Falcon Oil & Gas : MD&A 31 December 2023

Falcon Oil & Gas Ltd.

Form 51-102F1

Management's Discussion & Analysis

For the Year Ended 31 December 2023

(Presented in U.S. Dollars)

Falcon Oil & Gas Ltd.

Management's Discussion & Analysis

For the Year Ended 31 December 2023

Table of Contents

	Page Number
Introduction	3
Overview of business and overall performance	6
Selected annual information	16
Results of operations	17
Summary of quarterly results	23
Liquidity and capital resources	25
Disclosure of outstanding share data	27
Legal matters	27
Transactions with non-arm's length parties and related party transactions	28
Off balance sheet arrangements and proposed transactions	28
Financial instruments and other instruments	28
New accounting pronouncements	28
Critical accounting estimates	28
Management's responsibility for MD&A	29

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Falcon Oil & Gas Ltd.

Management's Discussion & Analysis

For the Year Ended 31 December 2023

INTRODUCTION

The following management's discussion and analysis (the "MD&A") was prepared as at 25 April 2024 and is management's assessment of Falcon Oil & Gas Ltd.'s ("Falcon") financial and operating results and provides a summary of the financial information of the Company (as hereinafter defined) for the three months and year ended 31 December 2023. This MD&A should be read in conjunction with the audited consolidated financial statements for the years ended 31 December 2023 and 2022.

The information provided herein in respect of Falcon includes information in respect of its wholly-owned subsidiaries: TXM Oil and Gas Exploration Kft., a Hungarian limited liability company ("TXM"); Falcon Oil & Gas Ireland Ltd., an Irish limited liability company ("Falcon Ireland"); Falcon Oil & Gas Holdings Ireland Ltd., an Irish limited liability company ("Falcon Holdings Ireland"); Falcon Exploration and Production South Africa (Pty) Ltd., a South African limited liability company ("Falcon South Africa") and its 98.1% majority owned subsidiary, Falcon Oil & Gas Australia Limited, an Australian limited liability company ("Falcon Australia") (collectively, the "Company" or the "Group"). Mako Energy Corporation, a Delaware company and Falcon Oil & Gas USA Inc., a Colorado company former wholly owned subsidiaries of Falcon, were dissolved in 2021.

Additional information related to the Company, including the Company's Annual Information Form ("AIF") for the year ended 31 December 2023 dated 25 April 2024 can be found on the System for Electronic Document Analysis and Retrieval ("SEDAR+") at www.sedarplus.ca and Falcon's website at www.falconoilandgas.com.

Forward-looking statements

Certain statements contained in this MD&A constitute forward-looking statements and are based on Falcon's beliefs and assumptions based on information available at the time the assumption was made. By its nature, such forward- looking information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. The Company believes the expectations reflected in those forward-looking statements are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking statements should not be unduly relied upon.

