Mainland has deposited an aggregate total of $8.65 million into escrow to be used to drill the Burkley-Phillips No. 1 well to test the Haynesville shale formation on the Buena Vista Prospect in Mississippi.
The escrow funds are comprised of $7.785 million contributed by Mainland's corporate treasury and $865,000 contributed by Guggenheim Partners LLC as their portion of drilling costs of the first well drilled on the Buena Vista prospect.
The estimated total cost to drill and complete the Burkley-Phillips No. 1 well to test the Haynesville shale formation is projected to be US $13,550,000.
Mainland, as Operator, will drill the Burkley-Phillips No. 1 well using RAPAD Drilling & Well Service, Inc. The total well depth is projected to be 22,000 feet, or a depth sufficient to test the Haynesville shale formation.
Extensive historic and proprietary data from a previous well drilled on the Buena Vista, combined with petrochemical analysis reviewed by Mainland Resources' land and geological teams provide the basis for drilling the Burkley-Phillips No. 1 well to the deeper Haynesville formation. Additionally, it will be the only well drilled in the Buena Vista area testing the Haynesville shale formation since shale gas has emerged as a major production resource.
Mainland continues with road construction and drill site preparations for the Burkley-Phillips No. 1 well, and is currently on schedule to spud the well June 15, 2010. The permitting for the well is now complete.
The Company's working interest in the Burkley-Phillips No. 1 is 72%. Mainland will fund 90% of the well costs to earn its 72% interest in the well. Guggenheim Partners LLC will fund 10% of the well costs in order to earn an 8% working interest in the well.
Mainland currently holds interest in excess of 17,000 acres in the Buena Vista Prospect.
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