DENVER, April 10 /CNW/ -- Falcon Oil & Gas Ltd. (TSXV: FO, "Falcon")
announced today that it and its wholly owned subsidiary, TXM Exploration and
Production LLC, have entered into a Production and Development Agreement with
Exxon Mobil Corporation affiliate Esso Exploration International Limited
(ExxonMobil) under which Falcon and ExxonMobil will become joint owners in a
specified portion (the "Contract Area") of Falcon's long-term production
license (the "Production License") in the Mako Trough, Hungary. ExxonMobil
will operate the Contract Area.(Photo: http://www.newscom.com/cgi-bin/prnh/20080410/NYTH137 )The Contract Area consists of approximately 184,300 acres, or 75% of
Falcon's 246,000-acre Production License. The Contract Area will be owned
jointly, with Falcon owning a 33% undivided working interest and ExxonMobil
owning a 67% undivided working interest. The Agreement is effective today.
Falcon's Chairman and CEO, Marc A. Bruner, stated, "This agreement is a
milestone in Falcon's history and is the culmination of Falcon's extensive
efforts, announced on June 27, 2007, to find a strategic partner to support
and enhance Falcon's exploration and development efforts on Falcon's long-term
Production License. We are very pleased that we were able to reach agreement
with ExxonMobil, a company which brings to the table all the financial,
technical and operating expertise necessary to pursue the completions, testing
and evaluation of this resource, and then to maximize value if we are able to
commercialize this opportunity."
The Agreement provides for an initial consideration of US$25 million to
Falcon and for ExxonMobil to spend US$50 million to conduct an Initial Work
Program to test one or more of Falcon's existing wellbores or drill one or
more new wells for such tests. Field operations under the Initial Work
Program are scheduled to commence this year. After the Initial Work Program
is completed and if ExxonMobil elects to proceed to the next phase (the
"Appraisal Work Program"), it will pay Falcon an additional US$50 million and
will expend US$100 million on the Appraisal Work Program. If ExxonMobil
elects not to proceed beyond the Initial Work Program, it will relinquish and
reassign to Falcon all of ExxonMobil's interest in the Contract Area. After
the Appraisal Work Program is completed, ExxonMobil will pay Falcon an
additional US$75 million if it elects to proceed to the next phase (the
"Development Program") or it will reassign its interest to Falcon, subject to
the terms of the Agreement.
Falcon will incur no development costs within the Contract Area for
ExxonMobil's commitments during the Initial Work Program or the Appraisal Work
Program. Beginning with the Development Program, Falcon and ExxonMobil would
each receive revenues and be responsible for its proportionate share of
expenses within the Contract Area (that is, 33% Falcon and 67% ExxonMobil),
under a joint operating agreement.
ExxonMobil has the right to assign half its interest to MOL, a publicly
traded Hungarian oil and gas company.
In addition to Falcon's 33% undivided ownership in the
ExxonMobil-operated Contract Area, Falcon will remain sole owner and operator
of 391,445 acres outside the Contract Area boundaries, as well as shallow
rights covering 184,336 acres within the Contract Area, as follows:-- Falcon Lands: Falcon retains 100% ownership in the remaining 25%
(61,445 acres) of the Production License that is not part of the
Contract Area.-- Exploration Licenses: Falcon retains 100% ownership in 330,000 acres
which are outside the boundaries of the Production License, under the
original Mako Exploration License and original Tisza Exploration
License. Falcon also retains 100% ownership in the portions of the
Exploration Licenses which are above 2,800 meters within the boundaries
of the Production License. The 330,000-acre area outside the
Production License, and the shallower depths are not part of the
Production License.The Contract Area, Falcon Lands, and Exploration Licenses are shown on
the attached map.
Regarding Falcon's retained acreage, Mr. Bruner stated, "We see
significant upside potential within the large portion of the Mako Trough where
Falcon still owns 100%, and we intend to continue to evaluate and pursue
opportunities simultaneously with ExxonMobil's operations."
