Falcon Oil & Gas Ltd.
Annual Information Form
For the Fiscal Year Ended 31 December 2025
TABLE OF CONTENTS Page number
Introduction 2
Forward-looking statements 2
Documents incorporated by reference 4
Dollar amounts 4
Corporate structure 5
Organisational structure 5
General development of the business 6
Development of the business during 2023 6
Development of the business during 2024 6
Development of the business during 2025 7
Development of the business during 2026 8
Business description 9
General 9
Summary of operations 9
Beetaloo Sub-basin, Northern Territory, Australia 10
Karoo Basin, South Africa 15
Makó Trough, Hungary 16
Employees 17
Special skill & knowledge 17
Competitive conditions 17
Dependence on customers & suppliers 17
Changes to contracts 17
Environmental protection and policies 17
Foreign operations 17
Companies with oil and gas activities 17
Risk factors 18
Dividends & distributions 27
Description of capital structure 27
Market for securities 28
Trading price & volume 28
Prior sales 28
Escrowed securities and securities subject to contractual restrictions on transfer 28
Directors & Executive officers 29
Penalties & sanctions 30
Corporate cease trade orders or bankruptcies 30
Conflicts of interest 30
Executive Compensation 31
Legal proceedings & regulatory actions 34
Interest of management & others in material transactions 34
Transfer agent & registrar 34
Material contracts 34
Interests of experts 34
Additional information 34
INTRODUCTION
The information provided herein in respect of Falcon includes information in respect of its wholly owned subsidiaries: TXM Oil and Gas Exploration Kft., a Hungarian limited liability company ("TXM"); Falcon Oil & Gas Ireland Limited., an Irish limited liability company ("Falcon Ireland"); Falcon Oil & Gas Holdings Ireland Limited., an Irish limited liability company ("Falcon Holdings Ireland"); Falcon Exploration and Production South Africa (Pty) Ltd., a South African limited liability company ("Falcon South Africa") and its 98.1% majority owned subsidiary, Falcon Oil & Gas Australia Limited, an Australian limited liability company ("Falcon Australia") (collectively, the "Company" or the "Group").
References to "Falcon" refers to Falcon Oil & Gas Ltd. only.
Unless stated otherwise, the information given herein is as at 31 December 2025.
Forward-looking statements
Any statements not of historical fact may be deemed to be forward-looking information. Forward-looking information typically contains statements with words such as "may", "will", "should", "expect", "intend", "plan", "anticipate", "believe", "estimate", "preliminary" "projects", "dependent", "potential", "scheduled", "forecast", "outlook", "budget", "hope", "support" "ongoing", "objective", "measure", "depends", "could" or the negative of those terms or similar words suggesting future outcomes. In particular forward-looking statements in this Annual Information Form include, but are not limited to, statements with respect to: the strategy of the Board of Directors of Falcon (the "Board") and countries it believes support the exploitation of unconventional oil and gas; statements relating to the definitive agreement ("Transaction") entered into by Falcon and Tamboran Resources Corporation (NYSE: TBN, ASX: TBN) ("Tamboran Corp") for the sale of Falcon's subsidiaries; statements regarding the expected closing date of the Transaction, subject to all necessary closing conditions; statements relating to the Group's activities in the Beetaloo Sub-basin, Australia; the prospectivity of the Amungee Member play, Beetaloo Sub-basin; the shale oil and shale gas potential of the Beetaloo Sub-basin; information relating to drilling operations at the Shenandoah South 1H ("SS1H") well; the objectives and information relating to drilling of the two wells drilled in 2024 (Shenandoah SS2-2H ("SS2H"), Shenandoah SS2-2H sidetrack ("SS2H ST1") and the Shenandoah SS2-4H ("SS4H") wells) and the three wells drilled in 2025 (Shenandoah South SS2-1H ("SS2-1H"), SS2-3H ("SS3H") and SS2-5H ("SS5H") wells), collectively known as the Shenandoah South Pilot Project ("Pilot Project"); the belief by the Beetaloo Joint Venture partners ("BJV") of Falcon Australia and Tamboran (B2) Pty Limited ("Tamboran B2") that the SS1H well and SS2H ST1 well 30-day initial production ("IP30"), 60-day initial production ("IP60") and 90-day initial production ("IP90") results were above the commercial threshold required to progress development plans for the proposed 40 million cubic feet per day ("MMcf/d") stimulation campaign at the Shenandoah South location subject to funding and key approvals; Falcon's ownership in the northern and southern pilot areas and remaining acreage following the execution of the checkerboard; the geological rock properties in the region indicative of favourable well performance with potential to result in long-term, low-declining gas production, this region being one of the best locations in the Beetaloo Sub-basin for Pilot Project development activities; signing of a Binding Agreement for a long term Gas Sales Agreement to supply the Northern Territory, conditional on entering a binding Gas Transportation Agreement and Gas Processing Agreement and the plan for first gas flow in 2026; details on the 20-day initial production ("IP20") flow test results of SS2-1H including assumptions that it compares favourably to the average performance of more than 11,000 producing wells in the Marcellus Shale dry gas fairway with over 12 months of production history; consistency of the results of SS2-1H with SS-2H ST1; details on the planned three well stimulation campaign including the plan to commence in 2Q 2026; the commencement of gas sales in 3Q 2026 and the plan to tie the wells to the SPCF and bring to production during 3Q 2026; treatment under governmental regulatory regimes and tax laws; the quantity of petroleum and natural gas resources or reserves; anticipated production rates; the future coming into effect of the Upstream Petroleum Resources Development Act 23 of 2024 with respect to the Group's interest in the Karoo basin, South Africa; the awarding of exploration rights; liquidity and financial capital including the going concern capabilities of the Company; expectations regarding the ability of Falcon to access additional sources of funding to meet its obligations prior to the closure of the Transaction including those not currently available; and Falcon's ability to leverage its experience in the unconventional oil and gas industry to acquire interests in licenses.
Some of the risks and other factors, which could cause results to differ materially from those expressed in the forward-looking statements include, but are not limited to: failure to satisfy all conditions of the Transaction; general economic conditions in the Republic of Hungary, the Commonwealth of Australia, the Republic of South Africa and globally; supply and demand for petroleum and natural gas; industry conditions, including fluctuations in the price of petroleum and natural gas; governmental regulation of the petroleum and natural gas industry, including income tax, environmental and regulatory matters adversely impacting the exploitation of unconventional oil and gas resources; introduction of a moratorium; fluctuation in foreign exchange or interest rates; risks and liabilities inherent in petroleum and natural gas operations, including exploration, development, exploitation, marketing and transportation risk and for relatively under-explored basins such as the Beetaloo Sub-basin there may not be the shale oil and gas commercial potential; renewal of exploration permits; need to obtain regulatory approvals before development commences; environmental risks and hazards and cost of compliance with environmental regulations; aboriginal claims; risks and uncertainties associated with wellbore or reservoir conditions, geological, technical, drilling and processing problems; unanticipated operating events which can delay exploration and appraisal or reduce production or cause production to be shut-in or delayed; willingness of joint venture partners to continue with a work programme and bringing towards
commerciality; the ability of our joint venture partners to pay their proportionate share of joint interest billings; failure to obtain industry partner and other third party consents and approvals, when required; stock market volatility and market valuations; competition for, among other things, capital, acquisition of reserves, processing and transportation capacity, undeveloped land and skilled personnel; uncertainties inherent in estimating quantities of reserves and resources and bringing to commerciality; the need to obtain required approvals from regulatory authorities with delays impacting work programmes and associated costs or not receiving the requisite license to explore; risks associated with drilling wells which is speculative and often involves significant costs that may be more than estimated and may not result in any discoveries; risks associated with the ability to raise necessary funds to continue to meet obligations and cash availability to meet expenses as they fall due; pandemics such as COVID-19 may be prolonged, delaying work programmes and increasing cost; macroeconomic risks such as inflationary pressures and the current Russian-Ukrainian war also delay work programmes due to delivery of goods and increasing costs and the other factors considered under "Risk Factors" set out on page 18.
With respect to forward-looking statements contained in this Annual Information Form ("AIF"), Falcon has made assumptions regarding: the successful completion of the Transaction, the countries where the Group operates supporting the exploitation of unconventional oil and gas; the shale oil and shale gas commercial potential of the Beetaloo Sub-basin while it remains relatively under-explored; the continuation of the Beetaloo Sub-basin Pilot Project and being brought towards commerciality; the original gas in place and contingent gas resource calculated with respect to the Beetaloo Sub-basin are the best estimates based on the drilling results to date and other data (including seismic) available; work with Falcon's joint venture partner, Tamboran B2, will continue, obtaining necessary approvals to continue working in the Beetaloo; estimated date for the awarding of the exploration right over the acreage in the Karoo Basin; cost estimates for twelve months from the date of approval of this document and the Group's ability to continue as a going concern; the Beetaloo Sub-basin project being brought towards commerciality.
Management has included the above summary of assumptions and risks related to forward-looking information provided in this AIF in order to provide readers with a more complete perspective on Falcon's future operations and such information may not be appropriate for other purposes. Falcon's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits, if any, that the Company will derive therefrom. Readers are cautioned that the foregoing lists of factors are not exhaustive.
The forward-looking statements contained in this document are expressly qualified by this cautionary statement. Falcon disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required under applicable securities regulation. In addition, other factors not currently viewed as material could cause actual results to differ materially from those described in the forward-looking statements.
Advisory regarding oil and gas information
Any references in this AIF to initial production rates are useful in confirming the presence of hydrocarbons; however, such rates are not determinative of the rates at which such wells will continue production and decline thereafter and are not necessarily indicative of long-term performance or ultimate recovery. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production for Falcon. Such rates are based on field estimates and may be based on limited data available at this time.
Contingent resource estimates are those quantities of gas (produced gas minus carbon dioxide and inert gasses) that are potentially recoverable from known accumulations, but which are not yet considered commercially recoverable due to the need for additional delineation drilling, further validation of deliverability and original gas in place, and confirmation of prices and development costs. There is uncertainty that it will be commercially viable to produce any portion of the resources. For additional information relating to contingent resource estimates in respect of the Amungee NW-1H Velkerri B Shale Gas Pool which were prepared by an Origin Energy B2 Pty Ltd.'s ("Origin") employee and a Qualified Reserves and Resources Evaluator effective as of February 15, 2017, please refer to pages 11-12 for details.
Documents incorporated by reference.
The following documents, referenced herein, have been filed on the Canadian Securities Administrator's System for Electronic Document Analysis and Retrieval ("SEDAR+") at www.sedarplus.ca and are incorporated by reference herein:
Statement of Reserves Data and Other Oil and Gas Information with an effective date of 31 December 2025 (the "51-101F1 Report").
Report on Reserves Data prepared by Chapman Petroleum Engineering Ltd. ("Chapman") dated 12 February 2026 (the "51-101F2 Report").
Report of Management and Directors on Reserves Data and Other Information dated 28 April 2026 (the "51-101F3 Report").
Dollar amounts
All dollar amounts in this document are in United States dollars ("$"), except as otherwise indicated. ("CDN$") where referenced represents Canadian Dollars; ("£") represents British Pounds sterling, ("HUF") represents Hungarian Forints ("A$") represents Australian Dollars and ("€") represents the Euro.
The financial information provided herein has been prepared in accordance with International Financial Reporting Standards and International Accounting Standards as issued by the International Accounting Standards Board (IASB) (collectively IFRS Accounting Standards).
CORPORATE STRUCTURE
Falcon was incorporated and registered in British Columbia, Canada on 18 January 1980 under the laws of the Province of British Columbia with the name Sanfred Resources Ltd. ("Sanfred").
On 21 December 1999, Sanfred consolidated its authorised and issued share capital. On the same date Sanfred changed its name to Falcon Oil & Gas Ltd. On 2 March 2005, Falcon transitioned from the British Columbia Company Act to the new Business Corporations Act (British Columbia) ("BCA"). Other than the subsidiaries through which Falcon acts, Falcon has no commercial name other than its registered name and does not operate under any other name.
Falcon is a reporting issuer and the principal corporate legislation under which it operates is the BCA and the regulations made thereunder.
Falcon's registered office is at 1200 Waterfront Centre, 200 Burrard Street, Vancouver BC V7X 1T2, Canada. Falcon's head office is at 68 Merrion Square South, Dublin 2, Ireland, telephone number +353 1 676 8702. The Company's corporate website address is https://www.falconoilandgas.com.
Falcon has no administrative, management or supervisory bodies other than the Board of Directors ("the Board"), and the committees as set out in in this document, namely the Audit Committee, the Compensation Committee and the Reserves, Health Safety and Environment Committee.
Organisational structure
The following chart depicts the organisation of the Company as at the date hereof, including its subsidiaries:
100%
98.1% interest
Falcon Oil & Gas Ltd. (British Columbia, Canada)
Falcon Oil & Gas Ireland Limited. (Ireland)
TXM Oil and Gas Exploration Kft. (Hungary)
Falcon Oil & Gas Australia Limited (Australia)
100% interest
Falcon Oil & Gas Holdings Ireland Limited. (Ireland)
interest 100% interest
100% interest
Falcon Exploration and Production South Africa (Pty) Ltd
(South Africa)
Falcon Australia was formed in August 2008 to acquire participating interests ("PI") in certain properties in the Beetaloo Sub-basin located in the Northern Territory, Commonwealth of Australia.
Falcon Ireland was incorporated on 25 April 2012 and functions as a service company for corporate headquarters.
Falcon Holdings Ireland was incorporated on 6 November 2013 and functions as a holding company for the Group's investment in Falcon South Africa.
TXM was formed in 2004 to conduct oil and gas exploration and development business in the Republic of Hungary.
Falcon South Africa was incorporated on 17 March 2014 to conduct oil and gas exploration and development in South Africa.
GENERAL DEVELOPMENT OF THE BUSINESS
Developments of the business during 2023
On 16 February 2023 Falcon announced the commencement of the well stimulation programme at the A2H well.
On 22 March 2023 Falcon announced the successful completion of a 25-stage stimulation programme at the A2H well.
On 1 August 2023 Falcon announced the spudding of the SS1H horizontal well in EP117 with a Helmerich & Payne ("H&P") super-spec FlexRig® Flex 3 Rig.
On 25 August 2023 Falcon noted that Falcon Australia's joint venture partner, Tamboran B2, had given notice that the 2014 farm-in commitments had been met, having reached the associated cost carry commitment of A$264 million.
