Mallon, Smart Exploration announce coalbed methane joint venture

Mallon Resources Corp., Denver, and Smart Exploration Inc., Tulsa, have agreed to form a joint venture to explore and develop the Fruitland formation coal seams under Mallon's East Blanco prospect in New Mexico's San Juan basin.

April 9, 2002

By the OGJ editors
HOUSTON, Apr. 9 -- Mallon Resources Corp., Denver, and Smart Exploration Inc., Tulsa, have agreed to form a joint venture to explore and develop the Fruitland formation coal seams under Mallon's East Blanco prospect in New Mexico's San Juan basin.

A letter of intent was signed calling for a finalized exploration agreement by May 1. That agreement will require Smart to drill a pilot project of six horizontal test wells on Mallon's acreage in order to earn a 50% interest in the venture. Mallon will commit 58,000 acres to the project (OGJ, July 16, 2001, p. 44).

Mallon Chairman George O. Mallon Jr. said, "We have long held a substantial coal acreage position and a good database of information, but we have been without the expertise to properly explore the coal ourselves."

Smart President Berry J. Mullennix said, "Having recently sold our coalbed methane project in the Arkoma basin, we have been looking for another CBM opportunity. Mallon's coal appears to be ideally suited to our proprietary horizontal drilling and completion techniques."