Falcon Oil & Gas : MD&A 31 March 2024

Falcon Oil & Gas Ltd.

Form 51-102F1

Management's Discussion & Analysis

For the Three Months Ended 31 March 2024

(Presented in U.S. Dollars)

Falcon Oil & Gas Ltd.

Management's Discussion & Analysis

For the Three Months Ended 31 March 2024

Table of Contents

	Page Number
Introduction	3
Overview of business and overall performance	6
Results of operations	16
Summary of quarterly results	19
Liquidity and capital resources	20
Disclosure of outstanding share data	23
Legal matters	23
Transactions with non-arm's length parties and related party transactions	23
Off Balance sheet arrangements and proposed transactions	23
Financial instruments and other instruments	23
New accounting pronouncements	23
Business risks and uncertainties	23
Critical accounting estimates	23
Management's responsibility for MD&A	24

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Falcon Oil & Gas Ltd.

Management's Discussion & Analysis

For the Three Months Ended 31 March 2024

INTRODUCTION

The following management's discussion and analysis (the "MD&A") was prepared as at 22 May 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 ended 31 March 2024. This MD&A should be read in conjunction with the unaudited interim financial statements for the three months ended 31 March 2024 and 2023 and the audited consolidated financial statements and MD&A for the years ended 31 December 2023 and 2022.

The Company's independent auditors have not performed a review on the unaudited interim financial statements for the three months ended 31 March 2024 and 2023.

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").

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") and the 90-day initial production ("IP90") results to be above the commercial threshold required to progress the Beetaloo to pilot development during 2024, IP30, IP60 and IP90 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, results of SS1H providing the Beetaloo Joint Venture partners ("BJV") of Falcon and Tamboran (B2) Pty Limited ("Tamboran B2") 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; that 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 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 the 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; potential development of and production from Beetaloo West; 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-

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Falcon Oil & Gas Ltd.

Management's Discussion & Analysis

For the Three Months Ended 31 March 2024

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 Member/Middle Velkerri play, anticipated production rates, information relating to the letter of intent ("LOI") executed with 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 ("JOA") and the Farm-In Agreement ("FIA") 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 Amungee NW-2H ("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.

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Falcon Oil & Gas Ltd.

Management's Discussion & Analysis

For the Three Months Ended 31 March 2024

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 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").

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Falcon Oil & Gas Ltd.

Management's Discussion & Analysis

For the Three Months Ended 31 March 2024

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-out 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 March 2024 of the Company's interest in Australia is $52.5 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 EP-76 (Beetaloo Sub-basin, Northern Territory, Australia)	22.5(i)	Tamboran B2(iii) Exploration	1,891.3
Exploration Permit EP-98 (Beetaloo Sub-basin, Northern Territory, Australia)	22.5(i)	Tamboran B2(iii) Exploration	10,316.0
Exploration Permit EP-117 (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 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 8. 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 three 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 Three Months Ended 31 March 2024

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% (subject to the exercise of Falcon Australia's call option - see "Overriding Royalty Beetaloo Sub-basin Exploration Permits" for details) 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 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-out 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 Beetaloo 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-out 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- Out 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.

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Falcon Oil & Gas Ltd.

Management's Discussion & Analysis

For the Three Months Ended 31 March 2024

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.

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 JOA and the 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 on sole risk operations to a maximum of 6,400 acres per well, providing Falcon Australia with participation optionality on the drilling of future wells;
• 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 A1H 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 13-15.

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

For details relating to the A2H well up to June 2023 please refer to the Company's AIF for the year ended 31 December 2023 dated 25 April 2024.

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.

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Falcon Oil & Gas Ltd.

Management's Discussion & Analysis

For the Three Months Ended 31 March 2024

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.

On 30 October 2023 Falcon provided an operational update on the SS1H well.

• A DFIT of the Amungee Member B-shale on the SS1H well was conducted to analyse geo-mechanical and reservoir properties, with results verified by third-party subsurface experts, Subsurface Dynamics, Inc.
• Formation pressures at SS1H were monitored for over 20 days and analysed to provide a pore pressure prediction for the area.
• DFIT results demonstrated an over pressured regime, with a pore pressure gradient of at least 0.54 pounds per square inch ("psi") per foot, which is consistent with an over pressured regime observed in the core area of the Marcellus shale. In addition, this result provides confidence that the upcoming flow test of the SS1H well can replicate or exceed commercial flow tests achieved at the Santos-operated Tanumbirini 2H and Tanumbirini 3H wells (0.51 - 0.56 psi per foot) in the EP161 acreage.
• Condor Energy Services commenced the mobilisation of stimulation equipment to the SS1H well pad ahead of the planned 10 stage stimulation program in November 2023.
• On successful flow testing of SS1H, the BJV would expect to be in a position to sanction a proposed pilot development in the Shenandoah South region.

