Mahalo Energy Ltd.
TSX : CBM

Mahalo Energy Ltd.

April 25, 2007 08:30 ET

Mahalo Provides Shale Drilling Update

CALGARY, ALBERTA--(CCNMatthews - April 25, 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 initial results of its 2007 US shale gas development program.

The Company spudded its first Woodford shale horizontal well in Hughes County, Oklahoma in early 2007. The well was completed utilizing a multi-stage, high-volume stimulation program and is generating strong economic results.

The well has been tied in and is currently producing at 1.3 to 1.5 mmcf per day and is continuing to clean-up. The operator is currently installing compression to reduce wellhead pressure which will further improve productivity. Total well costs, including drilling, completion and tie-in, were very attractive at approximately US$3.5 million. Mahalo's working interest in this well is approximately 20 per cent.

As a result of this success, Mahalo will be pursuing further development on both Woodford and Caney shale prospects located within its Arkoma Basin asset base. The Company anticipates spudding a second Woodford horizontal well in Hughes County in early June. This well will be operated by Mahalo at a working interest of approximately 50 per cent.

Mahalo anticipates drilling three Caney horizontal wells in Q3 and Q4 with a working interest of greater than 40 per cent. Stimulation plans for the Caney have been under review for some time; Mahalo has a high level of confidence that multi-stage stimulation programs will also generate success in its Caney completions.

These ongoing shale developments provide an opportunity to unlock substantial new gas reserves as evidenced in Mahalo's Contingent Resource Study, previously press released on December 12, 2006. The independent third party study quantified Mahalo interest discovered gas resource (best estimate) at 524 Bcf in the Woodford shale and 3.04 Tcf in the Caney shale.

Other Operations

The Company is ahead of schedule on the installation of an expanded Kayla West low-pressure gas gathering system needed to bring an estimated 500 boe of coalbed methane production (net to Mahalo) on stream in the Lakeview area. This expansion will also support continued development of numerous Lakeview/Poteau Hartshorne CBM drilling prospects.

Mahalo is currently drilling an operated, 100 per cent working interest Hartshorne tight gas sand prospect in its Poteau field. The success of this well will generate additional prospects and tie ins will occur within existing infrastructure.

Additional Information

Mahalo is a junior, unconventional natural gas producer, focusing on the development and production of coalbed 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

ADVISORIES

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.

Contact Information

  • Mahalo Energy Ltd.
    Duncan Chisholm
    President and 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