Mahalo Energy Ltd.
TSX : CBM

Mahalo Energy Ltd.

March 20, 2007 08:30 ET

Mahalo Announces Non-Core Asset Sales and Increase to Bank Line

CALGARY, ALBERTA--(CCNMatthews - March 20, 2007) -

(NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR DISSEMINATION IN THE UNITED STATES. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAW.)

Mahalo Energy Ltd. ("Mahalo" or the "Company") (TSX:CBM)is pleased to announce the following:

Non-Core Asset Sales

Mahalo announces that it has completed one sale of non-core oil and gas assets for $7.3 million and has entered into an agreement for a further asset sale which is expected to close on or before March 31, 2007. These asset sales will result in aggregate proceeds of approximately $14.6 million, subject to standard industry adjustments. The two asset sales consist of certain properties located in southern Alberta and northeastern British Columbia with combined production of approximately 285 boe per day. The Company estimates that its average daily sales volumes will approximate 2,700 boe per day following the two transactions.

These asset sales reflect the Company's strategic plan of divesting of certain non-core assets in order to continue to focus on unconventional coal bed methane ("CBM") and shale gas development opportunities, where it has realized drilling success and production additions.

Bank Line Increase

Mahalo is also pleased to announce that it has received a borrowing base increase to Cdn $60 million from Cdn $53 million under its credit facility with the Union Bank of California. The Company expects borrowings under the facility to be approximately $39 million following completion of the two asset sale transactions.

Operational Update

In November 2006, Mahalo advised shareholders of significant horizontal drilling success in its U.S. Hartshorne CBM development program. The Company is pleased to advise that this success is continuing. The 2007 development program has already resulted in 3 CBM wells producing over 1.0 MMcf per day and 1 CBM well with a rate above 2.5 MMcf per day.

Mahalo is also working aggressively to tie-in approximately 500 boe per day of CBM production currently being held behind pipe due to pipeline constraints. The Company is also involved in the drilling and completion of a horizontal Woodford Shale well in the United States, results of which will be forthcoming in the next few weeks.

Mahalo expects to file its 2006 Audited Financial Statements, Management's Discussion and Analysis and Annual Information Form during the week ended March 30, 2007.

About Mahalo

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 at www.sedar.com or the Company's website at www.mahaloenergy.com.

Forward-looking Statements

Certain matters discussed in this document may be considered forward-looking statements. Such statements include declarations regarding management's intent, belief or current expectations. 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. Mahalo undertakes no obligation to update or revise any forward-looking statements, except as required by law.

Barrel of Oil Equivalent Measures

Disclosure provided herein in respect of barrel of oil equivalent ("boe") units may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of natural gas to one barrel of oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

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 and CEO
    Direct: (403) 716-3114
    (403) 451-3501 (FAX)
    or
    Mahalo Energy Ltd.
    Bill Gallacher
    Chairman of the Board
    Direct: (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