Any statements not of historical fact may be deemed to be forward-looking information. Forward-looking information typically contains statements with words such as "may", "will", "should", "expect", "intend", "plan", "anticipate", "believe", "estimate", "preliminary" "projects", "dependent", "potential", "scheduled", "forecast", "outlook", "budget", "hope", "support" "ongoing", "objective", "measure", "depends", "could" or the negative of those terms or similar words suggesting future outcomes. In particular forward-looking statements in this MD&A include, but are not limited to, statements with respect to: strategy of the Board of Directors of Falcon (the "Board") and countries it believes support the exploitation of unconventional oil and gas; the shale oil and shale gas potential of the Beetaloo Sub-basin; the Beetaloo Sub-basin Stage 3 work programme; objectives of the wells to be drilled in the Beetaloo Sub-basin Australia; expectations on bringing the project to commerciality and a multi-well pilot programme in 2024; information relating to drilling operations at the Amungee NW-3H ("A3H") well and initial evaluation of drilling results and reservoir conditions; information relating to drilling operations at the Shenandoah South 1H ("SS1H") well and the belief that the SS1H 30- day initial production ("IP30") and the 60-day initial production ("IP60") results to be above the commercial threshold required to progress the Beetaloo to pilot development during 2024, IP30 and IP60 flow test extrapolation for proposed future development wells, geological rock properties in the region indicative of favourable well performance with potential to result in long-term,low-declining gas production, that this region is one of the best locations in the Beetaloo Sub-basin to commence pilot development activities, IP90 flow rate results expected to be announced in late April 2024, result of SS1H providing the Beetaloo Joint Venture ("BJV") BJV confidence to progress development plans for the proposed 40 million cubic feet per day ("MMcf/d") Pilot Project at the Shenandoah South location subject to funding and key approvals; the project is expected to require six 10,000-foot development wells initially to achieve plateau production of 40 MMcf/d. Drilling of the first of these wells is planned to commence in Q2 2024 and the JV is targeting first gas in H1 2026; drilling of the first of these wells planned to commence in Q2 2024 and the targeting of first gas in H1 2026, funding to commence drilling of the initial two wells in the program and evaluation of opportunities to support funding the remaining capital commitments to reach first production, including issuance of equity and/or debt, evaluation of pre-payment for gas from the proposed Pilot Project and potential farm-down opportunities; signing of a Binding Agreement for a long term Gas Sales Agreement to supply tie Northern Territory, conditional on entering a binding Gas Transportation Agreement and Gas Processing Agreement and reaching a final investment decision on upstream drilling activity and the plan for first gas flow in H1 2026; information and analysis relating to the conducted diagnostic fracture injection test ("DFIT"); treatment under governmental regulatory regimes and tax laws; the quantity of petroleum and natural gas resources or reserves; statements relating to the Group's activities in the Beetaloo Sub-basin; the results at Kyalla 117 N2-1H ST2 ("Kyalla 117"); the contingent resource estimate for the Amungee NW-1H ("A1H") Velkerri B shale gas pool and statements relating to whether all frack stages contributed to the initial extended production test in 2016; details relating to normalised gas flow rates at Amungee, the prospectivity of the Amungee

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Falcon Oil & Gas Ltd.

Management's Discussion & Analysis

For the Year Ended 31 December 2023

Member/Middle Velkerri play, anticipated production rates, information relating to the letter of intent ("LOI") executed with Tamboran (B2) Pty Limited ("Tamboran B2") following Origin Energy B2 Pty Ltd.'s ("Origin") divestment of its interest in the Beetaloo Exploration Permits, amendments to the Joint Operating Agreement and the Farm-In Agreement following the executed LOI, limited proration units on sole risk operations providing future participation optionality and future sole risk operations; fiscal terms regarding the Karoo basin, South Africa, the Mineral and Petroleum Resources Development Amendment Bill ("MPRDA Bill"), the awarding of exploration rights; liquidity and financial capital including the going concern capabilities of the Company; expectations regarding the ability of Falcon to access additional sources of funding including those not currently available; and Falcon's ability to leverage its experience in the unconventional oil and gas industry to acquire interests in licenses.

Some of the risks and other factors, which could cause results to differ materially from those expressed in the forward- looking statements include, but are not limited to: general economic conditions in the Republic of Hungary, the Commonwealth of Australia, the Republic of South Africa and globally; supply and demand for petroleum and natural gas; industry conditions, including fluctuations in the price of petroleum and natural gas; governmental regulation of the petroleum and natural gas industry, including income tax, environmental and regulatory matters adversely impacting the exploitation of unconventional oil and gas resources; introduction of a moratorium; fluctuation in foreign exchange or interest rates; risks and liabilities inherent in petroleum and natural gas operations, including exploration, development, exploitation, marketing and transportation risk and for relatively under-explored basins such as the Beetaloo Sub-basin there may not be the shale oil and gas commercial potential; renewal of Exploration Permits; need to obtain regulatory approvals before development commences; environmental risks and hazards and cost of compliance with environmental regulations; aboriginal claims;;; initial evaluation confirming reservoir continuity of the Amungee Member B-shale over 150 kilometres between A2H and Beetaloo W-1 wells including a target development area of approximately 1 million acres where the shale depth exceeds 2,700 metres may not be accurate; risks and uncertainties associated with wellbore or reservoir conditions, geological, technical, drilling and processing problems; unanticipated operating events which can delay exploration and appraisal or reduce production or cause production to be shut-in or delayed; willingness of joint venture partners to continue with a work programme and bringing towards commerciality; the ability of our joint venture partners to pay their proportionate share of joint interest billings; failure to obtain industry partner and other third party consents and approvals, when required; stock market volatility and market valuations; competition for, among other things, capital, acquisition of reserves, processing and transportation capacity, undeveloped land and skilled personnel; uncertainties inherent in estimating quantities of reserves and resources and bringing to commerciality; the need to obtain required approvals from regulatory authorities with delays impacting work programmes and associated costs or not receiving the requisite license to explore; risks associated with drilling wells which is speculative and often involves significant costs that may be more than estimated and may not result in any discoveries; cash availability to meet expenses as they fall due; pandemics such as COVID-19 may be prolonged, delaying work programmes and increasing cost; macroeconomic risks such as inflationary pressures and the current Ukraine Russia conflict also delay work programmes due to delivery of goods and increasing costs and the other factors considered under "Risk Factors" in Falcon's AIF dated 25 April 2024.