On 30 August 2023 Falcon announced that the SS1H pilot hole in EP117 had reached a total vertical depth of 3,300 metres, intersecting approximately 90 metres of the Amungee Member B-shale with strong dry gas shows.
On 18 September 2023 Falcon announced that drilling operations on the SS1H well were successfully completed.
On 25 September 2023 Falcon announced the spudding of the Amungee NW-3H ("A3H") horizontal well in EP98 with a H&P super-spec FlexRig® Flex 3 Rig.
On 16 October 2023 Falcon announced that drilling operations on the A3H well in EP98 had been successfully completed. On 27 November 2023 Falcon announced the commencement of stimulation activities at the SS1H well in EP117.
On 7 December 2023 Falcon announced the completion of the 10-stage stimulation program over a 500 metre horizontal section of the Amungee Member B-Shale within the SS1H well.
Developments of the business during 2024
On 29 January 2024 Falcon announced the commencement of the IP30 testing at the SS1H well in EP117.
On 26 February 2024 Falcon announced the SS1H well in EP117 achieved commercial IP30 flow rates significantly higher than pre-drill expectations.
On 25 March 2024 Falcon announced that it had elected to reduce its PI in the proposed Pilot Project from 22.5% to 5% for the first two wells drilled in 2024.
On 26 March 2024 Falcon announced that the SS1H well achieved above commercial IP60 flow rate of 3.0 MMcf/d (normalised to 6.0 MMcf/d over 1,000 metres).
On 18 April 2024 Falcon announced a proposed placing of new Common Shares of the Company. Furthermore, Falcon Australia agreed to grant Daly Waters Energy, LP ("Daly Waters") and a major US-based energy industry service provider overriding royalty interest ("ORRI") over Falcon Australia's PIs in the Exploration Permits in return for cash payments of $3 million and $1 million, respectively.
On 22 April 2024 Falcon announced the Company had raised gross proceeds of c. $4.9 million (c. £3.9 million) through the Subscription and Placing, for a total number of 64,794,087 Common Shares at an Issue Price of £0.06p per share.
On 23 April 2024 Falcon announced that the BJV has signed a Binding Agreement for a long-term Gas Sales Agreement to supply the Northern Territory Government ("Buyer") with 14.6 PJ (13.8 BCF) per annum from the proposed Pilot Project for an initial term of nine years, with a Buyer's option to extend for a further six-and-a-half years.
On 26 April 2024 Falcon announced that SS1H well in EP117 achieved above commercial IP90 flow rate of 2.9 MMcf/d (normalised to 5.8 MMcf/d over 1,000 metres).
On 7 May 2024 Falcon confirmed that it had received TSX Venture Exchange conditional approval for the second tranche of the Subscription by Sheffield Holdings LP ("Sheffield"), as previously announced on 22 April 2024. Accordingly, the Company issued a further 6,638,597 New Common Shares to Sheffield at an Issue Price of £0.06p per share, taking the aggregate interests of Sheffield to 116,386,398 Common Shares, representing 10.49 per cent of the enlarged issued share capital.
On 30 August 2024 Falcon announced the commencement of the 2024 drilling programme with the spudding of the SS2H horizontal well in EP98 in the Beetaloo Sub-basin.
On 3 September 2024 Falcon announced that it planned to change its corporate name to "Beetaloo Resources Corp." and to consolidate its share capital on the basis of up to two hundred and fifty pre-consolidation common shares for each one post-consolidation common share. The name change and consolidation were subject to shareholder approval being obtained at a special meeting of shareholders to be held on 29 October 2024 and all necessary regulatory approvals including the approval of TSX Venture Exchange and AIM.
On 30 October 2024 Falcon announced that all resolutions considered and voted upon by the shareholders at its special meeting on the 29 October 2024 were approved.
On 12 November 2024 Falcon provided an update on operations in EP98 in the Beetaloo Sub-basin. The SS2H well was successfully drilled to a total depth ("TD") of 6,300 metres. When preparing to run production casing a downhole mechanical issue was unable to be remediated, which resulted in the SS2H well being plugged and sidetracked.
On 18 November 2024 Falcon announced that SS2H ST1 well had been cased and suspended at a total measured depth of 4,932 metres.
On 25 November 2024 Falcon announced the spudding of the SS4H horizontal well in EP98 in the Beetaloo Sub-basin.
On 23 December 2024 Falcon announced that BDO Canada LLP had been appointed as Falcon's new auditor, replacing BDO LLP in the UK.
On 23 December 2024 Falcon announced that the SS4H horizontal well was successfully drilled, cased and cemented to a measured depth of 6,452 metres in EP98 in the Beetaloo Sub-basin.
Developments of the business during 2025
On 24 January 2025 Falcon announced the commencement of the stimulation campaign at the S22H ST1 and S24H wells in the Beetaloo Sub-Basin and also that for the next drilling phase of the Pilot Project, which involves the drilling and stimulation of the remaining wells, Falcon Australia elected to reduce its PI from 5% to 0%.
On 7 February 2025 Falcon announced the completion the SS2H ST1 stimulation in the Beetaloo Sub-basin.
On 13 February 2025 Falcon provided an operational update on the stimulation campaign for SS2H ST1 and SS4H.
On 23 April 2024 Falcon announced that the BJV had signed a Binding Agreement for a long-term GSA to supply the Northern Territory Government (Buyer) with 14.6 PJ (13.8 BCF) per annum from the proposed Pilot Project for an initial term of nine years, with a Buyer's option to extend for a further six-and-a-half years.
On 13 May 2025 Falcon announced that Tamboran Corp and Daly Waters had signed a binding agreement to finalise the checkerboard of their joint acreage across the Exploration Permits.
On 16 June 2025 Falcon announced that SS2H ST1 well achieved an average IP30 flow rate of 7.2 MMcf/d over 1,671-metres across a 35-stage stimulated length, making it the highest IP30 result in the Beetaloo to date.
On 14 July 2025 Falcon announced that SS2H ST1 well achieved an IP60 flow rate of 6.8 MMcf/d over 1,671-metres across a 35-stage stimulated horizontal.
On 11 August 2025 Falcon announced that SS2H ST1 well achieved an average IP90 flow rate of 6.7 MMcf/d over 1,671 metres.
On 14 August 2025 Falcon announced that the BJV had signed an historic agreement with Native Title Holders and the Northern Land Council for the sale of appraisal gas from their Exploration Permits.
On 29 September 2025 Falcon provided an operational update on the 2025 drilling campaign.
On 30 September 2025 Falcon entered into a Transaction to sell all its subsidiaries to Tamboran Corp. Tamboran Corp will acquire all of Falcon's subsidiaries in exchange for 6,537,503 shares of Tamboran Corp NYSE Common Stock and cash consideration of $23.7 million. On completion, eligible Falcon shareholders will exchange their common shares for Tamboran
Corp shares at an exchange ratio of 0.00687 shares of Tamboran Corp NYSE Common Stock for each Falcon common share and the cash consideration will be paid by Tamboran into a blocked account in the name of a sanctioned shareholder.
On 15 October 2025 Falcon announced that the three wells of the 2025 drilling campaign were drilled and cased, each with a 3,000 metre horizontal section
On 15 December 2025 Falcon announced the completion of the SS2-1H stimulation program.
Developments of the business during 2026
On 05 January 2026 Falcon announced that Falcon Australia held a General Meeting in Brisbane Australia on 30 December 2025. At the General Meeting, as part of the broader Transaction, shareholders had approved the sale of Falcon's 98.1% interest to Falcon Australia to Tamboran Corp. Falcon and its associates were excluded from voting on the relevant resolutions. Acquisition of the 98.1% interest in Falcon Australia will provide Tamboran Corp with the option of compulsorily acquiring all the remaining shares in Falcon Australia held by minority shareholders.
On 17 February 2026 Falcon announced that, in accordance with applicable AIM Rules, that the admission of Falcon's common shares to trading on AIM will be cancelled following completion of the Transaction with Tamboran Corp.
On 12 March 2026 Falcon announced that the Shareholders of common shares of the Company voted to approve the Transaction with Tamboran Corp. The Transaction was approved by approximately 99.76% of votes cast by Shareholders at a special meeting held on 11 March 2026 to consider the Transaction
On 16 March 2026 Falcon announced that the Transaction remains subject to a number of terms and conditions as set forth in the arrangement agreement dated 30 September 2025, including approval of the plan of arrangement by the Supreme Court of British Columbia.
On 25 March 2026 Falcon announced that the hearing before the Supreme Court of British Columbia, which was initially adjourned until 24 March 2026, has been further delayed due to a backlog at the Court. The Company were advised that the matter is now expected to be heard on 26 March 2026.
On 27 March 2026 Falcon announced that Falcon appeared before the Supreme Court of British Columbia (the "Court") on 26 March 2026 seeking the Court's final order to approve the Transaction (the "Final Order"). Lamesa Holding S.A., a beneficial shareholder of the Company, opposed the granting of the Final Order and appeared at the hearing. The Court approved the Final Order, subject to certain amendments to the Plan of Arrangement relating to the treatment of Falcon shareholders that are subject to sanctions.
On 02 April 2026 Falcon announced that SS2-1H well achieved an average IP20 flow rate of 10.3 MMcf/d over 2,632 metres.
BUSINESS DESCRIPTION
General
Falcon is an international oil and gas company engaged in the exploration and development of unconventional oil and gas assets. The Company's interests are located in internationally diversified countries that are characterised by a high regional demand for energy and are close to existing infrastructure allowing rapid delivery of oil and gas to market in Australia and Hungary.
Falcon's strategy is to leverage the Group's expertise in the unconventional oil and gas industry to acquire interests in licences covering large acreages of land and to build on its internationally diversified portfolio of unconventional assets and interests, located in countries that the Board believes support the exploitation of unconventional oil and gas. Falcon seeks to add value to its assets by entering into farm-in arrangements with major oil and gas companies that will fully or partially carry Falcon through seismic and drilling work programmes. The Group's principal interests are located in two major underexplored basins in Australia and South Africa and further interests in Hungary, covering approximately 12.3 million gross acres in total. The carrying value at 31 December 2025 of the Company's interest in Australia is $56.8 million, while the Hungarian asset is nil due to a determination in 2014 that the estimated recoverable amount was insufficient to cover the carrying value of the asset. For the South African interest, costs associated with the technical cooperation permit are expensed as incurred.
Falcon is incorporated in British Columbia, Canada and headquartered in Dublin, Ireland. Falcon's Common Shares are traded on the TSX-V (symbol: FO.V) and AIM, a market operated by the London Stock Exchange (symbol: FOG).
Proposed sale of all Falcon subsidiaries to Tamboran Corp
On 30 September 2025 Falcon entered into a Transaction to sell all its subsidiaries to Tamboran Corp. Tamboran Corp will acquire all of Falcon's subsidiaries in exchange for 6,537,503 shares of Tamboran Corp NYSE Common Stock and cash consideration of $23.7 million. On completion, eligible Falcon shareholders will exchange their common shares for Tamboran Corp shares at an exchange ratio of 0.00687 shares of Tamboran Corp NYSE Common Stock for each Falcon common share and the cash consideration will be paid by Tamboran into a blocked account in the name of a sanctioned shareholder. The Transaction has been unanimously approved by the Board of Directors of Tamboran Corp and Falcon. The Transaction is expected to close in the second quarter of 2026. The Transaction will on completion result in Falcon ceasing to own all its assets and business. The entities being acquired pursuant to the Transaction are all of Falcon's subsidiaries, namely TXM, Falcon Ireland, Falcon Holdings Ireland, Falcon South Africa, a South African limited liability company and Falcon's 98.1% majority owned subsidiary, Falcon Australia ("Falcon's subsidiaries").
Summary of Operations
The following table summarises the principal oil and gas interests of the Company in Australia, South Africa and Hungary:
Notes:Assets (Country)
Interest (%)
Operator
Status
Area (km2)
Exploration Permit EP76 (Beetaloo Sub-basin, Northern Territory, Australia)
22.5(i)
Tamboran B2
(iii)
Exploration
1,891.3
Exploration Permit EP98 (Beetaloo Sub-basin, Northern Territory, Australia)
22.5(i)
Tamboran B2
(iii)
Exploration
10,316.0
Exploration Permit EP117 (Beetaloo Sub-basin, Northern Territory, Australia)
22.5(i)
Tamboran B2
(iii)
Exploration
6,412.0
Technical Cooperation Permit, (Karoo Basin, South Africa) (ii)
100
Falcon
TCP
30,327.9
Makó Production Licence (Makó Trough, Hungary)
100
TXM
Production
994.6
Falcon owns 98.1% of Falcon Australia, which holds a 22.5% interest in EP76, EP98 and EP117 (collectively the "Exploration Permits"). The remaining 1.9% interest of Falcon Australia is held by others. The Exploration Permits are currently in year 3 with a permit year end of 31 May 2028. On 25 March 2024 Falcon announced that Falcon Australia had elected to reduce its PI in the proposed Pilot Project from 22.5% to 5% for the first two wells and on 24 January 2025 it was announced that Falcon Australia would reduce its participation in the remaining wells for the Pilot Project to 0%.
In compliance with the terms of the Technical Cooperation Permit ("TCP"), the Company submitted its application for an exploration licence in August 2010. Local counsel has confirmed that despite the TCP having an expiry date of October 2010, the Company's interests remain valid and enforceable.
In September 2022 Origin announced the divestment of their interest in the Exploration Permits to Tamboran B2, with Tamboran B2 appointed as operator.
Beetaloo Sub-basin, Northern Territory, Australia
OverviewFalcon Australia is one of the two registered holders of approximately 4.6 million gross acres (~ 18,619 km2), 1 million net acres of three Exploration Permits in the Beetaloo Sub-basin, Northern Territory, Australia. The Beetaloo Sub-basin is located 600 kilometres south of Darwin, close to infrastructure including a highway, a pipeline and a railway, offering transport options to the Australian market and beyond via the existing and developing liquified natural gas capacity in Darwin.
The Beetaloo Sub-basin is a Proterozoic and Cambrian tight oil and gas basin. In its entirety, the Beetaloo Sub-basin covers approximately 8.7 million acres (~ 35,260 km2) and is a relatively underexplored onshore exploration basin. The area is also remote and sparsely populated. In consideration of these factors, the Board believes the Beetaloo Sub-basin has shale oil and shale gas potential.
Exploration PermitsA summary of Falcon Australia's Beetaloo Exploration Permits is included on the previous page.
