2012-09-07 14:28 ET - News Release

Mr. Philip O'Quigley reports

SOUTH AFRICA LIFTS THE MORATORIUM ON SHALE GAS EXPLORATION

Falcon Oil & Gas Ltd. has learned the government of South Africa lifted the moratorium on shale gas exploration on Sept. 7, 2012.

Falcon holds a 100-per-cent interest in a 7.5-million-acre technical co-operation permit in the Southwest Karoo basin which was granted in October, 2009. In January, 2011, Falcon submitted an application for an exploration right covering the same area. With the lifting of the moratorium, Falcon is now looking forward to feedback from the licensing authority regarding its application before the end of the year.

The Karoo basin, which measures 600,000 square kilometres, is located in central and southern South Africa, and contains thick, organic rich shales such as the Permian Whitehill formation. The United States Energy Information Administration's April, 2011, report, "World Shale Gas Resources: An Initial Assessment," estimated that there is 485 trillion cubic feet of technically recoverable shale gas resources in South Africa's Karoo basin.

Philip O'Quigley, chief executive officer of Falcon, commented, "Falcon welcomes the decision taken by the government of South Africa today to lift the moratorium on shale gas exploration in the Karoo basin, and looks forward to the finalization of its exploration right application and the subsequent commencement with the preparations of the exploration area for the exploration activities."