on your own?

MAB: Well Kevin, I believe with the group of people that we have I feel very comfortable about making a deal. I would be very disappointed if we didn’t have a deal here within, say, anywhere between 60 to 120 days.

Norman Giles, a private investor.
I would like to know what circumstances your production license can be forfeited. And this is a comment, I find it incredible that you or your CFO won’t release how much money you have today.

MAB: Let me just say this. I’d love to tell you, but the lawyers say without audited statements, not just the cash but the liabilities associated with it, we can’t do it, because I would love to tell you, but I cant, alright? Now what was the other part of this question?

Umm, the licenses. All we really need to do at this point is put forward our development plan. There are no obligations or forfeitures that we have to drill a certain number of wells or do completions. We just have to put forward the development plan that we want. So we’re really not under the gun to be able to loose this license.

Al [Champ ??] of Midsouth Capital
I joined the conference a little bit late. I’m an investor and also a broker, I have some clients as well as myself, and also I have investments in PetroHunter and Galaxy, and I’m just concerned that this situation will turn out to be like Galaxy and PetroHunter, that is a market disaster, in fact it has been already, and while we might be doing great things on an operating basis, my sense is that the ways these companies have been financed has just been a disaster. And really the Bruner name has certainly been tarnished, especially in my eyes and probably in the eyes of other people as well. I’d like some reaction to that comment.

MAB: As far as I’m concerned, we’re talking about Falcon here, and I think we’ve been doing the right things at Falcon. I might ask Lonnie of the Scotia Group to comment on the operations of Falcon and what we’ve done to date. Lonnie you there?

Lonnie: Yeah Marc, I’m here. As I said in your report, you’ve accomplished a great deal in a relatively short period of time. You are dealing with a very complicated resource that is going to take a lot to understand, you’re taking the right steps to do that. A very encouraging point is that everything that you have tested has tested mobile hydrocarbons, which we think is phenomenal at this point.

MAB: Thank you Lonnie.

Paul Maose of Griffith, Maose and Partner

Hi Marc, I actually have two questions, one is tell me about how your new board is going to help you and also I would like to know why you are so excited about the results you have got from the Magy well here.

MAB: I think we have from a technical side the pre-emanate scientists in Hungary that can help us, and I think from a technical side as well I might comment that Daryl Gilbert, I’ve known him for some time, Daryl was the senior partner at Gilbert Laustsen Jung and Associates, which is the largest independent oil and gas evaluation company in Canada. He, between four and five years, did the evaluation work for Ultra Petroleum when I was the Chairman of Ultra, and I can’t think of anyone that is more qualified in unconventional gas than Daryl. We’re going to be using Daryl as well as the consultants to help us with the negotiations and strategic planning for those negotiations with the strategic partners, as well as consulting with us in working with Scotia in our reserve calculations and evaluations. I think from that standpoint we’re well served. Igor in Switzerland is well versed in being able to understand gas marketing in Europe, and can help us with that. Dave Fisher has been CFO of one of the largest mining companies in the world and he has a lot of experience helping in corporate finance type matters, so I think we have a well versed group of people that can help us, a lot of new directors can be very helpful to us. From a standpoint of what we see, over in the Magyarcsanad, we have evidence that there’s fractures in the cores that we have taken, and we believe there is a fracture system out here much like the Austin Chalk or the Barnett Shale play of Texas, and if the fractures are like the one we intersected, instead of one lets assume we would have twenty or more, they could be better or they could be worse than what we’ve found, we could have a situation here where we don’t need to frac the wells at all, we could just drill the wells, and produce the oil as we intersect the fractures while drilling. So this would lower the cost and we could have very quick payout, it is possible we could even have payout while we’re drilling the wells. So, we had to frac the wells here to understand that the oil was coming out of the fractures not out of the matrix. Sam Swift, is that pretty accurate what I’ve just said?

SS: That’s pretty accurate. The exciting thing about the Magyarcsanad is that we’ve defined exactly what that one fracture is. Now extrapolating that to twenty fractures I think is a good extrapolation but that’s all it is, just like you said, they could be better, they could be worse, could be more, could be less.

MAB: Sam, if we drilled a new well, that’s if we maybe drilled a horizontal leg in the future in the Magyarcsanad, but if we drilled a new well, we could actually drill four different laterals could we not?

SS: There’s really no limit and of course there’s definite advantages operationally using a new well, we could have larger casing and a lot of advantages we don’t have in the Magy well.

MAB: OK thank you Sam. Ladies and Gentlemen thank you so much for having the opportunity to be able to answer your questions and bring you up to date. Thank you.


---

Conference Call Mitschnitt: http://falcon.hrwrl.com/Quarterly_Investor_Call.mp3
Falcon Oil & Gas Ltd. To Webcast Annual General Meeting

LOCATION: http://www.videonewswire.com/event.asp?id=42276

BUDAPEST, HUNGARY, September 14, 2007 /PRNewswire via COMTEX/ -- Falcon Oil & Gas Ltd. (TSXV: FO) ("Falcon" or the "Company"), will host a webcast of the company's Annual General Meeting on Tuesday, September 18, 2007 at 10:00 a.m. (PT).

What: Falcon Oil & Gas Ltd. Annual General Meeting
When: September 18, 2007 at 10am PT
Where: http://www.videonewswire.com/event.asp?id=42276
or the company's website, www.falconoilandgas.com.

How: Live over the Internet -- Simply log on to the web at the address above.


Minimum Requirements to listen to broadcast:

The Windows Media Player software, downloadable free from
http://www.microsoft.com and at least a 56Kbps connection to the Internet.


If you experience problems listening to the webcast, send an E-mail to: webcast@multivu.com.
Falcon Oil & Gas Ltd. Announces Engagement Of Weber Shandwick

BUDAPEST, Hungary, Oct 04, 2007 /PRNewswire-FirstCall via COMTEX/ -- Under Falcon Oil & Gas Ltd.'s (TSXV: FO) ("Falcon" or the "Company") ongoing requirements and policy of complying with TSX Venture Exchange continuous disclosure obligations, Falcon officially announces that it has, effective May 2007, engaged global public relations firm Weber Shandwick to provide media and investor relations services (the "Services") to Falcon. Weber Shandwick has been engaged by Falcon to refine and execute an investor relations strategy that will enhance and expand Falcon's exposure with the Canadian and international investment community.
"We are excited to have engaged Weber Shandwick to assist Falcon in refining our investor relations strategy and our communications with our current and future shareholders," said Marc A. Bruner, President, Chairman and CEO of Falcon. "Weber Shandwick brings world class expertise in strategic financial communications as well as a top quality team that understands our marketplace and the industry."
Weber Shandwick will provide Falcon the Services until the agreement is terminated by either party on at least 30 days prior written notice. Falcon has agreed to pay Weber Shandwick hourly time charges based on rates between $50-$450/hour (depending on the individual providing the Services) for the Services performed on Falcon's behalf. In addition, the Company will reimburse Weber Shandwick for reasonable, actual out-of-pocket expenditures, including travel, sales tax, printing, postage and other services charges.


(Quelle: http://www.marketwatch.com/news/story/falcon-oil--gas-ltd/st…)
FO-Erwähnung in Bloomberg Artikel:

[...]
Falcon Oil & Gas Ltd. (FO CN): The Canadian company that's exploring natural gas wells in southeastern Hungary plans to list shares on the Budapest Stock Exchange this year or next, Nepszava said, citing an unidentified person.

Falcon and its Hungarian unit, TXM Kft., are holding talks with companies such as Exxon Mobil Corp., Germany's RWE AG and Hungarian oil refiner Mol Nyrt. on possible cooperation in exploring the natural gas fields near the town of Mako, the newspaper said. The shares were unchanged at 56 cents.
[...]


