18 April 2024

FalconOil&GasLtd
(“Falcon”, the “Company” or the “Group”)

Proposed Fundraising and grant of ORRIs to raise gross proceeds of approximately $8.5 million (£6.8 million)

Falcon Oil & Gas Ltd (AIM: FOG, TSXV: FO.V), the international oil and gas company engaged in the exploration and development of unconventional oil and gas assets, is pleased to announce a proposed placing of new Common Shares of the Company (the "Placing Shares") at a price of 6p per Placing Share (the "Issue Price") by way of a conditional placing of the Placing Shares with institutional investors (the “Placing”) and proposed direct subscriptions for new Common Shares of the Company (the “Subscription Shares”) by certain new and existing investors at the Issue Price (the “Subscription”) in order to raise gross proceeds of up to US$4.5 million (c.£3.6 million) (the Placing and the Subscriptions together, the "Fundraising").

Alongside the Fundraising, Falcon Oil & Gas Australia Limited (“Falcon Australia”) has agreed to grant Daly Waters Energy, LP (“Daly Waters”) and a major US-based energy industry service provider overriding royalty interests (“ORRIs”) over Falcon Australia’s working interests in the Beetaloo Sub-Basin exploration permits in return for cash payments of US$3 million and US$1 million, respectively, as further detailed below. Completion of the grant of the ORRIs is subject to agreement of final legal documentation and to submission to the Northern Territory Government, Australia for registration.

The net proceeds of the Fundraising, together with the Company’s existing cash resources of c.US$4.3 million, the balance of Falcon’s net carry of A$3.75m due from Tamboran and the consideration from the grant of the ORRIs, if finalised, will primarily be used to fund Falcon’s share of estimated capital expenditure in respect of the work to be carried out on the proposed Shenandoah South Pilot Project (the “Pilot”) in 2024, including the drilling of two 3,000 km horizontal wells and the stimulation and flow test of two wells in the Beetaloo Sub-basin, Australia. These proceeds will also enable Falcon to fund its share of the cost of the planned 330km2 of 3D seismic survey around the Pilot area, which it is expected will be acquired during Q4 24 with processed results being available by Q1 25.

The Placing is being conducted through a bookbuilding process (the "Bookbuild") which is being managed by Cavendish Capital Markets Limited (the "Bookrunner") and will open immediately following the release of this Announcement and will be made available to eligible institutional investors. The Bookrunner is also acting as nominated adviser (for the purpose of the AIM Rules for Companies) to the Company in connection with the Placing.

Certain directors of the Company have indicated that they intend to participate in the Fundraising.

Company Background

Falcon is an international oil and gas company focused on the exploration and appraisal of unconventional oil and gas assets, with the current portfolio focused in Australia, South Africa and Hungary. Its corporate strategy is to explore unconventional oil and gas basins; following successful exploration, continue with appraisal programs to determine commercialisation options; and subsequently monetise assets prior to production.

Falcon Australia owns 22.5% of three exploration permits in the Beetaloo Sub-basin, located in the Northern Territory of Australia (the “Beetaloo”) being EP76, EP98, EP117 (the "BeetalooExploration Permits") which represent total gross acreage of 4.6 million, or 1 million acres net to Falcon Australia’s 22.5% participating interest.

In 2014, Falcon Australia farmed-out 35% of its participating interest in the Beetaloo Exploration Permits to a subsidiary of Origin Energy Limited (“Origin”), and 35% of its interest in the Beetaloo Exploration Permits to Sasol Petroleum Australia Limited ("Sasol"), a subsidiary of Sasol Limited, pursuant to the terms of a farm out agreement (“Farm-out Agreement”), in a deal worth A$200 million (c.US$143 million). In 2020, Falcon Australia farmed down a further 7.5% and Origin agreed to increase the gross cost cap of the work program by A$150.5 million (c.US$97 million) to A$263.8 million (c.US$170 million).

