FALCON OIL AND GAS: CHART AND DISCUSSION THREAD (moderated)

Falcon Oil & Gas Ltd. Receives Approval of Closing Report for Mining Plot and Provides Operations Update in Hungary

09:35 EST Thursday, December 21, 2006

(TSXV Symbol: FO)


BUDAPEST, Hungary, Dec. 21 /CNW/ - Falcon Oil & Gas Ltd. (TSXV: FO) ("Falcon") announced that it has received written approval from the Hungarian Mining Authority based on the Geological Closing Report covering the estimated resource underlying Falcon's two exploration licenses. The Mining Bureau approval is based on the Hungarian Geological Survey recommendation.


Approval of Closing Report


On December 21, 2006, Falcon received written acceptance and approval of the formal Closing Report which it submitted to the Hungarian government authorities in October 2006. This government action means that the Hungarian government has validated and agrees with Falcon's geological and technical evaluation and conclusions about the existence, extent, and potential recoverable volumes of gas within the Basin Centered Gas Accumulation ("BCGA") underlying Falcon's exploration licenses. The approved Mining Plot covers 100 per cent of the area used by the Scotia Group, Inc., for their resource estimate, in a report ("Scotia Report") dated effective August 15, 2006 (previously filed at www.Sedar.com). This area is a continuous basin centered gas accumulation. The Mining Plot approval is for a period of 35 years with an extension for 17 1/2 additional years.

Marc A. Bruner, Chairman and CEO of Falcon, stated, "The approval and acceptance of the Closing Report represents a major achievement and the most important step toward obtaining the long-term production license covering this large resource. The Hungarian government's formal recognition that this BCGA is present in their country will enable Falcon to move forward with its drilling and development plan, and also will have significant benefits for Hungary, it's citizens and the region."

Dr. Gyorgy Szabo, a member of Falcon's Board of Directors stated further, "The company must still complete its environmental impact study and submit other documents in order to obtain the production licenses. Falcon expects this process to take a period of up to several months. However, the government's acceptance of Falcon's Closing Report indicates agreement with the Scotia Report and the analogy of this discovery to the Pinedale Field"


Commencement of Completion Operations


Falcon has started completion operations. The company continues to drill the Mako 7 which is already the deepest well at 19,862 feet (6054 meters) in Hungarian history.

Multiple zones of interest have been identified for completion and testing in each of the wells. Falcon plans to complete and obtain initial flow tests of the deepest zones first and continue testing of zones progressively farther up hole, subject to the results from lower zones. Results from the testing operations will be announced from time to time over the next several weeks or months.


Testing Infrastructure Completed Ahead of Schedule


Falcon has completed construction of a seven-mile (12-kilometer), 12-inch diameter high pressure gas gathering pipeline and related infrastructure that ties the Mako-6 well into the MOL transmission line which delivers gas to MOL's Algyo gas processing plant, approximately ten miles from the connection. During the initial testing phase, Falcon expects flaring to be limited to clean-up flow and an initial flow test of each well completion. Longer term testing will utilize the pipeline