A leopard can't change its spots…therefore a ‘tool’ always continues to be a ‘tool’.

Judging be the trading volumes you didn’t fool anyone.

But just in case, let’s clear up what the language says in this MD&A.

MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2011

The following Management’s Discussion and Analysis (the “MD&A”) was prepared as at November 28, 2011 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 for the three and nine months ended September 30, 2011. This MD&A should be read in conjunction with the unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2011 and 2010, and the audited consolidated financial statements and MD&A for the year ended December 31, 2010. The September 30, 2011 and 2010 unaudited condensed consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”).

The information provided herein in respect of Falcon includes information in respect of its wholly-owned operating subsidiaries Mako Energy Corporation (“Mako”), a Delaware company, TXM Oil and Gas Exploration Kft., a Hungarian limited liability company doing business as TXM Energy, LLC (“TXM”), TXM Marketing Trading & Service, LLC (“TXM Marketing”), a Hungarian limited liability company, and its majority owned subsidiary, Falcon Oil & Gas Australia Limited (“Falcon Australia”) (collectively, the “Company”).

So when it says ‘Falcon’… it means Falcon Oil & Gas Ltd.

Hess Participation Agreement

On June 28, 2011, all conditions precedent to closing of the Evaluation and Participation Agreement (the “E&P Agreement”) entered into on April 28, 2011 between Falcon Australia and Hess Australia (Beetaloo) Pty Ltd. (“Hess”) were satisfied. By the terms of the E&P Agreement, in July 2011 Hess paid $20.0 million to the Company (i) as a participation fee for the exclusive right to conduct operations for the exploration, drilling, development and production of hydrocarbons from three of the four Permits, and excluding an area comprising 100,000 acres surrounding the Shenandoah-1 well (the “Area of Interest”) and (ii) as consideration for warrants to acquire 10,000,000 common shares in the capital of Falcon at an exercise price of CDN$0.19 per share. The warrants are exercisable commencing on November 14, 2011, and expire on January 13, 2015.

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