Denver-based independent Mallon Resources Corp. said Tuesday that it has retained Waterous International Inc. of Houston to assist in the solicitation and evaluation of strategic alternatives for the further natural gas development of its primary property in the San Juan Basin of New Mexico.

“We recognize that our current capital situation is not sufficient to properly develop our 55,000-acre East Blanco Gas Field,” said Chairman George O. Mallon. “We have not had the resources necessary to continue our expansion of the field to the south, to properly test the Fruitland Coal, or to explore the deeper zones that produce in nearby parts of the basin. In addition, we do not feel that the market truly recognizes the underlying value of this significant asset. With this in mind, our board of directors has determined that in order to maximize value for our shareholders it is prudent to explore strategic alternatives for the company.”

“We believe that East Blanco represents a unique and attractive opportunity,” Mallon continued. “East Blanco, which is operated 100% by Mallon, is 99% gas. It has extensive infill, down-spacing and extension drilling opportunities that further enhance the previously mentioned potential in the Fruitland Coal and untested deeper zones, such as the Lewis Shale. Since drilling our first well in 1997, we have taken this field to over 21 MMcf/d.”

Mallon added that he believes the company has “barely scratched the surface” of the field’s ultimate potential. In an attempt to realize the play’s potential, Mallon said it is seeking a partner with “significant financial strength” to enable it to maximize the potential of the asset and bring greater value to its shareholders.

As part of the search, the company said it expects to open up a data room in Houston containing detailed corporate and property information during the second week of December. For more information, visit www.waterous.com, or contact Andy Taurins at (713) 437-5041.

Mallon’s exploration and production operations are focused primarily in the San Juan and Delaware Basins of New Mexico.

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