Falcon Partner Spuds Second Well in Hungary

Junior explorer Falcon Oil & Gas announced Friday that its partner, Gazprom Neft subsidiary Naftna Industrija Srbije (NIS), has spud its second well in a three-well exploration campaign onshore Hungary.

The Besa-D-1 well is being drilled to evaluate the gas potential of the Algyo Formation at a depth of approximately 9,840 feet in the Mako Trough.

However, results from testing of the first completed well in the campaign – Kutvolgy-1 – showed that, although the well experienced some recovery from certain intervals, production did not meet commercial rates. Consequently, testing of Kutvolgy-1 has been discontinued and the well will be plugged and abandoned.

As well as drilling Besa-D-1, NIS will continue to study the hydrocarbon potential of the entire Mako Trough, including the Deep Mako play.

Falcon is fully carried as all costs associated with its three-well drilling program in Hungary are funded by NIS.

At the start of May, Falcon announced a farm-out of its Beetaloo acreage in Australia's Northern Territory, in which it received $18.8 million (AUD 20 million) and an agreement to carry Falcon for a nine-well exploration and appraisal drilling program over five years. The firm also holds a Technical Cooperation Permit covering 7.5 million acres in the southwest Karoo Basin, South Africa.

Falcon CEO Philip O'Quigley commented in a company statement Friday:

"Following from our press release on 2 May 2014 of the transformational farm-out of our Beetaloo permits, I am pleased to announce we have spudded the second well of our three well program with NIS in Hungary. I look forward to sharing the results of the second well and building on the knowledge of what we have learned from the testing of Kutvolgy-1 with the market in due course."