With respect to forward-looking statements contained in this MD&A, Falcon has made assumptions regarding: the countries where the Group operates supporting the exploitation of unconventional oil and gas; the shale oil and shale gas commercial potential of the Beetaloo Sub-basin while it remains relatively under-explored; the continuation of the Beetaloo Sub-basin work programme and the project being brought towards commerciality; the original gas in place and contingent gas resource calculated with respect to the Beetaloo Sub-basin are the best estimates based on the drilling results to date and other data (including seismic) available; work with Falcon's joint venture partner, Tamboran B2, will continue, adopting recommendations of the scientific inquiry and obtaining necessary approvals to complete the remaining work programme; estimated date for the awarding of the exploration right over the acreage in the Karoo Basin; the Group's ability to continue as a going concern; the Beetaloo Sub-basin project being brought towards commerciality.

Management has included the above summary of assumptions and risks related to forward-looking information provided in this MD&A in order to provide readers with a more complete perspective on Falcon's future operations and such information may not be appropriate for other purposes. Falcon's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits, if any, that the Company will derive therefrom. Readers are cautioned that the foregoing lists of factors are not exhaustive.

The forward-looking statements contained in this document are expressly qualified by this cautionary statement. Falcon disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required under applicable securities regulation. In addition, other

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Falcon Oil & Gas Ltd.

Management's Discussion & Analysis

For the Year Ended 31 December 2023

factors not currently viewed as material could cause actual results to differ materially from those described in the forward-looking statements.

Advisory regarding oil and gas information

Any references in this MD&A to initial production rates are useful in confirming the presence of hydrocarbons; however, such rates are not determinative of the rates at which such wells will continue production and decline thereafter and are not necessarily indicative of long-term performance or ultimate recovery. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production for Falcon. Such rates are based on field estimates and may be based on limited data available at this time.

Contingent resource estimates are those quantities of gas (produced gas minus carbon dioxide and inert gasses) that are potentially recoverable from known accumulations, but which are not yet considered commercially recoverable due to the need for additional delineation drilling, further validation of deliverability and original gas in place, and confirmation of prices and development costs. There is uncertainty that it will be commercially viable to produce any portion of the resources. For additional information relating to contingent resource estimates in respect of the Amungee NW-1H Velkerri B Shale Gas Pool which were prepared by an Origin employee and a Qualified Reserves and Resources Evaluator effective as of February 15, 2017, please refer to Falcon's AIF dated April 25, 2024, which is available on SEDAR+ at www.sedarplus.ca.

Dollar amounts

All dollar amounts in this document are in United States dollars "$", except as otherwise indicated. "CDN$" where referenced represents Canadian dollars; "£" where referenced represents British pounds sterling, "HUF" where referenced represents Hungarian forints and "A$" where referenced represents Australian dollars.

The financial information provided herein has been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC").

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Falcon Oil & Gas Ltd.

Management's Discussion & Analysis

For the Year Ended 31 December 2023

OVERVIEW OF BUSINESS AND OVERALL PERFORMANCE

About the Group

Falcon is an international oil and gas company engaged in the exploration and development of unconventional oil and gas assets. The Company's interests are located in internationally diversified countries that are characterised by a high regional demand for energy and are close to existing infrastructure allowing for rapid delivery of oil and gas to market in Australia and Hungary.