(Quelle: http://www.bloomberg.com/apps/news?pid=20601082&sid=aYCEl6SX…)
1
FALCON OIL & GAS LTD.
FORM 51-102F1
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007
The following management’s discussion and analysis (the “MD&A”) was prepared as at November 27, 2007 and is
management’s assessment of Falcon Oil & Gas Ltd.’s (“Falcon” or the “Company”) financial and operating results
and should be read in conjunction with the unaudited interim consolidated financial statements for the nine months
ended September 30, 2007 and the audited consolidated financial statements for the year ended December 31, 2006
which can be found on SEDAR at www.sedar.com.
The information provided herein in respect of Falcon includes information in respect of its wholly-owned subsidiary
Makó Energy Corporation (“Makó”), and its directly and indirectly wholly owned subsidiaries: TXM Oil and Gas
Exploration Kft., a Hungarian limited liability company doing business as TMX Energy, LLC (“TXM”), TXM
Marketing Trading & Service, LLC a Hungarian limited liability company, JVX Energy S.R.L. (“JVX”), a
Romanian limited liability company, and CH Holdings, Inc., a Maryland corporation.
Additional information related to Falcon, including Falcon’s annual information form for the year ended December
31, 2006 dated April 30, 2007, can be found on SEDAR at www.sedar.com and Falcon’s website at
www.falconoilandgas.com.
Forward-looking Statements
Information provided herein contains estimates and assumptions which management is required to make regarding
future events and may constitute forward-looking statements within the meaning of applicable securities laws.
Forward-looking statements may include estimates, plans, expectations, opinions, forecasts, projections, guidance or
other statements that are not statements of fact. Although the Company believes the expectations reflected in such
forward-looking statements are reasonable, it can give no assurance that such expectations will be realized. These
statements are subject to certain risks and uncertainties and may be based on assumptions that could cause actual
results to differ materially from those anticipated or implied in the forward-looking statements. The Company’s
forward-looking statements are expressly qualified in their entirety by this cautionary statement.
Readers of this MD&A are cautioned not to rely on these forward-looking statements. Falcon is providing this
information as at the date hereof and does not undertake any obligation to update any forward-looking statements
contained herein as a result of new information, future events or otherwise.
Disclosure Controls and Procedures
Disclosure controls and procedures are designed to provide reasonable assurance that all relevant information is
gathered and reported to management, including the Chief Executive Officer and the Chief Financial Officer, on a
timely basis so that appropriate decisions can be made regarding public disclosure. As at the end of the period
covered by this MD&A and the date hereof, the Chief Executive Officer, the Chief Financial Officer and other
members of management evaluated the effectiveness of the Company’s disclosure controls and procedures, as
required by Canadian securities laws. Based on that evaluation, the Chief Executive Officer and the Chief Financial
Officer have concluded that, as of the end of the period covered by this MD&A and the date hereof, the disclosure
controls and procedures were effective to provide reasonable assurance that information required to be disclosed in
the Company’s annual filings and interim filings (as such terms are defined under Multilateral Instrument 52-109 -
Certification of Disclosure in Issuers’ Annual and Interim Filings) and other reports filed or submitted under
Canadian securities laws is recorded, processed, summarized and reported within the time periods specified by those
laws and that material information is accumulated and communicated to management, including the Chief Executive
Officer and the Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
2
Dollar Amounts
All dollar amounts below are in United States dollars, except as otherwise indicated.
The Company is an international energy company engaged in the exploration of oil and natural gas, with offices in
Vancouver, British Columbia, Denver, Colorado and Budapest, Hungary. The Company’s registered office is
located at 810-675 Hastings Street West, Vancouver, British Columbia, Canada V6B 1N2 and the Company’s head
office is located at 1875 Lawrence Street, Suite 1400, Denver, Colorado, U.S.A. 80202. The Company’s primary
focus is the identification, exploration and development of conventional and unconventional oil and gas projects,
including basin centered gas accumulations (“BCGA”) and coalbed methane in Central and Eastern Europe,
specifically Hungary and Romania.
Hungary
The first phase of operations in the Makó Trough has achieved several critical milestones in the last 18 months. The
Company has flowed varying amounts of gas from the Szolnok, Endrod and Basal Conglomerate formations proving
the presence of a basin centered gas accumulation. In addition to this, the Company has also flowed oil and gas on
test from the Endrod formation where it believes it has discovered a potential “basin centered, fracture oil play.”
As the Company moves forward to the next project phase of resource evaluation, it will be analyzing all data
acquired in order to optimize its forward planning.
Operational Overview
The milestones achieved to date can be summarized as follows:
• Acquired approximately 1149 square kilometres of 3D seismic profile; these data have been merged
into a composite data set of 1085 square kilometres covering approximately 80% of Falcon’s long
term production license (“Production License”).
• Hod Foldeak 3D (2004) 63 square kilometres
• Gater 3D (2005) 16 square kilometres
• Hod Szikancs 3D (2005) 90 square kilometres
• Hod North 3D (2006) 110 square kilometres
• Szekkutas/Makó-Kelet 3D (2006-2007) 830 square kilometres
• Drilled six exploratory wells.
• Testing of Pusztaszer-1 delineated the northwestern extent of the Makó Trough, established
the presence of mobile gas in the Szolnok formation, and confirmed the ability to frac at this
depth.
• The Székkutas-1 well established mobile gas in the northeastern portion of the basin in the
objective horizons of the Endröd and Szolnok formations.
• With the Makó-6 well, Falcon established the ability to drill and complete at depths of 5,600
metres. The Makó-6 well tested mobile gas from the Basal Conglomerate and established a
possible hydrocarbon column of over 2 km in the center basin.
3
• Makó-7 was drilled as a second deep basin test. Petrophysical and mud-log analysis
indicated the presence of hydrocarbons in a 2.5 km column in the Szolnok, Endröd and Basal
Conglomerate formations.
• Makó-4 was drilled to the Szolnok formation and is suspended pending completion of the
current geologic review.
• As discussed below, results from the Magyarcsanad-1, which tested the southern end of the
Makó Trough, flowed gas and oil from fractures in the Endröd formation.
• Secured the Production License from the Hungarian government covering all oil and gas in the BCGA
resource under the exploration license.
Evaluation Period
The current focus of operational activity is to analyze drilling results alongside information from the 3D seismic
program as part of a technical and operational review period in order to plan and implement the next phase of the
project, which will focus on resource development.
Over the first quarter of 2008, Falcon intends to focus its activities and operations on tendering for service and
products for the next phase of the Company’s program, including tendering for stimulation, drilling and completion
services, logging, testing, drilling and completion rigs. Falcon will be re-designing casing and tubing strings with
the expectation of slimming down well-bore geometry such that drilling times and cost will be decreased further.
Falcon will also be evaluating the constraints and impact of placing more than one well on a single pad to reduce the
environmental effect and overall project cost.
Further, Falcon intends to continue with its program of continuously evaluating operational competence in areas of
cementing, drilling and completions drilling fluids, environmental waste reduction and handling, administrative
policies and procedures.
No further drilling or testing activity on current exploration wells is to be undertaken as part of this phase as Falcon
believes such testing and/or drilling is not required in order to put in place the plan for the next phase of
development. Additionally, rigs have been released. In accordance with the requirements of Falcon’s Production
License and the Hungarian Mining Law and related regulations, Falcon must submit its development plan to the
Hungarian government by the end of 2007 outlining the Company’s 2008 testing and completion program.
Technical Evaluation
As Falcon moves from the initial resource delineation phase into a resource evaluation phase, Falcon has embarked
on a technical evaluation and review of the extensive technical data obtained so far from the drilling and testing of
six wells and the total merged acquisition of 1085 square kilometres of contiguous 3D seismic data. Over the next
few months of technical evaluation, Falcon intends to complete many of the tasks identified below to lay the
foundation for the resource development. Many of the tasks are ongoing and some have yet to be initiated. Some
tasks are being run internally by Falcon, while others will be completed by external experts under consulting
contracts. The following is a list of the tasks that are expected to be completed and integrated as part of the
technical evaluation.
Seismic Data Special Processing
Falcon has acquired four seismic surveys which collectively cover approximately 72% of the Makó Trough. These
surveys have now been merged into one single, contiguous 3D seismic survey covering 1085 square kilometres.
Falcon believes this seismic data set is an essential part of the evaluation of the Makó Trough in order to understand
the variability in reservoir quality (porosity and permeability and the identification of “sweet spots”), hydrocarbon
presence and type and the distribution and variability of the pressure cell. Falcon has engaged eSeis, Inc., to process
the data for the following properties: lithology/fluids, amplitude velocity offset (AVO), effective porosity, reservoir
quality, absorption, pore pressure and velocity modeling.
4
3D Seismic Fault Modeling
Falcon will process the volume for fault or coherency type modeling using a variety of industry algorithms in order
to be able to identify fault and fracture distribution and intensity in the 3D seismic. This will be integrated with the
fracture and fault analysis detailed below from Formation Micro Imager (FMI) and core.
Fault and Fracture Modeling From Wells
Various studies at various scales are being undertaken to understand the fault and fracture systems present in the
well image logs and core data. Image logs from five wells are being analyzed and processed by external experts on
image log analysis, to determine the extent, nature and orientation of the fractures within the well bore. Falcon
believes this is critical to the understanding of the development of the tight gas plays and fracture oil plays. In
addition, the cores are being analyzed for faults and fractures utilizing petrographic and computer tomographic
techniques.
Reservoir Properties Analysis
Falcon will conduct high resolution analysis to help understand the reservoir properties of potential tight gas plays.
This includes the traditional petrographic studies, including X-ray Diffraction and Scanning Electron Microscope
analysis from core samples. Core analytical work, including the measuring of porosity, permeability, grain density
and capillary pressure will be conducted on all core obtained. Falcon has collected 14 cores from various
stratigraphic horizons in the wells drilled to date.
Geochemical Analysis
Numerous geochemical studies are underway. These include organic carbon (TOC) content and rock-eval pyrolysis
to determine organic source rock types and quantity, vitrinite reflectance to determine thermal maturity, basin
evaluation for historical maturity and hydrocarbon development timing, gas and liquids analysis, fingerprinting and
biomarkers, Hydrogen Sulfide (H2S) and Carbon Dioxide (CO2) typing studies.
Sedimentology
All cores and image logs are being interpreted for environment of deposition for each of the formations in order to
help determine reservoir body size and continuity to help predict long term hydrocarbon deliverability to the well
bore.
Petrophysics
Falcon believes good, high resolution petrophysical analysis is critical to the evaluation of tight resource plays and
that such analysis must be calibrated with all available core data to help define reservoir quality in microdarcy rocks.
Image logs have indicated a number of thin reservoir beds in the Szolnok and Endrod formations. Net sand
measurements may not be fully accounting for these thin beds which are in addition to the thicker sands already
identified by conventional petrophysical analysis. In order to properly determine net sand and pay in these intervals,
Falcon will undertake a thin bed analysis of the log data.
Geological Static Model Build
Falcon intends to build a 3D geological static model that incorporates all information available in order to synthesis,
analyze and interpret all the wide variety of data sets to enhance the ability to visualize, understand and plan for
future work. The 3D model will integrate the seismic processing volumes including lithology, porosity, AVO and
pore pressure, the fault and fracture volumes, the stratigraphy, sedimentology the well petrophysical data and the
geochemical data. This data will be used both regionally and vertically to identify potential “sweet spots” which
will help determine Falcon’s development strategy going forward.
5
Operations
Magyarcsanad-1 Fracture Stimulation
As part of Falcon’s overall testing program, Falcon executed two fracture stimulations of the Magyarcsanad-1
exploration well at the end of July 2007. To date, results confirmed flowed gas and oil from fractures. The well has
yet to fully clean out fracture fluid, therefore, the following are initial indications of flow rates only and are not
necessarily indicative of future flow rates.
The Pre-Fracture Treatment (natural flow) unstabilized flow through perforations at 4,058-4,062 metres yielded an
initial rate of 387 barrels of oil per day (“bopd”) and declined to 63 bopd in 23 days The gas rates over the same
period were 665 thousand cubic feet of gas per day (“mcfgd”) and 137 mcfgd, respectively. Additional perforations
were added at 4,135-4,137 metres and 3,909-3,910.5 metres and the well was then fractured treated in stages with a
total of 329,000 pounds of propant and 9,200 barrels of fluid. We have recovered 60% of the frac volume to date.
The Post Fracture Treatment unstabilized flow yielded an initial rate of 91 bopd and declined to 35 bopd in 19 days.
The gas rates over the same period were 400 mcfgd and 85 mcfgd, respectively.
The well is currently shut-in for bottom hole pressure evaluation and analysis. We are also evaluating the recent inflow
production and temperature logs. Falcon is examining all potential future completion techniques to develop
this fracture play including the drilling of horizontal wells that might join up multiple fracture sets. The seismic data
should help considerably in defining the fault and fracture patterns in this resource, and these options will be
examined as part of the near term technical data review period.
Makó-6 Status
The Makó-6 was the first deep test in the Basin, reaching a total depth of 5692 metres. A test of the Synrift was
attempted which proved tight. An interval at the base of the Basal Conglomerate was tested with initial rates of up
to 700 mcfgd with associated H2S of 400 parts per million (“ppm”), and diminishing. The details are as follows.
The Basal Conglomerate was perforated at 5326-5328 metres. The well was then fracture treated with no
difficulties after importing additional HP frac equipment into Hungary. The special HPHT test packer was then
placed and tested to meet well-bore conditions. After 38.5 hours into the flow-back test, the Company had gas to