In accordance with local law and regulations, Falcon Australia's acreage interests are subject to combined government and Northern Land Council royalties on production values of up to approximately 12% and for other royalties granted by Falcon Australia, please refer to the section below. Falcon Australia is subject to Commonwealth Government corporation tax of 30%, however where the entity has aggregated annual turnover of less than A$50 million for the financial year and 'base rate entity passive income' of 80% or less of assessable income, Falcon Australia would be considered a 'base rate entity' for Australian tax purposes and would be taxed at a lower rate of 25%. Falcon Australia is also subject to the Commonwealth Government's Petroleum Resource Rent Tax ("PRRT") levied at the rate of 40% on taxable profits derived from the petroleum projects. The PRRT is calculated on the individual projects, and royalties are deductible for PRRT purposes. The PRRT tax system is separate from the company income tax system and is based on cash flow. Both royalties and PRRT are deductible for corporate income tax purposes.
Overriding Royalty Beetaloo Sub-basin Exploration PermitsOn 18 April 2024 Falcon announced that Falcon Australia had agreed to grant Daly Waters and a major US-based energy industry service provider an ORRI over Falcon Australia's PI in the Exploration Permits in return for cash payments of $3 million and $1 million respectively.
Falcon Australia agreed to grant:
to Daly Waters, in consideration for a cash payment of $3 million, an ORRI of 6.0% in respect of the area around the Pilot Project development, in which Falcon Australia has a 5% PI, and an ORRI of 1.3333% in respect of the remaining
~4.5 million acres; and
to a major US-based energy services provider, in consideration for a cash payment of $1 million, an ORRI of 2% in respect of the area around the Pilot Project development, and an ORRI of 0.4444% in respect of the remaining ~4.5 million acres.
Other ORRIs granted in previous years over Falcon Australia's 22.5% PI are as follows:
2% ORRI to Sheffield; and
1% ORRI Malcolm John Gerrard, Territory Oil & Gas LLC and Tom Dugan Family Partnership LLC.
Transformational Farm Out of Beetaloo unconventional acreageOn 19 September 2022 Origin announced its divestment of their 77.5% interest in the Exploration Permits to Tamboran B2, a 50:50 joint venture between Daly Waters Energy, LP and Tamboran (West) Pty Limited. On 11 October 2022 Falcon announced that Falcon Australia had entered into a binding LOI with Tamboran B2 pursuant to which the parties have agreed to amend the terms of the JOA and the Farm-in Agreement, each dated 2 May 2014 (as amended), entered into with Origin in respect of Falcon Australia's interest in the Exploration Permits.
Discoveries and ProspectivityOn 12 October 2016, Falcon announced that Origin had submitted a Notification of Discovery to the Department of Primary Industry and Resources on the Amungee NW-1H well in the Beetaloo Sub-basin and on 15 February 2017 it was announced that Origin had submitted the Results of Evaluation of the Discovery and Preliminary Estimate of Petroleum in Place for the Amungee NW-1H Velkerri B Shale Gas Pool ("Discovery Evaluation Report") to the Northern Territory Government. The submission followed the completion of extended production testing at the Amungee NW-1H exploration well of the "B Shale" member of the Middle Velkerri formation.
In addition, Origin undertook a resource study based on the Amungee NW-1H well results and other key wells in the Beetaloo Sub-basin including regional seismic data to determine a best estimate ("2C") contingent gas resource estimate for the Amungee Member B-Shale (previously the Middle Velkerri B Shale Pool) within EP76, EP98 and EP117.
Key Details of the Discovery Evaluation Report
The Discovery Evaluation Report was submitted in compliance with Section 64 of the Northern Territory Petroleum Act (2016) and as per the Reporting a Petroleum Discovery Guideline. The Report provides the following volumetric estimates and recovery
/ utilisation factors for the B Shale member of the Middle Velkerri formation within permits EP76, EP98, and EP117.
Middle Velkerri B Shale Volumetric Estimates as of 15 February 2017 (1)
Gross
Net Attributable (2)
Best Estimate
Best Estimate
Area km2 (3)
16,145
3,564
Original Gas In Place ("OGIP") (TCF)(4)
496
109
Combined Recovery / Utilisation Factor (5)
16%
16%
Technically Recoverable Resource (TCF)
85
19
OGIP Concentration (BCF/km2) (6)
31
31
1 The Report and estimates included in the table above were not prepared in accordance with the Canadian Oil and Gas Evaluation Handbook ("COGEH")
2 Falcon's PI is 22.07% (revised as of 7 April 2020 following the farm down, previously 29.43%), net attributable numbers do not incorporate royalties over the permits
3 Area defined by a depth range at a maturity cut-off consistent with the dry gas window within the Exploration Permits (EP76, EP98, EP117)
4 Trillion cubic feet
5 The combined recovery/utilization factor range was applied stochastically to the OGIP range to calculate the range of technically recoverable resource within the Exploration permits.
6 Billion cubic feet per square kilometre
Understanding the factors controlling deliverability and recovery as well as spatial variation within the gas play/shale pool are in their infancy. A quantitative assessment of the aggregated estimated recoverable resource of the gas play that can handle these complexities will require a statistically significant number of wells testing the gas play. As there is only a single production test within the gas play Origin decided upon a qualitative assessment approach instead to estimate the technically recoverable resource. There is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources.
Factors considered in the qualitative assessment of technically recoverable hydrocarbon resource in the gas play were the stimulated rock volume recovery factor range, the subsurface utilization factor range and surface utilization factor range.
Origin's Contingent Gas Resource Estimates for the Middle Velkerri B Shale Pool within EP76, EP98 and EP117
Origin also prepared a contingent resource estimate using probabilistic methods and reservoir evaluation data, in addition to regional seismic data.
Assessment of 2C Contingent Gas Resource Estimates for the Middle Velkerri B Shale Pool within EP76, EP98 and EP117 as of 15 February, 20171
Measured and Estimated Parameters
Units
Best Estimate
Area 2
km2
1,968
OGIP 3
TCF
61.0
Gross Contingent Resource4
TCF
6.6
Net Contingent Resource4,5
TCF
1.46
1 Contingent resource estimates were prepared on a statistical aggregation basis and in accordance with the Society of Petroleum Engineers Petroleum Resources Management System ("SPE-PRMS"). SPE-PRMS was developed by an international group of reserves evaluation experts and endorsed by the World Petroleum Council, the American Association of Petroleum Geologists, the Society of Petroleum Evaluation Engineers, and the Society of Exploration Geophysicists. Contingent resource estimates are those quantities of gas (produced gas minus carbon dioxide and inert gasses) that are potentially recoverable from known accumulations but which are not yet considered commercially recoverable due to the need for additional delineation drilling, further validation of deliverability and original gas in place, and confirmation of prices and development costs. If the estimates were to be prepared in accordance with COGEH, Falcon is highly confident that there would be no change to the contingent resource estimates above.
2 P50 area from the Contingent Resource area distribution
3 OGIP presented is the product of the P50 Area by the P50 OGIP per km2
4 Estimated gas contingent resource category of 2C. There is no certainty that it will be commercially viable to produce any portion of the resources.
5 Net to Falcon's 22.07% (revised as of 7 April 2020 following the farm down, previously 29.43%) working interest in EP76, EP98, and EP117, the net contingent resource number does not incorporate royalties over the permits
As noted in Origin's press release the "The contingent resource estimates contained in [their] report are based on, and fairly represents, information and supporting documentation that have been prepared by Alexander Côté who is a full-time Origin employee and a Qualified Reserves and Resource Evaluator. Mr. Côté is a registered professional engineer with specialised unconventional gas resource characterisation and development experience. Mr. Côté has consented to the form and context in which these statements appear". Mr. Côté is a member of the Association of Professional Engineers and Geoscientists of Alberta.
Further information relating to the disclosure of the contingent gas resource estimates.
Well Name
Amungee NW-1H
Permit / location
EP98 (onshore Beetaloo Sub-basin Northern Territory, Australia)
Working interest in well
Falcon 22.07% (previously 29.43% prior to the farm down on 7 April 2020)
Product type
Shale gas
Geological rock type of formation drilled
Organic rich shale (mudstone and siltstone)
Depth of zones tested
~2170-2190 metres below sea level
Type of test
Production test following hydraulic fracture stimulation
Hydrocarbon phases recovered
Gas (Approximate composition: methane ~92%, ethane+ ~3%, carbon dioxide and inerts ~5%)
Flow rates and volumes
Average rate (57 days): 1.1 MMscf/d, Final production rate: 1.07 MMscf/d,
Cumulative production: 63 MMscf
Number of fracture stimulation stages
11 stages (average size ~ 100 ton per stage)
Risks and level of uncertainty with recovery of resources
Risks and uncertainties include the lifting of the Northern Territory moratorium on hydraulic fracture stimulation, completing longer-duration production testing above the 57 days conducted on Amungee NW-1H, reducing well costs with scale of activity, establishing gas sales agreements and building infrastructure to connect the resource to market.
Contingent on the moratorium being lifted, additional appraisal drilling is planned (as per the work program associated with the permits), along with hydraulic fracture stimulation and testing to assess deliverability and move
the project towards commercialisation.
Significant positive and negative factors relevant to the estimate
Significant positive factors relevant to the estimate of the contingent resources include the successful well test at Amungee NW-1H which produced enough gas to surface to be of commercial interest; core and log data from Amungee NW-1H, Beetaloo W-1, Kalala S-1, Tanumbirini-1, McManus-1, Altree-2 and Walton-2 provide convincing evidence of a significant volume of moveable hydrocarbons; and the Marcellus Shale (Pa., USA) and Barnett Shale (Tx., USA) are analogous, commercially-productive fields that are similar to the Velkerri B Shale reservoir.
Significant negative factors include the lifting of the Northern Territory moratorium on hydraulic fracture stimulation, the limited number of wells on the Company's acreage, lack of a developed service sector providing uncertainty regarding estimates of capital and operating costs, developing
hydrocarbon regulations and environmental legislation and the requirement to obtain social acceptability for oil and gas operations.
Commerciality
Currently this project is based on a conceptual study. The economic status is undetermined at this time. The contingent resources will continue to be assessed as additional appraisal wells are drilled and tested in order to better evaluate the commercial potential of the play. After a sufficient number of wells have been drilled to demonstrate that the project is technically feasible and a development plan has been generated,
economics can be run to determine commerciality of production.
On 3 September 2021 Falcon provided results on the production log test at the Amungee NW-1H well. The results suggested a normalised gas flow rate equivalent of between 5.2-5.8 MMscf/d per 1,000m of horizontal section. Initial flow rates during the first 48 hours of testing ranged between 2 - 4 MMscf/d with rates averaging 1.23 MMscf/d over the first 23 days. A production logging tool ("PLT") was run on 19 August 2021 to 3,098 metres measured depth ("mMD"), just prior to the casing deformation at 3,112mMD. The PLT data confirmed that:
Only 5-15% of the production came from stages 1-7 beyond the casing deformation point at 3,112 mMD.
85-95 % of the production came from stages 8-11 spanning a 200m horizontal section, prior to the casing deformation.
Current Activity Pilot Project, reduced participating interestOn 25 January 2025, it was announced that Falcon Australia would reduce its participation to 0% for the three wells drilled in 2025.
SS2H & SS2H ST1 well - Falcon PI @ 5%On 7 February 2025 Falcon announced the completion of the SS2H ST1 well stimulation with 35 stages successfully completed across the 1,671-metre (5,483-foot) horizontal section of the Amungee Member B-shale with the Liberty Energy (NYSE: LBRT) modern stimulation equipment. Stimulation activities achieved five stages over a 24-hour period on multiple days, the average proppant intensity was 2,706 pounds per foot and achieved wellhead injection rates above 100 barrels per minute and the average stage spacing was 48-metres (~157-feet). On 14 May 2025 Falcon announced that flow testing had commenced after a longer soaking period following analysis of wells across the Beetaloo Sub-basin, allowing water to imbibe into the rock, increasing the formation's relative permeability to gas.
On 16 June 2025 it was announced that SS2H ST1 well achieved an average IP30 flow rate of 7.2 MMcf/d over 1,671-metres (5,483-foot) across a 35-stage stimulated length, making it the highest IP30 result in the Beetaloo to date. The normalized flow rate of 13.2 MMcf/d over an extrapolated 10,000-foot horizontal section is in-line with the average of more than 11,000 wells in the Marcellus Shale dry gas area on production over a 12-month period. The results demonstrate the commercial deliverability of gas from the Amungee Member B-Shale in the Australian East Coast gas market that typically sells at a premium to Henry Hub in the United States and under long term CPI-linked contracts. The exit rate trajectory continues a steady, low-declining curve at 6.7 MMcf/d (normalized at 12.2 MMcf/d per 10,000-feet) with a flowing wellhead pressure of ~910 psi. The steady state decline curve on SS2H ST1 well was consistent with that achieved from the SS1H well.
On 14 July 2025 it was announced that SS2H ST1 well achieved an IP60 flow rate of 6.8 MMcf/d over 1,671-metres (5,483-foot) across a 35-stage stimulated horizontal. The exit rate maintained a steady, low-declining curve at 6.4 MMcf/d with a flowing wellhead pressure of ~720 psi and exhibited less decline than that of the SS1H well over the 31-60 day period of testing.
Furthermore, on 11 August 2025 it was announced that SS2H ST1 well achieved an average IP90 flow rate of 6.7 MMcf/d over 1,671 metres (5,483-foot). At the completion of the 90-day period, the well was flowing at 6.5 MMcf/d with a wellhead pressure of ~700 psi, a ~3% decline in wellhead pressure from the end of day 60. SS2H ST1 was suspended ahead of expected stimulation in H1 2026.
SS4H well - Falcon PI @ 5%On 25 November 2024 Falcon announced the spudding of the SS4H horizontal well in EP98 and on the 23 December 2024 it was announced that SS4H well was successfully drilled, cased and cemented to a measured depth of 6,452 metres (21,169 feet). Data has indicated strong gas shows, and a continuation of the high-quality shale and rock properties observed in the SS1H well and SS2H ST1 well locations with no faulting observed along the entire 3,048-metre (10,000 foot) lateral section. In February 2025 it was noted that stimulation operations commenced in January 2025, however Tamboran B2 took proactive and precautionary steps to pause completion operations due to the detection of stress in a casing connection.
2025 Drilling campaignSS2-1H, SS3H and SS5H wells - Falcon PI @ 0%
On 14 July 2025 it was noted that the 2025 drilling campaign would target up to three 3,000 metre (~10,000-foot) horizontal wells to be drilled back-to-back over the following few months.
On 29 September 2025 it was announced that the first two wells of the 2025 drilling campaign were drilled and cased, each with a 3,000-metre horizontal section.
