SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 8-K
Current Report Pursuant to Section 13 or 15(d) of The Securities Act of 1934
Date of Report (date of earliest event reported): March 9, 1999
Mallon Resources Corporation
(exact name of registrant as specified in its charter)
Colorado 0-17267 84-1095959
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
999 18th Street, Suite 1700, Denver, Colorado 80202
(address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (303) 293-2333
not applicable
(former name or former address, if changed since last report)
Item 5. Other Events
Mallon Resources Corporation (the "Company") issued the following
press release, dated March 9, 1999, the text of which follows:
Denver, Colorado -- Mallon Resources Corporation (Nasdaq:
"MLRC") reported today that initial drilling on its new La Jara
Canyon acreage in the San Juan Basin of New Mexico indicates the
presence of substantial natural gas reserves on the block. The
Company believes the discoveries will enable it to continue its
rapid pace of reserve growth over the next several years.
Mallon drilled six wells scattered across its 39,000 acre La
Jara Canyon block in order to make a preliminary assessment of
the acreage's reserve potential. One development well and three
exploratory wells were successfully completed. One exploratory
well is still being tested. Among the four completed wells,
production was established in the San Jose, Nacimiento, Ojo
Alamo, and Pictured Cliffs Formations, at depths ranging between
1,200 and 3,600 feet. One exploratory well, drilled in the
southern-most portion of the block, was a dry hole. Mallon is
currently revising its 1999 drilling program to incorporate the
La Jara Canyon acreage.
George O. Mallon, Jr., Chairman, stated, "We are very
encouraged by the La Jara Canyon drilling results to date,
although we have only scratched the surface with just six wells
on this huge block. We are confident that development of La Jara
Canyon, combined with our ongoing development of East Blanco,
will enable Mallon to continue to increase its proved oil and gas
reserves at a rate of approximately 50% per year over the next
three years."
Last week, Mallon reported that year-end 1998 oil and gas
reserves rose 58% to 91.7 billion cubic feet of natural gas
equivalents. This performance followed a 51% increase in
reserves during 1997, the first year of Mallon's accelerated
reserve development program.
Kevin M. Fitzgerald, Mallon's Executive Vice President,
noted, "While our primary focus at La Jara Canyon was the Ojo
Alamo and San Jose Formations, reserves there appear to be much
more diversified, with additional significant accumulations in
the Nacimiento and Pictured Cliffs. By having tested gas
reserves in four different formations, we believe that we have
maintained or increased La Jara Canyon's reserve potential, while
substantially reducing drilling risks and increasing the
probability of success as the acreage is developed."
Mallon has identified a large number of drilling locations
at La Jara Canyon, most of which have at least two primary
targets, and a substantial portion of which have three or four
primary targets.
All six La Jara Canyon wells encountered the four main
formations in this multiple pay-zone environment, although the
productivity of individual formations varied from well to well.
While most of the wells will require further testing, the
following is a brief summary of individual well results to date:
Jicarilla 30-03-33 No. 2: This development well is one
quarter mile from East Blanco. A 32 foot interval was perforated
in the Ojo Alamo and tested at a stabilized rate of 710 thousand
cubic feet (mcf) of gas per day. In addition, the San Jose
flowed at a stabilized rate of 290 mcf per day, without
stimulation. This well is expected to produce at higher rates
after it is hydraulically fractured.
Jicarilla 30-03-34 No. 1: This exploratory well, drilled as
a 1.5 mile step-out from East Blanco, has been classified as a
discovery well. It has pay in the San Jose, Nacimiento, Ojo
Alamo and Pictured Cliffs Formations. The well will be completed
when a pipeline connection is extended underneath a highway to
the site, which should occur during second quarter 1999.
Jicarilla 29-02-9 No. 1: This exploratory well, drilled
approximately seven miles from East Blanco, has been classified
as a discovery well. It flowed naturally at a stabilized rate of
520 mcf per day from a 44 foot interval in the San Jose, which is
the highest natural rate the Company has encountered in the San
Jose. In addition, the Pictured Cliffs formation tested 470 mcf
per day at a stabilized flow rate, after artificial fracturing.
Other intervals remain to be tested.
Jicarilla 29-02-20 No. 1: This exploratory well, drilled
approximately seven miles from East Blanco, is currently testing
gas from the San Jose while recovering fracturing fluids. Other
San Jose intervals remain to be tested. A brief test was run on
the Fruitland Coal in this well because gas shows encountered
during drilling were unusually high for this area. Although the
well flowed gas at sub-commercial rates, analysis of coal sample
cuttings indicate a high gas content in the coal. When time
allows, long-term production tests will be run on the coal.
Jicarilla 28-02-4 No. 1: This exploratory well, drilled
approximately ten miles from East Blanco, has been classified as
a discovery well in the Pictured Cliffs and Nacimiento
Formations. A 48 foot Nacimiento interval flowed at a stabilized
rate of 720 mcf per day without fracturing. The Pictured Cliffs
sand is well developed and consistent with the pay encountered in
the 9 No. 1 well. In addition, a 17 foot Ojo Alamo interval
tested 260 mcf of gas and 240 barrels of water per day, without
fracturing.
Jicarilla 28-02-11 No. 1: This southern-most wildcat well
was drilled approximately 12 miles from East Blanco. It was
determined to be a dry hole.
Mallon entered into a Minerals Development Agreement
covering La Jara Canyon's 39,000 acres with the Jicarilla Apache
Tribe in 1998. The acreage, which is adjacent to the Company's
East Blanco Gas Field in Rio Arriba County, tripled the Company's
acreage holdings in the area.
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 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 effect the Company's
operations. These and other risk factors that affect the
Company's business are discussed in the Company's Annual Report.
Mallon Resources Corporation is a Denver, Colorado, 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."
Signatures
Pursuant to the requirements of the Securities Exchange act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
Mallon Resources Corporation
March 10, 1999 By: __/s/ Roy K. Ross_____________________
Roy K. Ross, Executive Vice President
