Mr. Philip O'Quigley reports

FALCON OIL & GAS LTD. - AMUNGEE NW-2H WELL UPDATE

Falcon Oil & Gas Ltd. has provided the following update on operations at the Amungee NW-2H in the Beetaloo subbasin in Northern Territory, Australia, with Falcon Oil & Gas Australia Ltd.'s joint venture partner, Tamboran (B2) Pty. Ltd. (collectively, the joint venture).

Background

In December, 2022, the A2H well was drilled to a total depth (TD) of 3,883 metres, including a 1,275-metre horizontal section within the Amungee member B shale, with a 25-stage stimulation program completed across a 1,020-metre horizontal section in March, 2023. Operations to install production tubing were completed in late April, 2023, and the well was subsequently reopened in preparation for production flow testing. This is only the sixth well drilled and fracture stimulated in the Beetaloo subbasin to date.

Update on flow testing:

• The A2H well achieved gas breakthrough; however, modelling and independent third party analysis from a U.S. laboratory identified a potential skin inhibiting the flow of gas from the stimulated shale. Despite this, the gas has flowed at an average rate of 970,000 cubic feet per day over 50 days with approximately 10 per cent of the water used in the simulation program recovered to date -- well below other wells in the basin.
• The JV believe flows from the well are yet to establish an uninhibited 30-day initial production rate.
• The well is currently producing approximately 830,000 cubic feet per day and water recovery is approximately 50 barrels per day, with cumulative gas production and water recovery of 52.37 million cubic feet and 17,879 barrels, respectively.
• The hydrocarbon phases recovered are dry gas with 90.4 per cent methane and 2.9 per cent ethane.
• The JV believes the results are not indicative of the underlying production potential of the Amungee member B shale as the Amungee NW-1H well (A1H) achieved flow rates of greater than five million cubic feet per day over a normalized 1,000 metres from the same well pad in 2021. Comparative details are included in the attached table.

• Results from the laboratory will continue to test fluid samples to determine how the JV can potentially clean up potential skin within the A2H well and apply learnings going forward on future completion operations. Updates to the market will be provided as further results and conclusions become available.
• Analysis is also being conducted to compare the completion and stimulation design of the A2H well and the A1H fracture stimulation in 2016, which had a production logging test completed in 2021, to establish the optimum approach to future completion and fracture stimulation designs.

Forward work program

The JV partners will continue to focus on interpreting the results to date and completing the test and analysis work to determine if there is cleanup work that can be carried out on the A2H well in Q3 2023.

The JV is also considering undertaking a two-well drilling program in the second half of this year, which, once formally approved by the JV, will include drilling a well at Shenandoah South (SS1H) in exploration permit 117, 60 kilometres south of A2H (from the same pad Kyalla 117 N2-1H ST2 was drilled) in Q3 2023 targeting deeper acreage in the JV exploration permits, followed by drilling Amungee 3H (A3H), a well in close proximity to the existing two Amungee wells.

Further details will be announced to the market once the JV has formally approved the work program.

Philip O'Quigley, Falcon's chief executive officer, commented: "Initial flow rates demonstrated from the A2H well to date do not reflect the true deliverability of the shale in the Amungee region. Being the sixth well drilled and stimulated within the Amungee member within the Beetaloo subbasin, we continue to learn from how the shale is stimulated and performs under varying conditions. Further analysis of all available data, together with any cleanup work, will hopefully yield more positive interpretation of the results obtained to date.

"We look forward to being able to use all the learnings from this A2H well and other work conducted in the Beetaloo subbasin to date in order to allow the JV to design a modified drilling and completion program me for the proposed upcoming two-well drilling program, which hopefully will deliver a successful outcome for our shareholders.

"Falcon remains in a very strong financial position with circa $16-million (U.S.) in cash and remains carried for costs at this time."

This announcement has been reviewed by Dr. Gabor Bada, Falcon Oil & Gas's head of technical operations. Dr. Bada obtained his geology degree at the Eotvos L. University in Budapest, Hungary, and his PhD at the Vrije Universiteit Amsterdam, the Netherlands. He is a member of AAPG (American Association of Petroleum Geologists).

About Falcon Oil & Gas Ltd.

Falcon Oil & Gas is an international oil and gas company engaged in the exploration and development of unconventional oil and gas assets, with the current portfolio focused in Australia, South Africa and Hungary. Falcon Oil & Gas is incorporated in British Columbia, Canada, and headquartered in Dublin, Ireland, with a technical team based in Budapest, Hungary. Falcon Oil & Gas Australia Ltd. is an approximately 98-per-cent subsidiary of Falcon Oil & Gas.

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