As commodity oil and gas prices move near their historic highs, new junior oil and gas exploration and development companies have been working to take advantage. Many of the people interested in working the oil and gas exploration and development pipeline are eager to profit but lack the capital and know-how to get the job done. To get around this inexperience factor, many juniors turn toward experienced operators with financing and experience in place. If a junior can find a senior willing to take on their prospects, at acceptable terms, profits are very likely to be found for all involved.
Mainland Resources Inc., a junior oil and gas exploration and development company, works to explore and exploit oil and gas deposits primarily in Louisiana. The company currently owns approximately 2,600 acres of leases in and adjacent to the Haynesville oil and gas shale deposits in Northwest Louisiana.
Although the company’s primary oil and gas activities have been focused on Northeast Louisiana in the past, a shift has begun with its entry into the Haynesville oil and gas region of Northwest Louisiana. The Haynesville region is thought to hold one of the country’s largest gas deposits, with some estimating an excess of 168 Tcf of reserves.
Given that the company is presently more involved with the acquisition of leases then the actual development of leases, it has had to find a partner to help it develop its wells. To this end, the company has partnered with Petrohawk Inc. (HK) to develop its first wells. If this first collaboration meets expectations, further drilling agreements have been arranged to develop other leases and wells owned by the company.
The company is well on its way to being able to develop its own leases in the near future. The current agreement with Petrohawk requires Petrohawk to finance all development costs, up to pipeline development and gathering, for the first well. Subsequent costs for Petrohawk will decline as additional wells are drilled. Ultimately, the agreement currently in place will give Mainland Resources the ability to leverage future efforts that much more easily. The real key to the company’s near-term future is the bringing in of the first well.
Mainland Resources is a younger company on the rise. It has a solid position in a region expected to produce long term revenues. It has also allied itself with an experienced player in the oil and gas exploration and development markets that is willing to share its experience and wealth. Given natural gas’s commodity pricing exposure, the company may need to work its way into a solid mid-level position in the marketplace, but does appear ready to take its place at the table and have a share of the oil and gas pie.
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