surface. This was measured through the Company’s test vessels. Falcon measured Qg= 354 mcfgd, Qoil=zero,
Qwater=29bbl/hr. Gas continued to increase. The flowing wellhead pressure was 3000 psi and at 41 Hours into the
flow test, gas peaked at 700 mcfgd. From 38.5 hours to 43 hours the gas rates were consistently steady around 500
mcfgd. Shortly after 43 hours into the flow-back the gas rate, the water rate & the FWHP began to drop drastically.
This was an indication the well was loading up or a possible plugging problem. After +/-49 hours into the flowback
test, the 3-1/2” x 5-1/2” annulus pressure jumped instantaneous from 100 psi to 4400 psi. Flow continued to
diminish. Well repair operations commenced immediately to investigate blockage. The tubing was found to be
partially blocked above the packer. Well work was suspended to further evaluate the cause and effect. Geological
and engineering work is underway to prepare for the Company’s next test in the Upper Basal Conglomerate.
Following a planned evaluation program, the Makó-6 could be re-entered for possible testing in the Upper Basal
Conglomerate, Endrod and Szolnok formations. The Company has not established a time table for additional work
to be performed in the well bore.
Makó-4 Status
The Makó-4 is currently suspended within the Szolnok formation at a depth of 4011 metres.
Based on seismic data and nearby well correlations, there is an additional 250 to 300 metres of Szolnok left to be
penetrated. Because of the unexpected results at the Magyarcsanad-1, management elected to defer drilling pending
evaluation of Falcon’s recently acquired 3D data.
6
Romania
The initial farmout well, the Lupendi Sud-1 well, drilled by Falcon’s wholly owned subsidiary, JVX in the Jiu
Valley Concession located in south western Romania, approximately 300 kilometres west of Bucharest, failed to
encounter hydrocarbons. The Lupeni Sud-1 was frac tested in mid-December 2006. Despite fraccing and swabbing
operations, the well failed to generate a meaningful flow rate. Under a farmout Agreement between Falcon and
Pannonian International, Ltd. (“Pannonian”), a wholly owned subsidiary of Galaxy Energy Corporation, the Lupeni
Sud-1 is one of two obligation wells Falcon must drill to enable the Company to earn a 75% undivided working
interest in the Concession. JVX has plugged and abandoned the well. Falcon and Pannonian are currently assessing
a long term plan with respect to other prospects in Romania.
Canada
Falcon also owns a non-operating working interest in four producing natural gas wells in Alberta, Canada which do
not comprise a material portion of Falcon’s assets (the “Hackett Interest”). The Company does not anticipate
expanding its operations in Canada beyond the Hackett Interests.
Financing
As of November 22, 2007, the Company had arranged for an equity financing pursuant to a (preliminary) short form
prospectus dated November 21, 2007 (the “Proposed Offering”). Under the terms of the Proposed Offering, a
syndicate of underwriters (the “Underwriters”) agreed to purchase an aggregate of 100,000,000 common shares at a
price of CDN$0.40 per share (the “Offering Price”) for aggregate gross proceeds of CDN$40,000,000.
Additionally, the Underwriters were granted an over-allotment option (the “Over-Allotment Option”) to purchase
up to an additional 15,000,000 common shares exercisable up to 30 days following the closing of the Proposed
Offering (the “Closing Date”). The Underwriters will receive a cash commission of 6% of the gross proceeds
(CDN$2,400,000) and warrants to purchase, at the Offering Price, 6% of the number of common shares sold
pursuant to the Proposed Offering, including those issued pursuant to the Over-Allotment Option, for a period of 24
months from the Closing Date. Closing is expected to occur on or about December 11, 2007, and is subject to
certain conditions, including but not limited to, receipt of all necessary securities regulatory approvals, including the
approval of the TSX Venture Exchange (“TSXV”).
Management’s Discussion and Analysis of Financial Condition and Results of Operations for
the Three Months Ended September 30, 2007 as Compared to the Three Months Ended
September 30, 2006
This review of the results of operations should be read in conjunction with the unaudited interim consolidated
financial statements for the three months ended September 30, 2007 and the audited consolidated financial
statements for the year ended December 31, 2006.
Results of Operations
The Company incurred a net loss for the September 2007 quarter of $4,596,000 ($0.010 per share) compared to a net
loss of $2,425,000 ($0.006 per share) for the comparative 2006 quarter. In the September 2007 quarter, the
Company recognized petroleum revenue of $26,000, of which $10,000 was attributable to initial net revenue from
the sale of liquid condensate from initial test production of the Magyarcsanad-1 well. Other than this income from
initial test production, the Company has not yet realized any revenue from its planned operations, and has incurred
significant expenditures in connection with its exploration for oil and gas. During the September 2007 quarter the
Company realized interest income of $324,000 as compared to $1,239,000 for the 2006 quarter. This decrease is
attributable to cash received from 2006 common share offerings which was available for short term investment in
2006, and which has been utilized in operations for 2007.
7
Liquidity and Capital Resources
Cash and cash equivalents at September 30, 2007 were $28,247,000 a decrease of $114,391,000 from $142,638,000
at December 31, 2006. Working capital at September 30, 2007 decreased to $18,293,000 from $134,563,000 at
December 31, 2006. These decreases include utilization of cash for the September 2007 quarter investing activities
of $27,152,000 and cash provided by operating activities of $2,251,000. At September 30, 2006 the Company had
cash and cash equivalents of $188,983,000 and working capital of $190,688,000. For the September 2006 quarter
the Company used $14,451,000 in investing activities and $5,690,000 in operating activities. Included in cash and
cash equivalents at September 30, 2007 is $7,079,000 held as security on letters of credit to drilling contractors for
Hungarian drilling operations and bank guarantees for Hungarian customs and VAT, as compared to $3,463,000 at
September 30, 2006.
Accounts payable and accrued expenses at September 30, 2007 were $15,727,000, which includes $13,673,000 for
capital expenditures for the Company’s Hungarian drilling operations, as compared to accounts payable of
$9,816,000, including amounts for capital expenditures of $7,774,000, at September 30, 2006. The increase is due
to increased drilling and exploration activity through September 2007 as compared to September 2006.
Amounts receivable at September 30, 2007 includes $4,329,000 due from the Hungarian government as a refund for
VAT paid; and prepaids include $789,000 for advance payments to, and refunds due from, Hungarian suppliers.
General and Administrative Expenses
General and administrative costs for the September 2007 quarter were $4,959,000 as compared to $3,952,000 for the
2006 quarter, an increase of $1,007,000. Overall, general and administrative costs increased due to the Company’s
continued expansion of operations in Hungary, resulting in the expansion of the Budapest office and an increase in
corporate administration in North America.
The significant components of the increase in general and administrative expenses for the September 2007 quarter as
compared to the comparable 2006 quarter are as follows:
• Depreciation increased to $73,000 from $35,000 for current period acquisition of office and computer
equipment in Budapest and Denver.
• Consulting fees increased to $648,000 from $528,000 for fees related to financial and business advisory
services, and shareholders relations for the Annual General Meeting (AGM) of the Company.
• Legal fees increased to $401,000 from $269,000 for services from outside legal firms in Hungary and
North America. The increase is related primarily to the AGM of the Company, real estate matters in
Hungary, obtaining work permits, consulting contract matters, the Company’s strategic partner initiative,
the due diligence process related to the strategic partner initiative, and general corporate matters.
• Office and administrative costs decreased to $459,000 from $523,000 as the Company had completed its
expansion of offices in Budapest and Denver in the 2006 quarter.
• Payroll and related costs increased to $1,018,000 from $181,000 for additional employees in Budapest and
Denver as operations expanded from 2006 to 2007, including establishment of a field office in Szeged,
Hungary.
• Travel and promotion increased to $760,000 from $490,000 for additional travel costs for professional
personnel to Hungary as operations expanded from 2006 to 2007, the increased emphasis on financial
marketing activities, and costs associated with the AGM.
In the September 2007 quarter, directors of the Company and members of the audit committee were paid an
aggregate $39,268, and officers of the Company were paid salaries of $245,000, as compared to $34,500 paid to
directors and $195,000 paid to officers in the comparable 2006 quarter.
8
Interest Expense
The Company did not incur interest expense in either the September 2007 or 2006 quarters.
Stock-Based Compensation
During the September 2007 quarter, the Company recognized stock based compensation of $874,000 for granted
options which vested during the quarter, as compared to $1,680,000 for the 2006 quarter. This decrease is a result of
fewer options being granted during the first nine months of fiscal 2007 and the decrease in the fair value of options
granted due to fluctuations in the Company’s stock price. Stock-based compensation was calculated utilizing the
Black-Scholes option pricing model.
Capital Expenditures
In the September 2007 quarter, the Company incurred $18,458,000 for additions to its oil and gas properties in
Hungary, as compared to $17,297,000 for the comparable 2006 quarter. The primary Capital expenditures for the
third quarter of 2007 were the rig down and demobilization of Rig 801 on Makó-4, the continued testing operations
on the Magyarcsanad and the rig down and demob of Rig 403, the continued testing operations of the Makó-6, the
rig down and demobilization of the 340K snubbing unit, the transportation and disposal cost associated with the
fracture treating fluids, the demobilization of high pressure well testing equipment, the ongoing seismic
interpretation and geological evaluation programs, and the continued monitoring of temporary suspended well
operations. In the September 2006 quarter, the Company incurred seismic costs associated with exploration of its
properties and the commencement of drilling of the Makó-7 and Magyarcsanad-1 exploratory wells.
As of March 31, 2007, the Company had plugged and abandoned the Romanian Lupeni Sud-1 well and continues to
evaluate its long-term plan with respect to this property. During the September 2007 quarter, the Company incurred
an additional $139,000 for costs associated with the Lupeni Sud-1 well.
In the December 2006 quarter, the Company commenced construction and completed a pipeline for $3,282,000,
linking the Makó-6 well to an existing transmission line. In the September 2007 quarter, an additional $166,000 was
incurred for pipeline costs.
In the September 2007 quarter, the Company recorded an impairment of $25,000 on its Canadian petroleum and
natural gas properties, as the carrying value of the Company’s Canadian properties exceeded the ceiling under the
full cost method of accounting.
Transactions with Related Parties
During the September 2007 and 2006 quarters, the Company paid $45,000 to a current director of the Company for
advisory and consulting services rendered to TXM.
Management’s Discussion and Analysis of Financial Condition and Results of Operations for
the Nine Months Ended September 30, 2007 as Compared to the Nine Months Ended
September 30, 2006
This review of the results of operations should be read in conjunction with the unaudited interim consolidated
financial statements for the nine months ended September 30, 2007 and the audited consolidated financial
statements for the year ended December 31, 2006.
Results of Operations
Net loss for the nine months ended September 30, 2007 was $7,197,000 ($0.016 per share) compared to a net loss of
$9,910,000 ($0.026 per share) in the comparable 2006 period. The net loss for the 2007 period included the
recording of a foreign exchange gain of $5,468,000 for the period as compared to a gain of $1,852,000 for the
comparable 2006 period. The increase in the foreign exchange gain is primarily attributable to foreign exchange
9
rate movements on Canadian denominated cash accounts, as the Canadian Dollar strengthened significantly versus
the US Dollar in the September 2007 period as compared to the 2006 period. Substantially all of the Company’s
cash balances and financings are in Canadian dollars and a portion of the Company’s operations are in Hungarian
Forints.
For the nine month period ending September 2007, the Company recognized petroleum revenue of $162,000, of
which $109,000 was attributable to initial net revenue from the sale of liquid condensate from initial test production
of the Magyarcsanad-1 well. Other than this income from initial test production, the Company has not yet realized
any revenue from its planned operations and has incurred significant expenditures in connection with its exploration
for oil and gas.
During the nine months ended September 30, 2007, the Company realized interest income of $2,180,000 as
compared to $2,054,000 for the comparable 2006 period. This increase is attributable to cash received from 2006
common share offerings which was available for short term investment.
Liquidity and Capital Resources
In March 2006, the Company completed the sale of an aggregate 77,000,000 common shares, including the exercise
of an over-allotment option, at a price of CDN$1.30 ($1.12) per share pursuant to a short form prospectus (the
“March Offering”), for gross proceeds of CDN$100,100,000 ($86,276,190). In August 2006, the Company
completed the sale of an aggregate 49,450,000 Common Shares, including the exercise of an over-allotment option,
at a price of CDN$3.50 ($3.12) per share, pursuant to a short form prospectus for gross proceeds of
CDN$173,075,000 ($154,490,508) (the “August Offering”).
As of the date hereof and as was indicated in the (final) prospectus’ filed in connection with the March Offering and
August Offering, the proceeds from such offerings have been used by the Company for the exploration and
development of the Company’s projects in Hungary and Romania and for general corporate and working capital
purposes. Remaining funds on hand from both offerings will be utilized in accordance with the Company’s
disclosures, pending ongoing results of testing and completion activities in 2007.
Cash and cash equivalents at September 30, 2007 were $28,247,000 a decrease of $114,391,000 from $142,638,000
at December 31, 2006. Working capital at September 30, 2007 decreased to $18,293,000 from $134,563,000 at
December 31, 2006. These decreases include utilization of cash for the September 2007 period investing activities
of $120,356,000 and operating activities of $254,000. At September 30, 2006 the Company had cash and cash
equivalents of $188,983,000 and working capital of $190,688,000 and for the September 2006 period the Company
used $49,471,000 in investing activities and $12,267,000 in operating activities. Included in cash and cash
equivalents at September 30, 2007 is $7,079,000 held as security on letters of credit to drilling contractors for
Hungarian drilling operations and bank guarantees for Hungarian customs and VAT, as compared to $3,463,000 at
September 30, 2006.
Accounts payable and accrued expenses at September 30, 2007 were $15,727,000, which includes $13,673,000 for
capital expenditures for the Company’s Hungarian drilling operations, as compared to accounts payable of
$9,816,000, including amounts for capital expenditures of $7,774,000, at September 30, 2006. The increase is due
to increased drilling and exploration activity through June 2007 as compared to June 2006.
Amounts receivable at September 30, 2007 includes $4,329,000 due from the Hungarian government as a refund for