On 15 October 2025 it was announced that the three wells of the 2025 drilling campaign were successfully cased, drilled and suspended ahead of stimulation, each with a 3,000-metre horizontal section. The 2025 drilling campaign was the first multi-well drilling program implementing batch drilling in the Beetaloo Sub-basin.
The average drilling to target depth was 26.7 days with the drilling and casing time delivered within the 35-day forecast.
Modifications to the mud system and use of anti-vibration drilling bits led to increased drilling efficiency. This resulted in reaching ~1,000 metres drilled in a day in the SS2-1H well, the fastest horizontal section drilled in the Amungee Member B-shale to date.
On 15 December 2025 Falcon announced the completion of the SS2-1H stimulation program.
58 stages were stimulated across a ~3,050-metre horizontal section within the Amungee Member B Shale, with an average intensity of 2,206 pounds per foot of proppant placed along the completed horizontal section.
Optimization of the stimulation design during the campaign increased stage spacing from ~50 metres to 60 metres reducing the total number of stages required. This adjustment is expected to lower costs in future stimulation programs.
Due to an equipment issue encountered during the cleaning out of the well, it was determined that ~2,632-metres of the horizontal section (86%) will contribute to unimpeded flow, but flow may be impeded for the remaining ~419-metre section from the toe.
The well will be soaked for 30 days before being flow tested for 30 days.
30-day initial production (IP30) flow rates are expected during the first quarter of 2026.
In H1 2026, three wells (which includes the second well of the 2024 drilling campaign) are expected to be stimulated ahead of the commencement of gas sales.
All wells included in the Pilot Project are expected to deliver the contracted 40 MMcf/d volume required under the Gas Sales Agreement with the Northern Territory Government subject to weather conditions and final stakeholder approvals.
2026 Drilling campaignOn 2 April 2026 Falcon announced that SS2-1H achieved an average IP20 flow rate of 10.3 MMcf/d over 2,632-metres (8,635-foot) across a 57-stage stimulated length within the Amungee Member B-Shale. The following was noted:
The normalized flow rate of 11.9 MMcf/d over an extrapolated 10,000-foot horizontal section compares favourably to the average performance of more than 11,000 producing wells in the Marcellus Shale dry gas fairway with over 12 months of production history.
The exit rate trajectory continues a steady, low-declining curve at 8.8 MMcf/d (normalized at 10.2 MMcf/d per 10,000-feet) with a flowing wellhead pressure of ~580 psi. The steady state decline curve on SS2-1H is consistent with that achieved from the SS-2H ST1.
Testing has been intentionally curtailed to avoid unnecessary flaring and carbon emissions and preserve reservoir energy ahead of tie-into the Sturt Plateau Compression Facility ("SPCF") and the commencement of gas sales in 3Q 2026.
The 2026 stimulation campaign for the Shenandoah South 3H, 4H and 5H wells is planned to commence in the second quarter, with all three wells expected to be tied into the SPCF and brought into production during 3Q 2026.
Beneficial use of Gas agreement ("Appraisal Agreement")
On 14 August 2025 Falcon announced that the BJV had signed an historic agreement with Native Title Holders and the Northern Land Council for the sale of appraisal gas from their Exploration Permits. The Appraisal Agreement provides Native Title Holders' consent to the BJV to the sale of appraisal gas from EP98 and EP117 of up to 60 TJ per day from the Pilot Project over a three-year period, subject to the Appraisal Agreement's terms. Furthermore, on 2 September 2025 Falcon announced that approval had been granted from the Northern Territory Government for the sale of appraisal gas from the Pilot Project.
Gas Sales Agreement ("GSA")On 23 April 2024 Falcon announced that the BJV had signed a Binding Agreement for a long-term GSA to supply the Northern Territory Government (Buyer) with 14.6 PJ (13.8 BCF) per annum from the proposed Pilot Project for an initial term of nine years, with a Buyer's option to extend for a further six-and-a-half years.The GSA is a binding supply commitment conditional on the BJV entering into a binding Gas Transportation Agreement with APA on the proposed Sturt Plateau Pipeline, a binding Gas Processing Agreement for the proposed Sturt Plateau Compression Facility, reaching a final investment decision on upstream drilling activity and receiving all necessary approvals to proceed with these projects. First gas flow is planned for 2026.
CheckerboardOn 13 May 2025 it was announced that Tamboran Corp and Daly Waters had signed a binding agreement to finalise the checkerboard of their joint acreage across the Exploration Permits. Both parties will hold operated working interest areas at 77.5% (except two smaller areas which are the subject of the sale of 100,000 acres by Tamboran Corp to Daly Waters), with Falcon Australia having the remaining 22.5% non-operating interest across the wider acreage. Ownership of the proposed northern Pilot Area containing 20,309 acres, the focus for initial gas production, remains unchanged with Falcon Australia at 5%, Tamboran Corp (operator) 47.5% and Daly Waters 47.5%. Ownership of the anticipated expansion into the southern Pilot Area containing 20,309 acres will be Falcon Australia at 22.5%, Tamboran Corp 38.75% and Daly Waters (operator) 38.75%. Falcon Australia is uniquely placed as the only party with an interest across all checkboard pieces.
Karoo Basin, South Africa
OverviewThe Company holds a TCP covering an area of approximately 7.5 million acres (~ 30,327 km2), in the southwest Karoo Basin, South Africa. The TCP granted Falcon exclusive rights to apply for an exploration right over the underlying acreage, which they duly did in August 2010, submitting an application to the Petroleum Agency of South Africa ("PASA"). The Company also submitted an environmental management plan in January 2011 which was updated at the request of the PASA and submitted on 27 February 2015.
RegulationsOn 25 April 2024, the National Council of Provinces passed the Upstream Petroleum Resources Development Bill ("Upstream Bill"), which sought to ensure that the upstream petroleum sector is no longer regulated under the Mineral and Petroleum Resources Development Act, 2002 (MPRDA), but its own standalone legislation. It separated the regulatory frameworks governing mining and upstream petroleum exploration and production which were previously collectively addressed under the MPRDA. This allows the upstream oil and gas sector to be regulated entirely separately from the established mining sector. The regulatory framework created under the Upstream Bill brings about a certain level of regulatory certainty.
On 25 October 2024 the Upstream Bill, now the Upstream Petroleum Resources Development Act 23 of 2024 ("Upstream Act") was assented by the South African President and published in the Government Gazette on 29 October 2024. The Upstream Act will only come into effect by a further proclamation by the South African President. The proposed new regulations focus on licence and permit-related application processes and procedures, associated rights-related obligations, health and safety matters, and appeals.
Fiscal TermsCorporation tax in South Africa is imposed at a rate of 27% of taxable income. Dividends tax is imposed on the shareholder at a rate of 20%, but it may be reduced in terms of a Double Tax Agreement (if applicable) and is 0% in respect of dividends paid by an oil and gas company out of amounts attributable to its oil and gas income. The 20% rate is effective from 22 February 2017.
The South African Government is entitled to a royalty on the sale of mineral resources of up to 7% of gross sales for unrefined resources and 5% of gross sales for refined resources, such as oil and gas.
Discoveries and ProspectivityThe overall Karoo Basin is approximately 173 million acres (~ 700,000 km2), located in central and southern South Africa, containing thick, organic rich shales such as the Permian Whitehill formation. The Karoo describes a geological period lasting some 120 million years, covering the late Paleozoic to early Mesozoic interval periods. Rocks were deposited in a large regional basin, resulting in the build-up of extensive deposits. Until recently, the Karoo Basin was not considered prospective for commercial hydrocarbons resulting, however in an independent report dated June 2013, the U.S. Energy Information Administration ("EIA") estimated there are 390 trillion cubic feet ("Tcf") of technically recoverable resources, ranking it fifth in the world after China, USA, Argentina and Mexico for shale gas potential. The Permian Ecca group contains three potential shales identified as having potential for shale gas, with the Whitehall Formation, in particular, considered ubiquitous, having a high organic content and deemed thermally mature for gas.
Current activityThe Board awaits the new legislation for the petroleum industry following the withdrawal of the MPRDA Bill in 2018 and the Board does not foresee the awarding of an exploration right over the acreage within the next 12 months.
[This part of the page was left blank intentionally]
Makó Trough, Hungary
OverviewFalcon has been active in the Makó Trough since 2005 when it acquired two exploration licences, the Makó and the Tisza exploration licences. In 2007, Falcon's subsidiary, TXM, was awarded the 35-year Makó Production Licence which covers some of the acreage originally covered by the Makó and the Tisza exploration licences.
Makó Production LicenceThe Makó Production Licence was granted by the Hungarian Mining Authority over a gas exploration project in the Makó Trough, covering approximately 245,775 acres (~ 1,000 km2), located in south-eastern Hungary. It is located approximately ten kilometres to the east of the largest producing field in Hungary, the Algyő field, owned and operated by the MOL Group. The area is transected by existing gas pipelines and infrastructure, including a 12 kilometre gas pipeline built by Falcon, offering transport and potential access to local markets and larger distribution centres for international markets.
Under the terms of the licence, the Group is obliged to pay a 2% royalty to the Hungarian Government on any unconventional production and has a further 5% royalty payable to John B. Gustavson Living Trust., the previous owners of the acreage.
From 1 January 2017, corporate income tax is a single rate of 9%, which is applicable to all levels of net income. There is also a profit-based energy industry tax of 41% levied on energy supplying companies with deductions allowable for certain capital expenditures. TXM is the operator and there are no outstanding work commitments on the Makó Production Licence.
Discoveries and ProspectivityThe Makó Trough contains two plays:
the shallower Algyő Play at depths between 2,300 metres and 3,500 metres; and
a deeper unconventional play targeting significant contingent resources in the Deep Makó Trough.
The Algyő Play is a relatively shallow play between 2,300 and 3,500 metres deep. While wells have been drilled through the Algyő Play and encountered gas shows, none tested the shallow play at an optimal location, as they targeted the Deep Makó Trough. Multiple Algyő prospects have been identified by the Group through extensive amplitude versus offset analysis, and 3D seismic data showed the presence of possible gas zones above the Szolnok formation (part of the Deep Makó Trough).
In 2013, Falcon agreed to a three-well drilling exploration programme with Naftna industrija Srbije jsc ("NIS"), a company 56% owned by Gazprom Group, to target the Algyő Play. receiving a cash payment of $1.5 million. Two of the three wells were drilled. Kútvölgy-1 reached TD of 3,305 metres, with the well penetrating an alternating sequence of sandstones, siltstones and shales over a gross interval of 320 metres to TD, with gas shows throughout, however well production did not meet commercial rates and the well was plugged and abandoned. Besa-D-1, the second well, was completed in November 2014. The testing of two sand intervals, both part of the tight turbiditic sequence in the lower Algyő Formation, indicated well production did not meet commercial rates and the well was plugged and abandoned. In 2015, Falcon signed a termination agreement with NIS, with NIS paying $3.7 million in fulfilment of its contractual obligations. Falcon retains a 100% interest in the Algyő Play.
The Deep Makó TroughThis is a deeper unconventional play targeting gas, and to a lesser extent oil, in the low permeability and low porosity rocks in the deeper horizons of the basin.
Between 2005 and 2007, Falcon acquired 1,100 km2 of 3D seismic data and executed a six-well drilling programme on the Deep Makó Trough. Each well encountered thick sequences of hydrocarbon bearing rocks, and tests flowed hydrocarbons from each tested horizon. Several wells flowed gas on test and one well, Magyarcsanád-1, tested light oil. The Makó-7 results demonstrated the presence of a very large column of hydrocarbons in the well-bore.
Current activityFalcon continues to maintain and safeguard its Hungarian wells and review its operations in Hungary, evaluating all options available to the Group to deliver shareholder value. The Group maintains its 100% interest in the Makó Trough.
Employees
As at 31 December 2025 and the date of this document, the Company had the following number of employees (including Executive Directors):
31 December 2025
Date of this document
Job Function
Dublin, Ireland
Dublin, Ireland
Management & Administration
4
4
Special skill & knowledge
The Company's ability to complete drilling and exploration is dependent on the availability of well-trained, experienced crews to operate its field equipment and qualified management. The Group believes that its strategic arrangement with other oil and gas exploration companies aids the Company in ensuring that it has the skills and knowledge available to assist the drilling, testing and evaluation of the Company's resources.
Competitive conditions
The oil and gas industry in Australia, Hungary and South Africa will continue to be competitive. Most contracts will be awarded on the basis of competitive bids, resulting in price competition.
Dependence on customers & suppliers
The Company is not dependent upon a single or few customers or suppliers for revenues for its operations.
Changes to contracts
There is no aspect of the Company's business in which changes to contracts would reasonably be expected to affect the Company in the current financial year.
Environmental protection and policies
The Company is subject to various federal, state, territorial, provincial and local environmental laws and regulations enacted in most jurisdictions in which it operates, which primarily govern the manufacture, processing, importation, transportation, handlings and disposal of certain materials used in operations, as well as limits on emissions into the air and discharges into surface and sub-surface waters. The Company adheres to all such laws and regulations. The Company may be required to increase operating expenses or capital expenditures in order to comply with any new restrictions or regulations.
To date environmental protection requirements have not had a significant effect on the Company's competitive position.
During 2025 Company operations complied in all material respects with applicable corporate standards and environmental regulations and there were no material notices of violations, fines or convictions relating to environmental matters at any of the Company's operations.
The Group believes that it is in substantial compliance with all material current government controls and regulations at each of its properties.
See also "General Development of the Business" and "Risk Factors".
Foreign operations
The Group is dependent on its foreign operations. The Group's principal interests are in Australia, South Africa and Hungary. All costs capitalised at 31 December 2025 for exploration and evaluation assets relate to Australia.
Companies with oil and gas activities
The 51-101F1 Report, 51-101F2 Report and the 51-101F3 Report are incorporated by reference herein.
RISKS FACTORS
The risk factors identified below, are those the Board believes are material to the Group but these risks may not be the only risks faced by the Group. Additional risks, including those the Board is unaware of or those that are currently deemed immaterial, may also result in decreased income, increased expenses or a decline in the value of Common Shares.
1. RISKS RELATING TO THE GROUP AND ITS BUSINESS
The Group may be unable to get the necessary approvals to operate its business.The Group may be unable to obtain necessary approvals from one or more Australian, South African or Hungarian government agencies, surface owners or other third parties, for surface use for seismic surveys; surface use for drilling activities; surface use for gathering lines, pipelines, or surface equipment.
