Canadian junior E&P Mahalo Energy Ltd., Calgary, (Toronto: CBM) has received a notice of default from lenders Ableco Finance LLC and Wells Fargo Foothill LLC relating to a failure to comply with covenants that the company be sold or recapitalize by March 1.
The company began reviewing strategic alternatives in December, including the sale of the company or its assets. Mahalo focuses on coalbed methane and shale gas in the U.S. with more than 60,000 net acres of CBM and shale gas prospective lands, largely in Oklahoma.
At year-end 2007, Mahalo held a 65% operated working interest in 7,680 gross acres in the Poteau coalbed-methane field in LeFlore County, Oklahoma, in the Arkoma Basin. Assets include 54 producing horizontal wells and 14 producing verticals. Annual net production was approximately 5.5 million cubic feet (900 barrels of oil equivalent).
The company has a 23% working interest in 15,452 gross acres in the Island/Shelton property in Pittsburgh County, Oklahoma. The majority of production is from 28 Hartshorne CBM wells and from three McAlester CBM wells. At year-end 2007, production was approximately 860 million cubic feet (143 barrels of oil equivalent).
It additionally holds interests in 86,000 gross acres (33,000 net) of shallow rights and 94,000 gross acres (38,000 net) of deep rights the Lakeview CBM property in central Oklahoma. Assets include 99 producing wells (43.3 net) as year-end 2007. Lakeview produces from multiple zones including the Hartshorne, Gilcrease, Jefferson, Caney and Woodford. Production was 6.9 million cubic feet (1,150 barrels of oil equivalent) year-end 2007.
GMP Securities LP is advisor to Mahalo. Contact Dan Tsubouchi, 403-543-3658.
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