Mahalo Energy Ltd.

Mahalo Energy Ltd.

November 07, 2005 16:39 ET

Mahalo Energy Ltd. Completes Previously Announced Acquisition

CALGARY, ALBERTA--(CCNMatthews - Nov. 7, 2005) -


Mahalo Energy Ltd. ("Mahalo" or the "Corporation") (TSX:CBM) is
pleased to announce that it has closed its previously announced
acquisition of certain land and producing assets in the Arkoma
Basin, Oklahoma, USA from a private US company. The effective date
of the transaction is August 1, 2005.

The total acquisition consideration of USD $29,000,000 (less cash
flow from August 1, 2005 to close) is represented by 65 percent cash
and 35 percent issuance of new equity, with the seller agreeing to
an escrow term on the share component of 9 to 12 months. Post-
acquisition, Mahalo retains a strong balance sheet with no
indebtedness. The cash portion of the acquisition and the completion
of the Corporation's 2005 capital program will be funded through
existing available cash-on-hand and existing credit facilities.

With this acquisition, Mahalo has significantly enhanced its
portfolio of opportunities relating to both CBM and Shale drilling
prospects. The Corporation currently estimates its prospect
inventory to exceed 1,500 locations. Mahalo currently has access to
over 345,000 net acres within its North American portfolio.

Mahalo is currently producing approximately 9.5 million cubic feet
per day of unconventional gas (1583 boe/d) and remains on target for
its exit production of 13.0 million cubic feet per day. (2166 boe/d)

In Canada, Mahalo is pursuing the tie in of new Corbett Creek
Manville production and an active drilling program of 15 Canadian
wells for the balance of the year. In the United States, the
Corporation expects to drill an additional 8-10 wells, proceed with
the tie in of an estimated 6 shale/CBM wells, and complete several
workovers. Ongoing pipeline and compression installations and
expansions will ensure adequate take-away capacity and availability
for the upcoming 2005 / 2006 capital program.

As part of the acquisition, the Corporation will benefit from having
two area drilling rigs committed to its use, allowing it to
immediately exploit its large prospect inventory. Mahalo is
confident that with its joint venture partners in the USA (Vectra
Energy, LLC and Williams Energy Corp.), it will maintain its capital
expenditure and operational efficiencies.

GMP Securities Ltd. acted as financial advisor for the acquisition.

Additional information about Mahalo and this transaction is
available on SEDAR ( or the Corporation's website at

Disclosure provided herein in respect of 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.

Forward Looking Statements

Certain information regarding the Corporation set forth in this
document, including management's assessment of the Corporation's
future plans and operations contains forward looking statements that
involve substantial known and unknown risks and uncertainties. These
forward looking statements are subject to numerous risks and
uncertainties, some of which are beyond the Corporation's and
management's control, including but not limited to, the impact of
general economic conditions, industry conditions, fluctuation of
commodity prices, fluctuation of foreign exchange rates,
imperfection of reserve estimates, environmental risks, industry
competition, availability of qualified personnel and management,
stock market volatility, timely and cost effective access to
sufficient capital from internal and external sources. The
Corporation's actual results, performance or achievement could
differ materially from those expressed in or implied by, these
forward looking statements and accordingly, no assurance can be
given that any of the events anticipated to occur or transpire from
the forward looking statements will provide what, if any benefits to
the Corporation.

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

Contact Information

  • Mahalo Energy Ltd.
    Duncan Chisholm
    Chief Executive Officer
    (403) 262-9623
    Mahalo Energy Ltd.
    Milton Porter
    Chief Financial Officer
    (403) 262-9623
    Mahalo Energy Ltd.
    201b, 218 - 8th Avenue S.W.
    Calgary, Alberta T2P 1B5
    (403) 262-9623
    (403) 262-7049 (FAX)