Mr. Philip O'Quigley reports

FALCON OIL & GAS LTD.: NIS DRILLING PROGRAMME- EXPIRY OF EXTENSION

The extension granted to Falcon Oil & Gas Ltd.'s partner, Naftna Industrija Srbije JSC, regarding the obligatory three-well drilling program in Falcon's Mako trough licence in Hungary, has expired.

In January, 2013, Falcon and NIS agreed to complete a three-well drilling program targeting the relatively shallow Algyo play by July, 2014. Under the terms of the agreement, NIS made a cash payment of $1.5-million (U.S.) and agreed to carry Falcon for 100 per cent of all costs associated with the drilling and testing program. The July, 2014, deadline for completion of drilling and testing of the three-well program was subsequently extended by Falcon to Dec. 31, 2014, to enable NIS to fulfill its three-well obligation. As of Dec. 31, 2014, NIS had only drilled and tested two wells.

Falcon is currently evaluating, and will pursue, all options available to the company to derive shareholder value as NIS has not fulfilled its commitments under the agreement.

Falcon retains 100-per-cent interest in the Mako trough licence in Hungary including the deep play.

Philip O'Quigley, chief executive officer of Falcon Oil & Gas, commented: "We would like to thank NIS for their partnership over the last two years. The first two wells in the three-well program were drilled and tested professionally. However, we are very disappointed that NIS has not fulfilled its obligations in accordance with the terms of the agreement and we will now pursue all options available to the company.

"Falcon remains focused on the potential farm-out of the Mako deep play and is currently working with industry to evaluate potential options."

We seek Safe Harbor.