Falcon Nixes Option to Acquire Stake in Buckskin Mesa Project

Falcon Oil & Gas has elected not to exercise its option to acquire a 50% working interest in PetroHunter Energy Corporation's 20,000 acre Buckskin Mesa project, located in the Piceance Basin, Colorado, under the Purchase and Sale Agreement entered in August 2008 between Falcon and PetroHunter previously filed on SEDAR.

As initially disclosed in its press release dated August 25, 2008, Falcon acquired a 25% interest in five wells in the 20,000 acre Buckskin Mesa Project (the "Five Wells") for consideration of US $7 million, and had an option (the "Option") to acquire an additional 50% working interest (37.5% net revenue interest) in the entire Buckskin Mesa Project, including the Five Wells.

Falcon will retain its 25% interest in the Five Wells. Exercise of the Option would have required Falcon to pay additional consideration of US $25 million in cash or securities convertible into Falcon common shares, or a combination thereof, and incur spending commitments of
US $18 million pursuant to a drilling and development program.

Falcon and PetroHunter continue to develop the 2009 work program for the jointly held 7 million acre prospect in Northern Territory, Australia (the "Beetaloo Basin"). The 28,888,888 common shares of Falcon issued to PetroHunter for Falcon's 50% interest in Beetaloo remain subject to the contractual agreements between the companies as previously disclosed; whereby 14,500,000 shares are pledged by PetroHunter to Falcon as collateral for Falcon's US$5.0 million loan to PetroHunter, 11,600,000 shares are available to PetroHunter to pledge as collateral for loans from third parties, leaving 2,788,888 available for sale by PetroHunter.

Marc A. Bruner, President, Chairman and CEO of Falcon stated that "results from the initial testing of the Five Wells did not warrant Falcon's
exercising of the option under its existing terms and conditions given the present economic climate."