Drilling contracts with Crosco of Croatia
 

Press Release Source: Falcon Oil & Gas Ltd

Falcon Oil & Gas Provides Operations Update
Wednesday June 15, 3:49 pm ET


VANCOUVER, British Columbia, June 15 /PRNewswire/ -- Falcon Oil & Gas Ltd. (Vancouver: FO - News) announced today the acquisition of a second exploration license in Hungary and the signing of contracts for the drilling rigs and casing required to start the Hungarian drilling program. The assignment of the license is subject to Hungarian government approval. In addition, Falcon has also entered into a farm-in to earn interests in a coalbed methane property in Romania.

Second Hungarian License Assigned

On June 9, 2005, Falcon Oil & Gas Ltd. ("Falcon") received the assignment of its second Hungarian oil and gas exploration license, through Falcon's wholly-owned Hungarian subsidiary, TXM Energy LLC ("TXM"). Falcon/TXM acquired the original Tisza license in January 2005 and has now acquired the Mako license.

"These licenses give us the right to undertake exploratory and drilling activities over a very large area," commented Falcon's President, CEO and Chairman, Marc A. Bruner. "We are extremely excited about moving forward with our development plans in Hungary." The Tisza License grants exploration and drilling rights over approximately 236,000 net acres, and the Mako License grants exploration and drilling rights over approximately 340,000 net acres, all of which are located in south central Hungary. Falcon plans to drill at least one well on each License in 2005, evaluate the results, and apply for further extensions of one or both Licenses. The Licenses both are currently scheduled to expire on December 31, 2005, prior to or after which time Falcon also would be entitled to apply for one or more production licenses covering areas where it establishes the likelihood of future commercial production.

Drilling Contracts Signed for Exploration Program in Hungary

On June 10, 2005, Falcon/TXM signed two drilling contracts with Crosco Drilling & Well Services Company, Ltd ("Crosco") of Croatia. The first contract is for a 4000 meter rig (~13,000 feet) to drill two shallow wells, with an option for a third shallow well. The second contract is for an 8000 meter rig (~26,000 feet) to drill a deep well on the Mako License, with an option for three additional deep wells. The two contracts provide for a total of three firm wells, with an option for Falcon/TXM to extend these contracts to a total of seven wells.

The contracts were awarded to Crosco, which is an international drilling contractor providing services in 23 countries. Mr. Bruner stated, "Falcon is pleased to have selected our rig contractor and to have signed these first two important drilling contracts with Crosco. We're impressed with the quality of Crosco's personnel and equipment. Depending on the results of our first test wells, we look forward to a long relationship with Crosco in Hungary." The first shallow well and first deep well will be commenced as soon as all government permits and other approvals have been obtained by Falcon/TXM, which is estimated to be sometime in the third quarter of this year.

Purchase of Drilling Pipe

In conjunction with the drilling program, Falcon has signed a $10 million (USD) purchase order and has made a down payment to Apex Tubulars of approximately $1 million (USD) for approximately 182,000 feet of various types and sizes of pipe, casing, and other materials. The purchase order provides that Falcon will receive the first delivery of casing as it moves forward with its drilling plans in Hungary, commencing in the third quarter of 2005. "These casing contracts are a key element of our drilling program," stated Allan D. Laird, Director of Falcon. "Premium casing is difficult to source right now and our operational people did an excellent job to keep our drilling program moving forward on schedule."

Farmout Agreement in Romania

On June 1, 2005, Falcon signed a Farmout Agreement (the "Agreement") on a coalbed methane property in the Jiu Valley of Romania, under which Falcon may earn a 75% interest in the property. This acquisition complements Falcon's operations in the neighboring country of Hungary and leverages the expertise of Falcon's engineering and geological staff in coalbed methane technology in the United States. Falcon will initially pay 100% of the costs to drill two coalbed methane earning wells, at an estimated cost of $1.5 million (USD), to earn a 75% working interest in the Jiu Valley property, with the right to opt out of the second well upon payment of a penalty. The prospect contains approximately 21,500 gross acres.

Falcon entered into the Agreement with Pannonian International, Ltd. ("Pannonian"), a wholly-owned subsidiary of Galaxy Energy Corporation (OTC Bulletin Board: GAXI - News), a company in which Marc A. Bruner is a "Control Person" within the meaning of the policies of the TSX Venture Exchange. The Concession was originally issued to Pannonian in 2002. The assignment of the Concession from Pannonian to Falcon is subject to Romanian government approval, as well as other regulatory approvals. Pannonian will act as Falcon's contract operator on the Jiu Valley wells. The first well is scheduled to be commenced by June 25, 2005.

Falcon Oil & Gas Ltd. is a British Columbia, Canada corporation, which is in the business of oil and gas exploration and production. It has operations in Hungary, Romania, and Canada.


Contact: Falcon Oil & Gas Ltd.
Marc A. Bruner President, CEO and Chairman
Allan D. Laird Director
(303) 803-3646

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release. The TSX Venture Exchange has in no way passed upon the merits of the above-described transactions and has neither approved nor disapproved the contents of this news release.


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