Mallon Reports First Quarter Drilling Operations and Revised 2001 Capital Expenditure Plans, and Provides Forecast Guidance

Apr 11, 2001, 01:00 ET from Mallon Resources Corporation

    DENVER, April 11 /PRNewswire/ -- Mallon Resources Corporation
 (Nasdaq: MLRC) today reported the following matters:
 
     First Quarter 2001 Drilling Operations
     During the first three months of 2001, Mallon drilled 11 successful new
 wells in its East Blanco Natural Gas Field in New Mexico's San Juan Basin.  Of
 these wells, two are currently hooked-up and on production, while nine of
 these wells, together with four wells that were drilled earlier, await
 pipeline connections.  It is expected that the required 15 miles of pipeline
 extensions will be completed within 30 days.  George Mallon, Chairman, said,
 "Difficult weather conditions in the San Juan Basin have significantly delayed
 our gathering line construction work and the connection of these new wells. We
 expect to have nine of these new wells on production by mid-May."
 
     Revised 2001 Capital Expenditure Plans
     Mallon now plans to make approximately $22 to $24 million of capital
 expenditures during 2001, approximately $12 million less than previously
 scheduled.  Mallon reports that it reduced its budgeted expenditures to an
 amount that it can finance out of cash on hand and expected cash flow, without
 incurring any more debt.  Mallon's revised capital expenditure plans call for
 the drilling of 33 new wells at East Blanco in 2001, and the installation of
 pumping units on 36 existing wells to enhance their production.  Mr. Mallon
 said, "We believe that it is prudent to scale-back our expenditures to avoid
 incurring more debt.  We believe that our new budget, while more cautious than
 our previous plans, is more than adequate to continue the prudent development
 of East Blanco while allowing us to continue to perform targeted enhancement
 operations on our Delaware Basin holdings."
 
     Financial Results Forecast Guidance
     Based on its operations to date and its revised plans, Mallon believes its
 first quarter 2001 and calendar 2001 financial and operating results will
 approximate the following:
 
 
                                         1st Quarter 2001   Full Year 2001
                                            Estimated      Estimated Range
      Net Production (Bcfe)                     1.7           8.5 - 9.5
 
      Expenses (in $ millions)
        Lease operating expense                 1.2           5.7 - 6.1
        Production tax                          1.5           6.8 - 7.6
        General and administrative              1.4 *         4.7 - 5.1 **
        Depreciation                            0.2           0.3 - 0.5
        Depletion                               1.7           8.6 - 9.5
 
      Capital expenditures (in $ millions)      6.8          22.0 - 24.0
 
 
      *  Includes $0.6 million of non-cash stock compensation
      ** Includes $1.7 million of non-cash stock compensation
 
 
     Mr. Mallon noted, "Our production for 2001 under this revised forecast is
 expected to be approximately 8.5 to 9.5 billion cubic foot equivalents, as
 compared to the 7.0 Bcfe we produced in 2000. This will reflect between a
 20% to 35% increase in production."
 
     The foregoing information contains forward-looking statements and
 forecasts, the realization of which cannot be assured.  Actual results may
 differ significantly from those forecast.  Inaccurate geologic and engineering
 interpretations, the volatility of commodity prices, unbudgeted cost
 increases, unforeseen delays in operations, and operations that prove less
 successful than anticipated are risks that can significantly affect Mallon's
 operations.  These and other risk factors that affect Mallon's business are
 discussed in Mallon's Annual Report.
 
     Mallon Resources Corporation is a Denver-based oil and gas exploration and
 production company operating primarily in the San Juan and Delaware Basins of
 New Mexico.  Mallon's Common Stock is quoted on Nasdaq under the symbol
 "MLRC."
 
     For additional information, contact:  Alfonso R. Lopez, Vice President -
 Finance of Mallon Resources Corporation, at 303-293-2333.
 
 

SOURCE Mallon Resources Corporation
    DENVER, April 11 /PRNewswire/ -- Mallon Resources Corporation
 (Nasdaq: MLRC) today reported the following matters:
 
     First Quarter 2001 Drilling Operations
     During the first three months of 2001, Mallon drilled 11 successful new
 wells in its East Blanco Natural Gas Field in New Mexico's San Juan Basin.  Of
 these wells, two are currently hooked-up and on production, while nine of
 these wells, together with four wells that were drilled earlier, await
 pipeline connections.  It is expected that the required 15 miles of pipeline
 extensions will be completed within 30 days.  George Mallon, Chairman, said,
 "Difficult weather conditions in the San Juan Basin have significantly delayed
 our gathering line construction work and the connection of these new wells. We
 expect to have nine of these new wells on production by mid-May."
 
     Revised 2001 Capital Expenditure Plans
     Mallon now plans to make approximately $22 to $24 million of capital
 expenditures during 2001, approximately $12 million less than previously
 scheduled.  Mallon reports that it reduced its budgeted expenditures to an
 amount that it can finance out of cash on hand and expected cash flow, without
 incurring any more debt.  Mallon's revised capital expenditure plans call for
 the drilling of 33 new wells at East Blanco in 2001, and the installation of
 pumping units on 36 existing wells to enhance their production.  Mr. Mallon
 said, "We believe that it is prudent to scale-back our expenditures to avoid
 incurring more debt.  We believe that our new budget, while more cautious than
 our previous plans, is more than adequate to continue the prudent development
 of East Blanco while allowing us to continue to perform targeted enhancement
 operations on our Delaware Basin holdings."
 
     Financial Results Forecast Guidance
     Based on its operations to date and its revised plans, Mallon believes its
 first quarter 2001 and calendar 2001 financial and operating results will
 approximate the following:
 
 
                                         1st Quarter 2001   Full Year 2001
                                            Estimated      Estimated Range
      Net Production (Bcfe)                     1.7           8.5 - 9.5
 
      Expenses (in $ millions)
        Lease operating expense                 1.2           5.7 - 6.1
        Production tax                          1.5           6.8 - 7.6
        General and administrative              1.4 *         4.7 - 5.1 **
        Depreciation                            0.2           0.3 - 0.5
        Depletion                               1.7           8.6 - 9.5
 
      Capital expenditures (in $ millions)      6.8          22.0 - 24.0
 
 
      *  Includes $0.6 million of non-cash stock compensation
      ** Includes $1.7 million of non-cash stock compensation
 
 
     Mr. Mallon noted, "Our production for 2001 under this revised forecast is
 expected to be approximately 8.5 to 9.5 billion cubic foot equivalents, as
 compared to the 7.0 Bcfe we produced in 2000. This will reflect between a
 20% to 35% increase in production."
 
     The foregoing information contains forward-looking statements and
 forecasts, the realization of which cannot be assured.  Actual results may
 differ significantly from those forecast.  Inaccurate geologic and engineering
 interpretations, the volatility of commodity prices, unbudgeted cost
 increases, unforeseen delays in operations, and operations that prove less
 successful than anticipated are risks that can significantly affect Mallon's
 operations.  These and other risk factors that affect Mallon's business are
 discussed in Mallon's Annual Report.
 
     Mallon Resources Corporation is a Denver-based oil and gas exploration and
 production company operating primarily in the San Juan and Delaware Basins of
 New Mexico.  Mallon's Common Stock is quoted on Nasdaq under the symbol
 "MLRC."
 
     For additional information, contact:  Alfonso R. Lopez, Vice President -
 Finance of Mallon Resources Corporation, at 303-293-2333.
 
 SOURCE  Mallon Resources Corporation