Falcon Oil & Gas Ltd.: Interim Results for ...

FOR: FALCON OIL & GAS LTD. TSX VENTURE SYMBOL: FO AIM SYMBOL: FOG ISE SYMBOL: FAC November 25, 2015 Falcon Oil & Gas Ltd.: Interim Results for the Nine Months Ended 30 September 2015 DUBLIN, IRELAND--(Marketwired - Nov. 25, 2015) - Falcon Oil & Gas Ltd. (TSX VENTURE:FO)(AIM:FOG)(ESM:FAC) is pleased to announce its financial results for the three and nine months ended 30 September 2015. 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 nine months period ended 30 September 2015 filed with the TSX Venture Exchange. These filings are available at www.sedar.com and on Falcon's website at www.falconoilandgas.com. Highlights: Operational /T/ -- Commencement of the Australian nine well exploration and appraisal programme, planned from 2015 to 2018, with the drilling of Kalala S-1, Amungee NW-1 and Amungee NW-1H with our partners Origin Resources Limited ("Origin") (35%) and Sasol Petroleum Australia Limited ("Sasol") (35%). -- Acceleration of Australian drilling programme with first horizontal well (Amungee NW-1H) brought forward to 2015. -- Encouraging preliminary results from the drilling of the first three Australian wells indicating favourable shale properties with excellent gas shows indicating the likelihood of high levels of gas saturations. -- Processing of Falcon's exploration license application in South Africa's Karoo Basin continues to progress and the South African Department of Mineral Resources ("DMR") is expected to issue licences in 2016. /T/ Financial /T/ -- Strong financial position, debt free with cash of US$9.8 million. -- Continued focus on strict cost management and efficient operation of the portfolio. -- G&A expenses decreased 41% period on period in the nine months ended 30 September 2015 to US$1.8 million (2014: US$3.1 million). /T/ Philip O'Quigley, CEO of Falcon Oil & Gas commented: "During the period we have announced some very encouraging results from the drilling of our first three wells in the Beetaloo basin. Excellent gas shows have been encountered which demonstrate a high level of gas saturation and is a strong indication of the potential prospectively of our Beetaloo acreage. Falcon is uniquely placed in this challenging oil price environment with its strong cash position, fully funded drilling programme and high quality assets. The technical evaluation of the results to date remains ongoing and we look forward to announcing these results and our 2016 drilling and exploration programme in due course." Australia - Encouraging preliminary results from the drilling of the first three exploration wells On 15 July 2015, Falcon announced the spudding of the Kalala S-1 well in the Beetaloo Basin, Australia. Kalala S-1 is the first of Falcon's fully funded and uncapped, 2015 three well drilling and evaluation programme in the Beetaloo Basin. On 1 September 2015 it was announced that drilling operations had successfully concluded on the Kalala S-1 well. Results encountered were very encouraging, with the well drilled to a total depth ("TD") of 2,619 metres. On 8 September 2015 the spudding of the second well, Amungee NW-1 well in the Beetaloo Basin, Australia was announced. The well is located approximately 25 kilometres east of the Kalala S-1 well. On 22 October 2015, it was announced that drilling operations successfully concluded on the Amungee NW-1 well. Results encountered were also very encouraging, with the well drilled to a TD of 2,611 metres. Following the encouraging results of the first two wells, it was decided to bring forward the drilling of the first horizontal well in the Beetaloo Basin, originally planned for the end of 2016. On 18 November 2015, Falcon announced that that drilling operations had successfully concluded on the Amungee NW-1H horizontal well. The well was drilled to a total measured depth of 3,808 metres, including 1,100 metres horizontal section in the "B Shale" interval of the Middle Velkerri Formation, 100 metres more than originally planned. Results obtained to date are very encouraging. The joint ventures' attention will now focus on an in-depth shale evaluation program and petrophysical analysis of all the technical data gathered on the three wells drilled to date. Rig 185, which was used in drilling Kalala S-1, Amungee NW-1 and Amungee NW-1H will be "warm stacked" on location in the Beetaloo basin allowing for an early commencement of the 2016 drilling program. The cost of stacking Rig 185 will be borne by Origin and Sasol with no financial impact on Falcon. South Africa - processing of the exploration licence by the Petroleum Agency of South Africa ("PASA") continues to progress The PASA continues