Falcon Oil & Gas Ltd. Enters Into Agreements to Acquire Assets in Piceance Basin, Colorado and Northern Territory, Australia



    DENVER, Aug. 25 /CNW/ -- Falcon Oil & Gas Ltd. (TSXV: FO) ("Falcon" or
the "Company") today announced that an independent committee of the Board of
Directors ("Independent Committee") has approved entering into binding
agreements with PetroHunter Energy Corporation ("PetroHunter") under which
Falcon will acquire a 25% working interest in five wells ("Five Wells")
located within PetroHunter's 20,000 acre Buckskin Mesa project ("Buckskin Mesa
Project") located in the Piceance Basin, Colorado and undertake a completion
and testing program in respect of these Five Wells. If testing is successful,
Falcon will have an option to acquire a 50% working interest in the Buckskin
Mesa Project. Falcon has also entered into agreements to acquire a 50% working
interest in PetroHunter's 7 million acre prospect in Northern Territory,
Australia (the "Beetaloo Basin").
    Marc A. Bruner, the Chairman, CEO and President of Falcon is a
significant shareholder of PetroHunter. As a result, the Board of Directors of
Falcon formed an Independent Committee, consisting of the 6 independent
directors of Falcon, to evaluate and approve the transactions.
    "The evolution of our business strategy is to build our portfolio and
pursue assets that will enable us to leverage our unconventional resource
expertise," stated Falcon's Chief Operating Officer, Rod Wallis. "The Buckskin
Mesa Project provides Falcon with the potential for near-term gas production
in one of the most productive unconventional gas deposits in the continental
U.S. The transaction structure ensures that the commitment to develop the
field is only made when there is a high degree of certainty that gas can be
extracted on an economically attractive basis. The Beetaloo Basin has numerous
conventional structures and a vast resource play that we believe could rival
the Mako Trough in Hungary."
    Mr. Wallis continued, "We conducted an extensive review of the assets and
believe there is considerable upside potential in these two world-class
assets. Expanding our asset base and geographic portfolio into other
economically and politically stable countries provides an opportunity to
transform Falcon into a leading global player in unconventional exploration
and production."
    
    Piceance Basin, USA, Buckskin Mesa Project
    
    Pursuant to the agreements, Falcon will acquire a 25% interest in Five
Wells in the 20,000 acre Buckskin Mesa Project for consideration of US$7
million which will be used to complete and test the Five Wells. Falcon has up
to a 60 day period to review and analyze the test results of the well
completions, and will then have an option (the "Buckskin Mesa Option") to
acquire an additional 25% working interest in the Five Wells (for a total of
50%) and a 50% working interest in the 20,000 acre Buckskin Mesa Project. The
Buckskin Mesa Option requires Falcon to pay additional consideration of US$18
million, subject to adjustments, in spending commitments pursuant to a
drilling and development program that will be mutually agreed upon by Falcon
and PetroHunter, and US$25 million, payable under certain circumstances, in
cash or securities convertible into Falcon shares, or a combination thereof.
If Falcon elects to issue securities convertible into Falcon shares, it is
required to, among other things, obtain the prior approval of the TSX Venture
Exchange.
    In addition, Falcon will have an option to become the operator of the
Buckskin Mesa Project. If it elects to become the operator, Falcon will pay
additional consideration of US$3.5 million in cash or securities convertible
into Falcon shares, or a combination thereof.
    The closing of the Buckskin Mesa transaction is subject to certain
closing conditions including receipt or waiver of TSX Venture Exchange and all
other regulatory approvals and settlement of an outstanding PetroHunter
litigation regarding the Buckskin Mesa Project.
    
    Beetaloo Basin, Northern Territory, Australia
    
    The agreements provide for the purchase of a 50% working interest in
PetroHunter's Beetaloo Basin acreage by Falcon for consideration of US$5
million in cash and US$20 million of securities convertible into Falcon shares
on a one for one basis based on the closing price of Falcon shares on August
22, 2008. PetroHunter will remain the operator of the Beetaloo Basin. The
agreements provide for a joint operating committee and substantial direct
involvement by Falcon managerial, technical and financial personnel. In the
event that Falcon's closing share price on the date that a receipt is issued
for the final prospectus to qualify the distribution of the common shares
underlying the convertible securities is below Falcon's closing share price on
August 22, 2008, the convertible securities have an adjustment mechanism which
provides PetroHunter with price protection of up to 20%. In addition, the
agreements provide for additional price protection, to a maximum of US$7
million, if Falcon's share price is below 70% of Falcon's closing share price
on August 22, 2008.
    The closing of the Beetaloo Basin transaction is subject to certain
closing conditions including receipt or waiver of TSX Venture Exchange and all
other regulatory approvals.
    Copies of all material agreements relating to the transactions will be
available on SEDAR at www.sedar.com.
    BMO Capital Markets is acting as exclusive financial advisor to Falcon in
connection with these transactions.
    
    Investor Conference Call
    
    Falcon will host an investor conference call on August 25, 2008 at 11 am
(EDT) to discuss the transactions. 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 (706) 679-3130. The conference call will also be broadcast live on the
Internet and may be accessed at www.falconoilandgas.com. The webcast and
accompanying presentation will be archived on the Company's website.
    The conference call will be available for replay via telephone beginning
at 1:00 pm (EDT) on August 25, 2008 until September 8, 2008 at 11:59 p.m.
(EDT). To listen to a replay of the conference within the U.S. and Canada,
dial (800) 642-1687 or internationally (706) 645-9291. The replay code is
61691017.
    
    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, and in
Romania through its wholly owned subsidiary JVX Energy Corporation.  Further
information about Falcon is available at www.falconoilandgas.com.
    
    About PetroHunter Energy Corporation
    
    PetroHunter Energy Corporation, through the operations of its
wholly-owned subsidiaries, PetroHunter Operating Company, and Sweetpea
Corporation Pty Ltd, is a global oil and gas exploration and production
company with primary assets consisting of various oil and gas leases and
related interests in oil and natural gas properties, including approximately
20,000 net mineral acres in Colorado and over 7,000,000 net mineral acres in
Australia.

    
     Contacts:
    

    
     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
    
    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. 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, Alexander
Hubbard-Ford of Falcon Oil & Gas Ltd., +1-303-951-1116,
investor@falconoilandgas.com Web Site: http://www.falconoilandgas.com

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