Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on October 27, 2010 at 15:19

I'm encouraged that you judge their technical staff competent. That they bet the farm is of little surprise as that's also Mainland's M O. If they discover producible shale, I'll gladly give them credit. I do not intend to convey an impression that dry gas is not of value, only that it's value has diminished considerably in the last six months. Mainland has publicly failed to entice any significant development partners to date. I think it likely that many have looked at the specifics of the prospect and declined to participate.

Permalink Reply by Paul M. Hess on October 27, 2010 at 23:51

Ah! But it is the Hogs nose which leads him to the acorn. We will hope that Mainland's Geologists have "sniffed" out a good one.

No argument on the diminished value of dry gas deals due to the market prices. It has even impacted ideas I would like to get going and they involve gas and liquids. But I do have to wonder, if it is of such lessened value, why leasing and drilling activity remains relatively active within those trends. I know some may be under pressure of expiring leases, but the rest ?????? So for those folks in the area of the Mainland test, the candles lit and prayers offered.

Permalink Reply by Skip Peel - Mineral Consultant on October 28, 2010 at 2:48

Ray, I have followed Mainland Resources since August, 2008 when they applied for Haynesville Drilling & Production Units, one in the Holly Field and one in the Bethany-Longstreet Field in DeSoto Parish, LA. I have had an Internet Alert in their name since that time and have read every report issued. I have visited their website a number of times. Mainland's past history is to tout, tout, tout but not drill squat. They have attempted to portray themselves as an "early mover" in the Haynesville Shale Play when in fact they acquired their modest leasehold as a Cotton Valley prospect and had no prior knowledge of nor ability to develop Haynesville Shale. They never drilled one single well of any kind in LA. but they did participate as a Working Interest in some pretty good wells drilled by others. Though Mainland's Haynesville experience is quite limited, it seems the driver behind a new business model. That model is to look for deep opportunities where they can rather quickly assemble a lease block at bargain prices and then spend almost two years trying to get investors and partners to participate by using the name, "Haynesville Shale". Even with the broad recognition of the Haynesville as the premier shale play, it has been a struggle. And one or more partners were announced in numerous reports attempting to pump up this prospect only to have the deal fall through. Mainland has had a very hard time attracting any support for the Buena Vista from any company that has an acknowledged track record in E&P. Mr. Atencio has been CEO for only a few months. And it's nice to hear that you think highly of him. However Mainland's history prior to his participation is not one to inspire confidence in the project.

Permalink Reply by Dennis Dion on October 28, 2010 at 3:54

Skip I believe you're missing something here, MNLU never looked for a partner for the Buena Vista project since they have the money to drill this 1st deep well. Negociations with major players will be a lot easier with a successful well completed and a potential of 220 producing wells on their property

Permalink Reply by Skip Peel - Mineral Consultant on October 28, 2010 at 4:32

Denis, your statement is factually inaccurate. Here is an example from earlier this year. There were similar attempts and failures by Mainland Resources previous to this.


Mainland Resources, Inc. (OTC:MNLU) Pays Promoters as Wells Dry Out
By Violeta Slavtchevska
Date: Apr 6, 2010

A massive promotion for $25,000 drove the price of Mainland Resources, Inc. (OTC:MNLU, MNLU message board) up again yesterday. The company was included on promoters' watch list and mentioned in numerous newsletters, promising huge speculative gains for risk lovers.

The shares closed at $1.55 yesterday and marked the highest level for this months, realizing a third monthly rise by 8.39%. It is Mainland's forth subsequent promotion for this year and as the over $150,000 spent on promotions suggest, the price jumps do not seem to be synched to fundamental data.

Apart from the reappointment of William (Bill) D.
Thomas as Chief Financial Officer, the company's management announces no other significant changes of their failing business model. It seems as the management will also in the future rely on press releases to support the stock and to attract new investors. Last week was announced that AGORACOM will provide online investor relations services for Mainland using a social network. The news followed two previous press releases, according to which Mainland Resources will drill the Burkley-Phillips No. 1 well in Mississippi and will merge with American Exploration Corporation, acquiring all of its property and equipment.

The company engaged in the exploitation of natural resources has not reported any production of oil or gas and the last financial results filed are more than disastrous. With a remarkable net loss of over $13.5 Million for the fiscal year ended February 2009, Mainland Resources has never made a profit and finances its operating activity through issuing new stock.

