Monday, May 10, 2010

Updated Ryder Scott Report Increases Oil-In-Place Best Estimates in Falcon's Beetaloo Basin Property

With Unrisked Undiscovered Oil-In-Place Best Estimate Increasing from 192.91 Billion Barrels to 395.11 Billion Barrels, Company Initiates Planning for the Potential of Several Joint Venture Partners in the Beetaloo Basin Project

DENVER, May 10 /CNW/ -- Falcon Oil & Gas Ltd. (TSXV: FO) ("Falcon" or the "Company"), a global energy company focused on acquiring, exploring and developing acreage positions of unconventional and conventional oil and gas resources, today announced the results of the recently completed Ryder Scott Company-Canada Resource Report, dated May 3 2010, on the Beetaloo Basin Project in the Northern Territory (NT), Australia (the "Beetaloo Basin Project") entitled "Falcon Oil & Gas Ltd. Evaluation of the Unconventional Oil Resource Potential Pertaining to Certain Acreage Interests in the Beetaloo Basin Northern Territory, Australia as of May 1, 2010"(the "Report").

Ryder Scott has prepared an updated evaluation of the unconventional oil resource potential of the Beetaloo Basin Project (previous report available on Sedar) which consists of four Exploration Permits (the "Permits") comprising approximately 28,200 square kilometres (7 million gross acres), covering the majority of the Beetaloo Basin and basin margin highs. Falcon's 75% owned subsidiary, Falcon Oil & Gas Australia Pty Ltd. ("Falcon Australia"), owns 100 % of the Permits, and is the operator of the Beetaloo Basin Project.

The Report on the unconventional oil resource potential of the Beetaloo Basin Project describes a possible distribution of the unrisked prospective (recoverable) portion of unrisked "undiscovered original oil-in-place resources," as defined by the Canadian Oil and Gas Evaluation Handbook ("COGEH") and does not represent an estimate of reserves or contingent resources. The Report has been prepared in accordance with the Canadian standards set out in the COGEH and is compliant with National Instrument 51-101 "Standards of Disclosure for Oil and Gas Activities."

The Company notes that while the unrisked, undiscovered oil-in-place has increased in this updated report, lower recovery factors were utilized resulting in a change of less than 10% in the unrisked, prospective (recoverable) oil resource estimate. This current update evaluates only the oil resource potential of the unconventional shale oil deposits in the Beetaloo Basin Project as the gas resource potential was not re-evaluated in this report.

Ryder Scott's unrisked, undiscovered and prospective (recoverable) oil resource assigned to Falcon Australia's lands in the Beetaloo Basin is as follows:

                                  Table 3: Total Undiscovered and
Prospective (Recoverable) Oil
Resources in the Beetaloo Basin,
As of May 1, 2010
Reservoir Unrisked Undiscovered Unrisked Prospective
Oil-In-Place (Recoverable) Oil
(Billion stb) Resources
(Billion stb)
Low Best High Low Best High
--- ---- ---- --- ---- ----
Hayfield 0.05 0.09 0.15 0.01 0.01 0.02
-------- ---- ---- ---- ---- ---- ----
Jamison 8.22 11.92 16.40 0.80 1.34 2.15
------- ---- ----- ----- ---- ---- ----
Subtotal 8.27 12.01 16.55 0.81 1.35 2.17
------------ ---- ----- ----- ---- ---- ----
Upper Kyalla Shale
Oil (Revised) 54.30 104.90 176.50 2.12 4.40 8.10
------------------ ----- ------ ------ ---- ---- ----
Lower Kyalla Shale
Oil 16.90 37.10 62.20 0.67 1.55 2.85
------------------ ----- ----- ----- ---- ---- ----
Middle Velkerri
Shale Oil 184.50 241.10 317.20 6.66 10.24 15.33
--------------- ------ ------ ------ ---- ----- -----
Subtotal 255.7 383.1 555.9 9.45 16.19 26.28
-------------- ----- ----- ----- ---- ----- -----
Total Oil Resource
within the Beetaloo
Basin 263.97 395.11 572.45 10.26 17.54 28.45
-------------------- ------ ------ ------ ----- ----- -----

    Table 3, Appendix 2 from the Report as of May 1, 2010,
dated May 3, 2010. For a definition of "Low" "Best"
and "High," see Section 5 of the Report titled
"Definitions of Resources and Reserves," item 5.3.5
titled "Uncertainty Category." The total oil and gas
resource is an arithmetic summation of the multiple
estimates of the individual reservoir resources. Under
Section 5.2 of COGEH: Undiscovered Petroleum Initially-
In-Place (equivalent to undiscovered resources) is
that quantity of petroleum that is estimated, on a
given date, to be contained in accumulations yet to be
discovered. Prospective Resources are those quantities
of petroleum estimated, as of a given date, to be
potentially recoverable from undiscovered accumulations
by application of future development projects.
Prospective resources have both an associated chance of
discovery and a chance of development. There is no
certainty that any portion of the undiscovered
resources will be discovered and that, if discovered,
it may not be economically viable or technically
feasible to produce any of the resources.

Commenting on the Report, Marc A. Bruner, President and Chief Executive Officer of Falcon, stated, "Our ongoing data analysis from the Beetaloo Basin continues to provide evidence of the immense hydrocarbon potential of this area. The increased oil-in-place volumes in this updated report and the more conservative recovery factors utilized should be an asset in our search for partners. The Beetaloo Basin is one the few remaining unexplored onshore ancient sedimentary basins in the world, analogous to basins in locations such as Siberia and Oman. Our property is well situated for development as it is located 310 miles southeast of the Darwin, which has both a major LNG facility and export terminal; has two underutilized pipelines nearby; and has a highway and railway line that cut through the heart of the property. Given the scope of these early oil estimates in conjunction with the previously estimated gas resources, the property's size, and ease of access and transport, we anticipate having the ability to attract several major joint venture partners. We have established a data room for this project and currently have potential joint venture partners reviewing the project. We expect to re-enter the Shenandoah 1 well and commence testing during the third quarter of 2010."

Bruner continued, "Australia is an ideal country in which to conduct business. With a stable legal system and a favorable fiscal regime that encourages exploration, working in Australia fits perfectly within our business strategy. We seek to discover and assemble underdeveloped lands, partner, and then grow our oil and gas production base through a diversified portfolio of development and exploration opportunities. Success in Australia could provide us the resources and opportunity to successfully replicate the process in other locations throughout the world."

Source: CNW Group