Falcon holds a Technical Cooperation Permit covering 7.5 million acres in the southwest Karoo Basin. In August 2010, Falcon submitted an application for an exploration license covering the same area.
The Karoo Basin covers 600,000 sq km in central and southern South Africa and contains thick, organic rich shales such as the Permian Whitehill Formation. Until recently, the Karoo Basin was not considered prospective for productive hydrocarbons resulting in very limited modern hydrocarbon exploration onshore in South Africa.
With the advances in modern drilling technology and shale exploration, the United States Energy Information Administration’s June 2013 report “World Shale Gas Resources: An Initial Assessment” estimates 390 TCF of technically recoverable shale gas resources in South Africa’s Karoo Basin. (page 10).
Technical Cooperation Permit
Falcon holds a Technical Cooperation Permit (TCP) covering an area of approximately 7.5 million acres (approximately 30,327 km2) onshore Karoo Basin, South Africa. In geological terms the Karoo refers to a geological period lasting some 120 million years and the rocks laid down during that period of time. These rocks were deposited in a large regional basin and resulted in the build-up of extensive deposits, some of which have been identified as having excellent shale gas potential. The TCP grants Falcon an exclusive right to apply for an exploration right over the underlying acreage.
South Africa – Exploration Licence being processed by Petroleum Agency SA
The Petroleum Agency of South Africa (“PASA”) is proceeding with the processing of the Company’s application for a shale gas Exploration Licence in South Africa’s Karoo Basin and the Company expects that the South African Department of Mineral Resources (“DMR”) will issue Falcon with a licence to explore for shale gas in 2016.
Cooperation agreement with Chevron
In December 2012, Falcon entered into a cooperation agreement with Chevron to jointly seek unconventional exploration opportunities in the Karoo Basin. The Chevron Agreement provides for Falcon to work with Chevron for a period of five years to jointly seek to obtain exploration rights in the Karoo Basin subject to the parties mutually agreeing participation terms applicable to each right.