Falcon's strategy is to leverage the Group's expertise in the unconventional oil and gas industry to acquire interests in licences covering large acreages of land and to build on its internationally diversified portfolio of unconventional assets and interests, which are located in countries that the Board believes support the exploitation of unconventional oil and gas. Falcon seeks to add value to its assets by entering into farm-in arrangements with major oil and gas companies that will fully or partially carry Falcon through seismic and drilling work programmes. The Group's principal interest is located in the underexplored Beetaloo Sub-basin in Australia; with further interests in Hungary and an underexplored basin in South Africa, covering approximately 12.3 million gross acres in total. The carrying value at 31 December 2023 of the Company's interest in Australia is $51 million, while the Hungarian asset is nil due to a determination in 2014 that the estimated recoverable amount was insufficient to cover the carrying value of the asset. For the South African interest, costs associated with the technical cooperation permit are expensed as incurred.

Falcon is incorporated in British Columbia, Canada and headquartered in Dublin, Ireland with a technical team based in Budapest, Hungary. Falcon's Common Shares are traded on Toronto's TSX Venture Exchange ("TSX-V") (symbol: FO.V); and AIM, a market operated by the London Stock Exchange (symbol: FOG).

Summary of Operations

The following table summarises the principal oil and gas interests of the Company in Australia, South Africa and Hungary:

Assets	Interest	Operator	Status	Gross Area
(Country)	(%)			(km2)
Exploration Permit EP76 (Beetaloo Sub-basin, Northern Territory, Australia)	22.5(i)	Tamboran B2(iii) Exploration	1,891.3
Exploration Permit EP98 (Beetaloo Sub-basin, Northern Territory, Australia)	22.5(i)	Tamboran B2(iii) Exploration	10,316.0
Exploration Permit EP117 (Beetaloo Sub-basin, Northern Territory, Australia)	22.5(i)	Tamboran B2(iii) Exploration	6,412.0
Technical Cooperation Permit, (Karoo Basin, South Africa) (ii)	100	Falcon	TCP	30,327.9
Makó Production Licence (Makó Trough, Hungary)	100	TXM	Production	994.6
Notes:

1. Falcon owns 98.1% of Falcon Australia, which holds a 22.5% interest in EP76, EP98 and EP117 (collectively the "Exploration Permits"). The remaining 1.9% interest of Falcon Australia is held by others. Renewal applications for EP76 and EP117 were submitted in September 2022 ahead of the end of the five year term which expired in December 2022, a further renewal application for EP98 was submitted in March 2023 ahead of the current five year term expiring in June 2023. Both renewal applications have been approved by the Northern Territory Government. The permits are currently in year 1 with a permit year end 31 May 2028.
2. In compliance with the terms of the Technical Cooperation Permit ("TCP"), the Company submitted its application for an exploration licence in August 2010. Local counsel has confirmed that despite the TCP having an expiry date of October 2010, the Company's interests remain valid and enforceable.
3. In September 2022 Origin announced the divestment of their interest in the Exploration Permits to Tamboran B2, details are included on page 7. Tamboran B2 were appointed as operator.

Beetaloo Sub-basin, Northern Territory, Australia

Overview

Falcon Australia is one of the two registered holders of approximately 4.6 million gross acres (~ 18,619 km2), 1 million net acres, of the Exploration Permits in the Beetaloo Sub-basin, Northern Territory, Australia. The Beetaloo Sub-basin is located 600 kilometres south of Darwin, close to infrastructure including a highway, a pipeline and a railway, offering transport options to the Australian market and beyond via the existing and developing liquified natural gas capacity in Darwin.

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Falcon Oil & Gas Ltd.

Management's Discussion & Analysis

For the Year Ended 31 December 2023

The Beetaloo Sub-basin is a Proterozoic and Cambrian tight oil and gas basin. In its entirety, the Beetaloo Sub-basin covers approximately 8.7 million acres (~ 35,260 km2) and is a relatively underexplored onshore exploration basin. The area is also remote and sparsely populated. Considering all these factors, the Board believes the Beetaloo Sub-basin has shale oil and shale gas potential.

