Mahalo Energy Ltd.
TSX : CBM

Mahalo Energy Ltd.

July 03, 2008 20:02 ET

Mahalo Announces New US $105 Million Bank Facility

CALGARY, ALBERTA--(Marketwire - July 3, 2008) -

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Mahalo Energy Ltd. (TSX:CBM) ("Mahalo" or the "Company") is pleased to announce that it has closed a new US $105 million credit facility (the "Facility") with Ableco Finance LLC ("Ableco"). Mahalo intends to use the proceeds to fund future exploration and development initiatives. The new Facility replaces the Company's existing credit facilities.

The new Facility is a four year committed facility composed of a US $65 million revolving credit facility (with an initial borrowing base set at US $50 million), a US $25 million term facility (fully funded at closing), and a US $15 million delay draw term facility which is available for future acquisitions and capital expenditures, subject to the satisfaction of certain pre conditions.

The new Facility provides Mahalo with a more balanced capital structure that will allow increased flexibility for the Company to execute its business plan and continue to achieve positive results for its shareholders.

Operational Update

Mahalo is actively drilling and completing Hartshorne CBM wells within its Oklahoma acreage. In 2008 the Company will drill, complete and tie in an anticipated 41 net CBM wells.

The Company is also pleased to announce the recent appointment of a Senior Vice President, US Exploration and a Vice President, US Land, both of whom were recruited from a major US Shale gas corporation. Under the guidance of its new US employees, the Company intends to actively pursue Caney / Woodford shale gas development in the remaining half of 2008.

With the strength of improved gas prices, increased cash flows and the new Facility, the Company expects to exit 2008 with average production of 4,050 boed as previously forecast.

Canadian Asset Divesture

Mahalo is progressing on schedule through the development of a public data room and anticipates it is on schedule to complete the sale of an estimated 1,140 boed of Canadian production in the third quarter of 2008.

Mahalo is a junior, unconventional natural gas producer, focusing on the development and production of coal bed methane and shale gas prospects in the United States and coal bed methane in Canada. For additional information on the Company, please go to the Company's profile on SEDAR or the Company's website at www.mahaloenergy.com.

ADVISORIES

Forward-looking statements

Except for historical financial information contained herein, the matters discussed in this document may be considered forward-looking statements. Such statements include declarations regarding management's intent, belief or current expectations. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties; actual results could differ materially from those indicated by such forward-looking statements. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are: (i) that the information is of a preliminary nature and may be subject to further adjustment, (ii) the possible unavailability of financing, (iii) risks related to the exploration and development of oil and gas properties, (iv) the impact of price fluctuations and the demand and pricing for oil and natural gas, (v) the seasonal nature of the business, (vi) start-up risks, (vii) general operating risks, (viii) dependence on third parties, (ix) changes in government regulation, (x) the effects of competition, (xi) dependence on senior management, (xii) impact of economic conditions, and (xiii) fluctuations in currency exchange rates and interest rates. The forward-looking statements contained in this document are made as of the date hereof and are expressly qualified by this cautionary statement. Mahalo undertakes no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless so required by law.

The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this press release.

Contact Information

  • Mahalo Energy Ltd.
    Duncan Chisholm
    President & CEO
    (403) 716-3114
    (403) 451-3501 (FAX)
    or
    Mahalo Energy Ltd.
    Bill Gallacher
    Chairman of the Board
    (403) 233-4451
    or
    Mahalo Energy Ltd.
    540, 734 - 7th Avenue SW
    Calgary, Alberta T2P 3P8
    (403) 451-3500
    (403) 451-3501 (FAX)
    Website: www.mahaloenergy.com