Mahalo Energy to sell all Canadian resource assets
2008-05-21 05:40 MT - News Release
Mr. Duncan Chisholm reports
MAHALO ANNOUNCES STRATEGY TO FOCUS ON U.S. CBM AND SHALE; APPOINTMENT OF SENIOR U.S. VICE-PRESIDENT; AND INTENTION TO SELL CANADIAN ASSETS
Mahalo Energy Ltd. has taken steps to focus exclusively on its United States Hartshorne coal bed methane (CBM) and Woodford and Caney shale assets and opportunities. This strategy is complemented by the appointment of a seasoned United States shale gas professional to the Mahalo senior management team. The company has also decided to pursue the sale of all of its Canadian resource assets, proceeds from which will assist in financing additional CBM and shale gas activity in the United States.
Duncan Chisholm, president and chief executive officer, stated: "The company has demonstrated ongoing developmental success and repeatable, long-life reserves with low declines in its Oklahoma Hartshorne CBM program. We are also committed to capture additional Hartshorne acreage which will help grow our production and reserves. Industry activity close to our shale interests and our own shale work has been most encouraging; we have therefore decided to more aggressively pursue shale development underlying our acreage. An independent third party contingent resource study that we commissioned and subsequently press released in December, 2006, quantified Mahalo interest discovered gas resource (best estimate) at 524 billion cubic feet in the Woodford shale and 3.04 trillion cubic feet in the Caney shale."
"Mahalo is also fortunate to have Patrick J. Ryan join our team as senior vice-president, exploration, and general manager. Mr. Ryan will be based in our Tulsa, Okla., office. Mr. Ryan (BS geology, MS geology and MBA) has over 30 years of oil and gas experience with a majority in the mid-continental United States. Most recently, he was heavily involved in Woodford shale development in the Arkoma basin with Newfield Exploration. Mahalo is excited about the strong technical attributes that he brings to our company."
The Canadian assets for sale include developed and undeveloped properties of both a conventional and unconventional nature. Mahalo's developed and undeveloped Canadian landholdings amounted to approximately 29,000 and 99,000 net acres, respectively, as at Dec. 31, 2007. Sales of oil and gas from the properties in the three months ended March 31, 2008, averaged 1,354 barrels of oil equivalent per day net to Mahalo, before royalties. Approximately 65 per cent of the sales, on a barrel-of-oil-equivalent basis, were conventional natural gas from the Tofield field in Alberta. The asset sale will be facilitated through an agent and is expected to be completed in mid-2008.
Mr. Chisholm concluded by stating: "Upon completion of the sale of our Canadian properties, we will be in an excellent position to more aggressively exploit our significant United States CBM and shale gas prospect inventory. We have over 450 net drilling locations, including 212 net Hartshorne CBM wells; the remaining inventory involves shale gas prospects. This number is based on our seven-year drilling plan and assumes certain capital constraints."
We seek Safe Harbor.
