Mr. Philip O'Quigley reports

FALCON OIL & GAS LTD. ANNOUNCES TRANSACTION TO REDUCE THE BEETALOO BASIN OVERRIDING ROYALTY IN AUSTRALIA

Falcon Oil & Gas Ltd.'s subsidiary, Falcon Oil & Gas Australia Ltd., has entered into an agreement with CR Innovations AG to acquire its 4-per-cent overriding royalty interest relating to its exploration permits in the Beetaloo basin.

Transaction details:

• FOGA has made an initial payment to CRIAG of $999,000 (U.S.) on signing the agreement.
• FOGA will make a second payment to CRIAG of $999,000 (U.S.) to acquire the first 3 per cent of the ORRI.
• A second payment will be made upon completion of a farm-out deal in Australia.
• CRIAG has granted FOGA a five-year call option to acquire the remaining 1 per cent for $5-million (U.S.).
• All ORRIs acquired under the agreement will be immediately cancelled by FOGA.

Philip O'Quigley, chief executive officer of Falcon, commented: "We are delighted to have negotiated this reduction in the overriding royalty on our Australian assets. This transaction should help to further progress our farm-out negotiations, which are at an advanced stage. Together with the significant seismic program completed last year, this transaction further increases the value of our assets in the Northern Territory."

FOGA is a 98-per-cent subsidiary of Falcon and is the registered holder of four exploration permits covering seven million acres in the Beetaloo basin, Northern Territory, Australia.

About the overriding royalty interests

The total amount of the private ORRIs is 12 per cent. The ORRI entitles its owners to earn 12 per cent of the gross well head proceeds of any future production, subject only to transportation and marketing costs. CRIAG is the owner of 4 per cent with the balance of 8 per cent being held through a small number of families based primarily in the United States. The privately held ORRIs were created during the years 2006 to 2008 when the exploration permits were sold by their original owners.

We seek Safe Harbor.