Mainland Sells Haynesville Interest; Plans to Drill 3 Wells in La.
Mainland Resources provided the following operational update concerning its current assets and business plan:
Sale of Haynesville Interest (40% working interest):
Mainland Resources has sold a 40% working interest in the Haynesville Shale, which includes all of the rights 100 feet below the stratigraphic equivalent of the base of the Cotton Valley formation in the East Holly field, DeSoto Parish, Louisiana. This represents a 40% working interest in 2,903.07 gross acres or 1,162.3 net acres and includes all of the Haynesville shale interest of the Company in Louisiana. This sale does not affect any rights on the DeSoto Parish lease lands tied to formations outside the described zone.
Further Louisiana Assets (100% working interest):
Following the sale, Mainland retains all rights in 2,745.65 net acres as to all formations above the base of the Cotton Valley formation, including the Cotton Valley and Hosston zones, which have an estimated 65 net potential drilling locations. A reserve report was prepared by T.W. McGuire & Associates, Inc. dated December 9, 2008 for the Griffith 11-#1 well that attributes the Hosston/Cotton Valley formations with gas reserves in excess of 2 BCF. The three recent wells drilled by the original Operator through these zones to the Haynesville formation calculate as productive.
Based on the data and economics, Mainland plans to drill three wells as operator in 2010 in the Hosston/Cotton Valley formations on its DeSoto Parish leases. The Company expects that these formations will provide continual solid pay with little risk and predicable development costs.
Mississippi Assets (45.9 % working interest):
Mainland plans to drill an initial well on its Buena Vista project in Mississippi in the Haynesville Shale formation in 3Q 2010.
Use Of Proceeds:
Mainland Resources, Inc. intends to use the US $27+ million proceeds of the sale of its Haynesville Assets to fund the drilling of the initial well on the Buena Vista project in Mississippi, as well as commence development drilling on the Hosston/Cotton Valley formations in the East Holly Field, Louisiana, and to retire its debt with Guggenheim Partners LLC.