Australia
Australian government agencies have discretion in interpreting various laws, regulations and policies, which govern operations in the Beetaloo Sub-basin. Actions by Australian government agencies may affect the Company's operations including obtaining necessary approvals, land access, sovereign risk, regulatory risk, taxation and royalties which may be payable on the proceeds of the sale of a successful exploration.
Exploration Permit renewals and approval of contractual arrangements relating to them are also matters of governmental discretion, with no guarantees.
In Australia, Aboriginal native title to land ("Native Title") has survived the Crown's acquisition of sovereignty. The Native Title Act 1993 (Commonwealth) and the complementary state Native Title legislation, regulates the recognition and protection of Native Title in Australia, setting procedures to be followed regarding "future acts", including the grant of petroleum tenements. The Company must obtain clearances, consents and approvals relating to Native Title regarding the Exploration Permits. Access may be restricted or subject to negotiated arrangements (for example, compensation and access arrangements) in respect of areas subject to Native Title. If requisite approvals and consents are not obtained, the Group's business, prospects, financial condition and operational results may be adversely impacted.
Permit renewals: Permit renewal applications must be submitted to the Minister of the Northern Territory Government, Australia, no later than 3 months but no earlier than 6 months before the permit's expiration. The Minister may not renew the permit more than twice. A renewal application must include a comprehensive report of the previous work commitment program, findings and results. It must also include the proposed work program towards development of each of the 5 year renewal terms and a report on the future strategic exploration plan. While there is a presumption in the legislation that 50% of the acreage must be relinquished upon renewal the minister may approve the renewal of more than 50% of the permit area if sufficient justification is provided. Before the exemption period ends, the permittee may apply for an extension of the exemption and, if the Minister is satisfied in considering certain criteria, may extend the exemption for a period not exceeding 12 months. The permittee may also apply for a retention license which removes the need for relinquishment but is materially expensive to acquire. If permit renewals, relinquishment exemptions or retention licenses are not granted, there may be a material adverse effect on the Group's business, prospects, financial condition and results of operations.
South Africa
The Company holds a TCP covering an area of approximately 7.5 million acres, in the southwest Karoo Basin, South Africa. The TCP granted Falcon exclusive rights to apply for an exploration license over the underlying acreage, which they duly did in August 2010. The Company also submitted an environmental management plan in January 2011 which was updated at the request of the PASA and submitted on 27 February 2015. However, delays with both the technical regulations and the fiscal terms have delayed the granting of an exploration right and any progress with the project.
On 25 April 2024, the National Council of Provinces passed the Upstream Bill, which sought to ensure that the upstream petroleum sector is no longer regulated under the MPRDA, but its own standalone legislation. On 25 October 2024 the Upstream Bill, now the Upstream Act was assented by the South African President and published in the Government Gazette on 29 October 2024. The Upstream Act will only come into effect by a further proclamation by the South African President.
The delays with regulations may not result in the award of an exploration licence. This eventuality could have a material adverse effect on the Group's business, prospects, financial condition and results of operations.
Hungary
Hungarian government agencies have discretion in interpreting various laws, regulations, and policies governing operations under the Makó Production Licence. The Group must enter agreements with private surface owners to obtain access to the land for surface facility locations. There is a relatively short history of government agencies' handling and interpreting laws including regulations and policies relating to those laws since the mining laws governing oil and gas operations were only enacted in
Hungary in 1993 (laws amended since). This short history provides little precedent or certainty allowing the Group to predict whether such agencies will act favourably toward the Group.
Neither the Makó Production Licence nor Hungarian mining laws grant reasonable use of the surface covered by the Makó Production Licence geographical area. Instead, the licencee must obtain rights of way from surface owners, including private landowners, for access and other purposes. The landowner must ensure mining operators make observations and measurements, lay cables, display adequate signage and take any other actions necessary. If the landowner and licencee cannot mutually agree on operations, a licencee may request and pay for an easement from the Hungarian government. The Hungarian government has discretion to interpret various requirements for the issuance of drilling permits, and there is no assurance the Group will meet all requirements. An inability to meet any requirement could have a material adverse effect on the Group's business, prospects, financial condition and results of operations.
A decision by Tamboran B2 not to participate in further drilling operations, could have a material adverse effect on the Group's business, prospects, financial condition and results of operations.If Tamboran B2 decide to reduce or surrender their interest in the Exploration Permits and if the Group was unable to secure a new farm-in or joint venture partner for the development of the Beetaloo Sub-basin, its ability to develop and realise its investment in the asset could be significantly curtailed. This could have a material adverse effect on the Group's business, prospects, financial condition and results of operations.
Should Falcon fail to find a farm-in or joint venture partner to farm into Falcon's Karoo exploration licence, if awarded; this could have a material adverse effect on the Group's business, prospects, financial condition and results of operations.If the exploration license was to be awarded, and if the Group were unable to secure participation by a new farm-in or joint venture partner for the development of the Karoo acreage, its ability to develop and realise its investment in the asset could be significantly curtailed. This could have a material adverse effect on the Group's business, prospects, financial condition and results of operations.
There is no guarantee that the Company has or will continue to have good title to assets.Although title reviews have been and will continue to be performed according to standard industry practice prior to the acquisition of an oil and gas asset or rights to acquire leases in prospects/assets or the commencement of drilling wells, such reviews do not guarantee or preclude that an unidentified or latent defect in the chain of title will not exist, or that a third party claim will not arise that burdens, diminishes or defeats the claim of the Company. This could impact the Company's ability to realise its investment in a particular asset and could have a material adverse effect on the Group's business, prospects, financial condition and results of operations.
The Group cannot be certain that it will continue to meet all requirements to maintain its permits and licences.Falcon Australia and its BJV partner must perform work programmes to maintain the Exploration Permits. Hungarian mining law requires that the Group file annual plans of development ("Plans") relating to the Makó Production Licence. To the extent that the Group cannot fulfil the requirements, it may have to request extensions for filing a Plan/completing a work programme or it may be at risk of losing rights under the Makó Production Licence or the Exploration Permits. The Group may also disagree with the government's interpretation of the legal requirements, resulting in legal proceedings, which could delay exploration and development of the Makó Production Licence or the Beetaloo Sub-basin. Failure to fulfil commitments within the required timeframes, or to successfully negotiate extensions to carry out work plan commitments, could result in the Group losing those relevant interests and the associated resource potential, and also restrict the ability to obtain new licences in the relevant jurisdictions. For the Exploration Permits, the permits are currently in year 3 with a permit year end 31 May 2028. As licence terms and commitments are typically set by governments there may be unexpected and significant changes to licence terms and commitments. Any of these could significantly impact the value of those licences to the Group, with a material adverse effect on the Group's business, prospects, financial condition and results of operations.
The Group is exposed to general business risks associated with its joint venture and other partners, in addition to their ability to perform their contractual obligations.Like other companies its size, the development of the Group's business is substantially reliant on forming strategic relationships with larger oil and gas companies. The Group has sought and will continue to seek to involve the financial resources and the technical expertise of farm-in or joint venture partners to explore and develop its interests. These relationships involve surrendering certain economic and operational rights to such partners. As a result, the Company's return on assets operated by others depends upon factors which may be outside the Group's control, including the timing and amount of capital expenditures, the operator's expertise and financial resources, the approval of other participants, the selection of technology and risk management practices.
The Group will be exposed to the general risks associated with the businesses, operations and financial condition of its joint venture and other partners including, the risks of bankruptcy, insolvency, management changes, adverse change of control and natural disasters. The Group may have disputes with these parties, including disputes regarding the quality and/or timelines of
work performed. A failure by one or more of the Group's partners to discharge the agreed-upon commitments on a timely basis may materially and adversely impact the Group's business, prospects, financial condition and results of operations.
The Group may have substantial capital requirements that, if not met, may hinder its growth and operations.The Group's future growth depends on its ability and that of its partners to invest significant capital expenditures for the exploration and development of oil and gas interests. Future cash flows and the availability of financing will be subject to factors, such as:
the success of the Group's current and future exploration and development programme in Australia, South Africa and Hungary;
prevailing market conditions and investors appetite; and
prevailing oil and gas prices.
A Pilot Project at the Shenandoah South location commenced in 2024. Falcon Australia elected to reduce it's PI in the first two wells of the Pilot Project to 5% and has opted to reduce its PI further in the wells to be drilled in 2025 to 0%. Falcon has noted in its latest financial statements for year ended 31 December 2025 that further funding will be required for Falcon Australia's continued participation in the Beetaloo and estimated costs to be incurred into the future. It is noted in the latest financial statements of the Group that as of 31 December 2025 the Group had $1.2 million of cash and cash equivalents however that money has been expended at the date of the approval of these financial statements. Tamboran has provided funding in the intervening period to ensure Falcon continues to meet its obligations as they fall due in the period to completion of the Transaction. In addition to this, Falcon has submitted a Research and Development tax Incentive application for approximately
$2million with the refund expected imminently and will provide additional cash resources for the Group towards its own operating costs. Management and those charged with governance are confident that the Transaction will be completed since shareholder approval was obtained on 11 March 2026 and the Supreme Court of British Columbia approved the final order regarding the Transaction, subject to certain amendments on 26 March 2026, however if the Transaction does not complete further funding would be required and there can be no certainty that sufficient funds can be raised as required. This indicates the existence of a material uncertainty, which may cast significant doubt over the Group's ability to continue as a going concern, and therefore, it may be unable to realise its assets and discharge its liabilities in the normal course of business. The financial statements do not include adjustments that would result if the Group was unable to continue as a going concern. Having given due consideration to the Transaction as noted above and the cash requirements of the Group, management and those charged with governance has a reasonable expectation that the Group will have adequate resources to continue in operational existence for a period up to the finalization of the Transaction or if for whatever reason the Transaction does not proceed for at least twelve months from the date of approval of these financial statements. For this reason, the Board continues to adopt the going concern basis in preparing these consolidated financial statements which assumes the Group will be able to meet its liabilities as they fall due for the foreseeable future. Issuing equity securities to satisfy the Group's financial requirements could cause substantial dilution to its existing shareholders. Financing may be unavailable, or the Group may be unable to obtain necessary financing on acceptable terms. If sufficient capital resources are unavailable, the Group may be forced to curtail activities or sell interests in an untimely manner or on unfavourable terms, having a material adverse effect on the Group's business, prospects, financial condition and results of operations.
The Group may be unable to identify liabilities associated with its licences causing the Group to incur losses.While the Board and management believe it has reviewed and evaluated its assets in Australia and Hungary in a manner consistent with industry practices, such review and evaluation might not necessarily reveal all existing or potential problems. Inspections on all wells may not always be performed, and environmental problems, such as groundwater contamination, are not necessarily observable even when an inspection is undertaken.
Resource estimates depend on many assumptions that may be inconclusive, subject to varying interpretations, or inaccurate.On 15 February 2017, Falcon announced Origin had submitted a Discovery Evaluation Report to the Northern Territory Government. This provided volumetric estimates and recovery / utilisation factors for the B Shale member of the Middle Velkerri Formation within permits EP76, EP98 and EP117. Understanding the factors controlling deliverability and recovery as well as spatial variation within the gas play/shale pool are in their infancy. A quantitative assessment of the aggregated estimated recoverable resource of the gas play that can handle these complexities will require a statistically significant number of wells testing the gas play. As there was only a single production test within the gas play Origin decided upon a qualitative assessment approach instead to estimate the technically recoverable resource.
Origin also prepared a contingent gas resource estimate using probabilistic methods and reservoir evaluation data, in addition to regional seismic data. The risks and uncertainties with the recovery of the resources include completing longer duration production testing above the 57 days conducted on Amungee NW-1H, reducing well costs with the scale of activity, establishing gas sale agreements and building infrastructure to connect the resource to market. The project was based on a conceptual study, the economic status has yet to be determined. The estimated contingent resources will continue to be assessed as additional appraisal wells are drilled and tested to better evaluate the commercial potential of the play. After a sufficient number of wells have been drilled to demonstrate that the project is technically feasible, and a development plan has been generated,
economics can be run to determine commerciality of production. It is possible further drilling and production testing may not yield positive results, having a material adverse effect on the Group's business, prospects, financial condition and results of operations.
Drilling for and producing oil and gas are high-risk activities with many uncertainties that could adversely affect the Group's business, prospects, financial condition or results of operations.The Group's future success depends primarily on the outcome of its exploration, appraisal and Pilot Project activities. These activities are subject to risks beyond the Group's control, including not finding commercially productive oil or gas reservoirs. Exploration and development of oil and gas from unconventional resources relies on innovative and expensive techniques and often involves exploration in areas where no proven reserves exist. The Group's decisions to explore, develop or otherwise exploit its interests depends on the evaluation of data obtained through geophysical and geological analyses, production data and engineering studies, the results of which are often inconclusive or subject to varying interpretations. The cost of drilling, completing and operating wells is often uncertain before drilling commences, with overruns in budgeted expenditures common risk, making a project uneconomical. Many factors may curtail, delay or prevent drilling operations, including:
unexpected drilling conditions;
pressure or irregularities in geological formations;
equipment failures or accidents;
pipeline and processing interruptions or unavailability;
adverse weather conditions;
lack of market demand for oil and gas;
delays imposed by or resulting from compliance with environmental and other regulatory requirements;
delays resulting from a global pandemic, such as COVID-19
shortage of or delays in the availability of drilling rigs and the delivery of equipment; or
reductions in oil and gas prices.
The Group's future drilling activities may be unsuccessful, and drilling success rates could decline. The Group could incur losses drilling unproductive wells. Another global pandemic may result in significant delays to operations getting both equipment and personnel in country, resulting in potentially significant delays to obtaining drilling results and consequential increased costs, which may materially and adversely impact the Group's business, prospects, financial condition and results of operations. Shut-in wells, curtailed production and other production interruptions may materially and adversely impact the Group's business, prospects, financial condition and results of operations.
Market conditions or operational impediments may hinder the Group's access to oil and gas markets or delay production in the future.The marketability of future production from the Group's interests will depend upon the availability, proximity and capacity of pipelines, oil and gas gathering systems and processing facilities, with dependence heightened where infrastructure is less developed. The Group may be required to shut-in wells, at least temporarily, due to the inadequacy or unavailability of transportation facilities or the lack of market demand, resulting in the Group being unable to realise revenue until arrangements were made to deliver production to market. The Group's ability to produce and market oil and gas is affected and potentially harmed by:
the lack of pipeline transmission facilities or carrying capacity;
the proximity and capacity of processing equipment;
the availability of open access transportation infrastructure;
government regulation of oil and gas production including environmental protection, royalties;
allowable production, pricing, importing and exporting of oil and gas;
government transportation, tax and energy policies;
changes in supply and demand for oil and gas; and
general economic conditions.
