Mainland Resources announced the closing and receipt of $3.2 million from Guggenheim Corporate Funding LLC to complete the purchase of the 8,225 net oil and gas lease acres covering the Mississippi Project and to pay off their previous bridge loan with Guggenheim. Mainland Resources has entered into a two-year $40 million senior secured advancing line of credit agreement with Guggenheim. This senior secured advancing line of credit provides that affiliate Guggenheim Energy Opportunities, LLC will participate for 10% of Mainland's working interest in the drilling and development of the Mississippi project.
As previously announced, Mainland and American Exploration Corp. have aligned and pooled their oil and gas lease holdings in Mississippi, which collectively total 13,225 net acres to explore for oil and gas there. Mainland, American and Guggenheim have signed a Joint Operating Agreement naming Mainland Resources as operator for the project.
In addition, Mainland has been working with Petrohawk Energy Corp., in the successful drilling and completion of the Haynesville Shale in Northwestern Louisiana. Mainland will use portions of the Guggenheim funding to continue drilling in Haynesville Shale wells in northwest Louisiana. Mainland is currently producing 11 million cubic feet per day (MMcf/day) from two wells with the third well on schedule to be completed in December 2009. The Company's fourth Haynesville well is on the drilling schedule for February 2010. The fifth Haynesville well is on the schedule for July 2010.
Mike Newport, CEO and President of Mainland Resources, Inc. said, "Guggenheim brings a lot of technical experience to this project and we are pleased to have them join the venture. They have been involved in several shale gas projects within the southern United States and have identified and participated in extremely successful projects that are very similar to the Mississippi Shale Project. We are excited Guggenheim has recognized the significant upside potential and has elected to pay their way to participate in this project with Mainland. We believe our experience gained in the Haynesville Shale will bring significant value to the Mississippi Shale Project."
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