Falcon Oil & Gas Ltd. announces closing of Beetaloo Basin transaction



    (TSXV Symbol: FO)

    DENVER, CO, Oct. 2 /CNW/ - Falcon Oil & Gas Ltd. (TSXV: FO) ("Falcon" or
the "Company") today announced that the Company has closed the transaction to
acquire its previously announced 50% working interest in PetroHunter Energy
Corporation's ("PetroHunter") 7 million acre prospect in Northern Territory,
Australia (the "Beetaloo Basin"). As consideration for the Beetaloo Basin
transaction Falcon issued PetroHunter US$20 million of Falcon securities
convertible into common shares of Falcon stock on a one for one basis, in
addition to the US $5 million paid by Falcon to PetroHunter on August 25,
2008. The conversion of the convertible securities will result in the issuance
of a maximum of 28,888,888 shares of Falcon at a minimum deemed value of $0.72
per share.
    Falcon also today announced that it has loaned PetroHunter US$5 million.
The temporary bridge loan must be repaid within 120 days and bears interest at
a rate of 10% per annum. PetroHunter will not receive the proceeds of the loan
directly; rather, the loan proceeds will be advanced directly to certain
creditors of PetroHunter who are due payment for services or other obligations
directly related to the Beetaloo Basin and Buckskin Mesa properties. The loan
is secured by a first mortgage in favour of Falcon on five wellbores owned by
PetroHunter and by a pledge of US$7.5 million worth of the convertible
securities issued to PetroHunter in connection with the Beetaloo Basin
transaction.
    Under the terms of the loan, Falcon also negotiated an amendment to the
Beetaloo Basin purchase agreement and an amendment to the escrow agreement
associated with the Initial Buckskin Mesa transaction. The amendment to the
Beetaloo Basin purchase agreement reduces the maximum amount due to
PetroHunter from US$7 million to US$3.5 million in the event that Falcon's
share price at the time of receipt for a (final) prospectus with respect to
the convertible securities is issued is less than $0.63 per share. The
amendment to the Initial Buckskin Mesa escrow agreement provides that the
final decision on the initial testing program for the five initial Buckskin
Mesa wells requires mutual agreement between senior management of Falcon and
PetroHunter.
    Falcon and PetroHunter continue to work diligently to satisfy or waive or
all conditions to the acquisition by Falcon of a 25% working interest in five
wells located within PetroHunter's 20,000 acre Buckskin Mesa project located
in the Piceance Basin, Colorado and an option to acquire a 50% working
interest in the entire Buckskin Mesa property.

    About Falcon Oil & Gas Ltd.

    Falcon Oil & Gas Ltd. is a British Columbia corporation in the business
of oil and gas exploration and production. It has operations in Hungary
through its wholly owned subsidiary TXM Oil and Gas Exploration, LLC, in
Romania through its wholly owned subsidiary JVX Energy Corporation and in
Australia through its wholly owned subsidiary Falcon Oil & Gas Australia Pty
Ltd. Further information about Falcon is available at www.falconoilandgas.com.

    In 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:

For further information: Investor and Public Relations: Falcon Oil and
Gas Ltd: Alexander Hubbard-Ford, (303) 951-1116, investor@falconoilandgas.com;
Falcon Oil & Gas Ltd. Corporate Address: 1875 Lawrence Street, Suite 1400,
Denver Colorado 80202 USA, Phone (303) 893-1800, Fax (303) 572-8927

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Falcon Oil & Gas Ltd.

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