Changes in such factors may materially and adversely impact the Group's business, prospects, financial condition and results of operations.
Shortages of rigs, equipment, supplies and personnel could delay or adversely affect the Group's cost of operations or its ability to operate according to its business plans.Shortages of drilling and completion rigs, field equipment and qualified personnel can occur potentially driven by world events such as the Russian-Ukrainian war, resulting in sharp increases in costs and significant delays to operations. The demand for wage rates of qualified drilling rig crews generally rise in response to the increased number of active rigs in service and could increase sharply in the event of a shortage. Shortages of drilling and completion rigs, field equipment or qualified personnel could delay, restrict or curtail the Group's exploration and development operations, which may materially and adversely impact the Group's business, prospects, financial condition and results of operations.
The loss of the Group's key management and Directors or its inability to attract and retain experienced technical personnel could adversely affect the Group's ability to operate.The Group depends largely on the efforts and continued employment of its management team and board members. The loss of such services could adversely affect the Group's business operations. If the Group cannot retain key personnel or attract additional experienced personnel, its ability to compete in the geographic regions it conducts operations maybe harmed and may materially and adversely impact it's business, prospects, financial condition and results of operations.
The Group is subject to complex laws and regulations, including environmental regulations, which can have a material adverse effect on the cost, manner or feasibility of doing business.Exploration for and exploitation, production and sale of oil and gas in Australia, South Africa and Hungary are subject to extensive national and local laws and regulations, including complex tax laws, environmental laws and regulations and requires permits and approvals from governmental agencies. If permits are not issued or unfavourable restrictions or conditions are imposed on the Group, operations may be restricted. Failure to comply with laws and regulations, including the requirements of permits, may result in suspension or termination of operations and potential penalties. Compliance costs may be significant. Laws and regulations could also change, substantially increasing the Group's costs. The Group cannot be certain that existing laws or regulations, as currently interpreted or reinterpreted in the future, or future laws or regulations will not materially and adversely impact its business, prospects, financial position and operations, making future exploration cost prohibitive. The outcome of the moratorium in the Northern Territory, Australia, resulted in 135 recommendations requiring legislative and regulation changes and increased costs.
The Group does not insure against all potential operating risks. It might incur substantial losses and be subject to substantial liability claims of its oil and gas operations.The Group does not insure against all risks. It maintains insurance against various losses and liabilities arising from operations in accordance with customary industry practices and in amounts that the Board believes to be prudent. Losses and liabilities arising from uninsured and underinsured events or in amounts exceeding existing insurance coverage could have a material adverse effect on the Group's business, prospects, financial condition or results of operations. The Group's oil and gas exploration and production activities will be subject to hazards and risks associated with the drilling for, producing and transporting of oil and gas, and any of these risks can cause substantial losses, these include:
environmental hazards, such as uncontrollable flows of oil, gas, brine, well fluids, toxic gas or other;
pollution into the environment, including groundwater and shoreline contamination;
abnormally pressured formations;
fires and explosions;
personal injuries and death;
regulatory investigations and penalties; and
natural disasters.
Any of these risks could have a material adverse effect on the Group's ability to conduct operations or result in substantial losses. The Group may elect not to obtain insurance if it considers that the cost of available insurance is excessive relative to the risks presented. In addition, pollution and environmental risks generally are not fully insurable. If a significant accident or other event occurs and is not fully covered by insurance, this may materially and adversely impact the Group's business, prospects, financial condition and results of operations.
The Group's financial statements have been prepared on a going concern basis, it does not include any adjustment that would result if the Group was unable to continue as a going concern due to financing being unavailable or the Group being unable to obtain necessary financing on acceptable terms.The Group's financial statements have been prepared on a going concern basis under which an entity is considered to be able to realise its assets and satisfy its liabilities in the ordinary course of business for at least twelve months from the date of this document. Falcon has noted in its latest financial statements for year ended 31 December 2025 that the Group had $1.3 million of cash and cash equivalents however that money had been expended at the date of the approval of these financial statements. Tamboran has provided funding in the intervening period to ensure Falcon continues to meet its obligations as they fall due in the period to completion of the Transaction. In addition to this, Falcon has submitted a Research and Development tax Incentive application for approximately $2 million with the refund expected subsequent to the issue of the financial statements and will provide additional cash resources for the Group towards its own operating costs.
Management and those charged with governance are confident that the Transaction with Tamboran will be completed since shareholder approval was obtained on 11 March 2026 and the Supreme Court of British Columbia approved the final order regarding the Transaction, subject to certain amendments on 26 March 2026, however if the Transaction does not complete further funding would be required and there can be no certainty that sufficient funds can be raised as required. This indicates the existence of a material uncertainty, which may cast significant doubt over the Group's ability to continue as a going concern, and therefore, it may be unable to realise its assets and discharge its liabilities in the normal course of business. The financial statements do not include adjustments that would result if the Group was unable to continue as a going concern. Having given due consideration to the Transaction and the cash requirements of the Group, management and those charged with governance
has a reasonable expectation that the Group will have adequate resources to continue in operational existence for a period up to the finalization of the Transaction or if for whatever reason the Transaction does not proceed for at least twelve months from the date of approval of these financial statements. For this reason, the Board continues to adopt the going concern basis in preparing these consolidated financial statements which assumes the Group will be able to meet its liabilities as they fall due for the foreseeable future.
The Group may be subject to litigation that could have a material adverse effect on the GroupIn the normal course of operations, the Group may have disputes or legal proceedings, including regulatory proceedings, tax proceedings or other legal actions. Potential litigation may develop in relation to contract disputes, employment matters, personal injuries, property damage, environmental issues and securities law matters. Such litigation claims may be material. The outcome of any litigation is uncertain and may materially impact the Group's financial condition. Even where the Group is successful in any dispute or legal proceeding, the proceeding may be time consuming and costly which could also have an adverse effect on the Group.
Pandemics may impact the Group's operations or financial conditionFalcon's business, financial condition or liquidity may be materially and adversely impacted by pandemics, epidemics or outbreaks of an infectious disease in Ireland, Australia or worldwide. The extent to which any pandemic, epidemic or other such infectious disease may impact the Company's operations, financial condition and future financial performance is currently unknown and pandemic risk may increase other risks including: market risk due to volatility in commodity prices as a result of reduced oil and natural gas demand and due to volatility in foreign exchange markets; operational risks due to workforce disruption or shut down orders which may restrict current operations and cash flows or future capital projects; and financing risk to the extent additional capital is required as financing alternatives may be limited or only available with terms unacceptable to Falcon as a result of reduced commodity prices and continued volatility in the financial markets.
Cyber-Security incidents may disrupt the Group's business operationsThe Company depends on digital technology, among other things, to process and record financial and operating data; communicate with its employees and business partners; analyze drilling information; and estimate quantities of oil and gas resources or reserves. Accordingly, the Company is susceptible to cyber incidents (both deliberate and unintentional). The unauthorized release, gathering, monitoring, misuse, loss or destruction of proprietary and other information could disrupt the Company's business plans and negatively impact its operations in a number of ways, including: (a) negatively impact the Company's competitive position in developing its oil and gas resources or reserves; (b) dry hole cost or drilling incidents; (c) loss of production or accidental discharge; (d) supply chain disruptions; and (e) expensive remediation efforts, distraction of management, damage to the Company's reputation, or a negative impact on the price of the Common Shares of the Company. As cyber threats continue to evolve, the Company may be required to expend significant additional resources to continue to modify or enhance its protective measures or to investigate and remediate any information security vulnerabilities.
The Company could fail to complete the Arrangement or the Arrangement may be completed on different termsThere can be no assurance that the Transaction with Tamboran will be completed, or if completed, that it will be completed on the same or similar terms to those set out in the Arrangement Agreement dated September 30, 2025 (the "Arrangement Agreement"). The completion of the Transaction is subject to the satisfaction of a number of conditions, some of which are outside of the control of the parties, which include, among others, obtaining necessary approvals and performance by the Company and Tamboran of their respective obligations and covenants in the Arrangement Agreement. If these conditions are not satisfied (or waived) or the Transaction is not completed for any other reason, shareholders will not receive the consideration contemplated in the Transaction.
If the Transaction is not completed, the ongoing business of the Company may be adversely affected as a result of the costs (including opportunity costs) incurred in respect of pursuing the Transaction, and the Company could experience negative reactions from the financial markets, which could cause a decrease in the market price of the Common Shares, particularly if the current market price reflects market assumptions that the Transaction will be completed or completed on certain terms. The Company may also experience negative reactions from its employees and there could be negative impact on the Company's ability to attract future business opportunities. Failure to complete the Transaction or a change in the terms of the Transaction could each have a material adverse effect on the Company's business, financial condition and results of operations.
There is no certainty that the Arrangement Agreement will not be terminated prior to the completion of the Transaction Under the Transaction, the Company and Tamboran have the right, in certain circumstances, in addition to termination rights relating to the failure to satisfy the conditions of the Transaction, to terminate the Arrangement Agreement. Accordingly, there can be no certainty, nor can the Company provide any assurance, that the Arrangement Agreement will not be terminated prior to the completion of the Transaction. Failure to complete the Transaction could negatively impact the trading price of the Common Shares or otherwise adversely affect the business of the Company and could make the Company liable to pay termination payments on the occurrence of a certain events. Obligation to Repay Cash Calls upon TerminationIn the event that the Transaction is terminated, the Company will be required to pay to Tamboran the amount of all cash calls paid by Tamboran on behalf of the Company that the Company would have otherwise have been required to pay pursuant to the BJV plus an additional 15% premium. As of December 31, 2025, Tamboran had paid cash calls on behalf of the Company in the amount of approximately A$1.8 million. The Company would be required to repay all cash calls together with the 15% premium within three months following termination of the Arrangement Agreement.
Forward-looking information may prove inaccurateShareholders are cautioned not to place undue reliance on forward-looking information. By its nature, forward-looking information involves numerous assumptions, known and unknown risks and uncertainties, of both a general and specific nature, that could cause actual results to differ materially from those suggested by the forward-looking information or contribute to the possibility that predictions, forecasts or projections will prove to be materially inaccurate. Additional information on the risks, assumptions and uncertainties are found in this Annual Information Form under the heading "Forward Looking Statements".
(ii) RISKS RELATING TO THE GROUP'S INDUSTRY
Competition in the oil and gas industry is intense and many of the Group's competitors have greater financial, technological and other resources than the Group does, which may adversely affect its ability to compete.The Group operates in the highly competitive areas of oil and gas exploration and development with other companies doing business in Australia, South Africa and Hungary. The Group faces intense competition from both major and other independent oil and gas companies in the locations where the Group operates. Many of the Group's competitors have substantially greater financial, managerial, technological and other resources. These companies might be able to pay more for exploratory prospects or assets than the Group's financial resources permit or the Group is willing to pay, leaving the Group at a competitive disadvantage. Competitors may also enjoy technological advantages and may be able to implement new technologies more rapidly. The Group's ability to explore for oil and gas prospects and to acquire additional assets in the future depends upon its ability to successfully conduct operations, implement advanced technologies, evaluate and select suitable assets and consummate transactions in this highly competitive environment. This may have a material adverse effect on the Group's business, prospects, financial condition and results of operations.
The Group has been an early entrant into new or emerging shale plays. As a result, its expectations regarding future drilling results are uncertain, and the value of its undeveloped acreage will decline if future drilling is unsuccessful. The Group has been an early entrant into new or emerging shale plays in the areas it operates, particularly in Australia and South Africa. While the Group considers its early entry provides certain competitive advantages, including a wider selection of available concessions to choose from, there is no guarantee such competitive advantages can be maintained in the future as competitors, many of whom are larger in size and operation, enter these regions. Additionally, the Group's prospects and expectations regarding future drilling results in these emerging shale plays are more uncertain than they would be in areas developed and producing substantial quantities of oil or gas already. Since new or emerging shale plays have limited or no production history, the Group is unable to use past drilling results in those areas to help predict future drilling results. As a result, the Group's risk on costs of drilling, completing and operating wells in these areas may be higher and the value of the Group's undeveloped acreage will decline if future drilling results are unsuccessful, all of which may have a material adverse impact on the Group's business, prospects, financial condition and results of operations. The environmental implications of certain technologies used in shale gas exploration activities are under scrutiny. The environmental implications of the Group's activities exploring for shale gas utilising drilling and completion techniques, such as horizontal drilling and hydraulic fracturing are subject to significant controversy and public debate. Given technologies are rapidly developing, their environmental implications may not be fully understood, and research into their effects is still ongoing. Speculation surrounds the possible effects of hydraulic fracturing on water aquifers (due to either the chemicals used in fracking fluids or gases released from the shales), contribution to seismic activity and disruption to local ecosystems amongst other things. The controversy surrounding the environmental implications of shale gas exploration has led to opposition from significant sections of the public as well as certain legislative and regulatory initiatives aimed at restricting these activities. The outcome of the moratorium in the Northern Territory, Australia, resulted in 135 recommendations requiring legislative and regulation changes and increased costs to ensure adherence to the recommendation. In South Africa, a moratorium on shale gas exploration was imposed in February 2011 but was subsequently lifted in 2015 with the introduction of gazetted regulations, however on 18 October 2017, the Eastern Cape High Court held that the Minister lacked the authority to promulgate the Regulations for Petroleum Exploration and Production. On 4 July 2019, the Supreme Court of Appeal upheld the decision of the High Court principally because the Minister was not authorised to make the regulations. The provision of the MPRDA on which the Minister relied to make the regulations had been repealed in 2013 and therefore no longer existed. South Africa has made progress during 2024 with the Upstream Act assented by the President of South Africa however it will only come into effect on a further proclamation in the Government Gazette. Similar restrictions have been introduced in other European countries and in various regions of Canada and the United States. Any further restrictions on these activities in Australia and South Africa, or the introduction of such restrictions in other locations in which the Group operates (including a prohibition on hydraulic fracture stimulation), would make shale gas exploration and production unviable due to a lack of presently-existing alternative technologies, and could prevent the Group from being able to profitably develop its interests.Furthermore, if any Group activities were found to have caused environmental damage, it could be subject to significant liabilities and reputational damage. Even if no environmental damage were tied directly to the Group's activities, to the extent operations by other companies in the shale gas industry were found to have caused environmental damage or to the extent further research provides evidence of negative environmental implications of fracking or other aspects of shale gas exploration, public and political opposition to shale gas exploration may be further intensified and the Group's business could come under increasing legal and regulatory restrictions, all of which may materially and adversely impact the Group's business, prospects, financial condition and results of operations.