VAT paid and prepaids include $789,000 for advance payments to and refunds due from, Hungarian suppliers.
The Company anticipates that its 2007 operating costs and overhead requirements will be funded from existing
working capital. The Company’s activities in Hungary for 2007, as at the date hereof, have been and continue to be
focused on testing and evaluating exploratory wells drilled in Hungary. The results of the testing and evaluation of
these wells, including finalization of the re-processing of 3D seismic, will define the Company’s future drilling
requirements for exploration and development.
The Company’s capital requirements in the future will be largely dependent upon, among other things: the progress
of the Company’s drilling programs, regulatory approvals, technological advances and the success of the Company’s
10
various exploration programs. The ability of the Company to further these activities will be largely dependent upon
the Company’s ability to obtain additional capital through equity or debt financings and/or to attract a strategic
partner.
Until such time as a production decision is made, it is expected that the only available source of future capital will
be through the issuance of additional equity shares including but not limited to the Proposed Offering. The
availability of equity capital, and the price at which additional equity could be issued, is dependent upon the success
of the Company’s exploration activities and upon the state of the capital markets generally.
The Company’s exploration efforts are focused exclusively in Europe, and the Company does not intend to expand
its operations in Canada beyond the Hackett Interest.
General and Administrative Expenses
General and administrative costs for the nine months ended September 30, 2007 were $14,121,000 as compared to
$13,837,000 for the corresponding nine month period, an increase of $284,000. Overall, general and administrative
costs increased due to the Company’s continued expansion of operations in Hungary, resulting in the expansion the
Budapest office and an increase in corporate administration in North America, including relocating to new office
facilities in Denver, Colorado during the third quarter of 2006.
The significant components of the increase in general and administrative expenses for the September 2007 period as
compared to the comparable 2006 period are as follows:
• Depreciation increased to $199,000 from $58,000 as a direct result of the acquisition of office and
computer equipment in Budapest and Denver.
• Consulting fees increased to $1,873,000 from $1,109,000 for fees incurred in 2007 related to gas
marketing, financial and business advisory services related to the strategic partner process, and shareholder
relations for the 2007 AGM.
• Legal fees increased to $1,617,000 from $734,000 for services from outside legal firms in Hungary and
North America. The increase is related to the expansion of operational and corporate activities subsequent
to the March and August Offerings, regulatory filings in both Canada and Hungary, general corporate
matters, including the annual TXM Quota Holders meeting and related filings and AGM, real estate matters
in Hungary, obtaining work permits, consulting contract matters, the Company’s continued focus on its
strategic partner initiative, and the due diligence process related to the strategic partner initiative.
• Office and administrative costs increased to $1,585,000 from $1,222,000, primarily as a result of the
expansion of offices in Budapest and Denver and establishment of a field office in Szeged, Hungary, which
occurred in the second and third quarters of 2006.
• Payroll and related costs increased to $2,811,000 from $553,000 for additional employees in Budapest and
Denver as operations expanded from 2006 to 2007, an addition of a corporate general counsel and chief
operating officer in the third quarter of 2006, and establishment of a field operation offices in Szeged and
Makó, Hungary.
• Travel and promotion increased to $2,081,000 from $1,390,000 for additional travel costs for professional
personnel to Hungary as operations expanded from 2006 to 2007, and additional costs incurred associated
with the increase in financial marketing services and the strategic partner process.
In the September 2007 nine month period directors of the Company and members of the audit committee were
paid an aggregate $108,000, and officers of the Company were paid salaries of $735,000 as compared to
$77,000 paid to directors and $445,000 paid to officers in the comparable 2006 period. The increase in officer
salaries from 2006 to 2007 was due to the addition of a full time Chief Operating Officer and a
Secretary/General Counsel in the third quarter of 2006.
11
Interest Expense
The Company did not incur interest expense in either the September 30, 2007 or 2006 periods.
Stock-based Compensation
During the September 2007 period, the Company recognized stock based compensation of $2,508,000 for granted
options which vested during the quarter, as compared to $7,629,000 for the 2006 period. This decrease is a result of
fewer options being granted during the first nine months of fiscal 2007 and the decrease in the fair value of options
granted due to fluctuations in the Company’s stock price. Stock-based compensation was calculated utilizing the
Black-Scholes option pricing model.
Capital Expenditures
During the nine months ended September 30, 2007, the Company incurred $110,820,000 for additions to its oil and
gas properties in Hungary, as compared to $54,912,000 for the comparable 2006 period. The primary capital
expenditures for the first two quarters of 2007 were the location construction of the Foldeak, the drilling of the
Makó-4 well, rig down of Rig 403 on the Makó-4 and mobilization of same to Magyarcsanad-1 well, complete
logging of the Makó-7 well and rig down, mobilization and rig up of rig 801 on Makó-4, completion of Makó-6
stimulations (fracturing) in the Synrift and lower Basil Conglomerate, release and retrieval of HPHT permanent
packer and the continued flow testing of the Magyarcsanad-1 well, completion of initial flow tests of the Szekkutas-
1 well, and completion of the Szekkutas seismic survey. The primary capital expenditures during the 2006 period
were additional seismic costs associated with exploration of the Company’s Hungarian licensed properties, the
completion of exploratory drilling on the Pusztaszer-1 well, the commencement and completion of drilling of the
Szekkutas-1 exploratory well, drilling of the Makó-6 exploratory well and professional fees to consultants, legal fees
related to license acquisition and retention and expenditures to determine drilling sites. During the third quarter of
2007, as the Company implemented its evaluation phase of operations, the primary capital expenditures for the
period were the rig down and demobilization of Rig 801 on Makó-4, the continued testing operations on the
Magyarcsanad and the rig down and demob of Rig 403, the continued testing operations of the Makó-6, the rig down
and demobilization of the 340K snubbing unit, the transportation and disposal cost associated with the fracture
treating fluids, the demobilization of high pressure well testing equipment, the ongoing seismic interpretation and
geological evaluation programs, and the continued monitoring of temporary suspended well operations. As of
September 30, 2007, the Company's total cumulative expenditures for exploration under the Licenses, including the
acquisition cost of the Licenses, seismic testing, drilling of exploratory wells, and initial testing and completion of
wells was approximately $234,842,000, including an Asset Retirement Obligation (“ARO”) of approximately
$1,977,000 for the six wells drilled at September 30, 2007.
As of March 31, 2007, the Company had plugged and abandoned the Romanian Lupeni Sud-1 well. During the
September 2007 period, the Company incurred an additional $824,000 for costs associated with the Lupeni Sud-1
well in addition to $1,628,000 as at December 31, 2006.
During the year ended December 31, 2006, the Company commenced construction and completed a pipeline for
$3,282,000, linking the Makó-6 well to an existing transmission line. During the September period 2007, an
additional $304,000 was incurred for pipeline costs.
Transactions with Related Parties
During the nine months ended September 30, 2007, the Company paid $135,000 to a current director of the
Company for advisory and consulting services rendered to TXM and paid nil in consulting fees to a former director
of the Company. During the comparable 2006 period the Company paid $95,000 and $41,341, respectively, under
each of these arrangements. In June 2006, the Company entered into an Office Sharing Agreement with
PetroHunter Energy Corporation (“PetroHunter”) for office space in Denver, Colorado, of which the Company is
the lessee. Under the terms of the agreement, PetroHunter and the Company share, on an equivalent employee
basis, all costs related to the office space, including rent, office operating costs, furniture and equipment and any
other expenses related to the operations of the corporate offices. Certain employees of PetroHunter have provided
services to the Company, and PetroHunter has invoiced the Company for these services at cost. The largest single
12
shareholder of PetroHunter is also the President and CEO of the Company. At September 30, 2007, PetroHunter
owed the Company $498,000 for its share of net costs incurred.
As previously stated, on June 1, 2005, the Company also entered into the Farmout Agreement with Pannonian, a
wholly-owned subsidiary of Galaxy. As a result of his interests in Galaxy, the Company’s President and Chief
Executive Office is a “Control Person” of Galaxy within the meaning of the policies of the TSXV.
Selected Quarterly Information
The following is a summary of the eight most recently completed quarters:
Three months
Ended December
31, 2005
Three Months
Ended March 31,
2006
Three Months
Ended June
30, 2006
Three Months
Ended September
30, 2006
Total assets $46,708,768 $130,247,204 $133,072,283 $280,434,034
Petroleum and natural
gas properties
26,357,743 45,204,250 63,956,829 79,532,565
Working capital
(deficiency)
13,737,327 74,024,547 59,152,681 190,688,426
Stockholders’ equity 38,006,436 116,651,645 120,699,352 266,907,319
Revenue 45,873 37,388 21,843 18,157
Net Income (Loss) (1,623,463) (1,600,338) (5,884,325) (2,425,262)
Income (Loss) per sharebasic
and diluted
(0.005) (0.005) (0.015) (0.006)
Three Months
Ended December
31, 2006
Three Months
Ended March 31,
2007
Three Months
Ended June
30, 2007
Three Months
Ended September
30, 2007
Total assets $286,383,475 $290,190,826 $288,263,412 $274,788,840
Petroleum and natural gas
properties
123,777,478 170,905,424 216,433,277 234,934,259
Working capital
(deficiency)
134,562,552 85,233,651 40,586,242 18,293,328
Stockholders’ equity 260,006,697 258,580,626 259,789,896 256,068,735
Revenue 5,288 25,043 111,842 25,561
Net Income (Loss) (10,348,426) (3,101,064) 500,233 (4,595,798)
Income (Loss) per sharebasic
and diluted
(0.023) (0.007) 0.001 (0.010)
Disclosure of Outstanding Share Data
The following is a summary of the Company’s outstanding share data as at September 30, 2007 and as at November
27, 2007:
13
Class Of Securities As of September 30, 2007 As of November 27, 2007
Common Shares 464,499,163 465,199,163
Compensation Warrants Nil Nil
Stock Options 37,790,000 36,590,000
March Agents’ Warrants 1,281,900 1,281,900
August Agents’ Warrants 1,236,250 1,236,250
Director and Management Compensation
The following is a summary of the amounts paid and payable, directly and indirectly, to Falcon’s directors and
officers for the nine months ended September 30, 2007:
Name
Position with Falcon
Amounts paid and payable, directly
and indirectly, to Falcon’s directors
and officers for the nine months
ended September 30, 2007
Marc A. Bruner President, Chief Executive Officer
and Chairman of the Board of
Directors
$225,000
Andrew P. Calerich1 Director $25,700
Dr. Győrgy Szabó2 Director $157,500
Stephen Schultz Director $27,000
Carl Stadelhofer Director $27,000
Evan L. Wasoff Chief Financial Officer $180,000
David Brody3 Corporate Secretary and General
Counsel
$150,000
Dr. James Edwards Chief Operating Officer $180,000
Igor Akhmerov4 Director $1,300
David Fisher4 Director $1,300
Daryl Gilbert4 Director $1,083
Jan Van Holsbeeck4 Director $1,300
Prof. Ferenc Horvath4 Director $1,083
1Mr. Calerich did not stand for re-election at the Company’s most recent Annual and Special Meeting held on September 18,
2007.
2Of this amount $15,000 was paid and was payable, directly or indirectly, to Dr. Szabó in respect of his services as a director of
the Company and $90,000 was paid and was payable, directly or indirectly, to Dr. Szabó in respect of his services as a
consultant to the Company.
14
3 This amount does not include any amount paid to Patton Boggs LLP, a US law firm that provides US legal advice to the
Company, of which Mr. Brody was and is a partner. The amount paid to Patton Boggs LLP is not included in the amounts paid
to Mr. Brody because, since Mr. Brody’s appointment as Corporate Secretary and General Counsel of Falcon, Mr. Brody has not
received any remuneration from Patton Boggs LLP.
4These figures represent amounts paid and payable, directly and indirectly, to the individuals for the period commencing
September 18, 2007 and ending September 30, 2007.
Business Risks and Uncertainties
As stated above and as discussed in the Company’s continuous disclosure documents, certain risk and uncertainties
that could cause the Company’s actual results to materially differ from our current expectations include, but are not
limited to:
• The Company’s business is at a similar stage to that of a recently formed company with no operating
history, which makes it difficult to evaluate its business prospects;
• The Company will have substantial capital requirements that, if not met, may hinder its growth and
operations;
• The Company’s capital requirements in the future will be largely dependent upon, among other
things: the progress of the Company’s drilling programs, regulatory approvals, technological
advances and the success of the Company’s various exploration programs. The ability of the
Company to further these activities will be largely dependent upon the Company’s ability to obtain
additional capital through equity or debt financings and/or to attract a strategic partner. Until such
time as a production decision is made, it is expected that the only available source of future capital
will be through the issuance of additional equity shares. The availability of equity capital, and the
price at which additional equity could be issued, is dependent upon the success of the Company’s
exploration activities and upon the state of the capital markets generally. The Company might not be
able to determine reserve potential, identify liabilities associated with the properties or obtain
protection from sellers against them, which could cause the Company to incur losses;
• The Company might incur debt in order to fund its exploration and development activities, which
would continue to reduce its financial flexibility and could have a material adverse effect on the
Company’s business, financial condition or results of operation;
• Shortages of rigs, equipment, supplies and personnel could delay or otherwise adversely affect the
Company’s cost of operations or its ability to operate according to its business plans;
• Resource estimates depend on many assumptions that may turn out to be inconclusive, subject to
varying interpretations, or inaccurate;
• The value of the common shares might be affected by matters not related to the Company’s own
operating performance for reasons that include the following:
• general economic conditions in Canada, the United States, Hungary, Romania, and globally;
• industry conditions, including fluctuations in the price of oil and natural gas;
• governmental regulation of the oil and gas industry, including environmental regulation;
• fluctuation in foreign exchange or interest rates;
• liabilities inherent in oil and natural gas operations;
• geological, technical, drilling and processing problems;
15
• unanticipated operating events which can reduce production or cause production to be shut in
or delayed;
• failure to obtain industry partners and other third party consents and approvals, when
