Falcon Oil & Gas Ltd Falcon Oil & Gas Ltd-Interim Results for Six Months Ended 30 June 2014

 
TIDMFOG 
 
Falcon Oil & Gas Ltd-Interim Results for Six Months Ended 30 June 2014 
FOR:  FALCON OIL & GAS LTD. 
 
TSX VENTURE SYMBOL:  FO 
AIM SYMBOL:  FOG 
 
August 29, 2014 
 
Falcon Oil & Gas Ltd-Interim Results for Six Months Ended 30 June 2014 
 
DUBLIN, IRELAND--(Marketwired - Aug. 29, 2014) - Falcon Oil & Gas Ltd. (TSX VENTURE:FO)(AIM:FOG)(ESM:FAC) (the 
"Company" or the "Group") announces that it has filed its results for the three and six months ended 30 June 
2014. 
 
The following should be read in conjunction with the complete Interim Financial Statements and the accompanying 
Management's Discussion and Analysis for the three and six months period ended 30 June 2014 filed with the 
TSXV. These filings are available at www.sedar.com and www.falconoilandgas.com. 
 
Highlights 
 
 
=-  Completion of the transformational Farm-Out Agreement and Joint 
    Operating Agreements of the Beetaloo permits, Northern Territory, 
    Australia. 
=-  Positive developments toward the processing of shale gas exploration 
    rights in South Africa - expected awarding of exploration right in 2014. 
=-  Total depth of the second well in Hungary, fully carried by Naftna 
    Industrija Srbije JSC ("NIS") reached and contract with NIS extended. 
=-  Continued focus on strict cost management and efficient operation of the 
    portfolio. 
=-  The Group incurred a loss of US$2.4 million in the six months ended 30 
    June 2014, decreasing from a loss of US$6.6 million in the six months 
    ended 30 June 2013. 
=-  Strong financial position, debt free with cash and cash equivalents of 
    US$5.5 million (31 December 2013: US$8.4 million). Subsequently, on 
    closing of Beetaloo Farm-out, Falcon received A$20 million cash from the 
    Farminees in August 2014. 
 
 
Philip O'Quigley, CEO of Falcon commented: 
 
"2014 has been a busy year thus far for the Group with the execution and completion of the Agreements with 
Origin and Sasol of our Beetaloo permits in the Northern Territory, Australia. Together with the A$20 million 
cash received, the deal is worth up to approximately A$200 million to Falcon. I look forward to updating the 
market and making further announcements on the Group's progress throughout the remainder of the year." 
 
Australia 
 
Farm-out of Beetaloo permits, Northern Territory, Australia 
 
On 21 August 2014, Falcon completed its Farm-Out Agreement and Joint Operating Agreement with Origin and Sasol 
each farming into 35% of Falcon's exploration permits in the Beetaloo Basin, Australia. 
 
The main transaction details are: 
 
 
=-  Falcon retains a 30% interest in the Permits. 
=-  Falcon has received A$20 million cash from the Farminees. 
=-  Origin is appointed as Operator. 
=-  Farminees to carry Falcon in a nine well exploration and appraisal 
    program over the next four years, detailed as follows: 
    --  3 vertical exploration/stratigraphic wells and core studies; 
    --  1 hydraulic fracture stimulated vertical exploration well and core 
        study; 
    --  1 hydraulic fracture stimulated horizontal exploration well, 
        commercial study and 3C resource assessment; and 
    --  4 hydraulic fracture stimulated horizontal exploration/appraisal 
        wells, micro-seismic and 90 day production tests. 
=-  Drilling/testing specifically targeted to take the project towards 
    commerciality. 
=-  Farminees will pay for the full cost of completing the first five wells 
    estimated at A$64 million, and will fund any cost overruns. This 
    drilling programme will commence by mid 2015. 
=-  Farminees to pay up to the full cost of the next four horizontally 
    fracture stimulated wells, 90 day production tests and micro seismic 
    with a capped expenditure up to A$101 million, any cost overrun funded 
    by each Party in proportion to their working interest. 
=-  Farminees may reduce or surrender their interests back to Falcon only 
    after: 
    --  the drilling of the first five wells or 
    --  the drilling and testing of the next two horizontally fracture 
        stimulated wells. 
 