to progress the Company's application for a shale gas exploration licence in South Africa's Karoo Basin. The Company expects that the DMR will issue Falcon with a licence to explore for shale gas in 2016. Background Falcon was granted a Technical Cooperation Permit in 2009 covering 7.5 million (30,327 km2) acres in the southern part of the Karoo Basin. The Company has a cooperation agreement (as announced on 12 December 2012) with Chevron Business Development South Africa Limited ("Chevron"), which enables the Group to work with Chevron for a period of five years in jointly obtaining exploration licences. Hungary - review of operations Falcon continues to review its operation and future plans in Hungary, evaluating all options available to the Group to deliver shareholder value. The Group maintains its 100% interest in the Mako Trough. Financial review Falcon's cash and cash deposits balance as at 30 September 2015 was US$9.8 million (31 June 2015: US$10.5 million). Falcon incurred a loss of US$2.0 million during the nine months ended 30 September 2015, decreasing from a loss of US$3.97 million during the nine months ended 30 September 2014. General and Administrative expenses decreased 41% in the nine months ended 30 September 2015 to US$1.8 million (2014: US$3.1 million). The decrease reflects a continued focus on strict cost management and efficient operation of the portfolio. Annual General & Special Meeting As previously announced, Falcon's Annual General and Special Shareholder Meeting will be held at The Conrad Hotel, Earlsfort Terrace, Dublin 2, Ireland on 9 December 2015 at 11:00 a.m. (Dublin time). A complete notice and related documents have been sent to the shareholders of record as at 30 October 2015. These documents have been filed on the Canadian System for Electronic Document Analysis and Retrieval ("SEDAR") at www.sedar.com and Falcon's website at www.falconoilandgas.com. /T/ Falcon Oil & Gas Ltd. Interim Condensed Consolidated Statement of Operations and Comprehensive Loss (Unaudited) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Three months Three months Nine months Nine months ended 30 ended 30 ended 30 ended 30 September September September September 2015 2014 2015 2014 $'000 $'000 $'000 $'000 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Revenue Oil and natural gas revenue 2 5 6 22 ---------------------------------------------------------------------------- 2 5 6 22 Expenses Exploration and evaluation expenses (141) (191) (593) (595) Production and operating expenses (4) (7) (15) (22) Depreciation (8) (29) (26) (102) General and administrative expenses (565) (868) (1,830) (3,118) Share based compensation (28) (65) (228) (272) Foreign exchange gain / (loss) 30 (127) 755 (182) Other income 1 73 1 372 ---------------------------------------------------------------------------- (715) (1,214) (1,936) (3,919) ---------------------------------------------------------------------------- Results from operating activities (713) (1,209) (1,930) (3,897) Fair value gain - outstanding warrants 291 283 22 506 Finance income 68 10 75 36 Finance expense (38) (651) (172) (619) ---------------------------------------------------------------------------- Net finance income / (expense) 30 (641) (97) (583) ---------------------------------------------------------------------------- Loss and comprehensive loss for the period (392) (1,567) (2,005) (3,974) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Loss and comprehensive loss attributable to: Equity holders of the company (390) (1,556) (2,000) (3,954) Non-controlling interests (2) (11) (5) (20) ---------------------------------------------------------------------------- Loss and comprehensive loss for the period (392) (1,567) (2,005) (3,974) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Loss per share attributable to equity holders of the company: Basic and diluted (0.000 cent) (0.002 cent) (0.002 cent) (0.004 cent) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Falcon Oil & Gas Ltd. Consolidated Statement of Financial Position (Unaudited) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- At 30 September At 31 December 2015 2014 $'000 $'000 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Assets Non-current assets Exploration and evaluation assets 39,616 39,619 Property, plant and equipment 77 103 Trade and other receivables 25 104 Restricted cash 2,301 331 ---------------------------------------------------------------------------- 42,019 40,157 ---------------------------------------------------------------------------- Current assets Cash and cash on deposit 9,842 14,753 Trade and other receivables 340 443 ---------------------------------------------------------------------------- 10,182 15,196 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Total assets 52,201 55,353 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Equity and liabilities Equity attributable to owners of the parent Share capital 382,853 382,853 Contributed surplus 42,888 42,660 Retained deficit (384,349) (382,349) ---------------------------------------------------------------------------- 41,392 43,164 Non-controlling interests 708 713 ---------------------------------------------------------------------------- Total equity 42,100 43,877 ---------------------------------------------------------------------------- Liabilities Non-current liabilities Decommissioning provision 8,692 9,493 ---------------------------------------------------------------------------- 8,692 9,493 ---------------------------------------------------------------------------- Current liabilities Accounts payable and accrued expenses 917 1,469 Derivative financial liabilities 492 514 ---------------------------------------------------------------------------- 1,409 1,983 ---------------------------------------------------------------------------- Total liabilities 10,101 11,476 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Total equity and liabilities 52,201 55,353 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Falcon Oil & Gas Ltd. Interim Condensed Consolidated Statement of Cash flows (Unaudited) ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Nine months ended 30 September 2015 2014 $'000 $'000 ---------------------------------------------------------------------------- Cash flows from operating activities Net loss for the period (2,005) (3,974) Adjustments for: Share based compensation 228 272 Depreciation 26 102 Fair value gain - outstanding warrants (22) (506) Net finance expense 97 583 Effect of exchange rates on operating activities (755) 182 Change in non-cash working capital: Trade and other receivables 182 6 Accounts payable and accrued expenses 68 (764) Restructuring spend (439) - Interest received 75 36 ---------------------------------------------------------------------------- Net cash used in operating activities (2,545) (4,063) Cash flows from investing activities Increase in cash deposits - other receivables - (6,000) Increase / (decrease) in restricted cash (1,991) 219 Exploration and evaluation assets (110) (6,577) Proceeds from farm-out transaction - Origin and Sasol - 20,471 Property, plant and equipment - (10) ---------------------------------------------------------------------------- Net cash (used in) / generated by investing activities (2,101) 8,103 Change in cash and cash equivalents (4,646) 4,040 Effect of exchange rates on cash & cash equivalents (265) (88) Cash and cash equivalents at beginning of period 8,753 8,431 ---------------------------------------------------------------------------- Cash and cash equivalents at end of period 3,842 12,383 ---------------------------------------------------------------------------- /T/ This announcement has been reviewed by Dr. Gabor Bada, Falcon Oil & Gas Ltd'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 Aniversiteit Amsterdam, the Netherlands. He is a member of AAPG and EAGE. About Falcon Oil & Gas Ltd. Falcon Oil & Gas Ltd 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 focused in Australia, South Africa and Hungary. Falcon Oil & Gas Ltd 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 is based on current expectations that are subject to significant risks and uncertainties that are difficult to predict. Such information may include, but is not limited to comments made with respect to the awarding of an exploration license in South Africa, deriving shareholder value from the Group's Hungarian operations, to the type, number and objectives of the wells to be drilled in the Beetaloo basin Australia, expected contributions of the partners, the prospectivity of the Middle Velkerri shale play and the prospect of the exploration programme being brought to commerciality. 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. FOR FURTHER INFORMATION PLEASE CONTACT: Falcon Oil & Gas Ltd. +353 1 417 1900 OR Falcon Oil & Gas Ltd. Philip O'Quigley, CEO +353 87 814 7042 OR Falcon Oil & Gas Ltd. Michael Gallagher, CFO +353 1 417 0814 OR Falcon Oil & Gas Ltd. John Craven Non-Executive Chairman +353 1 417 1900 OR Davy (NOMAD & Joint Broker) John Frain / Anthony Farrell +353 1 679 6363 OR GMP Securities Europe LLP (Joint Broker) Rob Collins / Emily Morris +44 20 7647 2800 OR CAMARCO Billy Clegg +44 20 3757 4983 OR CAMARCO Georgia Mann +44 20 3757 4980 Falcon Oil & Gas Ltd.