In November 2022, Origin completed the sale of 100 per cent of its interest in joint venture to Tamboran (B1) Pty Limited (“Tamboran B1”). Tamboran B1 is the 100% holder of Tamboran B2 Pty Limited, with Tamboran B1 being a 50:50 joint venture between Tamboran Resources Limited and Daly Waters. As part of the transaction, Falcon Australia was granted an additional gross carry on future well costs up to A$30 million (net A$6.75 million to Falcon) and the introduction of drilling spacing units ("DSUs”) on sole risk operations providing optionality to Falcon Australia on future wells to be drilled.

To date, the JV has drilled eight wells in the Beetaloo region. In December 2023, Falcon announced the successful flow test at Shenandoah South 1H (“SS1H”). SS1H was drilled to 4,300 meters TD, including a horizontal section over 1,074m intersecting ~90 meters of the Amungee Member B-shale, representing the thickest section seen in the Beetaloo Sub-basin depocenter to date. Logging of the Amungee Member B-shale formation indicated potentially higher porosity and gas saturation relative to offset wells Initial evaluation confirms reservoir continuity of the Amungee Member B-shale over 150 kilometers between Amungee NW-2H and Beetaloo W-1 wells. Diagnostic fracture injection test (“DFIT”) results demonstrated an over-pressured regime at the Shenandoah South location, with a pore pressure gradient of at least 0.54 psi /ft. This is in line with results demonstrated at the Tanumbirini well (0.51 – 0.56 psi/ft), providing confidence on the ability to replicate or exceed the commercial flow rates achieved at the Tanumbirini location. Stimulation activities which included 10 stimulation stages within the Amungee Member B-shale over a 500-metre horizontal section was completed on 7 December 2023.

In February 2024, the Company announced that the SS1H well achieved an average 30-day initial production (IP30) flow rate of 3.2 million cubic feet per day (MMcf/d) over the 1,644-foot (501 metres), 10 stage stimulated length within the Amungee Member B-Shale, normalised to 6.4 MMcf/d over 3,281-feet (1,000 metres), significantly exceeding pre-drill expectations and achieving what Falcon and its partners believe to be above the commercial threshold required to progress the Beetaloo to the Pilot development during 2024, subject to funding and key stakeholder approvals.

In March 2024, Falcon announced that it had elected to reduce its working interest in the proposed Pilot project from 22.5% to 5%, optimising its interest in the Beetaloo, since Falcon will only have to pay for 5% of the costs of the two wells to be drilled in 2024 as part of the Pilot development, but still retaining a weighted average 10% working interest in the enlarged area of circa 72,000 acres around the Pilot and a 22.5% working interest in the remaining 4.6 million acres (together, the “Remaining Area”). Shortly thereafter, the Company announced that the SS1H well achieved an average 60-day initial production (IP60) flow rate of 3.0 million cubic feet per day (MMcf/d) over the 1,644-foot (501 metres), 10 stage stimulated length within the Amungee Member B-Shale, normalised to 6.0 MMcf/d over 3,281-feet (1,000 metres).

Reasonsforthe Fundraising

The estimated gross capex for work to be carried out on the Pilot development and other Beetaloo related costs in 2024 is c.US$82 million. Under the terms of the Farm-out Agreement, Falcon’s net cash contribution is estimated at c.US$9 million, including contingency.

The net proceeds of the Fundraising, together with the Company’s existing cash resources of c.US$4.3 million, the balance of Falcon’s net carry of A$3.75m due from Tamboran and the consideration payable in respect of the grant of the ORRIs, if finalised, will primarily be used to fund Falcon’s share of estimated capital expenditure in respect of the work to be carried out on the Pilot development in 2024, including the drilling of two wells and the stimulation and flow test of two wells in the Beetaloo Sub-Basin, Australia and other related Beetaloo costs. The net proceeds will also enable Falcon to fund its share of the cost of the planned 330km2 of 3D seismic survey around the Pilot area, which it is expected will be acquired during Q4 24 with processed results being available by Q1 25.

