Falcon Oil & Gas Ltd-Hungary Drilling Update

July 25, 2013

Falcon Oil & Gas Ltd. has announced that initial drilling operations on the Kutvolgy-1 well have ceased, the well having reached total depth ("TD") of 3,305 metres.

Kutvolgy-1 is the first of a planned three well programme to evaluate the gas potential of the Algyo formation in the Mako Trough. As prognosed, the top of the Algyo formation was encountered at 2,985 metres; the well then penetrating an alternating sequence of sandstones, siltstones and shales over a gross interval of 320 metres to TD, with gas shows throughout.

Two conventional cores have been taken and extensive wireline logs were run. As planned the well has been cased to TD and is now suspended while further technical evaluation is undertaken prior to carrying out an appropriate rigless testing programme later this year. No operational problems or accidents occurred during drilling.

The location of the second of the three well programme will be decided after a full evaluation of the Kutvolgy-1 well results. Operations on the second well are expected to commence in Q4 this year.

In accordance with the terms of the agreement with NIS, announced on 14 January 2013, Falcon is fully carried, as all costs associated with this three well drilling program are funded by NIS. Any hydrocarbon sales revenue resulting from this program will be shared equally between Falcon and NIS.

Source: Falcon Oil, 2013.