Mainland Resources announced the following update on progress of the Burkley-Phillips No. 1 well on the Buena Vista Prospect in Mississippi.
To date, twelve (12) miles of road and drill site location have sufficiently dried after late and abnormal rains and flooding in the area from the runoff of the nearby Mississippi River. The location contractor (Boots Smith) has started work by adding gravel, where necessary, over the road to the well location. A bulldozer was also moved in on June 23, 2010 in final preparation of the well pad site.
Rapad Drilling (Jackson, Mississippi) is prepared to move in their Rig # 34, and Mainland intends to spud the well as soon as the work on the location and road is complete. The current anticipated spud date is between July 7 and July 15, 2010.
The Company's working interest in the Burkley-Phillips No. 1 well is 72%. Mainland will fund 90% of the well costs to earn its 72% interest in the well. Guggenheim Energy Opportunities Fund will fund 10% of the well costs in order to earn an 8% working interest in the well.
Upon successful completion of Mainland's previously announced proposed merger with American Exploration Corp, Mainland will have a 92% working interest in the well, while Guggenheim will have an 8% working interest in the well.
The estimated dry hole cost is $8.65 million. These funds have been escrowed by Mainland and Guggenheim. The total estimated cost to complete the well is $4.9 million for a total drilled and completed well cost of $13.55 million.
Mainland currently holds interests in excess of 17,500 acres in the Buena Vista Prospect and intends to acquire additional acreage. In the event the Burkley-Phillips No. 1 well is successful, there is potential for more than 220 net drilling locations using 80 acre spacing per well covering the 17,500 acres.
Mainland was able to obtain the drill cuttings from a well drilled by Chevron in 1981, which Mainland is offsetting with the Burkley-Phillips No. 1 well.
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