Mainland goes even further and admits in its annual SEC filing it will most probably not be able to raise any other type of financing and will continue to finance its strategic plans for the acquisition and drilling of new oil and gas opportunities with additional shares of common stock. That will add the risk of ownership dilution and loss of voting power for current shareholders to the systematic risks of the industry.

Permalink Reply by Skip Peel - Mineral Consultant on October 28, 2010 at 6:10

I have read a number of similar articles over the last 24 or so months. The opinion expressed by the author is shared by others. I could post those articles also but I'm not that interested. Care to comment on American Exploration Corp.?

Permalink Reply by Dennis Dion on October 28, 2010 at 7:06

Skip, you got it wrong again, Burkley Phillips #1 well is fully funded and they still have an untapped $40M line of credit with Guggenheim....That's the situation today with Mainland Resources. I trust Mainland's team of experts opinion more than that of the writers of those blah blah blah articles

Permalink Reply by Skip Peel - Mineral Consultant on October 28, 2010 at 7:35

No, Dennis. I don't have it wrong. I just pass along what is being reported on the Internet. And I am not a CPA so those that wish to talk finances are welcome to do so but I will decline to participate. I haven't heard any comment on Mainland's repeated failures to find partners in the Buena Vista prospect even though I have posted a specific example, American Exploration. And I'd like one of you to post a link to a well other than the Burkley-Phillips that Mainland has completed as the operator, anywhere. Mainland may be on the up and up but they make noises just like a lot of overly speculative O&G ventures that can not stand scrutiny. If you guys wish for me to post other past articles on Mainland, I will do so just to prove that the article I posted previously is not an aberration. You can also look in the GHS archives and find a number of old discussions about Mainland. You and Ray are beginning to sound suspiciously like Mainland employees, investors or Internet touters.

Permalink Reply by The_Baron on October 28, 2010 at 7:38

Just look at their SEC filings...

They are burning through cash, and you can see reports on all their oil gas holdings
http://www.sec.gov/Archives/edgar/data/1395205/000118374010000601/f...

Permalink Reply by The_Baron on October 28, 2010 at 7:43

Mississippi Prospect

On September 3, 2008, the Company signed an Option Agreement with Westrock Land Corp ("Westrock") to acquire 5,000 net acres in mineral oil and gas leases located in the State of Mississippi. In accordance with the terms and provisions of the Option Agreement; (i) the Company will acquire a 100% working interest and a 75% net revenue interest in the Leases; (ii) the Company has agreed to pay certain acquisition costs per net mineral acres and also paid a $500,000 deposit on September 3, 2008 to secure the Option Agreement; (iii) the balance of the acquisition costs totalling $2,275,000 will be due and payable upon completion of the due diligence, to be completed by the Company no later than October 15, 2008. The Option Agreement was subsequently extended on each of October 15, 2008, November 30, 2008, April 16, 2009 and June 1, 2009 whereby the option period was extended until January 20, 2010. Additional deposits of $250,000, $100,000, $250,000, $100,000 and $100,000 were paid on October 17, 2008, December 1, 2008, December 29, 2008, April 27, 2009, May 6, 2009 and June 5, 2009 for a total deposit to date of $1,300,000 (February 28, 2009 - $1,100,000). Effective February 12, 2010, based upon completion of its due diligence, the Board of Directors determined that it was not in the best interests of the Company and its shareholders to proceed with the acquisition and development of the Leases in accordance with the terms and provisions of the Option Agreement and the Company authorized the termination of the Option Agreement. The company and Westrock agreed that the Option Agreement would be terminated and the Company and Westrock would be released from their respective duties and obligations. The Company forfeited its deposit of $1,300,000 paid to Westrock which was recorded as a loss during fiscal 2010.