required;
• stock market volatility and market valuations;
• competition for, among other things, capital, acquisition of reserves, undeveloped land and
skilled personnel;
• the need to obtain required approvals from regulatory authorities;
• Hungarian and worldwide supplies and prices of and demand for natural gas and oil;
• political conditions and developments in Hungary;
• political conditions in natural gas and oil producing regions;
• revenue and operating results failing to meet expectations in any particular period;
• investor perception of the oil and gas industry;
• limited trading volume of common shares;
• change in environmental and other governmental regulations;
• announcements relating to the Company’s business or the business of its competitors;
• the Company’s liquidity; and
• the Company’s ability to raise additional funds;
• The Company might not be able to obtain necessary approvals from one or more Hungarian
government agencies, surface owners, or other third parties;
• Drilling for and producing natural gas and oil are high-risk activities with many uncertainties that
could adversely affect the Company’s business, financial condition or results of operations;
• Competition in the oil and gas industry is intense and many of the Company’s competitors have
greater financial, technological and other resources than the Company does, which may adversely
affect its ability to compete;
• Political instability or fundamental changes in the leadership or in the structure of the governments in
the jurisdictions in which the Company operates could have a material negative impact on the
Company;
• Market conditions or operation impediments may hinder the Company’s access to natural gas and oil
markets or delay its production;
• A substantial or extended decline in natural gas and oil prices may adversely affect the Company’s
ability to meet its capital expenditure obligations and financial commitments;
16
• The Company may enter into currency hedging agreements but may not be able to hedge against all
such risks;
• The Company is subject to complex laws and regulations, including environmental regulations, which
can have a material adverse effect on the cost, manner or feasibility of doing business;
• The loss of the Company’s chief executive officer or other of the Company’s key management and
technical personnel or its inability to attract and retain experienced technical personnel could
adversely affect the Company’s ability to operate;
• The Company does not plan to insure against all potential operating risks. It might incur substantial
losses and be subject to substantial liability claims on its natural gas and oil operations; and
• To the extent that the Company establishes natural gas and oil reserves, it will be required to replace,
maintain or expand its natural gas and oil reserves in order to prevent its reserves and production from
declining, which would adversely affect cash flows and income.
Should one or more of these risks materialize, or should the Company’s underlying assumptions prove incorrect, the
Company’s actual results may materially differ from the Company’s current expectations. Therefore, in evaluating
forward-looking statements, readers should specifically consider the various factors that could cause the Company’s
actual results to materially differ from such forward-looking statements.
Off-Balance Sheet Arrangements and Proposed Transactions
The Company does not have any material off-balance sheet arrangements or proposed transactions.
Management’s Responsibility for MD&A
The information provided in this MD&A is the responsibility of management. In the preparation of this MD&A,
estimates are sometimes necessary to make a determination of future values for certain assets or liabilities.
Management believes such estimates have been based on careful judgments and have been properly reflected in this
MD&A.
The audit committee has reviewed the MD&A with management. The audit committee has approved the MD&A as
presented.
FALCON OIL & GAS LTD.
(A Development Stage Company)
Interim Consolidated Financial Statements
Nine Months Ended September 30, 2007 and 2006
(Presented in U.S. Dollars)
NOTICE TO READER
The interim consolidated financial statements which follow are prepared by
management and are neither audited nor reviewed by the Company’s auditor.
2
FALCON OIL & GAS LTD.
(A Development Stage Company)
INTERIM CONSOLIDATED BALANCE SHEETS
(U.S. Dollars)
(Unaudited)
ASSETS
September 30, 2007 December 31, 2006
Current assets
Cash & cash equivalents $ 21,075,336 $ 137,208,050
Restricted cash (Note 2) 7,171,660 5,429,509
Amounts receivable (Note 4 ) 5,449,013 14,058,604
Prepaids & other 1,324,291 1,550,562
Total current assets 35,020,300 158,246,725
Property and equipment, net 1,052,557 749,441
Pipeline 3,586,408 3,282,288
Petroleum and natural gas properties (Note 3) 234,934,259 123,777,478
Other 195,316 327,543
Total Assets $ 274,788,840 $ 286,383,475
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 15,726,972 $ 23,617,673
Property contract payable (Note 3) 1,000,000 -
Asset retirement obligation - 66,500
Total current liabilities 16,726,972 23,684,173
Asset retirement obligations (Note 5) 1,993,133 1,692,605
Property contract payable (Note 3) - 1,000,000
Total liabilities 18,720,105 26,376,778
Commitments and contingencies (Note 10)
Shareholders' equity (Notes 6 & 7)
Share capital 273,870,968 273,068,217
Contributed surplus 14,630,503 12,174,587
Deficit accumulated during development stage (32,432,736) (25,236,107)
Total shareholders' equity 256,068,735 260,006,697
Total liabilities and shareholders' equity $ 274,788,840 $ 286,383,475
Subsequent event (Note 11)
On behalf of the Board:
"David Fisher"___________________, Director "Stephen Schultz"________________, Director
The accompanying notes are an integral part of these interim consolidated financial statements.
3
FALCON OIL & GAS LTD.
(A Development Stage Company)
INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
(U.S. Dollars)
(Unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
2007 2006 2007 2006
Petroleum revenue $ 25,561 $ 18,157 $ 162,446 $ 77,388
Direct costs
Production costs 70,252 13,469 83,939 28,868
Depreciation, depletion and accretion 9,757 9,261 18,970 28,260
80,009 22,730 102,909 57,128
Costs and expenses
Accounting 123,334 60,356 447,154 238,024
Depreciation and amortization 73,256 34,687 199,063 58,372
Consulting 647,527 528,875 1,872,979 1,108,696
Director fees 39,268 34,500 108,268 77,000
Investor relations 561,683 149,519 890,697 826,225
Legal costs 400,664 269,254 1,617,145 734,678
Office and administrative 459,205 522,873 1,585,195 1,221,737
Payroll and related costs 1,018,826 181,389 2,810,895 552,685
Stock based compensation 874,637 1,680,276 2,507,916 7,629,467
Travel and promotion 760,623 490,226 2,081,513 1,389,771
4,959,023 3,951,955 14,120,825 13,836,655
Other (income) expense
Interest income (324,171) (1,239,402) (2,179,687) (2,054,062)
Abandonment costs 139,344 - 757,811 -
Impairment of petroleum and natural gas
properties 25,451 - 25,451 -
(Gain) on foreign exchange (258,297) (291,864) (5,468,234) (1,852,408)
(417,673) (1,531,266) (6,864,659) (3,906,470)
Net (loss) for the period (4,595,798) (2,425,262) (7,196,629) (9,909,925)
Accumulated deficit, beginning of period (27,836,938) (12,462,418) (25,236,107) (4,977,755)
Accumulated deficit, end of period $ (32,432,736) $ (14,887,680) $ (32,432,736) $ (14,887,680)
Net loss per common share -
basic and diluted $ (0.010) $ (0.006) $ (0.016) $ (0.026)
Weighted average number of common
shares outstanding – basic and diluted 464,499,463 434,359,976 463,718,485 388,207,451
The accompanying notes are an integral part of these interim consolidated financial statements.
4
FALCON OIL & GAS LTD.
(A Development Stage Company)
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. Dollars)
(Unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
2007 2006 2007 2006
Cash flows (provided) used in operating activities
Net (loss) $ (4,595,798) $ (2,425,262) $ (7,196,629) $ (9,909,925)
Adjustments to reconcile net loss to
Net cash (used) in operating activities
Stock based compensation 874,637
1,680,276
2,507,916
7,629,467
Depreciation, depletion and amortization
83,013
43,834
218,033 86,518
Property abandonment
139,344
-
757,811
-
Property impairment
25,451
-
25,451
-
Unrealized foreign exchange (gain) loss
(258,297)
(142,353)
(5,468,234)
(1,852,408)
Changes in non-cash working capital accounts
Amounts receivable 7,146,449
(2,751,204)
8,609,591
(5,035,466)
Prepaids and other
370,026
(1,874,522)
340,977
(3,895,222)
Accounts payable and accrued expenses
(1,534,178)
(220,457)
(48,669)
710,461
Net cash provided (used) in operating activities
2,250,647
(5,689,688)
(253,753)
(12,266,575)
Cash flows used in investing activities
Property and equipment
(91,379)
(241,404)
(484,659)
(384,854)
Additions to petroleum and natural gas properties
(26,894,766)
(14,209,641)
(119,567,016)
(49,085,846)
Pipeline additions
(165,569)
-
(304,120)
-
Net cash used in investing activities
(27,151,714)
(14,451,045)
(120,355,795)
(49,470,700)
Cash flows from financing activities
Proceeds from the sale of common stock
-
154,490,508
-
240,766,698
Proceeds from warrant and option exercise
-
1,077,540
750,751
5,716,122
Offering costs
-
(8,576,919)
-
(15,289,220)
Net cash provided by financing activities
-
146,991,129
750,751
231,193,600
Effect of exchange rate on cash
258,297
142,353
5,468,234
1,852,408
Net (decrease) increase in cash and cash equivalents (24,642,770) 126,992,749 (114,390,563) 171,308,733
Cash and cash equivalents, beginning of period 52,889,766
61,990,156
142,637,559
17,674,172
Cash and cash equivalents, end of period $ 28,246,996 $ 188,982,905 $ 28,246,996 $ 188,982,905
The accompanying notes are an integral part of these interim consolidated financial statements.
5
FALCON OIL & GAS LTD.
(A Development Stage Company)
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(U.S. Dollars)
(Unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
2007 2006 2007 2006
Supplemental schedule of cash flow
information
Cash paid for interest $ - $ - $ - $ -
Cash paid for income taxes $ - $ - $ - $ -
Supplemental disclosures of non-cash
investing and financing activities
Stock options granted $ 874,637 $ 1,680,276 $ 2,507,916 $ 7,629,467
Agent warrants issued $ - $ 1,207,000 $ - $ 2,052,700
Petroleum and natural gas property costs in
accounts payable $ 13,711,431 $ 7,774,172 $ 13,711,431 $ 7,774,172
Cash and cash equivalents at September 30,
2007 is comprised of:
Cash $ 21,075,336
Restricted cash (Note 2) 7,171,660
$ 28,246,996
The accompanying notes are an integral part of these interim consolidated financial statements.
FALCON OIL & GAS LTD.
(A Development Stage Company)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007
(UNAUDITED)
6
NOTE 1 – ORGANIZATION
Falcon Oil & Gas Ltd. (“Falcon”) was incorporated under the laws of British Columbia on January 18, 1980 for
the purpose of acquiring, exploring, and developing petroleum and natural gas properties. Falcon is considered a
development stage company as defined by Canadian Institute of Chartered Accountants Accounting Guideline No.
11.
The Company has producing petroleum and natural gas properties in Alberta, Canada and exploration projects in
Hungary and Romania. The Company’s exploration projects in Hungary continue to be evaluated, and
management believes that the carrying costs of these projects are recoverable. Should the Company be
unsuccessful in these exploration activities, the carrying cost of these prospects will be charged to operations.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying consolidated financial statements include Falcon and its directly and indirectly wholly owned
subsidiaries: Mako Energy Corporation (Mako), a United States Company, TXM Oil and Gas Exploration Kft., a
Hungarian limited liability company doing business as TXM Energy, LLC (“TXM”), TXM Marketing Trading &
Service, LLC (“TXM Marketing”) a Hungarian limited liability company, JVX Energy S.R.L. (“JVX”), a
Romanian limited liability company, and CH Holdings, Inc., a Maryland corporation (collectively “the
Company”). All significant intercompany transactions have been eliminated on consolidation.
The unaudited interim consolidated financial statements of the Company have been prepared by management in
accordance with Canadian generally accepted accounting principles (“Canadian GAAP”) for interim financial
information using the same accounting policies and methods of application as the audited consolidated financial
statements of the Company for the year ended December 31, 2006, and are presented in United States dollars.
The preparation of financial statements in conformity with Canadian GAAP requires management to make
estimates and assumptions that affect the amounts reported in the interim consolidated financial statements and
accompanying notes. Actual results could differ from those estimates. The interim consolidated financial
statements have, in management’s opinion, been properly prepared using careful judgment within reasonable
limits of materiality. These unaudited interim consolidated financial statements do not include all the
information and note disclosures required by Canadian GAAP for annual financial statements and therefore
should be read in conjunction with the Company’s most recently reported annual audited consolidated financial
statements.
CASH EQUIVALENTS
For purposes of reporting cash flows, the Company considers as cash equivalents all highly liquid investments with
a maturity of three months or less at the time of purchase. Restricted cash at September 30, 2007 and December 31,
2006 includes $ 7,171,660 and $5,429,509, respectively, on deposit as collateral for letters of credit issued by the
Company, bank guarantees and reclamation deposits.
TRANSLATION OF FOREIGN CURRENCIES
The Company’s foreign operations, conducted through its subsidiaries, are of an integrated nature and,
accordingly, the temporal method of foreign currency translation is used for conversion of foreign-denominated
amounts into U.S. dollars. Monetary assets and liabilities are translated into U.S. dollars at the rates prevailing on
the balance sheet date. Other assets and liabilities are translated into U.S. dollars at the rates prevailing on the
transaction dates. Revenues and expenses arising from foreign currency transactions are translated into U.S.
dollars at the average rate for the year. Exchange gains and losses are recorded as income or expense in the year in
which they occur.
FALCON OIL & GAS LTD.
(A Development Stage Company)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007
(UNAUDITED)
7
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
COMPARATIVE FIGURES
Certain comparative figures have been reclassified, where applicable, to conform to the current period’s
presentation. Such reclassifications had no effect on the Company’s net loss in any of the periods presented.
NEW ACCOUNTING STANDARDS
Effective on January 1, 2008, the Company will be required to adopt the following new accounting standards
issued by the Accounting Standards Board (“AcSB”) of the Canadian Institute of Chartered Accountants.
Section 3862 “Financial instruments – Disclosures” replaces the disclosure requirements of Section 3861
“Financial instruments – Presentation and disclosure”. Section 3862 will require additional disclosure of the risks
associated with financial instruments and of how those risks are managed.
Section 1535 “Capital disclosures” will require disclosure of information to enable users of the financial statements
to evaluate the Company’s objectives, policies and processes for managing capital.
Section 3031 “Inventories” requires inventory to be carried at the lower of cost and net realizable value using, in
certain cases, the specific identification method or either of the first-in, first-out or average cost methods. Write
downs to net realizable value may be reversed, to the extent of the original write down, if there is clear evidence of
an increase in value due to a change in circumstances.
Also, the AcSB has adopted a strategic plan under which Canadian accounting standards for publicly-listed
companies will converge with International Financial Reporting Standards (“IFRS”) by the end of 2011. The
Company understands there to be material differences between Canadian GAAP and IFRS, and is therefore