Exploration Permits

A summary of Falcon Australia's Beetaloo Exploration Permits is contained in the table on the previous page.

In accordance with local law and regulations, Falcon Australia's acreage interests are subject to combined government and Northern Land Council royalties on production values of up to approximately 12% and 3% to other parties. Falcon Australia is subject to Commonwealth Government corporation tax of 30%, however where the entity has aggregated annual turnover of less than A$50 million for the financial year and 'base rate entity passive income' of 80% or less of assessable income, Falcon Australia would be considered a 'base rate entity' for Australian tax purposes and would be taxed at a lower rate of 25%. Falcon Australia is also subject to the Commonwealth Government's Petroleum Resource Rent Tax ("PRRT") levied at the rate of 40% on taxable profits derived from the petroleum projects. The PRRT is calculated on the individual projects, and royalties are deductible for PRRT purposes. The PRRT tax system is separate from the company income tax system and is based on cash flow. Both royalties and PRRT are deductible for corporate income tax purposes.

Overriding Royalty - Beetaloo Sub-basin Exploration Permits

On 31 March 2022 it was announced that Falcon Australia had agreed to grant Sheffield Holdings LP ("Sheffield") a 2% overriding royalty interest ("ORRI") over Falcon Australia's 22.5% working interest in return for a cash payment of $6 million. The 2% ORRI granted to Sheffield will be calculated on equal economic terms as the Malcolm John Gerrard, Territory Oil & Gas LLC and Tom Dugan Family Partnership LLC ("TOG Group"), with the cash proceeds of $6 million used to exercise Falcon Australia's call option to reduce the existing ORRI with the TOG group from 3% to 1%. Both transactions took place in April 2022. These changes to the ORRI's were submitted for registration to the Northern Territory Government, Australia and were approved.

On 18 April 2024 Falcon announced that Falcon Australia had agreed to grant Daly Waters Energy, LP ("Daly Waters") and a major US-based energy industry service provider an ORRI over Falcon Australia's working interests in the Beetaloo Sub-basin exploration permits in return for cash payments of $3 million and $1 million, respectively. Completion of the grant of the ORRIs is subject to agreement of final legal documentation and to submission to the Northern Territory Government, Australia for registration.

Falcon Australia agreed to grant:

• to Daly Waters, in consideration for a cash payment of $3 million, an ORRI of 6.0% in respect of the area around the Pilot development, measuring 51,200 acres, in which Falcon Australia has a 5% working interest, and an ORRI of 1.3333% in respect of the remaining 4.52 million acres; and
• to a major US-based energy services provider, in consideration for a cash payment of $1 million, an ORRI of 2% in respect of the area around the Pilot development, measuring 51,200 acres, and an ORRI of 0.4444% in respect of the remaining 4.52 million acres.

Transformational Farm Out of Beetaloo unconventional acreage

On 21 August 2014, Falcon Australia completed its farm-in agreement and joint operating agreement (collectively the "Agreements") with Origin and a subsidiary of Sasol Limited, each farming into 35% of Falcon Australia's Exploration Permits in the Beetaloo Sub-basin. In May 2017 Origin acquired Sasol's 35% interest in the joint venture with Sasol departing to focus its capital investment on its African and North American footprint.

On 16 August 2018, Falcon announced it had signed an agreement to amend the farm-in agreement with Origin to deem Stage 1 of the exploration and appraisal drilling programme in the Beetaloo Sub-basin complete and to commence Stage 2, with an A$15 million increase to the Stage 2 capped expenditure.

On 7 April 2020 it was announced that Falcon Australia had executed an agreement which included a restated Farm- in Agreement and Joint Operating Agreement (collectively "the 2020 Agreements") with Origin farming down 7.5% of Falcon Australia's participating interest ("PI") in the Exploration Permits. Following the transaction Falcon Australia now holds a 22.5% PI. Full details of the announcement are included in the Company's AIF for the year ended 31 December 2023 dated 25 April 2024 on page 12.

