Maverick Oil and Gas (fka MAVO)

[MWM]

NOTE 7. DISCONTINUED OPERATIONS


● Foreclosure of our Fayetteville Shale Project interests.


Effective January 8, 2008, our interest in the Fayetteville Shale Project were foreclosed upon through assignment of our interest in Maverick Woodruff County, LLC (which held our leasehold interests in the Fayetteville Shale Project), Maverick Operating, LLC (the licensed operator of our Fayetteville Shale Project) and miscellaneous seismic data and files related to our Fayetteville Shale Project. In consideration of the transfers evidenced by the Strict Foreclosure Agreement, our obligations under the 2007 Debentures were extinguished and certain mutual releases were provided. The balances and results related to our former subsidiaries Maverick Operating, LLC and in Maverick Woodruff County, LLC together with the related debt and interest obligation extinguished with foreclosure, are being reported as part of discontinued operations in the accompanying financial statements. We recognized a gain of approximately $3.9 million for the quarter and six months ended February 29, 2008 related to the disposal.



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· Barnett Shale Project:


On April 26, 2007, we completed the sale of our interests in the Barnett Shale project for net proceeds of approximately $22.5 million. The sale of our interest in the project was required as part of the terms of the secured convertible debentures. The cash received from the buyer was subject to post-closing adjustments based upon the net of total revenues and capital expenditures for the period January through April 2007. Our final settlement took place during November 2007.


· Whitewater Project:



During November 2007, we sold our interest in our Colorado-based Whitewater project. We initially sold a 30% interest in the project for $600,000, plus the pro rata assumption of all unpaid project costs since May 2006. Thereafter, we sold the remaining 70% interest in the project to one of our Fayetteville Shale project partners for $200,000, the discharge of approximately $1.4 million owed to this partner, and the assumption of the remaining unpaid project costs since May 2006. This asset was impaired to its expected realizable value of $2,000,000 in anticipation of a cash sale. The combination cash and discharge of debt transaction ultimately resulted in a gain of approximately $450,000 for the quarter ended February 29, 2008.