FORM 51-102F3

MATERIAL CHANGE REPORT

ITEM 1 —— Name and Address of Company

Falcon Oil & Gas Ltd. (the “Company”)

1875 Lawrence Street, Suite 1400

Denver, Colorado, USA 80202

ITEM 2 —— Date of Material Change

December 7, 2009 and December 8, 2009

ITEM 3 —— News Release

Press releases were disseminated on December 7, 2009 and December 8, 2009

through CNW Group Ltd.

ITEM 4 —— Summary of Material Change

On December 7, 2009, the Company issued a press release announcing that the Company and PetroHunter Energy Corporation (“PetroHunter”) had entered into two agreement (the“Agreements”), which provide for Falcon Oil & Gas Australia Pty Ltd’s (“Falcon Australia”) acquisition of PetroHunter’s remaining 25% interest in the four Beetaloo Basin Exploration Permits (the “Permits”) in the Northern Territory of Australia, and for Falcon Australia to engage in a private placement of equity securities (the “Financing”) to finance further exploration on the Permits. The two companies’ Boards of Directors have approved the Agreements.

On December 8, 2009, the Company issued a press release announcing that Janos Csak had resigned from the Company’s Board of Directors, effective December 7, 2009. Mr. Csak was not nominated for re-election at the Company’s upcoming annual and special meeting of shareholders (the “2009 Shareholder Meeting”).

ITEM 5 —— Full Description of Material Change

On December 7, 2009, the Company issued a press release announcing that the Company and PetroHunter had entered into the two Agreements, which provide for Falcon Australia’s acquisition of PetroHunter’s remaining 25% interest in the Permits, and for Falcon Australia to engage in the Financing to finance further exploration on the Permits. The two companies’ Boards of Directors have approved the Agreements.

The Agreements provide for the following: (1) for conversion of debt owed by Falcon Australia to the Company, the Company will own 75% of the common shares in the restructured Falcon Australia; (2) in consideration for an assignment to Falcon Australia of the undivided 25% working interest which PetroHunter’s wholly-owned subsidiary, Sweetpea Petroleum Pty Ltd (“Sweetpea”) owns in the four Permits, Sweetpea will own 25% of the common shares of the restructured Falcon Australia; (3) Falcon Australia will then own 100% of the working interest in the Permits; (4) the parties will enter into a Master Services Agreement (“MSA”) providing for Falcon Australia to operate the Permits; (5) the Company will receive a management fee under the MSA; and (6) Falcon Australia intends to enter into an agreement with Martin Place Securities (“MPS”), based in Sydney, Australia, to undertake the Financing. The terms of the agreement with MPS and the amount of the Financing have not yet been determined.

The closing of the Agreements is subject to various conditions first being satisfied, including TSX Venture Exchange approval.

On December 8, 2009, the Company issued a press release announcing that Janos Csak had resigned from the Company’s Board of Directors, effective December 7, 2009. Mr. Csak was not nominated for re-election at the Company’s 2009 Shareholder Meeting.

ITEM 6 —— Reliance on Section 7.1(2) of National Instrument 51-102

N/A

ITEM 7 —— Omitted Information

N/A

ITEM 8 —— Executive Officer

For further information, please contact:

Evan Wasoff, Chief Financial Officer of the Company

Tel: (303) 893-1800, Fax: (303) 572-8927

ITEM 9 —— Date of Report

December 15, 2009.