On 19 September 2022 Origin announced its divestment of their 77.5% interest in the Exploration Permits to Tamboran B2, a 50:50 joint venture between Daly Waters Energy, LP and Tamboran (West) Pty Limited.

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Falcon Oil & Gas Ltd.

Management's Discussion & Analysis

For the Year Ended 31 December 2023

On 11 October 2022 Falcon announced that Falcon Australia had entered into a binding LOI with Tamboran B2 pursuant to which the parties have agreed to amend the terms of the joint operating agreement ("JOA") and the farm- in agreement ("FIA"), each dated 2 May 2014 (as amended), entered into with Origin in respect of Falcon Australia's interest in the Beetaloo Sub-basin Exploration Permits. The key terms of the LOI provide for:

• Falcon Australia to earn an additional carry on future well costs of up to A$30m (A$6.75m net to Falcon Australia);
• the introduction of limited proration units (now referred to as a DSU) on sole risk operations providing Falcon Australia with participation optionality on the drilling of future wells; For further details on the optionality created please refer to details included in Capital expenditures on page 26.
• the sharing of well data on any sole risk wells, providing Falcon Australia with visibility on crucial data and analysis even where it elects not to participate; and
• pre-emptiverights in relation to Origin's divestment of its 77.5% interest in the Beetaloo Sub-basin would not be exercised by Falcon Australia and all pre-emptive and similar rights are to be removed from the JOA, providing Falcon Australia with greater flexibility for realisation of licence interests.

Discoveries and Prospectivity

The work programme commenced in 2015 with the drilling of three wells, Kalala S-1 to a total depth ("TD") of 2,619 metres, Amungee NW-1 to a TD of 2,611 metres and A1H to a TD of 3,808 metres, including a 1,100-metre horizontal section. In 2016, the Beetaloo W-1 well was drilled to a TD of 3,173 metres and the horizontal A1H well was hydraulic stimulated.

On 12 October 2016, Falcon announced that Origin had submitted a notification of discovery and an initial report on discovery ("Notification of Discovery") to the Department of Primary Industry and Resources of the Northern Territory on the A1H well.

On 15 February 2017 it was announced that Origin had submitted the Results of Evaluation of the Discovery and Preliminary Estimate of Petroleum in Place for the Amungee NW-1H Velkerri B Shale Gas Pool ("Discovery Evaluation Report") to the Northern Territory Government. The submission followed the completion of extended production testing at the A1H exploration well of the "B Shale" member of the Middle Velkerri formation.

In addition, Origin undertook a resource study based on the A1H well results and other key wells in the Beetaloo Sub- basin including regional seismic data to determine a best estimate ("2C") contingent gas resource estimate for the Middle Velkerri B Shale Pool within EP76, EP98 and EP117. For key details of the Discovery Evaluation Report and Origin's contingent gas resource estimate please refer to the Company's AIF, dated 25 April 2024, on pages 14-15.

On 19 January 2021 Falcon announced that Origin had submitted a Notification of Discovery to the Department of Industry, Tourism and Trade of the Northern Territory ("DITT") on Kyalla 117.

Current Activity

On 10 November 2022 Falcon announced the spudding of the A2H well with the Silver City Rig 40 in EP98, with Falcon Australia Limited's joint venture partner, Tamboran B2.

• Tamboran B2 planned to drill the vertical and build section to a depth of approximately 2,450 metres, followed by the drilling of a 1,000-metre horizontal section within the primary target of the Amungee Member B Shale.
• Following drilling, the A2H well was expected to commence a hydraulic fracture stimulation programme with a US style unconventional shale design. The well was designed with 5-½ inch casing to allow for effective placement of proppant into the formation, optimizing completion efficiency.
• The A2H well was the first of two horizontal wells in the Stage 3 programme to be drilled during this current drilling campaign.

On 23 December 2022 Falcon announced that drilling operations, including casing and cementing at the A2H well were successfully completed. The A2H well was drilled to a TD of 3,883 metres, including a 1,275-metre horizontal section within the Amungee Member B Shale.

Key points to note:

• The A2H well intersected the Amungee Member B Shale at 2,413 metres vertical depth.
• Preliminary drilling data confirmed elevated gas shows with high concentration C1, (methane) observed.