 
Overriding Royalty Agreements 
 
In addition at completion of Falcon's Beetaloo Farm-out, Falcon paid Malcolm John Gerrard, Territory Oil & Gas 
LLC and Tom Dugan Family Partnership LLC ("TOG Group") US$5 million to acquire 5%; and CR Innovations AG 
("CRIAG") US$999,000 to acquire 3% of their respective Overriding Royalties over Falcon's Exploration Permits 
in the Beetaloo Basin. The Overriding Royalty is now at 4%. Falcon and the Farminees have the option to reduce 
this Royalty further to 1% by the exercise of two 5 year call options. The call options will be funded by 
Falcon and each of the Farminees in proportion to their interest in the permits. 
 
South Africa 
 
In May 2014, President Zuma and the ANC was returned to government and continued to highlight the importance of 
exploration efforts progressing. In addition, a cabinet reshuffle occurred where Mr. Ngoako Ramatlhodi was 
appointed as the new Minister for Mineral Resources. 
 
The Mineral and Petroleum Resources Development Amendment ("MPRDA") Bill which was approved by the National 
Council of Provinces is now with the President for assent. Some of the proposed new terms had raised concern 
within the oil and gas industry. In Q2 2014, Mr. Ngoako Ramatlhodi requested the President delay the signature 
of the MPRDA Bill in order to give him time to investigate the matter. If the President has reservations 
regarding the constitutionality of the Bill he can refer it back to the National Assembly. In the event that 
this course of action is decided upon, the impugned provisions of the MPRDA Bill will be reconsidered by the 
National Assembly and the National Council of Provinces and may be modified. 
 
The Board expects that the exploration right over the acreage will be awarded in 2014. As a reminder to 
shareholders and as announced in press release of 12 December 2012, the Group entered into an exclusive 
cooperation agreement with Chevron to jointly seek unconventional exploration opportunities in the Karoo Basin. 
The agreement provides for the Group to work exclusively with Chevron for a period of five years to jointly 
seek to obtain exploration rights in the Karoo Basin. 
 
Hungary 
 
Hungary Drilling Update - contract with NIS extended 
 
As announced on 15 July 2014 initial drilling operations on the Besa-D-1 well have reached total depth ("TD") 
of 3,000 metres having encountered gas shows. Besa-D-1 is the second of a planned three well programme to 
evaluate the gas potential of the Algyo Formation in the Mako Trough License. The well has now been cased to TD 
and is suspended pending further technical evaluation in order to determine an appropriate testing programme 
later this year. No operational problems occurred during drilling. 
 
In January 2013, the Group agreed a three-well drilling programme with Naftna industrija Srbije jsc ("NIS") to 
target the Algyo Play, whereby NIS made a cash payment of US$1.5 million to the Group in February 2013, and 
agreed to drill three wells by July 2014 at their cost. The July 2014 date for completion of drilling and 
testing of the NIS three well programme has been extended to 31 December 2014. This extension has been granted 
to allow NIS to: 
 
 
=-  Complete the testing of Besa-D-1; 
=-  Evaluate the hydrocarbon potential of the entire Mako Trough including 
    the Deep Mako play; and 
=-  Fulfill the third well obligation of the NIS three-well drilling 
    programme. 
 
 
Results for operating activities 
 
The Group incurred a loss of US$2.4 million in the six months ended 30 June 2014, decreasing from a loss of 
US$6.6 million in the six months ended 30 June 2013. 
 
The Group's cash and cash equivalent balance at 30 June 2014 was US$5.5 million (31 December 2013: US$8.4 
million). Subsequently, on closing of Beetaloo Farm-out, Falcon has received A$20 million cash from the 
Farminees. 
 
About Falcon Oil & Gas Ltd. 
 
Falcon is an international oil & gas company engaged in the acquisition, exploration and development of 
conventional and unconventional oil and gas assets, with the current portfolio spread between Australia, South 
Africa and Hungary. Falcon is incorporated in British Columbia, Canada and headquartered in Dublin, Ireland 
with a technical team based in Budapest, Hungary. 
 
