Falcon Oil & Gas Ltd. Announces Agreements With Merrill Lynch And Bmo Capital Markets As Advisors For Strategic Partner Initiative In Hungary

Denver, CO, July 13, 2009 -- Falcon Oil & Gas Ltd. (TSXV: FO) (“Falcon”) is pleased to announce that it has entered into agreements (collectively, the “Agreements”) with Merrill Lynch Pierce Fenner and Smith, Inc. (“Merrill”) and BMO Capital Markets (“BMO”) pursuant to which Merrill and BMO have been engaged to provide advisory services with respect to strategic initiatives in order to assist Falcon in maximizing the potential of the 391,400 acres which are outside of the Falcon/ExxonMobil/MOL joint development project in Hungary (the “100% Falcon Acreage”).

Falcon’s Chairman and CEO, Marc A. Bruner, stated, “With the assistance and capabilities of our world-class advisors, we’re optimistic about concluding one or more transactions that will add significant value to our assets and will provide the capability to further define and determine the commercial potential of these properties.”

The Merrill Lynch and BMO Agreements

The execution of the Agreements is the first step in Falcon’s strategic partner initiative (the “2009 Initiative”). Under the 2009 Initiative, Falcon will be seeking one or more third parties with the financial and/or technical capabilities to participate in exploration and development activities on the 100% Falcon Acreage.

Sean Mueller, project lead for Merrill, said, “Merrill Lynch has one of the largest energy teams on Wall Street, with offices in nine countries, and with a substantial track record in unconventional gas transactions. Production from unconventional gas has completely changed the natural gas market in North America. Marc A. Bruner has been an industry pioneer in unlocking the potential at Jonah and Pinedale in the Rocky Mountains. He and his team have now taken that experience and expertise and expanded internationally to Hungary. Unconventional gas will become extremely important to Europe’s overall gas supply. Falcon’s Mako interests represent a unique opportunity in one of the most advanced unconventional plays in Europe.”

Hungary Strategic Partner Initiative – Production License and Exploration Licenses

As previously announced, under the transaction with ExxonMobil in April 2008, Falcon retained sole ownership and operatorship of 391,400 acres (collectively, “100% Falcon Acreage”) outside the Falcon, ExxonMobil, MOL Contract Area, as follows:

• Falcon Lands in Mining Plot: Falcon has 100% ownership in the 25% portion (61,400 acres) of the Mining Plot (long-term “Production License”) that is not part of the Contract Area.
• Exploration Licenses: Falcon has 100% ownership in 330,000 acres which are outside the boundaries of the Production License, and continue to be part of the original Makó Exploration License and original Tisza Exploration License.
• Shallow Rights: Falcon also owns 100% of those portions of the Mako and Tisza Exploration Licenses which are above 2,800 meters within the boundaries of the entire 246,000-acre Production License (including the 61,400 acres mentioned above).

Mr. Bruner commented, “ExxonMobil is now evaluating the Foldeak-1 well for testing, and we’re looking forward to seeing those results. We’re pleased with our relationship with ExxonMobil and MOL and the status of the joint development project.” Mr. Bruner continued, “However, when you consider the areas to the east and north of the Falcon, ExxonMobil, MOL acreage, there is significant Szolnok potential for further exploration and development. As we approach the point in time when we will begin to see test results from the Foldeak, we will apply that information to our 100% owned acreage, together with the extensive data that we have separately developed throughout this area, including the well data from our 2006-07 drilling program and our seismic information. The initiative that we started in 2007 resulted in our joint development agreement with ExxonMobil and MOL. Similarly, our plan is that the 2009 strategic partner initiative will lead to one or more transactions on our 100% owned acreage in Hungary.”

About Falcon Oil & Gas Ltd.

Falcon Oil & Gas Ltd. is a British Columbia corporation in the business of conventional and unconventional oil and gas exploration and production. Falcon seeks to maximize value for its shareholders through strategic relationships. It conducts operations in Hungary through its wholly owned subsidiary TXM Oil and Gas Exploration, LLC, in Romania through its wholly owned subsidiary JVX Energy Corporation, in Colorado through its wholly owned subsidiary Falcon Oil & Gas USA, Inc., and in Australia through its wholly owned subsidiary Falcon Oil & Gas Australia Pty Ltd. Further information about Falcon is available at www.falconoilandgas.com.

Contacts:
Investor Relations
Falcon Oil & Gas Ltd:

North America:
Brad Long
Toll Free 888 541 3624
Direct (360) 332 9821
blong@falconoilandgas.com

Europe:
Alexander Hubbard-Ford
Phone + 44 (0) 20 79351543
Mobile + 44 (0) 7984481541
investor@falconoilandgas.com

Falcon Oil & Gas Ltd.
Marc A. Bruner, CEO
1875 Lawrence Street, Suite 1400
Denver Colorado 80202 USA
Phone (303) 893-1800
Fax (303) 572-8927

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 made as of the date hereof disclaim 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.

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