BMO Capital Markets has acted as exclusive financial advisor to Falcon
with respect to the Transaction.Falcon to Host Investor Conference CallFalcon will host an investor conference call beginning at 9:00 a.m.
(Eastern Time), Friday, April 11, 2008. The conference call will be available
live via telephone. To participate in the conference call within the U.S. and
Canada, dial (866) 688-0039. To participate in the conference internationally,
dial +1 (706) 679-3130. The conference code is 43449303. The conference call
will also be broadcast live on the Internet and may be accessed at
www.falconoilandgas.com.
The conference call will be available for replay via telephone beginning
approximately two hours following the conclusion of the live call. To listen
to a replay of the conference within the U.S. and Canada, dial (800) 642-1687
or internationally +1 (706) 645-9291. The replay code is 43449303.About Falcon Oil & Gas Ltd.Falcon Oil & Gas Ltd. is a British Columbia corporation which is in the
business of oil and gas exploration and production. It has operations in
Hungary through its wholly-owned subsidiary TXM Exploration and Production,
LLC, and in Romania through its wholly-owned subsidiary JVX Energy
Corporation. Further information about Falcon is available at
www.falconoilandgas.com.
For information about ExxonMobil, please go to ExxonMobil.com.Falcon Oil and Gas Ltd. Investor and Public Relations:
Alexander Hubbard-Ford
+1 303-983-1800In the interests of providing Company shareholders and potential
investors with information regarding the Company, including the Company's
assessment of its and its subsidiaries' future plans and operations, certain
statements included in this press release may constitute forward-looking
information or forward looking statements (collectively, "forward-looking
statements"). All statements contained herein that are not clearly historical
in nature are forward-looking, and the words "anticipate", "believe",
"expect", "estimate" and similar expressions are generally intended to
identify forward-looking statements. Similarly, forward-looking statements in
this press release include, but are not limited to anticipated developments of
the Company's drilling project in Hungary and the timing thereof, the
Company's drilling project in Romania and the timing thereof, capital
investment levels and the allocation thereof, pipeline capacity, government
royalty rates, reserve and resources estimates, the level of expenditures for
compliance with environmental regulations, site restoration costs including
abandonment and reclamation costs, exploration plans, acquisition and
disposition plans including farmout plans, net cash flows, geographic
expansion and plans for seismic surveys. In addition, please note that
statements relating to "reserves" or "resources" are deemed to be
forward-looking statements, as they involve the implied assessment, based on
certain estimates and assumptions, that the reserves and resources described
can be profitably produced in the future. Such statements represent the
Company's internal projections, estimates or beliefs concerning, among other
things, an outlook on the estimated amounts and timing of capital
expenditures, anticipated future debt levels and incentive fees or revenues or
other expectations, beliefs, plans, objectives, assumptions, intentions or
statements about future events or performance. These statements are only
predictions. Actual events or results may differ materially. Although the
Company believes that the expectations reflected in the forward-looking
statements are reasonable, it cannot guarantee future results, levels of
activity, performance or achievement since such expectations are inherently
subject to significant business, economic, competitive, political and social
uncertainties and contingencies. Many factors could cause the Company's actual
results to differ materially from those expressed or implied in any
forward-looking statements made by, or on behalf of, the Company and the
foregoing list of important factors is not exhaustive. These forward-looking
statements made as of the date hereof disclaim any intent or obligation to
update publicly any forward-looking statements, whether as a result of new
information, future events or results or otherwise. Company shareholders and
potential investors should carefully consider the information contained in the
Company's filings with Canadian securities administrators at www.sedar.com
before making investment decisions with regard to the Company.
The TSX Venture Exchange does not accept responsibility for the adequacy
or accuracy of this release.
For further information: Alexander Hubbard-Ford, Falcon Oil and Gas Ltd.
Investor and Public Relations, +1-303-983-1800 Web Site:
http://www.falconoilandgas.com http://ExxonMobil.com