monitoring this project with a view to understanding the possible future effects of the transition to IFRS.
FALCON OIL & GAS LTD.
(A Development Stage Company)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007
(UNAUDITED)
8
NOTE 3 – PETROLEUM AND NATURAL GAS PROPERTIES
Interests in petroleum and natural gas proven and unproven properties include the following acquisition,
exploration and development costs:
Hungary Canada Romania Total
Balance, December 31, 2006 $ 123,722,417 $ 55,061 $ - $ 123,777,478
Acquisition costs - - - -
Exploration costs 110,819,626 - 824,311 111,643,937
Development costs - 81,046 - 81,046
Asset retirement obligation 299,787 - - 299,787
Impairment loss - (25,451) (824,311) (849,762)
Depletion and depreciation expense - (18,227) - (18,227)
Balance, September 30, 2007 $ 234,841,830 $ 92,429 $ - $ 234,934,259
Balance, January 1, 2006 $ 25,328,798 $ 53,359 $ 975,586 $ 26,357,743
Acquisition costs - - - -
Exploration costs 97,821,528 - 622,347 98,443,875
Development costs - 32,858 - 32,858
Asset retirement obligation 572,091 (1,359) (36,067) 534,665
Impairment loss - - (1,561,866) (1,561,866)
Depletion and depreciation expense - (29,797) - (29,797)
Balance, December 31, 2006 $ 123,722,417 $ 55,061 $ - $ 123,777,478
The Company’s Canadian properties are all proven and are subject to a ceiling test; the Company’s properties in
Hungary are unproven.
HUNGARY
The Company holds two petroleum and natural gas exploration licenses – the Tisza License and the Mako License
(collectively, the “Licenses”) –The Licenses relate to properties located in south central Hungary near the town of
Szolnok. The licenses were obtained from an unrelated entity, Prospect Resources, Inc. (“Prospect”). The
Company originally had the exclusive right to explore for petroleum and natural gas until December 2005 under
both the Tisza and Mako Licenses, and in December 2005, the Company received a two year extension on the
Licenses through December 2007. All revenues from oil and gas sales are subject to a royalty to the Hungarian
government in the amount of 12% and a overriding royalty to Prospect in the amount of 5%. Prospect will also be
paid a “success bonus” of 20% of gross revenue from the first well drilled under the Tisza License up to
$1,000,000. Upon extension of the Mako License, Prospect earned a one-time bonus of $1,000,000, due January
31, 2008.
On May 21, 2007, the Company received final written approval from the Hungarian Mining Authority for a
long-term production license (known as a “Mining Plot” under Hungarian law) covering all oil and gas in the
identified Basin Centered Gas Accumulation (“BCGA”) resource underlying Falcon's two exploration licenses.
The Mining Plot remains in effect as long as the Company continues petroleum and natural gas operations, and
continues to comply with all applicable laws and regulations.
FALCON OIL & GAS LTD.
(A Development Stage Company)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007
(UNAUDITED)
9
NOTE 3 – PETROLEUM AND NATURAL GAS PROPERTIES (CONTINUED)
ROMANIA
The Company entered into a farmout agreement (the “Farmout Agreement”) in June 2005 with a related entity, on
a coalbed methane property in the Jiu Valley of Romania, under which it may earn a 75% interest in the property.
Under the terms of the Farmout Agreement, the Company will initially pay 100% of the costs to drill two coalbed
methane earning wells to earn a 75% working interest in the Jiu Valley property, with the right to opt out of the
second well upon payment of a penalty. As of September 30, 2007, JVX had plugged and abandoned the first
exploratory well. Accordingly, 100% of the costs incurred on the initial well, the Lupeni Sud-1, have been
charged to operations as of September 30, 2007.
CANADA
The Company has working interests ranging from 12.76% to 25% in four producing petroleum and natural gas
wells in Alberta, Canada (collectively, the “Hackett Wells”). During the nine months ended September 30,
2007, the Company has recorded depletion expense of $18,115 (2006-$26,724), and depreciation of the related
asset retirement obligation of $113 (2006-$1,537). In the September 2007 quarter, the Company recorded an
impairment of $25,451 on its Canadian petroleum and natural gas properties, as the carrying value of the
Company’s Canadian properties exceeded the ceiling test under the full cost method of accounting.
NOTE 4 – AMOUNTS RECEIVABLE
Amounts receivable at September 30, 2007 and December 31, 2006 is comprised of the following:
2007 2006
Value added tax (VAT) – Hungary $4,328,998 $13,681,408
GST – Canada 132,472 108,106
Petroleum and natural gas revenue 52,909 7,741
Due from related party (Note 8) 498,401 105,893
Other 436,233 155,456
$5,449,013 $14,058,604
NOTE 5 – ASSET RETIREMENT OBLIGATIONS
At September 30, 2007 the estimated total undiscounted amount required to settle the asset retirement obligations
was $9,223,000. Costs for asset retirement have been calculated assuming a 3.0% inflation rate. These obligations
will be settled based on the estimated useful lives of the underlying assets, which extend up to 20 years into the
future. This amount has been discounted using a credit-adjusted risk-free interest rate of 8%. Changes to asset
retirement obligations for the nine months ended September 30, 2007 and the year ended December 31, 2006 were
as follows:
2007 2006
Asset retirement obligations – beginning of period $1,759,105 $1,156,253
Obligations associated with development program 299,787 992,962
Revisions to estimates - (391,793)
Liabilities settled during the year (66,500) -
Accretion 741 1,683
Asset retirement obligations – end of period $1,993,133 $1,759,105
FALCON OIL & GAS LTD.
(A Development Stage Company)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007
(UNAUDITED)
10
NOTE 6 – SHARE CAPITAL
AUTHORIZED
The Company has authorized an unlimited number of common shares, without par value.
ISSUED
September 30, 2007 December 31, 2006
Shares Amount
Contributed
Surplus Shares Amount
Contributed
Surplus
Balance, beginning of period 462,580,763 $273,068,217 $12,174,587 314,121,063 $40,463,660 $2,520,531
Issued during the period
For cash
Sale of common shares - - - 126,450,000 240,766,698 -
Exercise of warrants 1,268,400 567,595 - 14,259,700 4,450,700 -
Exercise of options 650,000 183,156 - 7,750,000 2,094,754
Offering costs - - - - (17,389,742) -
Fair value of agents warrants - - - - 2,052,700 -
Stock based compensation of
options
- - 2,507,916 - - 10,283,503
Contributed surplus reclassified
On exercise of options
- 52,000 (52,000) - 629,447 (629,447)
Balance, end of period 464,499,163 $273,870,968 $14,630,503 462,580,763 $273,068,217 $12,174,587
Under the requirements of the TSX Venture Exchange (the “TSX-V”), 42,000,000 common shares were being
held in escrow as September 30, 2007, and are being released over a one year period, with the release of the final
common shares from escrow occurring on April 12, 2008.
WARRANTS
A summary of the number of common shares reserved pursuant to the Company’s outstanding share purchase
warrants as at September 30, 2007 and December 31, 2006 and the changes for those periods is as follows:
2007 2006
Balance, beginning of period 3,786,550 14,500,000
Compensation warrants - -
Placement agent warrants - 3,546,250
Warrants exercised (1,268,400) (14,259,700)
Balance, end of period 2,518,150 3,786,550
Common shares reserved for share purchase warrants outstanding at September 30, 2007, are as follows:
Number of Shares Exercise Price Expiry Date
1,281,900 $1.12 (CDN$1.30) March 14, 2008
1,236,250 $3.12 (CDN$3.50) August 10, 2008
2,518,150
FALCON OIL & GAS LTD.
(A Development Stage Company)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007
(UNAUDITED)
11
NOTE 7 – SHARE BASED COMPENSATION
The Company, in accordance with the policies of the TSX-V, may grant options to directors, officers, employees
and consultants, to acquire up to 10% of the Company’s issued and outstanding common stock. The exercise price
of each option is based on the market price of the Company’s stock at the date of grant less a discount in
accordance with TSX-V policies. The options can be granted for a maximum term of five years. The Company
records compensation expense over the vesting period based on the fair value of options granted. These amounts
are recorded as contributed surplus. Any consideration paid by employees, directors or consultants on the exercise
of these options is recorded as share capital together with the related contributed surplus associated with the
exercised options.
A summary of the status of the Company's stock option plan as of September 30, 2007 and December 31, 2006,
and changes during the periods ending on those dates is presented below:
2007 2006
Options Weighted-
Average
Exercise Price
Options Weighted-Average
Exercise Price
Outstanding at beginning of period
37,840,000 $1.91 27,100,000 $0.27
Options granted 600,000 $0.54 18,490,000 3.62
Options exercised (650,000) $0.25 (7,750,000) 0.25
Options cancelled - - - 0.00
Outstanding at end of period 37,790,000 $1.92 37,840,000 $1.91
Options exercisable at end of period
25,059,400 $1.15 23,048,000 $0.82
The following summarizes information about stock options outstanding and exercisable at September 30, 2007:
Options
Outstanding
Options
Exercisable
Exercise
price
Weighted average
remaining
contractual life Expiry date
16,200,000 16,200,000 $0.25 2.51 years April 2, 2010
2,500,000 2,500,000 0.50 3.06 years October 10, 2010
12,707,000 5,082,800 3.98 3.60 years May 7, 2011
5,783,000 1,156,600 2.83 4.19 years December 9, 2011
600,000 120,000 0.54 4.88 years August 17, 2012
37,790,000 25,059,400
At September 30, 2007, the weighted average remaining contractual life of stock options outstanding is 3.21 years.
The weighted average fair value of the options granted during 2007 is $0.29 (2006 - $1.92).
The Company measures compensation costs using the fair value-based method for employee and non-employee
stock options. Compensation costs have been determined based on the fair value of the options at the grant date,
for employees, and at the balance sheet for non-employees using the Black-Scholes option-pricing model. The
following assumptions were used at September 30, 2007 in respect of non-employee stock options: expected term-
1.6 to 3.46 years; risk free interest rate – 4.0% to 4.5%; expected volatility-67.9% to 70.5%; and dividend yield –
0.
FALCON OIL & GAS LTD.
(A Development Stage Company)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007
(UNAUDITED)
12
NOTE 7 – SHARE BASED COMPENSATION (CONTINUED)
Stock based compensation expense for the nine months ended September 30, 2007 of $2,507,916 (2006-
$7,629,467) was recorded in the statement of operations.
Option-pricing models require the use of estimates and assumptions including the expected volatility of the
Company’s share price, the expected life of the option and the risk free interest rate. Changes in the underlying
assumptions can materially affect the fair value estimates.
NOTE 8 – RELATED PARTY TRANSACTIONS
Unless otherwise stated, transactions between related parties are measured at the exchange amount, being the
amount of consideration agreed to between the parties.
During the nine months ended September 30, 2007, the Company incurred $135,000 (2006-$135,000) to a current
director of the Company for advisory and consulting services rendered to TXM; and paid nil (2006-$41,341) in
consulting fees to a former director of the Company. In June 2006, the Company entered into an Office Sharing
Agreement with PetroHunter Energy Corporation (“PetroHunter”) for office space in Denver, Colorado, of which
the Company is the lessee. Under the terms of the agreement, PetroHunter and the Company share, on an
equivalent employee basis, all costs related to the office space, including rent, office operating costs, furniture and
equipment and any other expenses related to the operations of the corporate offices. Certain employees of
PetroHunter have provided services to the Company, and PetroHunter has invoiced the Company for these services
at cost. The largest single shareholder of PetroHunter is also the President and CEO of the Company. At
September 30, 2007, PetroHunter owed the Company $498,401 (2006-$89,592 Due to PetroHunter) for its share
of net costs incurred.
In August 2007, the Company granted options to purchase 600,000 shares of the Company’s common stock, at an
exercise price of $0.54 ($0.58 CDN) per share to a consultant to the Company, who was subsequently elected to
the Board of Directors.
NOTE 9 – SEGMENT INFORMATION
All of the Company’s operations are in the petroleum and natural gas industry with its principal business activity
being in the acquisition and development of petroleum and natural gas properties. The Company has producing
petroleum and natural gas properties located in Canada and considers the results from its operations to relate to the
petroleum and natural gas properties. The Company has unevaluated petroleum and natural gas properties in
Hungary and Romania. An analysis of the Company’s geographic areas at September 30, 2007 and 2006 is as
follows:
2007 Canada Hungary Romania Total
Revenue for the period
$ 52,952
$ 109,494
$ -
$ 162,446
Loss (income) for the period (3,021,048) 9,459,866 757,811 7,196,629
Capital assets 545,605 239,027,619 - 239,573,224
2006
Revenue for the period
$ 77,388
$ -
$ -
$ 77,388
Loss for the period 7,358,056 2,551,869 - 9,909,925
Capital assets 366,044 78,473,694 1,089,686 79,929,424
FALCON OIL & GAS LTD.
(A Development Stage Company)
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007
(UNAUDITED)
13
NOTE 10 – COMMITMENTS AND CONTINGENCIES
(a) ENVIRONMENTAL
Petroleum and natural gas producing activities are subject to extensive environmental laws and regulations.
These laws, which are constantly changing, regulate the discharge of materials into the environment and may
require the Company to remove or mitigate the environmental effects of the disposal or release of petroleum or
chemical substances at various sites. Environmental expenditures are expensed or capitalized depending on
their future economic benefit. Expenditures that relate to an existing condition caused by past operations and
that have no future economic benefit are expensed. Liabilities for expenditures of a non-capital nature are
recorded when environmental assessment and/or remediation is probable, and the costs can be reasonably
estimated.
(b) CONTINGENCIES
The Company may from time to time be involved in various claims, lawsuits, disputes with third parties, actions
involving allegations of discrimination, or breach of contract incidental to the operations of its business. The
Company is not currently involved in any such incidental litigation which it believes could have a materially
adverse effect on its financial condition or results of operations.
(c) DRILLING CONTRACTS
In June 2005, the Company entered into drilling contracts with CROSCO Integrated Drilling and Well Services
Company, Ltd. (CROSCO) for two drilling rigs on its Hungarian properties. The Company has issued two letters
of credit in the amount of $800,000 and $2,340,000 to secure the contracts.
NOTE 11 - SUBSEQUENT EVENT
As of November 22, 2007, the Company had arranged for an equity financing pursuant to a (preliminary) short
form prospectus dated November 21, 2007 (the “Proposed Offering”). Under the terms of the financing, a
syndicate of underwriters (the “Underwriters”) agreed to purchase an aggregate of 100,000,000 common
shares at a price of CDN$0.40 per share (the “Offering Price”) for aggregate gross proceeds of
CDN$40,000,000. Additionally, the Underwriters were granted an over-allotment option (the “Over-Allotment
Option”) to purchase up to an additional 15,000,000 common shares exercisable up to 30 days following the
closing of the Proposed Offering (the “Closing Date”). The underwriters will receive a cash commission of 6%
of the gross proceeds (CDN$2,400,000) and warrants to purchase, at the Offering Price, 6% of the number of
common shares sold pursuant to the Proposed Offering for a period of 24 months from the Closing Date,
including those issued pursuant to the over-Allotment Option. Closing is expected to occur on or about
December 11, 2007, and is subject to certain conditions, including but not limited to, receipt of all necessary
securities regulatory approvals, including the approval of the TSX Venture Exchange.
Falcon Oil 100-million-share prospectus offering