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Falcon Oil & Gas Ltd.

Management's Discussion & Analysis

For the Year Ended 31 December 2023

• Drilling was completed in 38 days (spud to TD) and a total cost of A$14.1 million (excluding casing and cementing), slightly ahead of pre-drill design days and budget. Falcon remained fully carried for the cost of these operations.
• Up to 24 stimulation stages were planned within the Amungee Member B Shale.

On 16 February 2023 Falcon announced the commencement of the well stimulation programme at the A2H well. Details of the stimulation programme were as follows:

• The stimulation programme would include up to 24 stimulation stages over a 1,200-metre horizontal section within the Amungee Member B Shale, with operations expected to be completed within 2-3 weeks.
• The A2H stimulation programme was to be executed utilising proven US-style shale stimulation designs and techniques, including the use of 5-½-inch casing, by Condor Energy Services, a respected Australian energy services provider.
• 5-½-inchcasing would allow the optimal placement of sand and fluid at an increased rate to the perforations during stimulation and has been proven to deliver significantly higher production rates.
• Following stimulation, up to four-weeks of fluid flow back was expected to take place prior to the installation of production tubing.

On 22 March 2023 Falcon announced the successful completion of a 25-stage stimulation programme at the A2H well. The stimulation programme details were as follows:

• 25 stages were successfully stimulated across a 1,020-metre horizontal section within the Amungee Member B Shale, with approximately 2,125 pound per foot of proppant placed along the completed horizontal section.
• Proppant was placed using 5-½-inch casing and was based on modern US shale design, the design is anticipated to result in improved flow rates during the extended production test.
• Stimulation fluid flow back would commence imminently and was estimated to take several weeks before the well is shut-in for installation of production tubing.

On 22 June 2023 Falcon provided an update on operations at A2H. Operations to install production tubing were completed in late-April 2023 and the well was subsequently re-opened in preparation for production flow testing. This was only the sixth well drilled and fracture stimulated in the Beetaloo Sub-basin to June 2023.

Update on Flow Testing

• The A2H well achieved gas breakthrough, however modelling and independent third-party analysis from a US laboratory identified a potential skin inhibiting the flow of gas from the stimulated shale. Despite this, the gas flowed at an average rate of 0.97 million cubic feet per day ("MMcf/d") over 50 days with circa 10% of the water used in the simulation programme recovered at the date of the announcement, well below other wells in the basin.
• The BJV believe flows from the well did not establish an uninhibited 30-day initial production rate.
• As of June 2023, the well was producing approximately 0.83 MMcf/d and water recovery was approximately 50 bbl/d with cumulative gas production and water recovery of 52.37 MMcf and 17,879 bbl, respectively.
• The hydrocarbon phases recovered were dry gas with 90.4% methane and 2.9% ethane.
• The BJV believes the results were not indicative of the underlying production potential of the Amungee Member B Shale as the A1H well achieved flow rates of >5 MMcf/d over a normalised 1,000 metres from the same well pad in 2021. Comparative details are included in the table below:

	A2H	A1H (full)*	A1H (flow)*
Stimulated Lat. Length (m)	1020	682	162
Stages	25	11	4
Proppant Volume (kbbls)	169	67	31
Proppant Tonnage (million pounds)	7.1	2.5	1.5

• • 1The A1H well was stimulated over a 682-metre horizontal section in the Amungee Member B Shale. Following testing, the flow was determined to be flowing over four stages (stage 8 - 11). A1H (flow) shows flow across this smaller length. A1H (full) is over 1,000 metre)
• Results from the laboratory to determine how the BJV can potentially clean-up potential skin within the A2H well and apply learnings going forward on future completion operations.
• Analysis was also conducted to compare the completion and stimulation design of the A2H well and the A1H fracture stimulation in 2016, which had a production logging test completed in 2021, to establish the optimum approach to future completion and fracture stimulation designs.

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Falcon Oil & Gas Ltd.

Management's Discussion & Analysis

For the Year Ended 31 December 2023

On 24 July 2023 Falcon announced that preparations to drill SS1H were underway.

