26th Jan 2015 11:37
LONDON (Alliance News) - Falcon Oil and Gas Ltd saw its shares drop Monday, after it said its partner in Hungary has not fulfilled its drilling obligations despite Falcon extending the deadline, and Falcon is considering all of its options.
Falcon shares were down 10.2% to 5.50 pence per share on Monday morning.
In January 2013, Falcon signed an agreement with Naftna Industrija Srbije JSC, for the Serbian based company to drill three wells on Falcon's wholly-owned Mako Trough license in Hungary.
The original deadline for the three wells to be completed was July 2014, however this was extended by Falcon to December 31, 2014, to give the Serbian company extra time to complete the three wells.
NIS had only drilled and tested two of the three wells by the end of 2014. Falcon said it will now "evaluate, and pursue all options available to the company to derive shareholder value as NIS has not fulfilled its commitments under the agreement".
Under the original agreement, NIS had paid USD1.5 million in cash and agreed to carry Falcon for 100% of all costs associated with the three well drilling and testing programme.
"We would like to thank NIS for their partnership over the last two years. The first two wells in the three-well programme were drilled and tested professionally. However, we are very disappointed that NIS has not fulfilled its obligations in accordance with the terms of the Agreement and we will now pursue all options available to the company," said Chief Executive Philip O'Quigley.
Falcon is still considering the potential farm-out of the Mako Trough play, and is "working with industry to evaluate potential options," it said.
By Joshua Warner; [email protected]; @JoshAlliance
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