2007-12-14 17:09 ET - Prospectus Approved

Effective Dec. 10, 2007, the company's prospectus dated Dec. 10, 2007, was filed with and accepted by the TSX Venture Exchange, and filed with and receipted by the securities commissions in each of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador, pursuant to the provisions of their respective securities acts.

Underwriters: Macquarie Capital Markets Canada Ltd. and Evergreen Capital Partners Inc.

Offering: 100 million common shares

Share price: 40 cents per share

Agents' warrants: 6 per cent of the total shares sold pursuant to the offering, including those sold upon exercise of the overallotment option, if any. Each warrant shall be exercisable to purchase one share at 40 cents per share for 24 months following the closing date.

Agents' fees: 6 per cent of the gross proceeds of the offering

Overallotment option: The agents may overallot the shares in connection with this offering and the company has granted to the agents an option to arrange for the sale of up to an additional 15 million common shares at 40 cents per share, at any time up to 30 days after the closing of the offering.

Falcon Oil & Gas Ltd
Symbol FO
Shares Issued 464,499,163
Close 2007-12-14 C$ 0.37
Falcon Oil & Gas Ltd. Completes $40,000,000 Equity Financing
BUDAPEST, Hungary, Dec. 17, 2007 (Canada NewsWire via COMTEX) -- (Canada NewsWire)

Falcon Oil & Gas Ltd. (TSXV: FO) ("Falcon" or the "Company") is pleased to announce that it has completed today its previously announced public offering (the "Offering") of 100,000,000 common shares in the capital of the Company (the "Common Shares") at $0.40 per Common Share (the "Issue Price") for aggregate gross proceeds of $40,000,000.

The Offering was completed by a syndicate of underwriters led by Macquarie Capital Markets Canada Ltd., which included Evergreen Capital Partners Inc. (collectively, the "Underwriters").

The Company intends to use the net proceeds from the Offering for completion and testing of three of its existing wells (Mako-4, Mako-6, and Mako-7), which the Company previously drilled in the Mako Trough on its licenses in Hungary, and for general working capital purposes.

In connection with the Offering, the Company also granted the Underwriters an over-allotment option, exercisable in whole or in part in the sole discretion of the Underwriters at any time until January 17, 2008, to arrange for the sale of up to an additional 15,000,000 Common Shares at the Issue Price to cover over-allotments, if any, and for market stabilization purposes.

The Common Shares have not been and will not be registered under the United States Securities Act of 1933, as amended (the "1933 Act"), and may not be offered or sold in the United States or to U.S. Persons (as defined in Regulation S under the 1933 Act) except in accordance with an exemption from the registration requirements of the 1933 Act and applicable state securities laws. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.
Falcon Oil & Gas Ltd. Enters Into Production and Development Agreement With ExxonMobil on Falcon's Project in Hungary
4/10/2008 8:40:00 PM (PR Newswire)

DENVER, April 10 /PRNewswire-FirstCall/ -- Falcon Oil & Gas Ltd. (TSXV: FO, "Falcon") announced today that it and its wholly owned subsidiary, TXM Exploration and Production LLC, have entered into a Production and Development Agreement with Exxon Mobil Corporation affiliate Esso Exploration International Limited (ExxonMobil) under which Falcon and ExxonMobil will become joint owners in a specified portion (the "Contract Area") of Falcon's long-term production license (the "Production License") in the Mako Trough, Hungary. ExxonMobil will operate the Contract Area.

(Photo: http://www.newscom.com/cgi-bin/prnh/20080410/NYTH137)


The Contract Area consists of approximately 184,300 acres, or 75% of Falcon's 246,000-acre Production License. The Contract Area will be owned jointly, with Falcon owning a 33% undivided working interest and ExxonMobil owning a 67% undivided working interest. The Agreement is effective today.

Falcon's Chairman and CEO, Marc A. Bruner, stated, "This agreement is a milestone in Falcon's history and is the culmination of Falcon's extensive efforts, announced on June 27, 2007, to find a strategic partner to support and enhance Falcon's exploration and development efforts on Falcon's long-term Production License. We are very pleased that we were able to reach agreement with ExxonMobil, a company which brings to the table all the financial, technical and operating expertise necessary to pursue the completions, testing and evaluation of this resource, and then to maximize value if we are able to commercialize this opportunity."

The Agreement provides for an initial consideration of US$25 million to Falcon and for ExxonMobil to spend US$50 million to conduct an Initial Work Program to test one or more of Falcon's existing wellbores or drill one or more new wells for such tests. Field operations under the Initial Work Program are scheduled to commence this year. After the Initial Work Program is completed and if ExxonMobil elects to proceed to the next phase (the "Appraisal Work Program"), it will pay Falcon an additional US$50 million and will expend US$100 million on the Appraisal Work Program. If ExxonMobil elects not to proceed beyond the Initial Work Program, it will relinquish and reassign to Falcon all of ExxonMobil's interest in the Contract Area. After the Appraisal Work Program is completed, ExxonMobil will pay Falcon an additional US$75 million if it elects to proceed to the next phase (the "Development Program") or it will reassign its interest to Falcon, subject to the terms of the Agreement.

Falcon will incur no development costs within the Contract Area for ExxonMobil's commitments during the Initial Work Program or the Appraisal Work Program. Beginning with the Development Program, Falcon and ExxonMobil would each receive revenues and be responsible for its proportionate share of expenses within the Contract Area (that is, 33% Falcon and 67% ExxonMobil), under a joint operating agreement.

ExxonMobil has the right to assign half its interest to MOL, a publicly traded Hungarian oil and gas company.

In addition to Falcon's 33% undivided ownership in the ExxonMobil-operated Contract Area, Falcon will remain sole owner and operator of 391,445 acres outside the Contract Area boundaries, as well as shallow rights covering 184,336 acres within the Contract Area, as follows:

-- Falcon Lands: Falcon retains 100% ownership in the remaining 25% (61,445 acres) of the Production License that is not part of the Contract Area.

-- Exploration Licenses: Falcon retains 100% ownership in 330,000 acres which are outside the boundaries of the Production License, under the original Mako Exploration License and original Tisza Exploration License. Falcon also retains 100% ownership in the portions of the Exploration Licenses which are above 2,800 meters within the boundaries of the Production License. The 330,000-acre area outside the Production License, and the shallower depths are not part of the Production License.

The Contract Area, Falcon Lands, and Exploration Licenses are shown on the attached map.

Regarding Falcon's retained acreage, Mr. Bruner stated, "We see significant upside potential within the large portion of the Mako Trough where Falcon still owns 100%, and we intend to continue to evaluate and pursue opportunities simultaneously with ExxonMobil's operations."

BMO Capital Markets has acted as exclusive financial advisor to Falcon with respect to the Transaction.

Falcon to Host Investor Conference Call

Falcon will host an investor conference call beginning at 9:00 a.m. (Eastern Time), Friday, April 11, 2008. The conference call will be available live via telephone. To participate in the conference call within the U.S. and Canada, dial (866) 688-0039. To participate in the conference internationally, dial +1 (706) 679-3130. The conference code is 43449303. The conference call will also be broadcast live on the Internet and may be accessed at www.falconoilandgas.com.

The conference call will be available for replay via telephone beginning approximately two hours following the conclusion of the live call. To listen to a replay of the conference within the U.S. and Canada, dial (800) 642-1687 or internationally +1 (706) 645-9291. The replay code is 43449303.

