something big brewing, page-5

UP DATE FOR Falcon in relation to being free carried


Beetaloo Basin, NT Australia, which are held 100% by Falcon Oil & Gas Australia Limited, a 73% owned subsidiary of Falcon.

Summary

Hess increases its capital expenditure on the 2D seismic program from US$40m to an anticipated US$57.5m
1,200km of the targeted 3,600km 2D seismic acquired to date
Two seismic crews acquiring 25km of 2D seismic per day should put Hess on target to complete seismic program by year end


Falcon remains fully carried on the entire 2D seismic program

Hess must exercise its option to elect to drill five exploration wells no later than 30th June 2013 to earn 62.5%

Falcon fully carried for its 37.5% of the five well exploration program

Additional carry - Falcon will be fully carried on the first US$10MM gross cost of the first development well
The additional carry and the later drilling election date are contingent on obtaining Northern Territory Department of Resources (DoR) approval for a 12 month extension of the Permits until 31 December 2013

Discussions with third parties are ongoing on the farm-out of EP99 and the Shenandoah well area
2D Seismic Program

Hess commenced the 2D seismic program on EP's 76, 98 and 117 in 2011 pursuant to its obligations under the Participation Agreement with Falcon (as outlined in Falcon's release on 2 May 2011).

However, due to unseasonably early and heavier rainfalls than normal, Hess acquired 470km of the 3,600km in 2011 and an additional 630km to date in 2012.

[ Way to go my veiw below]


Hess has now deployed two seismic crews, Western Geco and Terrex, in the Beetaloo Basin.

At the current "run rate" of 25km of 2D seismic per day, Hess should be on target to complete the acquisition of the entire 3,600km before the end of 2012 and has increased its capital expenditure to the program from US$40m to an anticipated US$57.5m. Falcon remains fully carried throughout the seismic program.

Exploration Drilling Phase

Hess has until 30th June 2013 to commit to the drilling of five exploration wells on EP's 76, 98 and 117 to earn 62.5% in the exploration permits. This is a revised date agreed with Falcon which will allow Hess adequate time to complete the acquisition and processing of the 3,600km of 2D seismic.

Should Hess commit to the drilling of the exploration wells, Falcon's interest in EP's 76, 98 and 117 will reduce to 37.5%, but Falcon will be fully carried through the drilling of all five wells.

Development Drilling Phase

In addition to carrying Falcon on the five well exploration program, should Hess elect to proceed to the "development phase", Hess has also agreed to carry Falcon, on the first development well, up to a gross cost of US$10m.

EP99 and Shenandoah Well Area

Falcon retains 100% of EP99 and the 100,000 acres surrounding the Shenandoah well area, a well completed and tested in 2011. The Company has received expressions of interest from a number of third parties regarding a farm-out on the combined area measuring approx. 670,000 acres. Further updates to the market will be issued in due course.

Philip O'Quigley, CEO of Falcon commented:

"Today's operational update is very significant in many respects. The anticipated increase in financial and technical resources being deployed for the seismic program under Falcon's Participation Agreement with Hess in the Beetaloo, demonstrates commitment to our Permits in the Beetaloo Basin.

We remain optimistic for a positive election by Hess to commit to drilling the five exploration wells which would leave Falcon fully carried through that entire programme. In addition,

we are encouraged by the number of approaches we have received from third parties to farm-in to the combined EP99 and Shenandoah well acreage and will update shareholders in due course."