BUDAPEST, Hungary, July 10 /CNW/ -- Falcon Oil and Gas Ltd. (TSXV: FO), announced today an operational update on its Mako-6 well in Hungary. The Mako-6 well has reached TD at a 5692m-measured depth and 5 1/2-inch casing has been set in preparation for testing of multiple zones. As indicated in Falcon's May 18, 2006 press release, the well had already drilled a 900m-gross sequence of the Szolnok Formation with overpressured gas shows and a net-to-gross ratio of approximately 60%. The Endrod Formation was expected to be present below the Szolnok Formation, as determined by prior drilling in the historic Hod-1 and Mako-1, -2 and -3 wells. The Endrod Formation was indeed encountered at 4388m with a sharp increase in both pressure and gas shows as evidenced by the mud log. At the base of the Endrod (5075m), Falcon management elected to continue drilling to explore and investigate the possibility of coarse-grained clastic sediments in the bottom of the basin. Such potential reservoir-grade sediments might be associated with early post-rift and syn-rift deposition, if present. This deeper target has never been drilled in the Mako Trough. Based on well information and seismic surveys, the Endrod has now been stratigraphically subdivided into an Upper and Lower member. The Upper Endrod (4388m to 4735m) consists of shale and marl with thin, fine-grained, sandstone turbidites. This unit appears to be highly overpressured and gas-charged. The sediments are organic-rich and represent part of the hydrocarbon generating portion of the Endrod. As mentioned in Falcon's May 18, 2006 press release, mud weights had to be increased to more than 16 pounds per gallon and gas evolving from these tight gas sands had to be flared to control the well. The Lower Endrod (4735m to 5075m) continued with a 340m sequence of organic-rich marl and shale. Significant gas shows and apparent high pressures persisted. Fine-grained sandstone turbidites were largely absent, but instead two 20m and 50m sandstone/conglomerate sequences occurred in discrete, thick intervals. These intra-Endrod conglomeratic units show indications of permeability on the logs evidenced by mud-cake and invasion profiles. Well logs also indicate gas with no movable water. The Upper and Lower Endrod are seismically distinctive and can be mapped over 1000 square km across the Mako Trough. The presence of the gas cell is believed to be pervasive throughout this area in accordance with Falcon's basin-centered-gas model. The apparent high net-to-gross, coarse-grained sediments encountered below the Endrod have been divided by Falcon into two zones based on both log character and clear seismic definition. The upper zone is called the Basal Conglomerate, which is likely deposited during early post-rift times. The lower zone is called the Syn-rift Conglomerate. It is probably associated with the early rifting phase at the time when the Mako Trough was being formed. The Basal Conglomerate (5075m to 5348m) consists of a very thick, 270m or more, coarsening-upward sequence of shale, sandstones and conglomerates. These sediments exhibited similar high pressures and gas shows previously encountered within the Endrod. Well log analyses predict gas presence with no apparent movable water. Initial log interpretation, strong mud cake build-up and invasion profiles indicate good permeability and porosity, which, however, must be confirmed by flow testing. Strong seismic reflectors associated with this zone can be mapped over 500 square km covering much of the central part of the Mako Trough. The underlying Syn-rift Conglomerate (5348m to TD at 5692m) is a 350m sequence of coarse conglomerates for which well log analyses indicate the presence of gas with no movable water. Initial analyses show these units to be of low porosity; however, strong mud cake build-up and invasion profiles in this zone may be indicative of permeability. These syn-rift conglomerates have a complicated distribution across the Mako Trough with thickness varying with deep structural control, so reservoir prediction is not possible at this stage. The well was terminated at 5692m after recovering a core, which showed that the well was still in the syn-rift section. Although strong gas shows were continuing, Falcon management considered it operationally prudent to not expose the very large section of open-hole, gas-bearing section (approximately 1400m) to more drilling. The well has been cased and will enter multiple flow test phases upon arrival of a suitable rig. About Falcon Oil & Gas Ltd. Falcon Oil & Gas Ltd. is a British Columbia corporation which is in the business of oil and gas exploration and production. It has operations in Hungary through its wholly-owned subsidiary TXM Oil and Gas Exploration, and in Romania through its wholly-owned subsidiary JVX Energy Corporation. Further information about Falcon is available at www.falconoilandgas.com. Contacts: Falcon Oil & Gas Ltd. Marc A. Bruner, President, Chairman & CEO Michael K. Lam, Corporate Development North America (416) 303-8810 Alexander Hubbard-Ford, Corporate Development Europe +44 (0)79 8448 1541 United States - CTA Public Relations Bevo Beaven Vice President/General Manager (303) 665-4200 In the interests of providing Company shareholders and potential investors with information regarding the Company, including the Company's assessment of its and its subsidiaries' future plans and operations, certain statements included in this press release may constitute forward-looking information or forward-looking statements (collectively, "forward-looking statements"). All statements contained herein that are not clearly historical in nature are forward-looking, and the words "anticipate," "believe," "expect," "estimate" and similar expressions are generally intended to identify forward-looking statements. Similarly, forward-looking statements in this press release include, but are not limited to anticipated developments of the Company's drilling project in Hungary and the timing thereof, the Company's drilling project in Romania and the timing thereof, capital investment levels and the allocation thereof, pipeline capacity, government royalty rates, reserve and resources estimates, the level of expenditures for compliance with environmental regulations, site restoration costs including abandonment and reclamation costs, exploration plans, acquisition and disposition plans including farmout plans, net cash flows, geographic expansion and plans for seismic surveys. In addition, please note that statements relating to "reserves" or "resources" are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions, that the reserves and resources described can be profitably produced in the future. Such statements represent the Company's internal projections, estimates or beliefs concerning, among other things, an outlook on the estimated amounts and timing of capital expenditures, anticipated future debt levels and incentive fees or revenues or other expectations, beliefs, plans, objectives, assumptions, intentions or statements about future events or performance. These statements are only predictions. Actual events or results may differ materially. As well, please note that certain statements made in this press release may not be in compliance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities and may not be in compliance with the Canadian Oil and Gas Evaluation Handbook. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievement since such expectations are inherently subject to significant business, economic, competitive, political and social uncertainties and contingencies. Many factors could cause the Company's actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, the Company and the foregoing list of important factors is not exhaustive. These forward-looking statements are made as of the date hereof disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise. Company shareholders and potential investors should carefully consider the information contained in the Company's filings with Canadian securities administrators at www.sedar.com before making investment decisions with regard to the Company. The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.