For further information on Falcon Oil & Gas Ltd., please visit www.falconoilandgas.com. 
 
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies 
of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. 
 
Certain information in this press release may constitute forward-looking information. This information 
including comments made with respect to the type and number of wells and expected costs of the work program 
under the Farm-out, the project being brought towards commerciality and the award of an exploration license in 
South Africa is based on current expectations that are subject to significant risks and uncertainties that are 
difficult to predict. Actual results might differ materially from results suggested in any forward-looking 
statements. Falcon assumes no obligation to update the forward-looking statements, or to update the reasons why 
actual results could differ from those reflected in the forward looking-statements unless and until required by 
securities laws applicable to Falcon. Additional information identifying risks and uncertainties is contained 
in Falcon's filings with the Canadian securities regulators, which filings are available at www.sedar.com. 
 
 
Falcon Oil & Gas Ltd. 
Interim Condensed Consolidated Statement of Operations and Comprehensive 
Loss 
(Unaudited) 
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=--------------------------------------------------------------------------- 
                               Three        Three 
                              months       months   Six months   Six months 
                            ended 30     ended 30     ended 30     ended 30 
                           June 2014    June 2013    June 2014    June 2013 
                               $'000        $'000        $'000        $'000 
=--------------------------------------------------------------------------- 
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Revenue 
Oil and natural gas 
 revenue                           7            4           17            7 
=--------------------------------------------------------------------------- 
                                   7            4           17            7 
 
Expenses 
Exploration and 
 evaluation expenses            (206)        (210)        (404)        (408) 
Production and operating 
 expenses                         (8)          (7)         (15)         (12) 
Depreciation                     (30)         (62)         (73)        (207) 
General and 
 administrative expenses      (1,231)      (1,419)      (2,250)      (2,604) 
Share based compensation         (12)        (178)        (207)        (273) 
Foreign exchange loss            (22)           -          (55)           - 
Other income                     162          102          299          339 
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                              (1,347)      (1,774)      (2,705)      (3,165) 
=--------------------------------------------------------------------------- 
 
Results from operating 
 activities                   (1,340)      (1,770)      (2,688)      (3,158) 
 
Fair value (loss) / gain 
 - outstanding warrants         (768)         557          223       (1,324) 
 
Finance income                    69          268          128          262 
Finance expense                  (35)        (951)         (70)      (2,422) 
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Net finance income / 
 (expense)                        34         (683)          58       (2,160) 
 
=--------------------------------------------------------------------------- 
Loss and comprehensive 
 loss for the period          (2,074)      (1,896)      (2,407)      (6,642) 
=--------------------------------------------------------------------------- 
=--------------------------------------------------------------------------- 
 
Loss and comprehensive 
 loss attributable to: 
 
Equity holders of the 
 company                      (2,069)      (1,805)      (2,398)      (6,506) 
Non-controlling 
 interests                        (5)         (91)          (9)        (136) 
 
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Loss and comprehensive 
 loss for the period          (2,074)      (1,896)      (2,407)      (6,642) 
=--------------------------------------------------------------------------- 
=--------------------------------------------------------------------------- 
 
 
Loss per share attributable to 
 equity holders of the company: 
 
Basic and diluted        (0.002 cent) (0.002 cent) (0.003 cent) (0.009 cent) 
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Falcon Oil & Gas Ltd. 
Interim Condensed Consolidated Statement of Financial Position 
(Unaudited) 
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=--------------------------------------------------------------------------- 
                                                 At 30 June  At 31 December 
                                                       2014            2013 
                                                      $'000           $'000 
=--------------------------------------------------------------------------- 
=--------------------------------------------------------------------------- 
 
Assets 
Non-current assets 
Exploration and evaluation assets                    74,869          74,517 
Property, plant and equipment                         5,336           5,403 
Trade and other receivables                             107              77 
Restricted cash                                         376             396 
=--------------------------------------------------------------------------- 
                                                     80,688          80,393 
=--------------------------------------------------------------------------- 
 
Current assets 
Cash and cash equivalents                             5,513           8,431 
Restricted cash                                         219             219 
Trade and other receivables                             752             473 
=--------------------------------------------------------------------------- 
                                                      6,484           9,123 
 
