Falcon Oil & Gas announces that its c. 98% subsidiary, Falcon Oil & Gas Australia Limited, has executed an agreement which includes a restated Farm-Out Agreement and Joint Operating Agreement with Origin Energy B2 Pty Ltd., a subsidiary of Origin Energy Limited to farm down 7.5% of Falcon Australia’s 30% participating interest (“PI”) in the Exploration Permits in the Beetaloo Sub-basin, Northern Territory, Australia (“the Permits”). Falcon and Origin are obligated to seek the Northern Territory government and TSXV stock exchange approvals, in respect of the Agreements.
 
Transaction details 

• With the necessary approvals, the PI of the respective JV partners will be: Falcon Australia 22.5%, Origin 77.5%
• In consideration of Falcon Australia transferring 7.5% of its PI, Origin will increase the gross cost cap of the work program by A$150.5 million.
• The previous farm-in arrangement included a Stage 2 gross cost cap of A$65.3 million and a Stage 3 gross cost cap of A$48 million, or A$113.3 million in total. Under the Agreements, the Stage 2 and Stage 3 gross cost caps will be combined and increased by A$150.5 million to A$263.8 million (the “Overall Cost Cap”),
• This Overall Cost Cap will be applied to the completion of the Stage 2 and Stage 3 work programmes.
• Amounts of the Overall Cost Cap not utilised during Stage 2 and Stage 3 will be applied to future work programmes.
• Expenditure above the Overall Cost Cap will be borne by the JV partners in proportion to their PI.
• Origin will assume 25% of the cost of Falcon Australia’s remaining call option to reduce the overriding royalties with the TOG Group. The cost to Falcon Australia, should it wish to exercise the call option, will reduce from US$7.5 million to US$5.625 million, in line with its reduced PI. 

KeyFacts Energy: Falcon Oil & Gas Australia country profile