Quick review of the Farm Out Agreement worth an estimated $200 million to Falcon. Great potential little risk.
Falcon Oil & Gas Ltd
Completion of Australian Beetaloo Basin Farm-out
And
Commencement of Nine well exploration and appraisal program
21 August 2014 - Falcon Oil & Gas Ltd. (TSXV: FO, AIM: FOG, ESM: FAC) (the “Company”) is pleased
to announce, that further to its press release of 2 May 2014, its 98% subsidiary, Falcon Oil & Gas
Australia Ltd (“Falcon”), has completed its Farm-Out Agreement and Joint Operating Agreement
(collectively “the Agreements”) with Origin Energy Resources Limited, a subsidiary of Origin Energy
Limited (“Origin”) and Sasol Petroleum Australia Limited, a subsidiary of Sasol Limited (“Sasol”),
(collectively referred to herein as the “Farminees”), each farming into 35% of Falcon’s Exploration
Permits in the Beetaloo Basin, Australia (the “Permits”).
Key transaction details are:
 Falcon retains a 30% interest in the Permits.
 Falcon has received A$20 million cash from the Farminees.
 Origin is appointed as Operator with immediate effect.
 Farminees to carry Falcon in a nine well exploration and appraisal program over the next
four years, detailed as follows:
o 3 vertical exploration/stratigraphic wells and core studies;
o 1 hydraulic fracture stimulated vertical exploration well and core study;
o 1 hydraulic fracture stimulated horizontal exploration well, commercial study and 3C
resource assessment; and
o 4 hydraulic fracture stimulated horizontal exploration/appraisal wells, micro-seismic and
90 day production tests.
 Drilling/testing specifically targeted to take the project towards commerciality.
 Farminees will pay for the full cost of completing the first five wells estimated at A$64
million, and will fund any cost overruns. This drilling programme will commence by mid
2015.
 Farminees to pay up to the full cost of the next four horizontally fracture stimulated wells,
90 day production tests and micro seismic with a capped expenditure up to A$101 million,
any cost overrun funded by each Party in proportion to their working interest.
 As part of the agreements to reduce the overriding royalties from what was originally 12% to
1%, Farminees will pay their pro-rata share (US$14 million (approx. A$15 million)) of the two
five year call options entered into by Falcon as part of agreements announced on 1
November 2013 with CR Innovations AG and 17 December 2013 with the TOG Group, should
Farminees and Falcon decide to exercise the call options.
 Farminees may reduce or surrender their interests back to Falcon only after:
o the drilling of the first five wells or
o the drilling and testing of the next two horizontally fracture stimulated wells.
Philip O’Quigley, CEO of Falcon commented:
“I am delighted to announce we have completed the Agreements with Origin and Sasol for our
transformational Farm-out of our Beetaloo acreage. Together with A$20 million cash up front, the
deal is worth up to approximately A$200 million to Falcon. We look forward to the immediate
commencement of the nine well exploration and appraisal program.”