Mainland Resources To Sell LA Haynesville Assets For $27.1MM

Bought 40% WI for deep rights to 1,162 net acres in East Holly Field in DeSoto Parish, LA, prospective for Haynesville shale.

Exco Resources Inc., Dallas, (NYSE: XCO) has acquired nonoperated interests in the Haynesville shale in Louisiana from Mainland Resources Inc., Houston, (OTCBB: MNLU) for $28.1 million.

The assets involve a 40% working interest in all rights deeper than the base of the Cotton Valley formation in East Holly Field in DeSoto Parish, defined to be 100 feet below the stratigraphic equivalent of the Cotton Valley formation. Mainland continues to own a 100% interest in all rights above this depth, and specifically in the Cotton Valley, Hosston and Upper Bossier sections. The rights retained by Mainland in all formations above the base of the Cotton Valley formation in the East Holly Field encompasses 2,745.65 net acres with an estimated 65 net potential drilling locations.

Petrohawk Energy Corp., Houston, (NYSE: HK) holds the other 60% interest in the deep rights and is operator. Mainland acquired 100% interest in 2,551 acres in East Holly Field in March 2008 from Kingsley Resources Inc. for $687,596.

Mainland previously reported that the then-undisclosed buyer would pay $17,500 per acre for the 1,162.3 net acres (2,903 gross) for a total $20.3 million, plus the buyer would reimburse Mainland for all drilling and completion costs paid by Mainland prior to closing.

Mainland plans to use the proceeds to fund the drilling of the initial well on its Buena Vista prospect in Jefferson County, Mississippi, as well as to begin development drilling on the Hosston/Cotton Valley formations in the East Holly Field, and to retire its debt to Guggenheim Partners LLC.

The effective date is Jan. 1, 2010.