Falcon Oil & Gas Issues Hungarian Gas Project Update

Falcon Oil & Gas recently provided an operations update from the first three wells in its drilling program in southeast Hungary.

Pusztaszer-1 Well

The Pusztaszer-1 well (P-1) was drilled on the Tisza License with the Crosco 403 rig on the flanks of the Mako Trough. The primary objective of the well was to test the northwestern extent of the potential basin-centered gas accumulation (BCGA).

The P-1 well was drilled on a structure identified from 3D seismic approximately 45 kilometers north of the historic Hod-1 well. This well reached total depth of 3900 meters on February 16, 2006, and subsequent study of the logs indicates that the prospective sections in the Szolnok and Endrod formations are more than 100 meters in thickness with moderate to good porosity. Further, the prospective sections appear to be overpressured, saturated with gas, and showed no signs of moveable water.

Mako-6 Well

At the Mako-6 well location on the Mako License, the Crosco 801 rig has reached a measured depth of 4310 meters. This depth corresponds to a predetermined, intermediate logging and casing point in the Mako-6 well program. Based on a preliminary interpretation of the geological, engineering, and petrophysical data available to this point in the drilling program, Falcon believes that the top of the Szolnok formation was encountered at a depth of 3425 meters and that the Szolnok formation extends over a gross interval of at least 900 meters. Further, mudlogging equipment recorded significant gas shows from numerous intervals with gas compositions ranging from methane (C1) through pentane (C5).

Gustavson Associates personnel conducted a preliminary interpretation of the logs and reported to Falcon management that a significant section of gas appears to have been encountered already in the Szolnok tight sands, which display an average porosity of nine percent with peaks up to 12 percent. The net sand content is about 60 percent and the logs show no indications of moveable water. Further evaluation, fracturing, and testing will be required to assess the economic viability of this sand section.

Accordingly, Falcon's president, CEO and chairman, Marc A. Bruner, said that the company has decided to run the intermediate casing in the Mako-6 well and proceed with drilling to the planned depth of 6000 meters.

"We are very pleased with the logs, gas shows and other data from this thick section of the Szolnok formation," said Bruner. "But these are only intermediate results and the program at Mako-6 is now to run and cement an intermediate string of casing to this depth and then to continue on drilling through the rest of the Szolnok formation and into the deeper Endrod formation. We were fortunate to encounter both the Szolnok and Endrod formations in our first well at Pusztaszer-1 and we now look forward to testing this concept at the Mako-6 well."

Szekkutas-1 Well

The Crosco 403 rig has now been moved onto the Szekkutas-1 (S-1) location, and this well was spudded on March 18, 2006. After five days of drilling, the well has reached a measured depth of 991 meters.

The S-1 is the third well in Falcon's Hungarian drilling program. It is located on the eastern margin of the basin on the Mako License, approximately 40 kilometers east of the first well at Pusztaszer-1 and about 25 kilometers north of the second well at Mako-6.