Mr. Philip O'Quigley reports

FALCON COMMENCES DRILLING WITH NAFTNA INDUSTRIJA SRBIJE JSC ("NIS") IN THE MAKO TROUGH, HUNGARY

Further to Falcon Oil & Gas Ltd.'s announcement on May 23, 2013, the first of three exploration wells, Kutvolgy-1, to evaluate the gas potential of the Algyo formation at a depth of approximately 3,000 metres in the Mako trough, was spudded on the June 11, 2013.

Drilling of this first well is expected to take approximately 40 days. It is planned to drill into the Algyo formation, log and suspend the well for further evaluation prior to carrying out an appropriate testing program.

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

Philip O'Quigley, chief executive officer of Falcon, commented: "We are pleased to confirm that the drilling of the first of a three-well program with NIS in Hungary has commenced. We are fortunate to have a strong partner in NIS funding this drilling campaign. I look forward to sharing the result of the drilling campaign with the market in due course."

About the Algyo

The Algyo is a relatively shallow play between 2,300 metres and 3,500 metres. A number of Falcon wells have been drilled through the Algyo in recent years, some of which encountered gas shows, but to date no well has ever tested the play concept at an optimal location as previous wells targeted deeper intervals of up to 6,000 metres.

Multiple Algyo prospects have subsequently been identified by Falcon through extensive AVO analysis and the upcoming exploration drilling program with NIS will be targeting three separate high-graded prospects.

A recent independent study by RPS Energy (January, 2013) included for the first time prospective resource recoverable volumes attributable to the shallow Algyo play. According to the RPS CPR report, eight of the 10 prospects identified by Falcon contain 568 billion cubic feet of prospective recoverable gas resources, each with a 10-per-cent geological probability of success.

We seek Safe Harbor.