The oil and gas industry is subject to extensive environmental regulation, uncertainties related to climate change that could adversely affect the Group's business, prospects, financial condition or results of operations.The Group faces a variety of uncertainties related to climate change. The oil and gas industry is subject to extensive environmental regulation in the countries it operates, ranging from potential impacts from emission restrictions, carbon taxes and other government policy initiatives, to changes in weather patterns that may affect operations. The direct or indirect costs of changing regulations may have a material adverse effect on the Group's business, financial condition, prospects and results of operations. Although the Group is not a large emitter of greenhouse gases, the future implementation or modification of greenhouse gases regulations, could have a material impact on the Group. Given the evolving nature of the debate related to climate change and the control of greenhouse gases and resulting requirements, it is not possible to predict the impact on the Group and its operations.
A substantial or extended decline in oil and gas prices may adversely impact the Group's business, prospects, financial condition and results of operations.The Group's future revenues, operating results, rate of growth and ability to execute farm-ins of the Group's acreage are substantially dependent upon the prevailing price and demand for oil and gas. Declines in price and demand for oil and gas may adversely affect the Group's business, prospects, financial condition and results of operations. Lower oil and gas prices may also reduce the oil and gas the Group can produce economically. Lower oil and gas prices may indirectly affect a potential farmin partner's decision to farm-in to the Group's acreage due to their own cash constraints. Historically, oil and gas prices and markets have been volatile and will likely continue as such in the future. Oil and gas prices are subject to wide fluctuations in response to relatively minor changes in the supply and demand for oil and gas, market uncertainty and a variety of additional factors beyond the Group's control. Factors that could cause this fluctuation include:
change in global supply and demand for oil and gas;
levels of production and other activities of the OPEC, and other oil and gas producing nations;
weather conditions;
the availability of transportation infrastructure;
market expectations about future prices;
the level of global oil and gas exploration,
production activity and inventories; the overall level of energy demand;
the effect of worldwide environmental and/or energy conservation measures;
currency exchange rates;
government regulations, tariffs and taxes;
the overall economic environment;
political conditions, including embargoes, in or affecting other oil producing activity; and
the price and availability of alternative fuels.
A substantial or extended decline in oil or gas prices may have a material adverse impact on the Group's business, prospects, financial condition and results of operations.
Political instability or fundamental changes in the leadership or structure of governments in the jurisdictions the Group operates could materially and negatively impact the Group's business, prospects, financial condition and results of operations.Political and economic upheavals may affect the Group's interests. While jurisdictions the Group operates in welcome foreign investment and are generally stable, there is no assurance the current economic and political situation in these jurisdictions will not change significantly in the future.
Local, regional and world events such as those with the Russian-Ukrainian war, the Israel-Palestine war, significant changes implemented by the USA could result in changes to the oil and gas, tax or foreign investment laws, or revisions to government policies in a manner that renders the Group's current and future interests uneconomical. These events could have a material adverse effect on the Group's business, prospects, financial condition and results of operations. There is also the risk of resource nationalisation or the imposition of restrictions and penalties on foreign-owned entities which may materially impact the Group's business, prospects, financial condition and results of operations.
Should one or more of these risks materialise, or should the Group's underlying assumptions prove incorrect, the Group's actual results may materially differ from the Group's current expectations. Therefore, in evaluating forward-looking statements, readers should specifically consider the various factors that could cause the Group's actual results to materially differ from such forward-looking statements.
(iii) RISKS RELATING TO THE COMMON SHARES
The Group's share price might be affected by matters not related to the Group's own operating performance for reasons that include the following:general political and economic conditions in Australia, South Africa, Hungary, and globally;
industry conditions, including fluctuations in the price of oil and gas;
governmental regulation of the oil and gas industry, including environmental regulation and introduction of moratoriums;
fluctuation in foreign exchange or interest rates;
liabilities inherent in oil and gas operations;
geological, technical, drilling and processing problems;
a global pandemic;
competition for, among other things, capital, undeveloped land and skilled personnel;
the need to obtain required approvals from regulatory authorities;
investor perception of the oil and gas industry in general and of unconventional oil and gas exploration, in particular;
limited trading volume of the Common Shares; and
announcements relating to the Company's business or the business of its competitors.
Companies that have experienced volatility in their value have been the subject of securities class action litigation, with the potential for the Group to be involved in similar litigation in the future. Such litigation often results in substantial costs and diversion of management's attention and resources with a material adverse effect on the Group's business, prospects, financial condition and results of operations.
Volatility of Share PriceThe market price of the Common Shares may be subject to fluctuations in response to a wide range of factors, including variations in the operating results of Falcon, divergence in financial results from market expectations, general economic conditions, legislative changes in the sector and other events and factors outside the Group's control. In addition, stock markets have from time to time experienced extreme price and volume fluctuations, which, as well as general economic and political conditions, could adversely affect the market price for the Common Shares. The value of Common Shares may go down as well as up. Investors may therefore realise less than or lose all their original investment.
Falcon is incorporated in British Columbia, Canada and is subject to Canadian company law.Falcon is incorporated in the province of British Columbia, Canada and its corporate structure, the rights and obligations of shareholders and its corporate bodies may be different from those of the home countries of international investors. Furthermore, non-Canadian residents may find it more difficult and costly to exercise shareholder rights. International investors may also find it costly and difficult to effect service of process and enforce their civil liabilities against the Company or some of its directors, controlling persons and officers.
A disposal of Common Shares by major Shareholders could adversely impact the market price of Common Shares Sales of a substantial number of Common Shares in the market by major shareholders, or the perception that these sales might occur, could adversely impact the market price of the Common Shares. Trading in the Common Shares may be suspended and/or the Common Shares may be excluded from trading on a stock exchange on which it is listed.Falcon's Common Shares are traded on the TSX Venture Exchange (symbol: FO.V) and AIM, the market operated by the London Stock Exchange (symbol: FOG). These stock exchanges have the right to suspend the trading of a given security if the issuer of the security fails to comply with the regulations of that exchange (such as for example to obey the disclosure rules), or if suspension is necessary to protect the interest of market participants, or if the orderly functioning of the market is temporarily endangered. There can be no assurance that trading in the Common Shares will not be suspended. A suspension of trading could adversely affect the trading price of the Common Shares.
DIVIDENDS & DISTRIBUTIONS
Falcon has not declared any dividends on the Common Shares and the Board does not anticipate paying any dividends in the foreseeable future. Any future determination to pay dividends will be at the discretion of the Board and will depend upon Falcon's financial condition, results of operations, capital requirements and such other factors as the Board deems relevant.
DESCRIPTION OF CAPITAL STRUCTURE
The following is a summary of the Company's outstanding share data as at 31 December 2025:
Class of securities 31 December 2025
Common shares (1) 1,109,141,512
Stock options 59,750,000
(1) Details of share issuance in 2024 are included on page 6.
Falcon is authorised to issue an unlimited number of Common Shares. Holders of Common Shares are entitled to receive notice of any meetings of shareholders of Falcon, and to attend and to cast one vote per Common Share at all such meetings. Holders of Common Shares do not have cumulative voting rights with respect to the election of directors and, accordingly, holders of a majority of the Common Shares entitled to vote in any election of directors may elect all directors standing for election. Holders of Common Shares are entitled to receive on a pro rata basis dividends, as and when declared by the Board at its discretion from funds legally available. Upon the liquidation, dissolution or winding up of Falcon shareholders are entitled to receive on a pro rata basis the net assets of Falcon after payment of debts and other liabilities, in each case subject to the rights, privileges, restrictions and conditions attaching to any other series or class of shares ranking senior in priority to or on a pro rata basis with the holders of Common Shares with respect to dividends or liquidation. The Common Shares do not carry any pre-emptive, subscription, redemption or conversion rights, nor do they contain any sinking or purchase fund provisions.
MARKET FOR SECURITIES
Trading price and volume
Falcon's Common Shares are traded on the TSX Venture Exchange (symbol: FO.V) and AIM, the market operated by the London Stock Exchange (symbol: FOG).
The following table sets forth, for the periods indicated, the reported high and low closing prices and the aggregate trading volume of the Common Shares on the TSXV(1):
Period
High CDN$
Low CDN$
Trading volume
'000
April 2026(2)
0.390
0.285
21,791
March 2026
0.405
0.260
21,131
February 2026
0.285
0.240
10,986
January 2026
0.270
0.220
15,319
December 2025
0.215
0.190
16,061
November 2025
0.205
0.180
9,354
October 2025
0.210
0.195
26,812
September 2025
0.185
0.145
11,574
August 2025
0.140
0.110
5,614
July 2025
0.125
0.105
984
June 2025
0.140
0.115
6,798
May 2025
0.120
0.100
1,499
April 2025
0.125
0.100
2,463
March 2025
0.115
0.100
2,026
February 2025
0.135
0.110
2,597
January 2025
0.140
0.085
4,147
Notes:
Data obtained from the TSX-V.
Up to an including the trading of the Common Shares on the close of business on 27 April 2026.
Prior Sales
There were no stock options or other securities that are not listed or quoted on a marketplace issued during the year ended 31 December 2025.
ESCROWED SECURITIES AND SECURITIES SUBJECT TO CONTRACTUAL RESTRICTIONS ON TRANSFER
Designation of class
Number of securities held in escrow or that are subject to a contractual restriction on transfer
Percentage of class as at 31 December 2025
Common shares - Note 1
60,000
0.01%
Note 1: This is a legacy escrow agreement dating back to 1985 between Computershare Trust Company of Canada and a shareholder whereby 60,000 shares remain in escrow.
DIRECTORS & EXECUTIVE OFFICERS
The following table sets out Falcon's directors and executive officers as of the date hereof, provides the person's name, location of residence, position(s) held with Falcon, principal occupation during the last five years and if a director, the date on which the person became a director. Each of Falcon's directors will hold office until the close of the next annual meeting of shareholders or until such director's successor is duly elected or appointed. Falcon understands based on information available publicly, that all of Falcon's current directors and executive officers as a group beneficially own, control or direct, directly or indirectly, over 7,217,456 common shares representing, as at 28 April 2026, approximately 0.65% of Falcon's issued and outstanding common shares. The full names, functions and dates of appointment of the Directors and Executive Officers are as follows:
Name & residence
Function
Date of Appointment
Principal occupation during last 5 years
Joe Nally, Lagos, Portugal
(1) (2)
Non-executive Chairman
10 September 2021
Independent businessman
Philip O'Quigley, Dublin, Ireland
Chief Executive Officer, Executive Director
1 May 2012
25 September 2012
CEO of Falcon Oil & Gas Ltd.
Gregory Smith, Calgary, Alberta, Canada (1)(2)(3)
Non-executive Director
22 December 2009
Chartered Professional Accountants of Alberta President of Oakridge Financial Management Inc.
Director and officer of CanadaBis Capital Inc. Director and CFO of Maglin Site Furniture Inc. Director of Rohde & Liesenfeld Canada Inc.
Anne Flynn, Dublin, Ireland
Chief Financial Officer, Executive Director
5 October 2016
2 May 2022
CFO, Falcon Oil & Gas Ltd.
Tom Layman, Austin, Texas, USA (1)(2)(3)
Non-executive Director
2 May 2022
Certified Petroleum Geologist, acts as a geoscience consultant
Notes:
Member of the audit committee.
Member of the compensation committee.
Member of the reserves, health safety and environment committee
Joe Nally - Non-Executive Chairman
Mr. Nally was appointed as Non-executive Chairman and to the Board of the Company in September 2021. Mr Nally has over 45 years' experience in London's capital markets including 18 years at Cenkos Securities PLC, a firm he co-founded in 2004. Mr Nally was an Executive Director and Head of Natural Resources at Cenkos, where he helped to build, develop and give strategic advice to a number of successful companies in the oil and gas sector. Prior to this, Mr Nally was a partner and director at Williams de Broe and an individual member of the International Stock Exchange of London.
Philip O'Quigley - Chief Executive Officer & Executive Director
Mr. O'Quigley has been a member of the Board since September 2012 and has been Chief Executive Officer of Falcon since May 2012. Mr. O'Quigley brings over 30 years' experience in senior management positions in the oil and gas industry. His career, which spans a number of London and Dublin listed exploration and production companies, includes experience working in countries such as Argentina, the United States, Algeria, the UK and Ireland. Before joining Falcon, he served as Finance Director for Providence Resources plc, an Irish oil and gas exploration and production company. Mr. O'Quigley is a Fellow of the Institute of Chartered Accountants in Ireland and qualified as a Chartered Accountant with Ernst & Young in Dublin.
Gregory Smith - Non-Executive Director
Mr. Smith has been a member of the Board and Chairman of the Audit Committee since December 2009 and is a Chartered Professional Accountant and President of Oakridge Financial Management Inc., a provider of financial and management consulting services to private and public companies. He is currently a director of Rhode & Liesenfeld Canada Inc., a company involved in international freight forwarding, specializing in industrial and resource industries; and a director of a number of private corporations. He is a past director and audit committee chairman of a number of public and private resource corporations including Kerr Mines Inc., TriWestern Energy Inc., Manson Creek Resources Ltd., CDG Investments Inc., CanadaBis Capital Inc and Tyler Resources Inc. Mr. Smith was admitted to the Institute of Chartered Professional Accountants of Alberta in 1975 and holds a Bachelor of Commerce degree from the University of Calgary.
Anne Flynn - Chief Financial Officer & Executive Director
Ms. Flynn was appointed to the Board in May 2022 and has been Chief Financial Officer since October 2016. Ms. Flynn joined Falcon in September 2014 as Group Financial Controller with responsibility for the Group's Dublin, Hungarian and Australian finance and commercial functions. She had previously held a finance managerial role with Adobe Systems Inc for a period of
over three years. Prior to Adobe, she worked for PwC Dublin and PwC New York for six years. Ms Flynn is a Fellow of the Institute of Chartered Accountants Ireland.
Tom Layman - Non-Executive Director
Mr. Layman has been a member of the Board since May 2022. Mr. Layman is a certified petroleum geologist with over 40 years' experience in the oil and gas industry. He has significant knowledge of unconventional resources, having worked on over 4,000 horizontal and vertical shale and unconventional wells across multiple US onshore basins on exploration and development projects.