Detailsofthe Placing

The Placing will be managed on the Company's behalf by the Bookrunner in accordance with the terms and conditions set out in Appendix to this Announcement. The Placing is not being underwritten by the Bookrunner. The Company reserves the right to issue and sell a lesser number of Common Shares through the Placing and to settle certain of the Placing Shares by way of a direct subscription with the Company. The Placing will be conducted in accordance with the terms and conditions set out in the Appendix. The Bookbuild, to determine demand for participation in the Placing, will commence with immediate effect following the release of this Announcement and is expected to close no later than 6.30 p.m. UK time on 19 April 2024. However, the timing of the closing of the Bookbuild is at the absolute discretion of the Bookrunner. The Bookrunner and the Company reserve the right to close the Bookbuild earlier or later, without further notice.

The number of Placing Shares and allocations will be determined by the Company and the Bookrunner following the close of the Bookbuild, but the number of Placing Shares and Subscription Shares will not, in aggregate, exceed 133,333,333 Common Shares. The Placing Shares will, when issued, be credited as fully paid and will rank equally in all respects with the existing Common Shares, including the right to receive all dividends and other distributions declared, made or paid in respect of such Common Shares after the date of issue of the Placing Shares.

As detailed in the Appendix, the Placing is conditional upon, inter alia, Admission becoming effective and the Placing Agreement not being terminated prior to Admission.

This Announcement should be read in its entirety. In particular, your attention is drawn to the "Important Information" section of this Announcement and to the detailed terms and conditionsofthePlacingandfurtherinformationrelatingtotheBookbuilddescribedinthe Appendix. By choosing to participate in the Placing and by making an oral and legally binding offer to acquire Placing Shares, investors will be deemed to have read and understood this Announcement in its entirety (including the Appendix) and to be making such an offer on the terms and subject to the conditions in it, and to be providing the representations, warranties, acknowledgements and undertakings contained in the Appendix.

Grant of Overriding Royalty Interests

Alongside the Fundraising, Falcon Australia has entered into agreements (the “ORRIAgreements”) granting certain overriding royalty interests over Falcon Australia’s working interests in the Beetaloo Sub-Basin exploration permits.

Under the terms of the ORRI Agreements, Falcon Australia has agreed to grant:

• to Daly Waters, in consideration for a cash payment of US$3 million, an overriding royalty interest of 6.0% in respect of the area around the Pilot development, measuring 51,200 acres, in which Falcon has a 5% working interest, and an overriding royalty interest of 1.3333% in respect of the Remaining Area; and
• to a major US-based energy services provider, in consideration for a cash payment of US$1 million, an overriding royalty interest of 2% in respect of the area around the Pilot development, measuring 51,200 acres, and an overriding royalty interest of 0.4444% in respect of the Remaining Area.

Completion of the grant of the ORRIs is subject to agreement of final legal documentation and to submission to the Northern Territory Government, Australia for registration.

Daly Waters is a wholly owned subsidiary of Sheffield Holdings LP, a vehicle controlled by Brian Sheffield, a highly successful investor who has made significant returns in the US unconventional energy sector. Brian Sheffield was Founder of Parsley Energy Inc. (“PE”), an independent unconventional oil and gas producer in the Permian Basin, Texas and previously served as its Chairman and CEO. PE was acquired for over US$7 billion by Pioneer Natural Resources Company (“Pioneer”), itself a leading independent oil and gas company.

UK MarketAbuseRegulation

This Announcement contains inside information for the purposes of Article 7 of UK MAR. Market soundings, as defined in UK MAR, were taken in respect of the Placing, with the result that certain persons became aware of inside information, as permitted by UK MAR. That inside information is set out in this Announcement and has been disclosed as soon as possible in accordance with paragraph 7 of Article 17 of UK MAR. Therefore, those persons that received inside information in a market sounding are no longer in possession of inside information relating to the Company and its securities.The person responsible for arranging the release of this announcement on behalf of Falcon is Phillip O’Quigley.