• The Helmerich and Payne ("H&P") (NYSE: HP) super spec FlexRig® Flex 3 rig ("H&P Rig") was successfully mobilised to the SS1H well pad location, in EP117, ahead of drilling the first of a two well programme in 2023.
• Drilling of the SS1H well was expected to commence in early August 2023, subject to final joint venture approval, with drilling operations expected to take approximately 45 days.
• The SS1H well would target the Amungee Member B-shale at an estimated target depth of 3,200 metres, (approximately 700 metres deeper than the A2H well in EP98).
• The SS1H well would be located approximately 60 kilometres south of the A2H well site. The deeper reservoir is expected to deliver higher pressures, based on data from the two Santos-operated Tanumbirini wells in EP161.

On 1 August 2023 Falcon announced the spudding of SS1H with the H&P Rig.

• The SS1H well, including a horizontal section of approximately 1,000 meters, would target the Amungee Member B-shale at an estimated target depth of 3,200 metres.
• Falcon participated in the SS1H well at its full PI of 22.5% which, under the terms of the JOA, created a drilling spacing unit ("DSU") (previously referred to as a proration unit) of 20,480 acres.
• Falcon remained fully funded for its share of all costs associated with the drilling and testing of the SS1H well.

On 30 August 2023 Falcon provided an update on operations at the SS1H well. A pilot hole in EP117 reached a total vertical depth ("TVD") of 3,300 metres, intersecting approximately 90 metres of the Amungee Member B-shale with strong dry gas shows.

• The 90 metres of the Amungee Member B-shale intersected represents the thickest section seen in the Beetaloo Sub-basin depocenter to date.
• The H&P Rig reached TVD in 21.5 days, drilling at 153 metres per day, a new record for wells drilled below 3,000 metres in the Beetaloo Sub-basin.
• Logging of the Amungee Member B-shale formation indicated potentially higher porosity and gas saturation relative to offset wells.
• Initial evaluation confirmed reservoir continuity of the Amungee Member B-shale over 150 kilometres between A2H and Beetaloo W-1 wells. This includes a target development area of approximately 1 million acres where the shale depth exceeds 2,700 metres.
• Tamboran B2 would commence a 1,000-metre horizontal section within the shale formation ahead of a stimulation program of up to 10 stages over a 500-metre section, which was planned for Q4 2023.

On 18 September 2023 Falcon announced that drilling operations on the SS1H well were successfully completed. The well was drilled to a TD of 4,300 metres, including a horizontal section over 1,074m in length in the Amungee Member B-shale, with casing and cementing also complete.

• The H&P Rig would be mobilised to the A3H well site to be drilled from the same pad as A2H. The A3H well is the second of the two well programme in 2023, targeting the Amungee Member B-Shale at an estimated depth of 2,450 metres TVD, with spudding of the well expected by the end of September 2023. Falcon Australia would participate at its full 22.5% interest.

On 25 September 2023 Falcon announced the spudding of the A3H horizontal well in EP98 with the H&P Rig.

• The A3H well is located approximately 60 kilometres north of the SS1H well.
• Drilling activity was expected to take approximately 25 days, including a 1,000-metre horizontal section.
• Falcon participated in the A3H well at its full PI of 22.5% which, under the terms of the JOA, created a DSU of 20,480 acres.

On 16 October 2023 Falcon announced that drilling operations on the A3H well were successfully completed.

• The A3H well was drilled, cased and cemented to a TD of 3,837 metres, including a horizontal section of 1,100 metres in the Amungee Member B-shale.
• The well intersected the Amungee Member B-shale at a TVD of 2,272 metres and encountered significant gas shows, in line with pre-drill expectations.
• Drilling took 17.9 days, at an average rate of 214 metres per day, and 20 days faster than the A2H well, the H&P Rig delivered the anticipated drilling efficiencies.
• A stimulation program is planned for the second quarter of 2024, following the Northern Territory wet season.
• Total costs for the drilling and cementing of the A3H well was A$12.6 million. Cost reductions of A$1.8 million, compared to A2H, demonstrates the application of learnings from previously drilled wells and the improvement in drilling technology with the H&P Rig.

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