Mr. Layman currently acts as a geoscience consultant, having previously been Senior VP of Geoscience at Parsley Energy, where he held an executive leadership role directing exploration and development of geoscience activities. Before he joined Parsley Energy, Mr. Layman was VP of Exploration Southern Division at Chesapeake Energy, where he worked for over seven years and was responsible for exploration and development activities across the company's asset portfolio. Prior to this, he was a Geoscience Manager at Burlington Resources and a Geologist at Exxon. Mr. Layman has been a member of the American Association of Petroleum Geologists (AAPG) for 40 years and currently serves on the Geology Foundation Advisory Council at the University of Texas at Austin.
Penalties & sanctions
No director or executive officer of Falcon or, to Falcon's knowledge, a shareholder holding a sufficient number of securities of the Company to materially affect the control of Falcon, has or within 10 years prior to the date of this Annual Information Form, been subject to any penalties or sanctions imposed by a court or securities regulatory authority relating to securities legislation, has entered into a settlement agreement with a securities regulatory authority, or been subject to any other penalties or sanctions imposed by a court or regulatory body, including a self regulatory body, that would likely be considered important to a reasonable security holder making an investment decision about Falcon.
Corporate cease trade orders or bankruptcy
No director or executive officer of Falcon is, or within the ten years prior to the date of this Annual Information Form, has been, a director or executive officer of any company that, while that person was acting in that capacity, was the subject of a cease trade or similar order or an order that denied the relevant company access to any exemption under securities legislation, for a period of more than thirty consecutive days; or was subject to an order that was issued after the director or executive officer ceased to be a director or executive officer and which resulted from an event that occurred while that person was acting in the capacity as director or executive officer.
Other than set forth above, no director or executive officer of Falcon or, to Falcon's knowledge, a shareholder holding a sufficient number of securities of Falcon to materially affect the control of Falcon is, or within the ten years prior to the date of this Annual Information Form, has been, a director or executive officer of any company that, while that person was acting in that capacity or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets.
No director or executive officer of Falcon or, to Falcon's knowledge, a shareholder holding a sufficient number of securities of Falcon to materially affect the control of Falcon has, within the ten years prior to the date of this Annual Information Form, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold the assets of the director, executive officer or shareholder.
Conflicts of interest
Certain officers and directors of Falcon are directors or officers of other oil and gas exploration companies. Consequently, potential conflicts of interest may arise in the event that these companies compete in respect of the sale or option of oil and gas properties in which Falcon is or may be interested.
The directors and officers of the Company are aware of the existence of laws governing accountability of directors and officers for corporate opportunity and requiring disclosures by directors of conflicts of interest and the Company will rely upon such laws in respect of any directors and officers' conflicts of interest or in respect of any breaches of duty by any of its directors or officers. All such conflicts will be disclosed by such directors or officers in accordance with the BCA and they will govern themselves in respect thereof to the best of their ability in accordance with the obligations imposed upon them by law.
Executive Compensation
For the purposes of the AIF, a "named executive officer" of the Corporation means an individual who, at any time during the year, was (each a "Named Executive Officer"):
the Corporation's chief executive officer ("CEO");
the Corporation's chief financial officer ("CFO");
the Corporation's most highly compensated executive officers other than the CEO and CFO, at the end of the most recently completed financial year and whose total compensation was more than CDN$150,000 for that financial year; and
each individual who would be a Named Executive Officer under paragraph (c) but for the fact that the individual was neither an executive officer of the Corporation, nor acting in a similar capacity, at the end of the most recently completed financial year.
Based on the foregoing definition, during the last completed financial year of the Corporation, there were two Named Executive Officers ("NEO"), being Philip O'Quigley, CEO and Anne Flynn, CFO.
Compensation Discussion and AnalysisIn assessing the compensation of its executive officers, the Corporation does not have in place formal objectives, criteria or analysis; it is through Board discussion, with input from and upon the recommendations of the Compensation Committee. The Compensation Committee is comprised of Joe Nally, Gregory Smith and Tom Layman.
The Corporation's executive compensation program has the following principal components: base salary, pension contribution, company healthcare plan, incentive bonus plan and stock options.
Base salaries, pension contributions and participation in the company healthcare plan for all employees of the Corporation are established for each position through comparative salary surveys of similar type and size companies. Both individual and corporate performances are also taken into account.
Incentive bonuses, in the form of cash payments, are designed to add a variable component of compensation based on corporate and individual performances for executive officers and employees. Individual bonuses for achievement of specific performance targets in addition to bonuses based on the average increase in the weighted market capitalisation of the company during the most recently completed financial year in reference to the anniversary of the commencement date of a particular employee are paid. In addition, the Compensation Committee may recommend a discretionary bonus to NEO's for exceptional performance.
Stock options are granted to provide an incentive to the directors, officers, employees and consultants (collectively, the "Participants") to achieve the longer-term objectives of the Corporation; to give suitable recognition to the ability and industry of such persons who contribute materially to the success of the Corporation; and to attract and retain persons of experience and ability, by providing them with the opportunity to acquire an increased proprietary interest in the Corporation. The Corporation awards stock options to the Participants based upon the recommendation of the Compensation Committee. Previous grants of incentive stock options are taken into account when considering new grants.
Implementation of a new incentive stock option plan and amendments to the Stock Option Plan are the responsibility of the Compensation Committee.
The Compensation Committee is responsible for setting the pay and conditions of the Company's Directors and Officers. This Committee reviews periodically the adequacy and form of the compensation of the Directors with a view to ensuring that such compensation realistically reflects the responsibilities and risks of being a director.
The Corporation has no other forms of compensation, although payments may be made from time to time to individuals or companies they control for the provision of consulting services. Such consulting services are paid for by the Corporation at competitive industry rates for work of a similar nature by reputable arm's length services providers.
Summary Compensation Table
The following table sets forth the compensation awarded to, earned by, paid to, or payable to the NEO and directors for the two most recently completed financial years, with the most recent such financial year ended 31 December 2025:
Name and principal position
Year
Salary
$
Bonus
$
Director Fees
$
Value of all other compensation
$(1)
Total compensation
$
Philip O'Quigley
2025
514,000
-
-
5,000
519,000
(CEO) (2)
2024
491,000
-
-
5,000
496,000
Anne Flynn (CFO) (2)
2025
218,000
-
-
27,000
245,000
2024
178,000
-
-
21,000
199,000
Joe Nally
2025
-
-
60,000
-
60,000
(Chairman)
2024
-
-
60,000
-
60,000
Gregory Smith
2025
-
-
50,000
-
50,000
(Director)
2024
-
-
50,000
-
50,000
Tom Layman
2025
-
-
100,000
-
100,000
(Director)
2024
-
-
100,000
-
100,000
(1) Value of all other compensation relates to health insurance contributions paid to Philip O'Quigley ($5,000) and Anne Flynn ($4,000) and pension payments paid into Anne Flynn's defined contribution plan ($23,000).
(2) Mr. Quigley and Ms. Flynn did not receive any additional compensation for serving as Directors of the Corporation.
Incentive Plan Awards Outstanding Share-Based Awards and Option-Based AwardsThere were no stock options granted during the year ended 31 December 2025.
The total number of stock options held by the NEOs and directors as at 31 December 2025 are included in the table below:
Name
Number of unexercised stock options held
Number of Common Shares held
Philip O'Quigley (CEO)
25,000,000
3,513,696
Anne Flynn (CFO)
12,500,000
200,000
Joe Nally (Director)
3,750,000
500,000
Gregory Smith (Director)
2,500,000
1,220,000
Tom Layman (Director)
5,000,000
1,783,760
Stock options are subject to vesting provisions whereby one third of the stock options vest on the date of the grant, one third on the first anniversary and one third on the second anniversary.
Exercise of Compensation Securities by Directors and NEOsThere were no stock options or other compensation securities exercised by a director or NEO during the year ended 31 December 2025.
Stock Option PlanIn 2004, the Shareholders approved the Corporation's stock option plan in substantially its current form (the "Stock Option Plan"), which is known as a "rolling plan". The Stock Option Plan requires the approval of the Shareholders each year at the annual general meeting of the Shareholders in accordance with the terms of the Stock Option Plan and TSX Venture Exchange ("TSX-V") Policy 4.4 - "Incentive Stock Options" ("Policy 4.4"). The Stock Option Plan was approved at the annual shareholders meeting held on 27 August 2025.
The following is a summary of the principal terms of the Stock Option Plan, which summary is qualified by and is subject to the full terms and conditions of the Stock Option Plan. Except as otherwise defined herein, capitalised terms used herein have the meanings ascribed thereto in the Stock Option Plan.
The Shareholders initially approved the Stock Option Plan on 18 November 2004 and subsequently at each annual general and special meeting of the Corporation held thereafter. Ten percent (10%) of the number of issued and outstanding Common Shares from time to time are currently reserved for issuance upon the exercise of options granted pursuant to the Stock Option Plan.
The purpose of the Stock Option Plan is to attract, retain and motivate the Participants by providing them with the opportunity, through stock options, to acquire a proprietary interest in the Corporation and benefit from its growth. In management's view, the ability to grant stock options as a means of compensating Participants contributes to the Corporation's overall financial performance. As such, management considers that the Stock Option Plan is beneficial to the Corporation as it provides the
Corporation with greater flexibility to compensate eligible Participants with grants of stock options and encourage Participant ownership of the Corporation.
The options are non-assignable and may be granted for a term not exceeding five (5) years, unless the Corporation is listed on Tier 1 of the TSX-V in which case the options may be granted for a term not exceeding ten (10) years. Options may be granted under the Stock Option Plan only to Participants or to persons that have agreed to commence serving in any of the aforementioned capacities subject to the rules and regulations of applicable regulatory authorities and any Canadian stock exchange upon which the Common Shares may be listed or may trade from time to time. The number of Common Shares reserved for issue to any one person pursuant to the Stock Option Plan may not exceed five percent (5%) of the issued and outstanding Common Shares at the date of such grant or in any twelve-month period. The exercise price of options issued may be issued at the market price of the Common Shares as listed on the TSX-V, subject to any discounts permitted by applicable legislative and regulatory requirements.
As at 28 April 2026, 21,750,000 stock options are issued and outstanding.
Summary of employment contracts of each named executive officer.
The following describes the material terms and conditions of the employment contracts including termination provisions and change of control benefits of each NEO in effect during the financial year ended 31 December 2025.
Mr. Philip O'Quigley
Mr. O'Quigley was appointed as a Director in September 2012. Mr. O'Quigley accepted the position of Chief Executive Officer pursuant to an employment contract dated 10 April 2012, commencing employment on 1 May 2012. Mr. O'Quigley receives an annual salary of €454,545 and is eligible for a bonus of up to 100% of the sum of Mr. O' Quigley's annual salary. The Company can terminate the employment contract on twelve months' notice, or payment in lieu of notice, at an estimated cost of $478,000 to Falcon. This contract includes a "change of control" provision, where in the event of a sale of the Company's assets or a change in the ownership of the Company, Mr O'Quigley is entitled to 3 years salary, at an estimated cost of $1,435,000. The change of control provisions also applies in the event of a change of control within 12 months following the termination of Mr. O'Quigley's employment contract.
Ms. Anne Flynn
Ms. Flynn was appointed Chief Financial Officer on 5 October 2016 and Director on 2 May 2022. Ms. Flynn is paid an annual salary of €200,000 and is eligible for a bonus of up to 50% of her annual salary. The Company can terminate the employment agreement on twelve months' notice, or payment in lieu of notice, at an estimated cost of $232,000 to Falcon. This contract includes a "change of control" provision, where in the event of a sale of the Company's assets or a change in the ownership of the Company, Ms Flynn is entitled to 12 months' salary, at an estimated cost of $232,000. The change of control provisions also applies in the event of a change of control within 12 months following the termination of Ms. Flynn's employment contract.
[This part of the page was left blank intentionally]
LEGAL PROCEEDINGS & REGULATORY ACTIONS
The Company has not been involved in any legal proceedings during the financial year and as of 28 April 2026, no legal proceedings are contemplated.
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
None of Falcon's current directors or executive officers has any interest, direct or indirect, in any material transactions in which Falcon has participated since 1 January 2023.
No persons or companies that are the direct or indirect beneficial owners of, or who exercise control or direction over, more than 10% of the outstanding Common Shares, or any associate or affiliate of any of the foregoing, has any interest, direct or indirect, in any material transactions in which Falcon has participated since 1 January 2023.
TRANSFER AGENT & REGISTRAR
The transfer agent and registrar for the Common Shares is Computershare Trust Company of Canada, 3rd Floor, 510 Burrard Street, Vancouver, British Columbia, V6C 3B9, Canada. Computershare Investor Services Plc acts as the depositary in the United Kingdom and is located at The Pavilions, Bridgewater Road, Bristol, BS99 6ZY, United Kingdom.
MATERIAL CONTRACTS
Falcon has not entered into any material contracts outside of the ordinary course of business in the last financial year or before the last financial year which are still in effect.
INTERESTS OF EXPERTS
Names of experts
The names of the experts are as follows:
Charles W. Chapman, co-author of the 51-101F2 Report, Chapman Petroleum Engineering Ltd, 1122 - 4th Street S.W., Suite 700, Calgary, Alberta, T2R 1M1, Canada;
BDO Canada LLP, the Company's auditors, 903 - 8th Avenue SW Suite 620, Calgary, AB T2P 0P7, Canada; and
RPS Energy author of the RPS 2013 Report, 411N. Sam Houston Parkway E., Suite 400 Houston, Texas 77060-3545, U.S.A.
Interests of experts
As of the date hereof, the directors, officers, employees and partners, as applicable, of each of the aforementioned companies and partnerships beneficially own, directly or indirectly in the aggregate, less than one percent of the securities of the Company. No director, officer, employee or partner, as applicable, of the aforementioned companies or partnerships is currently expected to be elected, appointed or employed as a director, officer or employee of the Company or of any associate or affiliate of the Company.
BDO Canada LLP are the auditors of the Group and have confirmed that they are independent within the meaning of the relevant rules and related interpretations prescribed by the relevant professional bodies in Canada and any applicable legislation or regulation.
ADDITIONAL INFORMATION
Additional information relating to Falcon may be found on SEDAR+ at https://www.sedarplus.ca.
Additional financial information is provided in Falcon's audited consolidated financial statements and MD&A for the year ended 31 December 2025.
Additional information, including directors' and officers' remuneration and indebtedness, principal holders of Falcon's securities and options to purchase Falcon's securities, where applicable, is contained in Falcon's information circular dated 21 July 2025. A further circular dated 4 February 2026 contains information on the Transaction with Tamboran.
[End of document]