The explorer's shares fell 7% today after it was revealed that Hess Corp's proposed five well drill programme would not go ahead.
In a dramatic twist to events the American giant asked for an extension to the June 28 deadline in order to conclude a farm-out with a third party described as "one of the largest oil and gas companies in the world".
This request was rejected by Falcon, which means Hess forfeits its right to earn 62.5% in three Beetaloo permits, having invested an estimated US$80mln exploring the area.
Falcon gets to keep 100% of four permits in the basin in Australia's Northern Territory, which the AIM and TSX-listed explorer says leaves it in a "stronger position going forward".
The company is still very encouraged by the technical aspects of the assets.
The group's own interpretation of seismic was completed just two weeks ago and senior staff - including chairman John Craven - have worked closely with the technical teams.
According to O'Quigley there is no technical justification for Hess's decision not to move forward, and he understands the project had been signed off by the American firm's teams in both Perth and Houston - before the corporate headquarters in New York stalled ahead of the deadline.
"Granting the extension wouldn't have guaranteed anything [for Falcon] in a month's time," O'Quigley told Proactive Investors.
"Yes, they were talking to a very big company. Yes, they wanted that company in before they went forward. And yes, they told me that if they had the extension they'd be able to finalise a deal with that company.
"But the risk we had was we'd be in a much worse position come August if Hess looked for another extension or in fact pulled out."
Granting Hess the extension could've amounted to 'delaying the inevitable', he added.
It is expected that Falcon will now pursue its own farm-out to bring in a new partner.
O'Quigley explains that Falcon has received unsolicited interest in the assets from four major oil companies that have actively been looking for an entry to the Beetaloo Basin.
Most of them have also had talks with Hess and have already been through its data room.
The Beetaloo basin has been identified as a potential world class conventional and unconventional play.
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