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

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

Falcon Oil&Gas Ltd. announced that it has received written approval from the Hungarian Mining Authority based on the Geological Closing Report covering the estimated resource underlying Falcon’s two exploration licenses. The Mining Bureau approval is based on the Hungarian Geological Survey recommendation.

Approval of Closing Report

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

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

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

Commencement of Completion Operations

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

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

Testing Infrastructure Completed Ahead of Schedule

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

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 http://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 Canada – Brisco Capital Partners Corp Graeme Dick (403) 313-9663 United Kingdom – 4C-Burvale Carina Corbett John Carrick-Smith +44 (0) 20 7559 6710

Falcon’s discovered resources are not reserves. Only those quantities of oil and gas that are anticipated to be economically recoverable from discovered resources are classified as reserves. Until such time as Falcon’s discovered resources are proven to be reserves, there is a risk that Falcon may not achieve ongoing operations from which it may generate significant revenue.

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. 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 http://www.sedar.com/ before making investment decisions with regard to the Company.

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