Falcon Prepares for Australia's Beetaloo Basin Drilling & Testing Program

Ireland's Falcon Oil & Gas Ltd. provided Wednesday the following operational update for its operations in Australia, South Africa and Hungary.

Operational Highlights

  • Preparations for 2016 Beetaloo Basin, Australia, drilling program at an advanced stage
  • Drilling locations being finalized for the two new vertical wells following technical evaluation undertaken by Origin, Sasol and Falcon
  • Well locations to penetrate condensate rich gas mature through to dry gas mature sections of the Middle Velkerri shale
  • Drilling expected to start 2Q 2016
  • Rig 185 remains “warm stacked” in the Beetaloo basin
  • Tendering and contracting for hydraulic stimulation and key well services ongoing

Financial Highlights

  • $3.7 million cash settlement agreed with NIS - received in December 2015
  • $12.7 million (unaudited) in cash and cash on deposit at Dec. 31, 2015

Australia – 2016 Drilling & Testing Preparations Underway in the Beetaloo Basin

Preparations are underway for the Group’s 2016 Beetaloo drilling and testing program in Northern Territory, comprising:

  • civil construction, the remobilization of Rig 185 and the drilling of Beetaloo W-1, a vertical well in exploration permit (EP) 117 approximately 53 miles (85 kilometers) south of the wells drilled in 2015
  • the drilling of a second vertical well, the location of which is being finalized and the hydraulic stimulation of either this well or the Beetaloo W-1 well; and
  • the re-entry and hydraulic stimulation of Amungee NW-1H in EP98 - This well was drilled in November 2015 to a total measured depth of 12,493 feet (3,808 meters), including 3,609 feet (1,100 meters) horizontal section in the “B Shale” interval of the Middle Velkerri Formation, 328 feet (100 meters) more than originally planned

The principal objectives of the 2016 drilling program are to:

  • test gas productivity of the Middle Velkerri shale by means of multi stage hydraulic stimulation
  • further determine the areal extent of the Middle Velkerri shale
  • determine the levels of gas saturation in the southern section of the basin; and
  • explore the shallower, oil prone sections of the Middle Velkerri shale

South Africa – Processing of the Exploration License by the Petroleum Agency of South Africa (PASA) Continues to Progress

The PASA recently confirmed that it expects to finalize a recommendation to the Minister of Mineral Resources on Falcon’s application for a shale gas exploration license in South Africa’s Karoo Basin, by May 2016. The Company expects that the Minister of Mineral Resources will issue Falcon with a license to explore for shale gas in 2016.

Background

Falcon was granted a Technical Cooperation Permit in 2009 covering 7.5 million acres (30,327 square kilometers) in the southern part of the Karoo Basin. The Company has a cooperation agreement (as announced on Dec. 12, 2012) with Chevron Business Development South Africa Limited (Chevron), which enables the Group to work with Chevron for a period of five years in jointly obtaining exploration licenses.

Hungary – Review of Operations

Falcon continues to review its operation and future plans in Hungary, evaluating all options available to the Group to deliver shareholder value. The Group maintains its 100 percent interest in the Mako Trough.

Broker Update

Following the closure of the London office of GMP Securities Europe LLP, engagement with GMP Securities Europe LLP, Falcon’s joint broker has now ended.

Philip O’Quigley, CEO of Falcon commented:

“We are delighted to report that preparations for the 2016 Beetaloo drilling and testing program are underway. Our shareholders can look forward to another exciting year of exploration activity which has the potential to transform the value of the company. Falcon remains fully carried throughout by our partners Origin and Sasol.”

“Also, we welcome the recent confirmation by the PASA and are optimistic on securing a shale gas exploration license in South Africa’s Karoo Basin in 2016.”

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