On 27 November 2023 Falcon announced the commencement of stimulation activities at the SS1H well in EP117.

• The planned program, conducted by Condor Energy Service, included 10 stimulation stages within the Amungee Member B-shale over a 500-metre horizontal section of SS1H. The stimulation operation was expected to be completed in December 2023.

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Falcon Oil & Gas Ltd.

Management's Discussion & Analysis

For the Three Months Ended 31 March 2024

• On completion of the stimulation campaign, production tubing would be installed ahead of expected flowback of stimulation fluid and gas breakthrough.
• The stimulation program incorporated lessons learned from the joint venture's A2H well in EP98 and the Tanumbirini wells in Santos operated EP161. This included an increase in hydraulic horsepower and higher well design pressures to increase effectiveness of stimulation treatments and fluid conditioning methodologies to decrease the risk of skin damage.
• Results from the SS1H well are a key deliverable that will support the sanctioning of the joint venture's proposed 40 MMcf/d pilot project at Shenandoah South.

On 7 December 2023 Falcon announced the completion of the 10-stage stimulation program over a 500 metre horizontal section of the Amungee Member B-Shale within the SS1H well in EP117.

• The stimulation program at SS1H delivered a proppant intensity of 2,212 pounds per foot (lb/ft) and the average proppant injection per stage was 356,000 pounds.
• The stimulation program achieved rates of 100 barrels per minute ("bpm") using slickwater, a first in the Amungee Member B-Shale and in-line with current US shale basin stimulation designs.
• Tamboran B2 planned to install production tubing ahead of the SS1H well commencing flow back of stimulation fluid.
• Proof of commercial flow rates as measured over the IP30 day period and which Falcon Australia estimated to be 1.5 MMcf/d over the 500 metre horizontal section (3.0 MMcf/d normalised over 1,000 metres) or greater will allow us to progress the sanctioning of the proposed 40 MMcf/d pilot project at Shenandoah South during the first half of 2024.

On 29 January 2024 Falcon announced the commencement of the IP30 testing at the SS1H well in EP117. Following the completion of the 10-stage stimulation program announced on 7 December 2023 and the subsequent successful installation of production tubing, the SS1H well was opened to allow sufficient flow back of stimulation fluid ahead of commencing the IP30 test. For normal operational reasons, the SS1H well was shut-in for a three week soak period and was successfully re-opened on 25 January 2024. The aim of soaking was to allow for sufficient stimulation fluid to be absorbed by the shale, increasing the relative permeability to gas of the formation and enhancing future production performance.

On 26 February 2024 Falcon announced that the SS1H well in EP117 achieved commercial IP30 flow rate of 3.2 MMcf/d (normalised to 6.4 MMcf/d over 1,000 metres), significantly higher than pre-drill expectations.

• The SS1H well in EP117 achieved an average 30-day IP30 flow rate of 3.2 MMcf/d over the 1,644-foot (501 metres), 10 stage stimulated length within the Amungee Member B-Shale, normalised to 6.4 MMcf/d over 3,281-feet (1,000 metres).
• Results from the SS1H well significantly exceeded pre-drill expectations and achieved what Falcon and its partners believe to be above the commercial threshold required to progress the Beetaloo to pilot development during 2024.
• Exit rate trajectory after the 30 days of flow testing showed a steady low declining curve at 2.9 MMcf/d over the stimulated length (normalised at 5.8 MMcf/d per 3,281 feet) and stable reservoir back pressure of 575 psi.
• The IP30 flow test extrapolates to ~19.5 MMcf/d for proposed future 10,000-foot (3,000 metres) development wells, in line with some of the highest flow rates achieved in the US Marcellus shale.
• The geological rock properties at SS1H, indicative of favourable well performance, met or exceed that of the US Marcellus shale, including reservoir pressure, effective porosity and gas-in-place. This creates the potential to result in long-term, low decline gas production, ultimately leading to very significant estimated ultimate recovery per well ("EUR").
• Results to date confirm that this region measuring more than 1 million gross acres below 8,850 feet (2,700 metres) is one of the best locations in the Beetaloo Sub-Basin to commence pilot development activities.
• Flow testing of the SS1H well will continue for the next 60 days to achieve average IP90 flow rates to better determine the well's EUR.

Shenandoah South 1H flow results

The SS1H well in permit EP117 successfully achieved IP30 flow rates following the 10-stage stimulation program within the bottom 501 metres (1,644 ft) of the 1,020-metre (3,346 ft) lateral section in the Amungee Member B-Shale (depth of c. 9,957ft). The fracture stages had an average interval spacing of 50 metre (164ft) and the average proppant concentrations of 2,212 lbs/ft across the 10 main stages with a total of over 3.5 million pounds of sand placed.

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