=--------------------------------------------------------------------------- 
Total assets                                         87,172          89,516 
=--------------------------------------------------------------------------- 
=--------------------------------------------------------------------------- 
 
Equity and liabilities 
 
Equity attributable to owners of the parent 
Share capital                                       382,853         382,853 
Contributed surplus                                  42,670          42,463 
Retained deficit                                   (353,003)       (350,605) 
=--------------------------------------------------------------------------- 
                                                     72,520          74,711 
Non-controlling interests                               728             737 
=--------------------------------------------------------------------------- 
Total equity                                         73,248          75,448 
=--------------------------------------------------------------------------- 
 
Liabilities 
Non-current liabilities 
Decommissioning provision                            11,192          11,138 
=--------------------------------------------------------------------------- 
                                                     11,192          11,138 
=--------------------------------------------------------------------------- 
 
Current liabilities 
Accounts payable and accrued expenses                 1,558           1,533 
Derivative financial liabilities                      1,174           1,397 
=--------------------------------------------------------------------------- 
                                                      2,732           2,930 
=--------------------------------------------------------------------------- 
Total liabilities                                    13,924          14,068 
 
=--------------------------------------------------------------------------- 
Total equity and liabilities                         87,172          89,516 
=--------------------------------------------------------------------------- 
=--------------------------------------------------------------------------- 
 
 
Falcon Oil & Gas Ltd. 
Interim Condensed Consolidated Statement of Cash Flows 
(Unaudited) 
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=--------------------------------------------------------------------------- 
                                                   Six months ended 30 June 
                                                          2014         2013 
                                                         $'000        $'000 
=--------------------------------------------------------------------------- 
 
Cash flows from operating activities 
Net loss for the period                                 (2,407)      (6,642) 
Adjustments for: 
  Share based compensation                                 207          273 
  Depreciation                                              73          207 
  Fair value (gain) / loss - outstanding 
   warrants                                               (223)       1,324 
  Net finance (income) / expense                           (58)       2,160 
  Other                                                     55            - 
Contribution to past costs - Chevron                         -        1,000 
Change in non-cash working capital                        (166)        (693) 
Interest paid                                                -         (573) 
Interest received                                           26           63 
=--------------------------------------------------------------------------- 
Net cash used in operating activities                   (2,493)      (2,881) 
 
Cash flows from investing activities 
Exploration and evaluation assets                         (538)        (560) 
Proceeds from farm-out transaction - NIS                     -        1,500 
Property, plant and equipment                               (6)         (26) 
=--------------------------------------------------------------------------- 
Net cash (used in) / generated by investing 
 activities                                               (544)         914 
 
Cash flows from financing activities 
Proceeds from private placement                              -       25,672 
Transaction costs relating to private placement              -       (1,897) 
Repayment of 11% debenture                                   -      (10,197) 
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Net cash from financing activities                           -       13,578 
 
Change in cash and cash equivalents                     (3,037)      11,611 
Effect of exchange rates on cash & cash 
 equivalents                                               119          218 
 
Cash and cash equivalents at beginning of 
 period                                                  8,431        2,884 
 
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Cash and cash equivalents at end of period               5,513       14,713 
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-30- 
 
FOR FURTHER INFORMATION PLEASE CONTACT: 
 
Falcon Oil & Gas Ltd. 
[phone] 
 
 
Falcon Oil & Gas Ltd. 
Philip O'Quigley, CEO 
[phone] 
 
 
Falcon Oil & Gas Ltd. 
Michael Gallagher, CFO 
[phone] 
 
 
Falcon Oil & Gas Ltd. 
John Craven, Non-Executive Chairman 
[phone] 
www.falconoilandgas.com 
 
 
CAMARCO 
Billy Clegg 
[phone] 
 
 
CAMARCO 
Georgia Mann 
[phone] 
 
 
Davy (NOMAD & Joint Broker) 
John Frain / Anthony Farrell 
[phone] 
 
 
GMP Securities Europe LLP (Joint Broker) 
Rob Collins / Liz Williamson / Emily Morris 
[phone] 
 
 
 
 
 
Falcon Oil & Gas Ltd.