As consideration for the Beetaloo Basin transaction, Falcon paid US$5m to PetroHunter and
issued US$20m of Falcon securities convertible into common shares of Falcon stock on a
one-for-one basis. The conversion of the convertible securities will result in the issuance of a
maximum of 28,888,888 shares of Falcon at a minimum deemed value of $0.72 per share.
PetroHunter will retain operatorship of the Beetaloo Basin. The agreements provide for a joint
operating committee and substantial direct involvement by Falcon managerial, technical and
financial personnel. The PetroHunter acreage (75% net revenue interest) is divided into four
leases with expiries ranging from December 2010 to December 2011 (EP-76 and EP98 expire
in December 2010, EP-99 expires in December 2011, and EP-117 expires in December 2011).
The Beetaloo Basin is an underexplored frontier basin located approximately 500km south of
Darwin. Shows of hydrocarbons, excellent oil-prone source rocks, and five separate potential
reservoir-quality sand sequences make the Beetaloo Basin highly prospective for oil and
natural gas. Eleven exploration wells or stratigraphic tests were drilled and more than
2,500km of seismic data was acquired between 1984 and 1993. Shows of 35