13



--------------------------------------------------------------------------------



MAINLAND RESOURCES INC.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2010
(Unaudited)





NOTE 3 - OIL AND GAS PROPERTIES (continued)


Buena Vista -Mississippi Haynesville/Bossier Prospect

On June 22, 2009, the Company signed an Option Agreement with Westrock Land Corp to acquire approximately 8,000 net acres in mineral oil and gas leases located in the State of Mississippi. In accordance with the terms and provisions of the Option Agreement; (i) the Company will acquire a 100% working interest and a minimum 75% net revenue interest in the Leases; (ii) the Company has agreed to pay certain acquisition costs per net mineral acres by August 31, 2009. On August 28, 2009, the Company amended the Option Agreement to expand the acreage to include an additional 225 acres thus aggregating approximately 8,225 net acres subject to the Option Agreement. The Company further agreed to advance a payment of $300,000 towards the total purchase price of the acreage under the Option Agreement on August 31, 2009. On October 13, 2009, the Company paid an additional $900,000 towards the purchase price of the property and paid the final instalment of $2,090,060 on November 3, 2009 for a total purchase price of $3,290,060. During fiscal 2010, the Company acquired approximately an additional 861 net acres for $122,376 and subsequent to year end the Company acquired approximately an additional 8,573 net acres at a cost of $556,258. The Company's total acreage as of August 31, 2010 is approximately 17,838 net acres, with net revenue interests ranging from 71.00% to 78.34%. Total cost to date of acquiring leases is $3,967,962.

(Barons notes: average of $222/ acre, but some of these leases have a royalty burden of up to 29%)

Burkley-Phillips No. 1

During the period the Company began preparations to drill the first well on the Buena Vista Prospect. Drilling commenced on July 21, 2010. The Company's working interest in the well is 72%. The Company will fund 90% of the well costs to earn its 72% interest in the well. Guggenheim Partners LLC will fund 10% of the well costs in order to earn an 8% working interest in the well. Guggenheim funded its portion of dry hole cost of $865,000 in advance of which $511,334 remains unexpended as of August 31, 2010.


Burkley-Phillips No. 1 (continued)

Effective on September 17, 2009, the Board of Directors of the Company authorized the execution of a letter agreement (the "Letter Agreement") with American Exploration Corporation, a Nevada corporation ("AEC") to jointly develop contiguous acreage known as the Buena Vista Area located in Mississippi (the "Joint Development Project"). In accordance with the terms and provisions of the Letter Agreement: (i) AEC agreed to commit approximately 5,000 net acres and the Company agreed to commit approximately 8,225 net acres to the Joint Development Project; (ii) the Company shall be the operator of the Joint Development Project; (iii) the Company agreed to pay 80% of the initial well drilling and completion costs to earn a 51% working interest in the well and the total Joint Development Project; and (iv) AEC agreed to pay 20% of the initial well drilling and completion costs to earn a 49% working interest in the well and the total Joint Development Project. Also in accordance with the terms and provisions of the Joint Development Project, future costs, including drilling and completions, for oil and gas activities of the net acreage in the Joint Development Project will be split on a 51% / 49% basis between the Company and AEC, respectively. The Company was required to acquire the acreage committed to the Joint Development Project from an unrelated third party on or before October 15, 2009 otherwise the Letter Agreement would terminate and would no longer be in force and effect. The Company completed the transaction as per above paragraph.


On April 26, 2010, AEC failed to fund its 20% share of the estimated total well costs of the Burkley-Phillips No. 1 well on the Company's Buena Vista Prospect ("Prospect") in Jefferson County, Mississippi. As a result, AEC forfeited its rights to a 29% working interest in the well and in the Prospect in favour of the Company. AEC will continue to be entitled to receive a 20% working interest in the first well and the Prospect after completion, subject to compliance by AEC with all other terms and conditions of the Letter Agreement and the related Joint Operating Agreement. On March 22, 2010, the Company and AEC entered into a definitive Merger Agreement and Plan of Merger (refer to Note 4).

Permalink Reply by Skip Peel - Mineral Consultant on October 28, 2010 at 8:14

Mr. Broadbent, I willingly leave the opinion of my credentials to the members of Go Haynesville Shale. And I do not make personal attacks as such is prohibited by the site rules. If you have not read the site rules, I suggest that you do so. You will find a link at the bottom of the Main Page.

Permalink Reply by Skip Peel - Mineral Consultant on October 29, 2010 at 3:17

Ray, my business is 95% computer related so I do tend to check on the site as I take regular breaks. And I have been an active member for 30 months so I do have a significant number of posts. I do not discount the possibility that you have considerable experience in the industry. And appreciate your comments as to the speculative nature of the Buena Vista project. I am quite willing to debate any specifics of my posts concerning Mainland that you may care to point out.

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