Mainland Resources Inc. and American Exploration Corp. have entered into a letter of agreement to jointly develop their contiguous oil acreage in Mississippi. Mainland Resources will commit approximately 8,500 net acres and American Exploration will commit approximately 5,000 net acres to the project.

American Exploration recently announced that it has received a shale gas analysis from Schlumberger evaluating the total gas in place within the Haynesville Shale Formation on their 5,000 acres. The assessment confirmed similar reservoir attributes as other areas of the Haynesville formation and estimated gas in place of at least 300Bcf/section.

This places more than 2 trillion cubic feet of gas covering just the 5,000 acres of American Exploration lands and does not include the potential gas that may be in the 8,500 acres that Mainland Resources is contributing to the project. The entire 13,500 acre project area has been completely remapped with reprocessed seismic data. The seismic data results confirm that the acreage is prospective for the Haynesville shale gas reserves.

Mainland Resources will be the operator of the project area and has committed to pay 80% of the initial well drilling and completion costs. This will earn the company a 51% working interest in the well and total project area. American Exploration will contribute the remaining 20% of the costs and receive the other 49% working interest in the well and project area.

Mainland Resouces President Mike Newport states, “We are very fortunate and excited to participate in this project area with American Exploration with such a large acreage position. The Haynesville Shale is the top gas play in North America and we feel this is one of the best new shale prospects in the region. This project could add tremendous value to our company.”