About Falcon Oil & Gas Ltd.

Falcon Oil & Gas Ltd. is a British Columbia corporation which is in the business of oil and gas exploration and production. It has operations in Hungary through its wholly-owned subsidiary TXM Exploration and Production, LLC, and in Romania through its wholly-owned subsidiary JVX Energy Corporation. Further information about Falcon is available at www.falconoilandgas.com.

For information about ExxonMobil, please go to ExxonMobil.com.

Falcon Oil and Gas Ltd. Investor and Public Relations:
Alexander Hubbard-Ford
+1 303-983-1800

In the interests of providing Company shareholders and potential investors with information regarding the Company, including the Company's assessment of its and its subsidiaries' future plans and operations, certain statements included in this press release may constitute forward-looking information or forward looking statements (collectively, "forward-looking statements"). All statements contained herein that are not clearly historical in nature are forward-looking, and the words "anticipate", "believe", "expect", "estimate" and similar expressions are generally intended to identify forward-looking statements. Similarly, forward-looking statements in this press release include, but are not limited to anticipated developments of the Company's drilling project in Hungary and the timing thereof, the Company's drilling project in Romania and the timing thereof, capital investment levels and the allocation thereof, pipeline capacity, government royalty rates, reserve and resources estimates, the level of expenditures for compliance with environmental regulations, site restoration costs including abandonment and reclamation costs, exploration plans, acquisition and disposition plans including farmout plans, net cash flows, geographic expansion and plans for seismic surveys. In addition, please note that statements relating to "reserves" or "resources" are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves and resources described can be profitably produced in the future. Such statements represent the Company's internal projections, estimates or beliefs concerning, among other things, an outlook on the estimated amounts and timing of capital expenditures, anticipated future debt levels and incentive fees or revenues or other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance. These statements are only predictions. Actual events or results may differ materially. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievement since such expectations are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause the Company's actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, the Company and the foregoing list of important factors is not exhaustive. These forward-looking statements made as of the date hereof disclaim any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise. Company shareholders and potential investors should carefully consider the information contained in the Company's filings with Canadian securities administrators at www.sedar.com before making investment decisions with regard to the Company.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Source: Falcon Oil & Gas Ltd. www.falconoilandgas.com
FALCON OIL & GAS LTD. ENTERS INTO PRODUCTION AND DEVELOPMENT AGREEMENT

FOR IMMEDIATE RELEASE

DENVER, April 10, 2008 – Falcon Oil & Gas Ltd. (TSXV: FO, “Falcon”)
announced today that it and its wholly owned
subsidiary, TXM Exploration and Production LLC, have entered into a
Production and Development Agreement with
Exxon Mobil Corporation affiliate Esso Exploration International
Limited (ExxonMobil) under which Falcon and
ExxonMobil will become joint owners in a specified portion (the
“Contract Area”) of Falcon’s long-term production
license (the “Production License”) in the Mako Trough, Hungary.
ExxonMobil will operate the Contract Area.

The Contract Area consists of approximately 184,300 acres, or 75% of
Falcon’s 246,000-acre Production License. The
Contract Area will be owned jointly, with Falcon owning a 33%
undivided working interest and ExxonMobil owning a
67% undivided working interest. The Agreement is effective today.

Falcon’s Chairman and CEO, Marc A. Bruner, stated, “This agreement is
a milestone in Falcon’s history and is the
culmination of Falcon’s extensive efforts, announced on June 27, 2007,
to find a strategic partner to support and enhance
Falcon’s exploration and development efforts on Falcon’s long-term
Production License. We are very pleased that we
were able to reach agreement with ExxonMobil, a company which brings
to the table all the financial, technical and
operating expertise necessary to pursue the completions, testing and
evaluation of this resource, and then to maximize
value if we are able to commercialize this opportunity.”

The Agreement provides for an initial consideration of US$25 million
to Falcon and for ExxonMobil to spend US$50
million to conduct an Initial Work Program to test one or more of
Falcon’s existing wellbores or drill one or more new
wells for such tests. Field operations under the Initial Work Program
are scheduled to commence this year. After the
Initial Work Program is completed and if ExxonMobil elects to proceed
to the next phase (the “Appraisal Work
Program”), it will pay Falcon an additional US$50 million and will
expend US$100 million on the Appraisal Work
Program. If ExxonMobil elects not to proceed beyond the Initial Work
Program, it will relinquish and reassign to Falcon
all of ExxonMobil’s interest in the Contract Area. After the Appraisal
Work Program is completed, ExxonMobil will pay
Falcon an additional US$75 million if it elects to proceed to the next
phase (the “Development Program”) or it will
reassign its interest to Falcon, subject to the terms of the
Agreement.

Falcon will incur no development costs within the Contract Area for
ExxonMobil’s commitments during the Initial Work
Program or the Appraisal Work Program. Beginning with the Development
Program, Falcon and ExxonMobil would each receive revenues and be
responsible for its proportionate share of expenses within the
Contract Area (that is, 33%
Falcon and 67% ExxonMobil), under a joint operating agreement.
ExxonMobil has the right to assign half its interest to MOL, a
publicly traded Hungarian oil and gas company.

In addition to Falcon’s 33% undivided ownership in the
ExxonMobil-operated Contract Area, Falcon will remain sole
owner and operator of 391,445 acres outside the Contract Area
boundaries, as well as shallow rights covering 184,336
acres within the Contract Area, as follows:
• Falcon Lands: Falcon retains 100% ownership in the remaining 25%
(61,445 acres) of the Production
License that is not part of the Contract Area.
• Exploration Licenses: Falcon retains 100% ownership in 330,000 acres
which are outside the boundaries of
the Production License, under the original Mako Exploration License
and original Tisza Exploration License.
Falcon also retains 100% ownership in the portions of the Exploration
Licenses which are above 2,800 meters
within the boundaries of the Production License. The 330,000-acre area
outside the Production License, and
the shallower depths are not part of the Production License.
The Contract Area, Falcon Lands, and Exploration Licenses are shown on
the attached map.

Regarding Falcon’s retained acreage, Mr. Bruner stated, “We see
significant upside potential within the large portion of
the Mako Trough where Falcon still owns 100%, and we intend to
continue to evaluate and pursue opportunities
simultaneously with ExxonMobil’s operations.”

BMO Capital Markets has acted as exclusive financial advisor to Falcon
with respect to the Transaction.

Falcon to Host Investor Conference Call
Falcon will host an investor conference call beginning at 9:00 a.m.
(Eastern Time), Friday, April 11, 2008. The
conference call will be available live via telephone. To participate
in the conference call within the U.S. and Canada, dial
(866) 688-0039. To participate in the conference internationally, dial
+1 (706) 679-3130. The conference code is
43449303. The conference call will also be broadcast live on the
Internet and may be accessed at
www.falconoilandgas.com.
The conference call will be available for replay via telephone
beginning approximately two hours following the
conclusion of the live call. To listen to a replay of the conference
within the U.S. and Canada, dial (800) 642-1687 or
internationally +1 (706) 645-9291. The replay code is 43449303.
About Falcon Oil & Gas Ltd.

Falcon Oil & Gas Ltd. is a British Columbia corporation which is in
the business of oil and gas exploration and
production. It has operations in Hungary through its wholly-owned
subsidiary TXM Exploration and Production, LLC,
and in Romania through its wholly-owned subsidiary JVX Energy
Corporation. Further information about Falcon is
available at www.falconoilandgas.com.

For information about ExxonMobil, please go to ExxonMobil.com.
Falcon Oil and Gas Ltd. Investor and Public Relations:
Alexander Hubbard-Ford
+1 303-983-1800

In the interests of providing Company shareholders and potential
investors with information regarding the
Company, including the Company’s assessment of its and its
subsidiaries’ future plans and operations, certain
statements included in this press release may constitute
forward-looking information or forward looking
statements (collectively, “forward-looking statements”). All
statements contained herein that are not clearly
historical in nature are forward-looking, and the words “anticipate”,
“believe”, “expect”, “estimate” and
similar expressions are generally intended to identify forward-looking
statements. Similarly, forward-looking
statements in this press release include, but are not limited to
anticipated developments of the Company’s
drilling project in Hungary and the timing thereof, the Company’s
drilling project in Romania and the timing
thereof, capital investment levels and the allocation thereof,
pipeline capacity, government royalty rates,
reserve and resources estimates, the level of expenditures for
compliance with environmental regulations, site
restoration costs including abandonment and reclamation costs,
exploration plans, acquisition and disposition
plans including farmout plans, net cash flows, geographic expansion
and plans for seismic surveys. In addition,
please note that statements relating to “reserves” or “resources” are
deemed to be forward-looking statements,
as they involve the implied assessment, based on certain estimates and
assumptions, that the reserves and
resources described can be profitably produced in the future. Such
statements represent the Company’s internal
projections, estimates or beliefs concerning, among other things, an
outlook on the estimated amounts and
timing of capital expenditures, anticipated future debt levels and
incentive fees or revenues or other
expectations, beliefs, plans, objectives, assumptions, intentions or
statements about future events or
performance. These statements are only predictions. Actual events or
results may differ materially. Although the
Company believes that the expectations reflected in the
forward-looking statements are reasonable, it cannot
guarantee future results, levels of activity, performance or
achievement since such expectations are inherently
subject to significant business, economic, competitive, political and
social uncertainties and contingencies.
Many factors could cause the Company’s actual results to differ
materially from those expressed or implied in
any forward-looking statements made by, or on behalf of, the Company
and the foregoing list of important
factors is not exhaustive. These forward-looking statements made as of
the date hereof disclaim any intent or
obligation to update publicly any forward-looking statements, whether
as a result of new information, future
events or results or otherwise. Company shareholders and potential
investors should carefully consider the
information contained in the Company’s filings with Canadian
securities administrators at www.sedar.com
before making investment decisions with regard to the Company.
The TSX Venture Exchange does not accept responsibility for the
adequacy or accuracy of this release.




**********************************************************************
http://cts.vresp.com/c/?FalconOilGas/00a4b52456/4bcd9cf88e/e…

**********************************************************************
Paste url into browser for map image:

http://www.falconoilandgas.com/releases/2_27_08.pdf


______________________________________________________________________
If you no longer wish to receive these emails, please reply to this
message with "Unsubscribe" in the subject line or simply click on the
following link:
http://cts.vresp.com/u?00a4b52456/4bcd9cf88e/e88f5b4

______________________________________________________________________
This message was sent by Falcon Oil & Gas

Falcon Oil & Gas
1075 South Boulder Rd., #205
Louisville, Colorado 80027
Falcon Oil & Gas estimates Mako gas at 25.8 tcf


2008-05-05 11:30 ET - News Release

Mr. Alexander Hubbard-Ford reports

FALCON & GAS LTD. RECEIVES AN UPDATED INDEPENDENT RESOURCE ASSESSMENT FROM RPS SCOTIA FOR ITS MAKO TROUGH DEEP GAS PROJECT IN HUNGARY

Falcon Oil & Gas Ltd. has received a new, updated, independent report from RPS Scotia disclosing an updated resource estimate of the Mako trough Pannonian basin gas accumulation within the production licence area of Falcon's deep gas exploration project in southeastern Hungary.

The RPS Scotia report is compliant with National Instrument 51-101 "Standards of Disclosure for Oil and Gas Activities."

The RPS Scotia report on the resource of the Mako trough describes a probabilistic distribution of the potentially recoverable portion of contingent resources, as defined by the Canadian Oil and Gas Evaluation Handbook, and does not represent an estimate of reserves.

Based on all available data, RPS Scotia has assigned the probabilistic estimation shown in the table of potentially recoverable contingent resources in the Szolnok formation, the Lower Endrod, the Basal conglomerate and the Synrift sequence. The RPS Scotia report measures the Mako trough in trillions of cubic feet and millions of barrel oil.


Probability greater than
P90 (90%) P50 (50%) P10 (10%)

Probabilistic estimation
of potentially recoverable
contingent resources 25.8 Tcf 43.9 Tcf 68 Tcf
42.6 mmbo 97.8 mmbo 202.7 mmbo


We seek Safe Harbor.


Beitrag zu dieser Diskussion schreiben


Es handelt sich hier um einen ältere Diskussionen, daher ist das Schreiben in dieser Diskussion nicht mehr möglich. Bitte eröffnen Sie hier ein neue Diskussion.